Thank you for sharing!

Your article was successfully shared with the contacts you provided.

DALLAS-The Texas-style, business-friendly “Let’s Make a Deal” keeps the money flowing in a high-stakes poker game boosted by economic development incentives, central US location and “right to work” power. The well-rounded packaging accounted for the nation’s largest carrot ever dangled — a $1-billion, 90-year incentive for the now-defunct Supercollider project.

Only $600,000 in incentives were tapped before the fusion project shut down, Bill Shelton, managing director of Ft. Worth-based Cornerstone Group, tells GlobeSt.com. Shelton also is an instructor at Texas A&M’s Real Estate Center. He’s also planning to roll the deals into a book on incentive practices across the US.

“It used to be location, location, location. It’s incentive, incentive, incentive today,” Shelton says. But, he stresses, it often takes more than incentive to lure corporate chiefs to the Lone Star state. “It’s not the driving force in many cases,” he says, citing the region’s centralized positioning and union option as being equally important when the cards are laid on the table.

Doing business these days means “playing by monopoly rules,” Shelton says. The game-playing strategy in recent months proved successful in Amarillo where a $45-million, 10-year deal sewed up Bell Helicopter Textron as a newcomer to the town with a population of 120,000.

Terms aren’t always available, but Shelton has the inside track to know the facts. The $45-million package had Amarillo Economic Development Corp. buying 185 acres at the city’s airport, kicking in $1 million in start-up funding for training, a 10-year property tax abatement and bond coffers. A $32-million non-taxable sales tax-generated bond fund pays Bell $2,500 per job while $8 million of taxable revenue bonds provide additional money for 1,475 jobs. It means rent is free if Bell delivers on the head count. And at the end of 10 years, Bell Helicopter Textron gets the real estate free and clear. The Amarillo EDC also kicked in money to help with employees’ relocation expenses.

The size of the deals are all across the board. In Big Spring, TX, with a population of 23,000, Star-Tex got a $2.3-million interest-free loan, amortized over 14 years, to rehab a building for a call center, Shelton relates. For every $10 of the payroll, the firm can “retire” $1 of its annual building payment. The EDC and Star-Tex each will kick in $2,000 per month for five years to lay some 60 miles of high-quality, fiber-optic lines from Midland to Big Spring for the 450 jobs that the company plans to create.

The Texas tact is, says Shelton, “modest when compared to Oklahoma.” A company can get up to 5% of its wages rebated for 10 years in Oklahoma. The recent passage of “right to work” legislation will give the neighbor to the north some of the same dynamics keeping Texas a stronghold for job growth.

The Texas legislature, through the years, gets the pat on the back for bundling the incentive programs now at work in all 254 counties. where many cities partake of 4a and 4b programs that use sales taxes as a business stimulant. The designations allow a 0.5% sales tax, with voters’ approval, to be imposed and deposited into an economic development coffer. There is a 2% window of opportunity above the 6.25% state sales tax that municipalities can and do use to set up the account.

It’s not a gift and there is a catch, says Gene Richards, director of Marketing Texas Business in Austin. The takers must produce all the jobs in order to get all the rebates cut in the deal-making process. The program will come up for review in the next legislative session just to find out if the accounts are being used properly, says Richards. The incentive program was set up in 1989 and nearly 480 communities out of 1,700 to 1,800 actively participate in the program.

Another big contributor to the cause is a sales tax exemption on manufacturing equipment, utilities, agricultural equipment and select deals. It boils down to tax forgiveness for newcomers and veteran businesses not just in the initial equipment phase, but forever, says Richards. The program started in 1989 at a 25% forgiveness and has been operating at 100% for the past eight years. Texas is only one of a handful of states offering the program.

Jeff Moseley, director of Texas Economic Development, tells GlobeSt.com it’s the full gamut of programs that is responsible for the state’s glowing record. From the disadvantaged to the wealthiest areas, there’s something in place for everyone: enterprise zones, NAFTA, the Foreign Trade Zone, Freeport exemptions, the sales tax leverage, no state income taxes and the freedom of choice between union and non-union operations.

“It’s probably just a real nice combination of programs and circumstances,” says Moseley. Chicago and New York City, he asserts, are “coming back to the Texas model” to work up incentives for inner city projects. For the Texas team, Moseley says it simply “rolls up its sleeves, sharpens its pencils and studies the programs that make sense for our taxpayers.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


GlobeSt. NET LEASE Fall 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.