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Code name usage irks some Denton taxpayers

Critics have called on the city of Denton to stop using secret code names for businesses when debating tax breaks for those companies behind closed doors.  

After "Project High Flyer" was posted on a Dec. 19 agenda, some critics called on City Hall to be more transparent. Instead of posting code names for economic development projects, they said the city should post the name of the business asking for the tax break. 

"Plano went down that road 10 years ago," said David Zoltner, a Denton veterinarian who frequently pushes for more transparency at City Hall. 

David ZoltnerDRC
David Zoltner

An attorney general ruling required Plano to release the names of businesses asking for tax  breaks. 

Shielding a company name from disclosure ostensibly protects the business and the taxpayer during negotiations, particularly since not all deals go through. But critics of the code-naming practice say the taxpayer would be better protected with more public scrutiny and less deal-making behind closed doors. 

In 2007-08, several companies asked Plano for tax rebates or other economic incentives, but the city wouldn't name names. A Plano resident formally requested the names of the companies asking for tax breaks.

The city of Plano didn't want to release the information. City officials and one of the companies told Greg Abbott, then Texas attorney general, that disclosing the information could put the deals at a competitive disadvantage.

But Abbott's office disagreed. In a letter ruling, the office said company names, on their face, aren't trade secrets. No evidence suggested that a business competitor got an advantage when a government simply revealed the name of a business seeking a tax break.

Attorney general letter rulings are not binding, so the practice of using code names remains in Denton.

A few people at City Hall and at the Denton Chamber of Commerce likely know what Project High Flyer stands for, but they aren’t allowed to say. The general public won’t find out the business name until negotiations are finished. 

Project code names also rub salt into some old wounds in Denton.  

In late 2015, the City Council negotiated economic incentives for “Project Cartoon” behind closed doors. For weeks, no one knew who had asked for tax rebates or how much they might get.

The deal received widespread criticism when it was finally unveiled for a vote. Critics said the $8.1 million package was already a done deal by the time the public learned that Project Cartoon was the code name for Buc-ee’s, a popular Texas chain of travel plazas.

Most projects already have a code name long before they get on a City Council agenda.

The Economic Development Partnership Board, a council-advisory body that includes city government and business leaders, gets brief reports from businesses interested in coming to Denton. Seven code-named projects were on the reports in November and December.

For example, “Project Nickel” is a manufacturing company that was referred to Denton by Team Texas, an economic development initiative in the governor’s office. The company is looking for 60 to 80 acres and says it will build a $90 million building and employ 550 within five years.

In November, the Denton Chamber of Commerce reported meeting with a representative from the Kansas City Southern Railway about new business projects in its service area, which includes Denton.

Then, in December, “Project Kansas” appeared on the board’s report. Project Kansas, a manufacturing and distribution company, is looking for 50 to 100 acres served by rail and would employ 100 people.

Buc-ee’s is under construction in southern Denton, in John Ryan’s City Council district. He was elected after the Buc-ee’s deal went through in December 2015.

Denton City Council member John RyanCourtesy Photo
Denton City Council member John Ryan
Courtesy Photo

He hasn’t been a part of many other business negotiations so far. However, he says he’s comfortable with the amount of information that gets shared at each level of negotiation, both with council members and the general public.

“When we’re talking with code names, we [the Denton city government] aren’t the only city they [the business] are talking to at that point,” Ryan said. 

Council members also have the option of learning the name of the business, as long as they formally agree not to disclose the name until it is unveiled to the public, he said.

In any talks with a prospective business, council members consider early on specific criteria about the project, Ryan said. That might be the size of the investment, or the number of jobs and how much they’ll pay.

Council members knew enough about recent prospects to know they were being asked whether to grant tax rebates or other incentives to distribution centers, even if they didn’t know until the end that they were making deals with Target and WinCo, Ryan said.

In other words, if council members decided they needed to leverage more from a deal with a certain kind of employer or business, they could do so early on.

Code names work because deals can fall through at any stage of the talks, Ryan said.

But when it’s time to consider the final details, real names replace the code names on city documents, Ryan said. 

“I am comfortable with it because we take no action on any item until the name of the company is released,” Ryan said.   

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881.

FEATURED PHOTO: Construction crews work Wednesday on the future Buc-ee's site. The popular Texas travel plaza company is building a 96-pump center in southern Denton. The plaza is expected to open later this year or in early 2019. Jeff Woo/DRC