During Tuesday's work session, the Fort Worth City Council received a presentation from Economic Development Director Robert Sturns concerning 2017 incentive review findings and policy recommendations for tax abatement and economic development program agreements.
A total of 44 agreements were reviewed, 11 tax abatement agreements and 33 Economic Development Program Grant agreements.
A review of the data raised several issues. Notably, Fort Worth Minority/Women Business Enterprise involvement was consistently below commitment.
*Of the 44 active agreements, 36 had Fort Worth MWBE requirements.
*In Fiscal Year 2017, 32 MWBE firms were contracted for supply and service needs, but the top 10 firms earned 84 percent of the amount spent on MWBE’s.
*MWBE utilization requirements are high (15 to 25 percent), but accounted for a low percentage of the overall incentive (average of 5 percent).
Sturns noted that firms appear to have challenges identifying qualified MWBE’s on the North Central Texas Regional Certification Agency list to fulfill supply and service expenditures.
A larger breakdown shows:
*Fort Worth business construction: Overall $211.2 million. MWBE $37.6 million, almost half of the commitment of $71.2 million.
*Fort Worth business supply and service: Overall $44.9 million. MWBE $8 million, below commitment of $35.9 million.
Sturns noted that results of the trend analysis show that even with reductions in the overall percentage requirement of MWBE participation under the previous policy (changed in 2016 to show each year instead of cumulative of all years and all incentive agreements), companies still struggled to meet the goal. He also asserted that Fort Worth lacks MWBE capacity in several areas as it relates to construction and supply and service.
Sturns suggested that capacity building efforts, while making progress, need to be continued. Also, the presentation suggested that new policy recommendations will revise MWBE program requirements to maximize participation and competitiveness.
Other ideas from Sturns included:
*The list needs to be more comprehensive, e.g., MWBE businesses with a
location in Fort Worth should qualify, even if the business's principal location is in a different city.
*The city should allow MWBE companies, other than those certified by NCTCRA, to qualify for incentive programs.
*Statistical sampling may not indicate a company whose certification has
lapsed or does not have a principal office in Fort Worth.
*Identifying 14 ineligible vendors representing a reported spending of $669,000 but no
impact to the overall incentive earned.
Sturns made some recommendations to the Strategic Plan Incentive, including:
*Citywide Incentive Program. Create new incentive tools to encourage business
growth within target industries and to facilitate development and redevelopment in
*Establish an economic development fund similar to those of Plano and Richardson (through property taxes), and seek creative uses for natural resource extraction revenues.
*Revise the city tax abatement policy to ensure that future abatements help advance the goals of this plan. Minimize or reduce requirements that make Fort Worth less competitive in comparison with other cities in the metro area.
*Create a new incentive program for specific corporate relocations and expansions occupying existing space.
*Establish incentive guidelines for public investments that are not typically considered incentives, but function as indirect incentives. This would include infrastructure extensions (roads, water/wastewater, electric, and other utilities) necessary for a new facility.
*Focus on wages at or above City of Fort Worth median household income ($54,876 in 2016, according to the American Community Survey five-year estimate).
*Structure and apply incentives in a way that moves Fort Worth closer to its desired result outlined in the 2017 Economic Development Strategic Plan
*Effective and responsible incentive use.
*Achieve better participation from MWBE Firms to increase overall capacity.
*Adopt resolution stating that the city elects to remain eligible to participate in property tax abatement according to state guidelines.
*Adopt the updated general tax abatement policy, including guidelines and
criteria, governing certain property tax abatements granted by the city of Fort
*Adopt the Economic Development Program Agreement Policy.
*Adopt the Designated Project Fund Policy.
An agenda item is expected to come before the city council at the Jan. 29 meeting.
"We want to ensure that we are doing all that we can to enhance and increase our overall participation, particularly with from our MWBEs, but there's also a competitiveness aspect to economic development," Sturns said. "We're trying to hit both of those."
Project completions with a total of $1.5 billion in capital investment included:
*WINNER Inc./Facebook, over $988 million capital investment, 10 percent tax abatement, 10 percent earned.
*Clearfork Development (Phase I), over $425 million invested, 25 percent tax abatement, 25 percent earned.
*Waterside by Trademark Property Company (Phase I), over $90 million invested, 25 percent tax abatement, 22.9 percent earned.
Taxes collected from companies with incentive programs totaled over $19 million. The total private investment leveraged was $3.7 billion with a private to public ratio of 229-1.
Companies with incentive agreements are required to hire a certain number of Fort Worth residents and utilize a certain percentage of Fort Worth companies for construction and annual supply and service agreements.
The total jobs created was 18,543, including 6,778 Fort Worth jobs and 1,426 central city.
"It's a very positive picture as you look at what we were able to accomplish in the overall program," Sturns said.