Companies receiving tax incentives and grants from the city created 56 percent more jobs than they were required to and spent far more than they were required to spend on goods and services last year, a report shows.
In the 2014 review of 40 tax abatement and Chapter 380 economic development agreements — five more companies than reported in the 2013 review — companies committed to hiring 9,014 employees to receive a benefit. But they actually hired 14,049 employees, the report shows.
To receive benefits, companies must commit to spending a certain amount on projects as well as spending money for goods and services with Fort Worth companies. The reports shows that the companies spent $466.8 million on their projects, 66.5 percent more than the $280.4 million they committed to spending.
Moreover, the companies spent $45.2 million with Fort Worth companies, nearly 300 percent more than the $11.4 million that was required to earn the benefit.
Of that, the companies committed to spending $214.1 million with Fort Worth minority- and women-owned businesses, but actually spent $288.6 million. They also spent $17.2 million on goods and services with minority- and women-owned businesses, more than double the $7.4 million required.
Of the 12 companies with active tax abatement deals in 2014, only three received the full benefit. Abatements are typically reduced when companies don’t meet hiring or spending goals. Had all the companies hit their goals, they would have received $5.7 million in abatements, but they only received $3.9 million. That meant the city received $1.7 million, which is $473,101 more than projected, the report said.
The city also offers Chapter 380 deals, which are like property tax incentives but can go beyond 10 years. Those also carry employment and spending requirements and are geared toward projects with large capital investments.
Of the 28 companies with Chapter 380 agreements, 18 earned the full benefit last year.
For 2014, $23.7 million in taxes were collected on the projects, with $13.8 million going back to the companies in grants. The city retained $9.9 million.
Robert Sturns, interim director of the city’s economic development office, said the numbers are a positive picture of the incentive program.
“Historically, the tax abatements have tended to have lower numbers on full compliance,” he said. “I’d probably tie that to the hard construction commitments that have to be met. If they don’t hit the commitment on spending with Fort Worth or MWBE contracts, for example, it reduces the total amount that can be earned for the life of the agreement. For 380s, not hitting those initial goals will usually result in termination of the deal.”
Sandra Baker, 817-390-7727