Companies receiving tax incentives from the city created nearly three times the number of projected jobs, but some still missed out on their full benefit because they didn’t hit hiring and spending targets for 2013, a report shows.
In the latest annual review of 35 tax abatement and Chapter 380 economic development agreements, the companies committed to hiring 3,585 employees to receive a benefit, but they actually hired 9,195 employees over the life of the agreements, the report said.
“Overall, the picture is very positive about how these tax abatements have performed as it relates to the overall commitments that have been made by these companies,” said Robert Sturns, Fort Worth’s business recruitment and retention manager.
But he added: “There are still some challenges as it relates to the economy. Companies are still struggling and in cases where the economy is not doing as well as it could, they’re having layoffs and curtailing their annual spending. That’s the driver in these reductions.”
In the deals with the city, companies agree to create a certain number of jobs, hire a certain number of center-city residents, and do a certain percentage of business with Fort Worth construction and minority- and women-owned companies. In exchange, they are offered an abatement on a percentage of their property taxes, in some cases 100 percent. The City Council approves the deals.
Of the 10 companies with active tax abatement deals in 2013, only three received the full benefit, including the Fort Worth Depot apartment community, GrandMarc at Westberry Place near TCU and the Omni Fort Worth Hotel downtown. Tax abatements are capped at 10 years.
Others didn’t hit their job or investment targets. Allied Electronics has a deal for a 75 percent abatement worth $122,953 but didn’t earn any of it.
And a Chase Operations Center in the CentrePort Business Park on the far east side has a deal for a 90 percent abatement but got only 5 percent, or $17,234, last year, with $327,443 going to city coffers. The report didn’t specify the number of jobs created.
Had the 10 companies hit their goals, they would have received more than $2.2 million in abatements. Instead, they got a little more than $1.7 million. That meant the city received $1.1 million, $542,024 more than projected, according to the report.
The city also offers Chapter 380 deals, which are much 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 25 companies with Chapter 380 agreements, 13 got the full benefit last year. For 2013, $17.1 million in taxes were collected on the projects, with $10.8 million going back to the companies in grants.
Eight other companies started their agreements in 2013 and will undergo the review process next year, Sturns said.
On construction spending, the companies committed to spending $262.7 million in 2013 but actually spent $499.4 million. Of that, $285.9 million was spent with minority- and women-owned businesses, nearly $90 million more than projected, the report said.