Central Dallas based Government (a strong case)

[MustangMonkey]

Some of you may have already read my post in the Strong Mayor post about creating a Dallas Metro based Government.
Why? You may ask. If I am ever asked to work at a job any closer to Oklahoma then I will seriously consider moving out of Texas (not that I have anything against OK, I just don't believe in commuting hundreds of miles *exaggeration* while I am still in the same metro, and I also can't stand working in some parasite city that steals employers and business from the city that gave this metro life in the first place.

The following article explains some of my concerns of previous post. It is also a pretty good argument for reducing property taxes and going with some other form of taxation.

Cash lures Thousand Trails to Frisco (http://dallas.bizjournals.com/dallas/stories/2002/05/27/story3.html)

Cash lures Thousand Trails to Frisco
City's aggressive incentives program raids neighboring municipalities, Tollway landlord claims
Christine Perez Staff Writer

FRISCO -- Thousand Trails Inc. has emerged as one of the first companies to take advantage of Frisco's aggressive cash incentives program, picking up a $125,000 check for moving its headquarters and about 100 jobs to the city.

The $75 million campground owner and operator has been based in Dallas since 1994 with offices at The Meridian, an office tower on Interstate 635 near Interstate 35E.

Now it has inked a 10-year deal for 23,000 square feet in Parkwood Office Center, a 103,000-square-foot, single-story office development east of Dallas Parkway and north of Stonebriar Centre mall.

As a 4A sales tax city, Frisco's Economic Development Corp. is funded by a half-cent city sales tax. Last year, it raked in $4.2 million in tax receipts from the booming Stonebriar Centre mall and surrounding retail. This year it expects to take in about $5 million.

The EDC is using the funds to help diversify its tax base, aggressively pursuing corporate office users by luring them with cold hard cash.

Thousand Trails (AMEX: TRV) initially concentrated its search for space on the Dallas North Tollway and Interstate 635 corridors. The company hadn't planned to go as far north as Frisco until economic incentives pulled the search in that direction, said Bryan Reed, chief financial officer.

"The dollars were about the same for space in Frisco and Plano, but the offer from the Frisco EDC made it impractical to go to Plano," he said.

The company hopes to be in its new space by Sept. 1. PageSoutherlandPage is handling interior design.

Thousand Trails owns and operates 59 campgrounds in 17 states and in British Columbia. It has about 115,000 members who pay to use campgrounds in the company's network.

"We operate like a cross between a fitness club, a hotel and a timeshare," Reed said.

Last year, Thousand Trails generated $75 million in revenue. Its net income for the quarter ending March 31 was up 74%, to $2.2 million, over the same period last year. The company expects to see continued growth as more baby boomers hit retirement age and as sales of RVs continue to climb.

Bill Shaw, chairman, president and CEO, said Thousand Trails currently has a tender offer out on the table to buy back some of its shares.

"We have an offer out for 1.5 million shares, at a price of $8.41," he said.

Shaw isn't expecting too many takers. Since the offer was made, Thousand Trails' stock has increased in value and is trading at about $10.50.

Riis Christensen with Transwestern Commercial Real Estate Services represented Thousand Trails in its search for space. He praised the straightforward approach used by the Frisco EDC.

"Most cities want you to do the deal before they will commit to incentives, so you never know what you might get," he said. "In Frisco, you fill out a form and they verify the information and come up with a number."

Landlords along Dallas North Tollway aren't as enamored with Frisco's approach. John Zogg, senior vice president of leasing and asset management for Crescent Real Estate Equities Co., said the EDC has created a loophole in state legislation.

"They're using the 4A tax money for something other than its intended use," he said. "The program was not intended to be used to raid neighboring municipalities. It was designed to help bring in businesses from far-away areas, not to bribe companies to come in from a mile or two away."

Crescent owns about 2 million square feet of office space along the Dallas North Tollway. It also owns a tract of land that could accommodate up to 750,000 square feet in new office development.

"If we build on that site, it will be because there is a compelling reason for a company to move there," said Mike Lewis, vice president of leasing. "We're not asking municipalities to utilize taxpayers' money to pay companies that are already located down the street."

Jim Gandy, executive director of the Frisco Economic Development Corp., said his group responds to all inquiries and doesn't "discriminate against brokers or companies based on their geographic location.

"The majority of our business prospects come to us from brokers," he said. "Other sources include accounting firms, law firms and various site selection consultants. We also get responses to listings in various publications and from our Web site. At the same time, we are also out actively working to attract companies to Frisco, through those same avenues."

One Crescent tenant, Intecom, an Addison-based telecommunications firm, is eyeing a move to Hall Office Park in Frisco. According to real estate sources, the company could receive as much as $1 million from the EDC.

George O'Brien, executive vice president and CFO of Intecom, told the Dallas Business Journal in March that the Frisco incentives were "significant enough to make a difference in the deal and warrant our consideration."

Sources say the company, which employs 250 at Liberty Plaza, is now moving closer to a Hall Office Park decision and interviewing architects to design the new space. O'Brien did not return calls seeking comment for this story.

Thousand Trails will be the first tenant at Parkwood Office Center, built last year on a speculative basis by Sealy & Grant. Daryl Mullin with Cushman & Wakefield represented the landlord in the deal, but Capstar Commercial Real Estate Services has since been given the leasing assignment.

Jay Bailey, vice president of leasing for Capstar, said Frisco incentives are helping generate strong activity at Parkwood. He expects to announce a new 15,000-square-foot tenant soon and has several other deals in the works.

Sealy & Grant is planning to develop three more buildings at Parkwood totaling about 150,000 square feet, once its current space is about 80% occupied, Bailey said.

Meanwhile, Steve Roberts Custom Builders broke ground earlier this week on Shantara Plaza II, a 65,000-square-foot garden office project that sits at the northeast corner of Warren Parkway and Parkwood Drive. Eight buildings are planned, ranging in size from 4,600 square feet to 12,650 square feet. The five-building first phase is expected to be ready for occupancy in December.

Lease rates will range from $19.75 to $21 per square foot, said Leigh Glendenning, who is marketing the project for Roberts.

Gandy with the Frisco EDC said his office has been swamped with inquiries since word of the cash incentives program has begun to spread, a trend he expects to continue.

"Activity breeds activity," he said.

Contact DBJ writer Christine Perez at cperez@bizjournals.com or (214) 706-7120






It is impossible for one city on-its-own to combat every single suburb in luring business. Once one city gains a business another is trying to take it away. No wonder DFW is such a great place to do business, you never have to pay rent *exaggeration*.

I think the city council of any neighboring city can see the wisdom of a govt. that pulls our area together instead of this constant competition for tax dollars. Now that Richardson is getting passed over for Plano, businesses are moving out of Plano to Allen. By-By Addison the pastures are greener in Frisco.

I think in the past the suburbs viewed this as not being their problem, but I think there is no denying that it will never end unless something is done.

[MustangMonkey]

Just another pice of information. Granted we are in an economic downturn, but what was once the Great Richardson Telecom Corridor now has a 46% vacancy rate. Ericsson has moved to Plano, and so has Alcatel (through acquisition). The suburbs need to wake up and realize their position as a suburb of a great central business district is not secure. When newer, cheaper, modern homes are built further out they will be left to waste like a passing locust plague, and know one will care (including me) when these faceless places go into decline (with people moving to the next greatest place).

BTW the last time I visited my wifes friends out in Allen, I notced Alcatel and Micron ocupying a once beutiful roadside landscape. Not to be to mean -Those freinds of my wife are very proud of their new home on a blank open field. lol.

[Axes]

All those cheap, 500K tract homes in Plano will be Texas' largest ghetto in 15 years. Plano will be a wasteland with Willow Bend and Collin Creek closed for the new mall in Melissa. Stonebriar will be "where all the gangs hang out."

[MustangMonkey]

Amen!

I wonder if we sent this to all the city councils in the area, if we would get any feedback (action -not talk)

[GarrettCarey]

Perhaps we should direct some city council members to this forum. They may get some good ideas or at least generate some good debates at city hall....probably not action though.

It really bothers me to see both small and large companies relocating to Allen, McKinney, Frisco, and the like. I really don't understand why companies would even want to go out there....okay tax incentives.....but why else would they go.....to "oklahoma" when they are Texas companies.

I would feel more comfortable with a company leaving Dallas if it were relocating to Irving, Fort Worth, or even Arlington....but Allen? I do not get it!

They'll be sorry soon enough.

What do I know?

[MustangMonkey]

There are several reasons:

When they move to these areas they can buy Bigger, Newer Homes, with more land to impress their neighbors and friends with. They can justify paying their employees less, since they can also buy more ect… out in the middle of nowhere.

They could never really get allot of talented people (employees) to move to the middle of nowhere like [pick some rural town to go here] so they locate on the fringes of a metropolitan area so they can sell all the advantages of being in a large city and not having to pay for it.

Its all about money (tax-incentives) are all they need.


Once taxes go up due to property value increases, or because they have to build more roads ect… for the moving in population surge ect… ect… They will be moving on to the next cheaper place where they can get a fast growth of younger people to come work for them in the next hot growth area.

[MustangMonkey]

From the Dallas Morning News

Northwest Dallas shows corporate muscle
Farmers Branch leads way with 18 companies on D-FW Top 200 list

05/24/2002

By SUZANNE MARTA / The Dallas Morning News

Farmers Branch went from two corporate headquarters in 2001 to 18 in the 2002 D-FW Top 200, putting the city neck-and-neck with Irving for having the most corporate headquarters of any suburb on the list.

Include Carrollton, Addison and Coppell, and northwest Dallas County is a hub of corporate activity. The four cities combined have 31 entries in The Dallas Morning News' annual ranking of the area's 200 largest publicly traded companies.

Farmers Branch's surge over the last year wasn't caused by a slew of relocations.

Most companies have been there for years but claim Dallas as their home city, not Farmers Branch. In part, it's because of a quirk in Farmers Branch ZIP codes. The U.S. Postal Service recognizes addresses in the city limits as both Farmers Branch and Dallas.

The quirk has led a number of people to be surprised at the corporate presence in the city.

"It's more shock than anything," said Melissa Chapman of the Farmers Branch Chamber of Commerce. "There's a perception that Farmers Branch is a rural place. We're not out in the country raising crops and cattle, we're raising big business."

Last year, the Chamber of Commerce produced a promotional video highlighting several of the corporate headquarters based there. It has become an important part of the agency's marketing package.

"Major companies bring instant credibility," said Brad Mink, Carrollton's director of economic development. "If a place is good enough for a Fortune 500 company, it's good enough for any company. It automatically crosses a lot of questions off the list."

Mr. Mink regularly touts Carrollton's corporate tenants – which include wireless company CellStar Corp. and retailer Gadzooks Inc. – in his recruiting pitches. "Our companies are our brand," he said. "It gives us immediate recognition and identity."

And those brands reach across several industry sectors.

"That speaks very well for us," Mr. Mink said. "It tells companies we have the infrastructure to meet almost anything a company needs."

Daniel Howard, chairman of the marketing department at SMU's Cox School of Business, said cities can build their own brand name by touting the presence of major corporations.

"Prestige snowballs," Mr. Howard said. "Once you get a major player in an area, then you'll get all the associated companies. The impact can be huge."

Companies, however, have different priorities.

Tuesday Morning Corp. chief executive Kathleen Mason said the retail chain – No. 57 in the Top 200 – uses a Dallas address to help give it identity.

"If you say Farmers Branch outside of Texas, or even outside of Dallas-Fort Worth, people aren't sure where you're talking about," Ms. Mason said. "If you say Dallas, everyone gets an immediate snapshot of where you're coming from."

Officials at i2 Technologies Inc., which employs about 1,500 workers at its Luna Road campus in Farmers Branch, said a Dallas address makes business sense when you're a global company.

"If I've got a sales guy in Europe saying we're based in Farmers Branch, they're not going to know where he's talking about," said Adrianne Court, the company's vice president of corporate real estate and recruiting.

Still, i2 is happy with its location.

"We're a big fish in a little pond. If I call someone at the city in Farmers Branch, I'll get a call right back," Ms. Court said. "There's more red tape if you're in Dallas.

"Here, we have the best of both worlds."

E-mail smarta@dallasnews.com or call 972-594-7198, ext. 2006.

[GarrettCarey]

That pisses me off.....using the Dallas name to get "global status" but can't office in the city that gave it life to begin with....pathetic.

What can city hall do to bring these companies back into the core? I think that the recent "urban trends" could help, but if you're an executive fronting the bill.....do you really care about urban trends?....nope! Some of the reasons have been stated elsewhere.

Dallas needs to do something to get some more "Big Timers" back here. Who knows, maybe the Victory and Main St. projects (leaders) could work together with city hall to put together a campaign for the Dallas CBD. Now that I think about it, maybe recent history at city hall (10-20 yrs) has been another driving factor for the companies to leave our jewel in the first place!

again i am rambling too much!
-late

[MustangMonkey]

How much do you know about the history of Dallas over the past 10-20 years.

One of the main problems I have seen is the intervention of the Federal Government getting involved in city issues. *This has been true for all major cities*

-side rant- How big does a city have to be before the Federal Government seems to think it is their job to tell them what they should and should not do.

Another issue might be some red tape that Dallas has generated over its life. City processes should be streamlined. However I think this is more of a small business ussue than a large one. Large companies usually have people that know how to run the process, nomatter where they are.

Any more comment on recent history?

[Axes]

Cities by nature are extremely inefficient, especially large ones. Large cities like Dallas have many competing interests from special interest groups, whether they be racial, commercial, non-profit, etc. There is a finite pie, and these groups are concerned with getting their piece not the city as a whole.

Small suburbs are able to move faster because they tend to be more homogenious and less fractured. Plus, large cities grow and have to "payoff" these special interest groups by contracts, positions, etc. that waste money. Think of how much money Dallas wastes on lesser quality, and higher priced "minority" contracts. Think of all the special interest bureaucrats making six figures to do nothing. It is a nature of democracy.

Meanwhile, Frisco has extra cash to bribe corporate HQs away.

[GarrettCarey]

Good point....but that hasn't seemed to plague Chicago, New York, LA, Seattle, etc has it? At least not to the extent it has plagued Dallas? Or has it? Why is it that those cities can compete with their suburb better than Dallas? What is killing Dallas?

[Axes]

I think you'll find every city you mentioned as or more suburbanized than Dallas. Look at the major corporations based in the "cities" you mentioned, you'll find many if not most in suburbs. New York, Chicago and especially L.A. and Seattle are very suburbanized. Microsoft. IBM. United Airlines. All based in suburbs. It is a fact of life. Freeways killed the American City.

New York and Chicago went through their dire spells during the 1970s and 1980s. Each of those is starting to rebound. Hopefully, Dallas will never fall to those levels and perk up soon.

[GarrettCarey]

I agree that these cities are as suburbanized as Dallas (or more perhaps), but do they have as big of a problem as Dallas with it's suburbs? Here we have several large suburbs to compete with i.e. Fort Worth (not a suburb though), Arlington, Irving(Las Colinas), Addison, Richardson, Plano, etc that are very capable in making strong bids for companies. Do the other cities have suburbs as strong as ours?.....i do not know!

And yes...freeways have killed the American City.

[Axes]

I can give you my experience from living in Chicago. In the 1970s and 1980s, Chicago had "white flight." Suburbs such as Schaumburg, Hoffman Estates, Rosemont, and others blossomed. Schaumburg would be like a large Irving or Plano; it probably has the second most corporate HQs in Illinois. Hoffman Estates and Rosemont are smaller a la Richardson with a few HQs.

Dallas just does a poor job of promoting its attractions. For example, Chicago has cultural institutions, parks, the lake, etc., that people can't get in the suburbs. Dallas has that, but no one talks about it. Dallas still has a small town mentality.

[MustangMonkey]

Well I think this gives some credibility that the suburbs see that the sprawl will never end with the current system. The way things are now will only leave them as the has-beens-of-tommorow.

Here is the latest article on what we have been discussing:
Cities' officials want to limit tax incentives (http://www.dallasnews.com/business/stories/060702dnbussalestaxfight.1a47c.html)

Cities' officials want to limit tax incentives
They urge cooperation; others support methods of attracting companies

06/07/2002

By STEVE QUINN / The Dallas Morning News

PLANO – Plano, Richardson, Addison and Farmers Branch officials want the state Legislature to stop some North Texas cities from using special sales tax revenues to lure companies from their neighbors.

The effort was touched off by Frisco's recent deal with Thousand Trails Inc. The city, using a half-cent sales tax that is intended to boost economic development, agreed to pay Thousand Trails $125,000 to move its headquarters from Farmers Branch to Frisco.

"We are not opposed to the economic development sales tax. We think it's a useful tool throughout the state," said Frank Turner, Plano's business development director. "Our focus is primarily where this kind of sales tax is used to attract a business out of one city to a neighboring city."

Frisco City Manager George Purefoy sees no problem with such moves. His interpretation is that the economic development tax was designed to help smaller cities compete against larger ones for new business.

The complaints, he said, are the "epitome of hypocrisy."

"In 1990, when we had 6,000 people, was the playing field level?" Mr. Purefoy asked. "We didn't complain to legislators. We got to work to see how we could compete, so I don't understand what the issues are."

Plano and Addison's city councils have scheduled discussions next week about the proposal campaign to amend the economic sales tax law, which the Legislature approved in 1989. Richardson and Farmers Branch will take up the issue soon, officials said.

Farmers Branch City Manager Richard Escalante said Frisco's deal with Thousand Trails – and others like it – defeats the spirit behind the economic development tax, which was intended to bring business to Texas.

"It's not a checkerboard where you move jobs from one square to the other along the same board," Mr. Escalante said. "Is that helping the state, the regional economy? Or is it moving more jobs and more business from the central part of the city farther away, therefore exacerbating job and transportation and environmental issues?"

Jim Gandy, president of the Frisco Economic Development Corp., denies that Frisco is raiding other cities' business communities.

Companies' needs change, he said, and sometimes there are better opportunities in newer cities such as Frisco, Allen and McKinney, all of which have the half-cent economic development sales tax.

"They may need more space, less space, newer space, or just need to reconfigure their space" Mr. Gandy said.

The dispute has been going on almost since the tax was passed. In the Dallas area, it pits cities that belong to Dallas Area Rapid Transit against cities that don't. DART cities can't take advantage of the economic development assessment because their sales taxes are capped out at 8.25 cents on dollar. One cent of that tax goes to the transit agency.

Plano, Richardson, Farmers Branch and Addison are all DART cities. Frisco, Allen and McKinney aren't.

And thanks to a retail boom generated by Stonebriar Centre, Frisco sales tax revenues are up 13 percent in 2002 over last year.

The revenue boost helped Frisco attract Thousand Trails, a company that operates campgrounds and had $79 million in revenues last year, by means of a cash incentive.

Terry Clower, associate director of the Center for Economic Development and Research at the University of North Texas, says he doesn't think the economic development tax gives cities such as Frisco, Allen and McKinney a leg up on their neighbors.

Company moves from city to city are "driven by the marketplace in which we operate," he said.

"The large part of economic development in most suburbs in major metro areas has been taking business from the central cities," he said. "That's just a natural progression.

"It points to a need for some regional cooperation, and it draws attention to the potential inequities from granting incentives and special privileges for individual companies."

The economic development tax, for example, did not play a role two years ago when Daisytek International Corp. moved from Plano to Allen. Daisytek had to make the move because it could no longer share space with its spinoff, PFSWeb, in a Plano Parkway office building.

"We do not do a full-court press to solicit companies," said Charisse Reaume, executive director for the Allen Economic Development Corp. "We accommodate companies that need space and take advantage of the business parks and other amenities we have."

Mr. Gandy said cities such as Plano can offer their own incentives, such as the tax abatements that Plano used to recruit Electronic Data Systems Corp. and Perot Systems Corp. from Dallas.

The difference, he said, is that incentive payments are immediate and tax abatements cover a longer period. But the result is the same: The company making the move saves money, Mr. Gandy said.

"Ultimately it has the same impact to the company," he said. "If they don't pay taxes, then they get to keep the cash. The bottom line is, it's still a cost savings to the company."

E-mail squinn@dallasnews.com

[MustangMonkey]

I kind of find it funny how these suburbs are now so interested in what is good for the core, after they have been trying to pull businesses out of Dallas for so long.

However, who can blame them with our current tax structure. What we need is a shared tax base in the Dallas Metro, and concentrate on moving businesses to the core, and investing in the core to make it a completely world class destination that people will be proud to work in (although it is already a great place with allot going on)

[GarrettCarey]

I agree on both points! Absolutely!

[MustangMonkey]

Here is a new article on the same subject from the Dallas Business Journal. The article contains a little more insight to the previous DMN article.

The groups from Richardson, Addison, and Farmers Branch are getting a little smarter in their thinking, but they are still missing the big picture. Or they just realize we are in Texas, and still run by an island/rural mentality at the state level.

Cities readying incentives fight (http://dallas.bizjournals.com/dallas/stories/2002/06/10/story1.html)

Economic-development officials call big cash payouts for local relocations 'bad policy'
Christine Perez Staff Writer

GREATER METROPLEX -- Reacting to aggressive cash incentives being offered by the city of Frisco, three neighboring cities are considering a call for new legislation that would limit the way economic development corporations spend their funds.

Addison, Plano and Richardson are developing position statements that their city councils will look at adopting in coming weeks.

The statements call for new state legislation that would, among other things, prohibit the use of EDC funds to lure companies from one city to another in the same metropolitan area.

The matter will go before the Addison city council on June 11, said Ron Whitehead, city manager.

"We have seen the Plano position statement and will be trying to get our city council to pass an identical resolution," he said.

Richardson is looking at a similar initiative, Whitehead said.

"The managers in all three cities have had discussions about the difficulties of competing in a market where certain cities are able to offer huge sums of cash as relocation awards," he said. "We're working on this together."

As a so-called 4A city, Frisco funds its EDC with a half-cent city sales tax. It took in $4.2 million last year and this year expects to top $5 million.

Addison, Plano, Richardson and other cities served by Dallas Area Rapid Transit are not 4A cities. The half-cent tax in those cities goes toward public transportation.

In an effort to diversify its tax base, the Frisco EDC has begun offering cash and other incentives to relocating businesses, whether they're coming in from across the world or across the street.

It also is providing Caribbean cruises or trips to the Bahamas to real estate brokers who bring a 50,000-square-foot lease or 150 full-time jobs to the city.

Careington International, a dental benefits firm, picked up $225,000 when it moved from Galleria III in North Dallas to Frisco Bridges last year. Thousand Trails, a $75 million campground owner and operator, will collect $125,000 for moving its headquarters from LBJ Freeway to Frisco's Parkway Office Centre in September.

But those deals pale in comparison to the $1 million Frisco reportedly is offering Intecom, an Addison-based telecommunications firm, to move to Hall Office Park, a 162-acre development north of State Highway 121.

"The economic development sales tax, as it was originally proposed in 1989, was designed to help relocate companies to Texas from other parts of the country and other parts of the world," Whitehead said. "It wasn't created so cities could pay millions of dollars to companies moving a few miles up the road."

Jim Gandy, executive director of the Frisco Economic Development Corp., was not available to comment for this story.

He recently told the Dallas Business Journal his group responds to all inquiries and doesn't "discriminate against brokers or companies based on their geographic location."

State lawmakers first authorized the original 4A sales tax in 1989. Two years later, a so-called 4B sales tax was added, broadening the use of the funds for infrastructure and other projects.

Since then, some non-4A and -4B cities have criticized the use of the tax -- and the lack of guidelines and controls. The position statement Plano and Addison are considering calls for amendments that will define eligible and prohibited uses of sales tax funds, requires that economic impact statements be made public before an incentive is funded and prohibits the use of sales tax funds for relocations within the same metropolitan area.

Amanda Nobles, president of the Texas Economic Development Sales Tax Association, said the possibility of new legislative controls is a hot topic within the group.

"There isn't anything evil about cash incentives. It just becomes an issue when cities use them for companies relocating from one Texas city to another," she said. "There are arguments on both sides of the issue. I don't know when TEDSTA will ultimately take a stand, or even if it will take a stand."

The association evaluates proposed legislation based on three criteria, asking whether it preserves local control, maintains a limited state role and focuses on economic development.

"When you get into a tax that is elected locally, it's hard to fashion a template that is going to fit every need," she said. "It's competition, a free-enterprise system. As long as the citizens of the community are satisfied, it's very hard to find fault with it."

An overwhelming interest in incentives should send up a red flag, said Ron Robinson, president of both the Richardson Chamber of Commerce and Metroplex Technology Business Council.

"If incentives appear to be the No. 1 reason why the company would move to Richardson, we would look very carefully at the project," he said. "In our view, the company should have other, more important reasons for coming here."

Robinson said the Richardson chamber favors statewide restrictions.

"We think each city in the state of Texas ought to be able to have 4A and 4B money, to make it fair," he said. "Secondly, in our view, there have been abuses in the use of that money around the state. One of the corrective elements should be that the funds can't be used to move companies from one Texas city to another, in the absence of compelling evidence that the company would otherwise leave the state."

Addison's Whitehead said funding relocations from nearby cities is "bad policy."

"Our whole philosophy is to build a good infrastructure, provide good services and keep a reasonable tax rate," he said. "We do not do things that are to the detriment of other communities. Our view is that it is really important to have a strong overall Metroplex. No city is an island."

Contact DBJ writer Christine Perez at cperez@bizjournals.com or (214)706-7120.

[MustangMonkey]

I hope I'm not distracting your reading by giving you too much information, but I think this is the most important obstacle our Metroplex has to overcome. These issues will define whether we are a region of managed growth, which contributes to our quality of life, or whether we are a sprawl infested, polluted, region full of suburban ghettos.

Anyway, here is an opinion article found in the Dallas Business Journal.


<a href="http://dallas.bizjournals.com/dallas/stories/2002/06/10/editorial1.html"> <h2>The Metroplex way</h2></a>

Some Metroplex cities have seen the face of true competition -- and they want nothing to do with it.

Addison, Plano and Richardson are among the most vocal in their concern over their ultra-aggressive neighbor, Frisco, which is handing out cash relocation incentives to businesses, even if they are coming from other Metroplex communities.

As we report in this issue, upset cities are calling for new legislation that would prohibit cities from using incentives to raid municipalities in the same metro area.

Heaven forbid such legislation ever becomes law.

Some think competition between cities should be fought under Queensberry Rules. In its present state, it's more of a bar brawl, with pool cues and sucker punches occasionally coming into play. That might be unseemly. But it is best for our regional prosperity.

This issue is of enormous importance to every business in North Texas. If local cities stop competing with one another, either out of politeness or by state fiat, the business climate of the Metroplex will erode sharply and irretrievably. Taxes will go up. Fees will go up. Regulations will multiply.

And expanding or relocating companies will go somewhere else where the game isn't fixed.

Good people in Addison, Richardson and Plano will tell you that Frisco has an unfair advantage, because it can use a half-cent sales tax to fund the business-recruitment war chest, while they have to use that half-cent to pay for public transportation. Good people in Frisco counter that Addison, Plano and Richardson, et al, have the unfair advantage, because they have DART, and Frisco does not.

Truth is, no one has an unfair advantage. If legislators ramrod through some ill-conceived vision for an "even playing field," the losers will be businesses all over the region, and, ultimately, the cities themselves.

In this bad economy, we need to give cities more freedom to improve their business climates, not less.

Disputes between North Texas communities are nothing new. The unwritten commandment of economic development around here is: Thou Shalt Not Raid Your Neighbor. The thing is, no one obeys that commandment.

Nor should they.

Cities have a lot of flexibility in how they raise tax dollars and how they use those tax dollars. That's as it should be. Some, such as Frisco, want to shift some of the tax burden away from homeowners and are willing to aggressively pursue businesses to achieve that goal. Other cities seem cozy with their bedroom-community reputation and do little to encourage or permit commercial expansion. Most cities are right in the middle. We say, God bless them all.

But no city should be able to tell Frisco how it can recruit or who it can recruit.

Almost every city here has hired a brilliant, aggressive director of economic development; these people all have a very close-knit, love-hate relationship with one another. Together, they help tout our region to the entire country. Locally, they spend all day trying to outdo one another.

We say, hallelujah. That's the American way, the Texas way, and the Metroplex way.

Let's keep it that way.

[Axes]

You guys beat me to it. I almost vomited when I read the whining in the ink. Poor Plano, a tract suburb whining about Frisco stealing businesses. Plano exists only due to its ability to steal development from Dallas. Typical. Like I said earlier, Plano will be a gigantic ghetto in 10-15 years.

[GarrettCarey]

This guy must live in Frisco!

To each his own I guess....

[Axes]

I agree with you guys. I hate that suburbs steal businesses from the city and from each other; but, it pisses me off that now that Plano has stolen all it needs, it wants to stop the process.

[MustangMonkey]

I agree, now these places seem to think the rules are unfair. Now that they began to take on some socially responsible projects, they think it isn't right for a community that doesn't contribute to the greater good to take advantage of a situation.

Collin County doesn't even support a public hospital system, and I would be very surprised if any of them are required to provide affordable housing, or provide homeless shelters. I'm sure these places have contributed with the massive layoffs of many suburban companies.



Question:
It appears to me that this tax system was developed in 1989, and if memory serves me correctly, that was the last year that a tall skyscraper was built in the CBD. Can anyone confirm this or give insight as to wether these two are related.


Getting past suburb bashing and their hypocrisy, the facts are that the system needs to change. It is a very destructive process.

I belive that competition is good when it is Dallas vs Chicago, Dallas vs Denver, or Atlanta. But it is easier to compete with these other places when you have some teammates on your side. If you have division in your own team you will destroy yourself from the inside.

This has happened to many large companies as they get large. Factions grow so that internal sections of the company are competing against each other, and instead of sharing resources, each group has to duplicate the others work. The only way they rebound is to reorganize and define their goals.

In the past, even with our city property taxes the way they are, the surrounding communities viewed Dallas as the headquarters, and what was good for Dallas was good for the region. And they where right.
At some point the neighbors got greedy, or maybe it was Dallas that wouldn't or wasn't allowed to share the wealth (I'm sure they didn't make any effort) so the surrounding cities decided they would do what they could to get their piece of a very large pie. Now the problem seems to be that the pie is getting splattered all over the place. Leading to more communities wanting their piece. Meanwhile none of these places are concerned about what is best for the region, just a bunch of scavengers watching out for themselves. It will bite us all in the end.

[jsoto3]

An excellent read on these issues of social, political, economic, and locational inequities/disparities (and their potential, dare I say, entirely possibly yet utterly improbable solutions) and metropolitan governance is:

"The Crisis of America's Cities" by Randall Bartlett (199:cool: (http://www.amazon.com/exec/obidos/ASIN/0765603020/qid=1024454629/sr=12-2/104-5774748-1633542)

On a different, but not entirely unrelated note, also check out:

"Stupid White Men : And Other Sorry Excuses for the State of the Nation" by Michael Moore (2002) (http://www.amazon.com/exec/obidos/ASIN/1590072510/qid=1024454721/sr=1-1/ref=sr_1_1/104-5774748-1633542), no apologies, it is candid, timely, witty, and true, I don't care who you are or what you believe. This is just my opinion, of course.

[Axes]

Thanks, but I'll pass on the second. No one takes a complex issue in wraps it in simplicity and an agenda like that Moore guy. I prefer balance, research, and analysis.

[Columbus Civil]

Does that mean you don't like Crackers the Corporate Crime Fighting chicken?

[MustangMonkey]

Here is the latest article from the Dallas Business Journal on Suburban cities wasting sales tax dollars

<a href="http://dallas.bizjournals.com/dallas/stories/2002/08/05/story3.html"> <h3>More D-FW cities join incentives war</h3></a>
Margaret Allen and Christine Perez Staff Writers

ROCKWALL - The city of Greenville is the latest to get bloodied in the escalating tussle between North Texas cities using sales tax money to lure companies from one community to another.

In a suburban tug of war over two separate companies this week, Rockwall gained plumbing manufacturer and distributor EZ-FLO International Inc. from neighboring Greenville. But Greenville clung tight to homegrown corporate citizen Texas Book Co.

The battle's cost to taxpayers: $430,000 cash, according to Robert Winningham, executive director of the Greenville Board of Development.

"Greenville won yesterday, but I'm not sure the taxpayers won," Winningham said. "It's like having a company put a gun to your head. I don't want Texas Book Co. to look bad in all this. They are just being smart businesspeople.

"But this is a loophole that needs to be closed. The system is not working as well as the Legislature intended," Winningham said. "The purpose wasn't to pit communities against one another to get more inducements."

At odds are 4A or 4B cities - cities whose economic-development activities are funded by as much as a half-cent sales tax approved by the Legislature in 1989 - against others who don't get the sales tax funding.

With 4A cities like Frisco, and now Rockwall, upping the ante on cash payments to companies during the last six months, the conflict is worsening.

Denison, for example, has mass-mailed a brochure offering up to $50,000 cash to anyone providing the name of a company that ultimately relocates to that North Texas community.

To resolve the conflict, professionals in the normally tight-knit economic development industry are locking horns over whether to seek Legislative interference, opt for self-policing or leave things as they are.

Because of the ruckus, it's likely lawmakers in Austin will get involved when the Legislature convenes its 2003 session in January, according to Charles Whitaker, chief of staff for Sen. David Cain, D-Dallas, whose 10-county district includes Greenville and other cities south of Rockwall County.

"This issue will certainly be addressed in the next legislative session. We just don't know how, or which direction it will take," Whitaker said. "The primary concern is to assist the economy on a regional or even statewide basis, not have cities pitted against one another. Sen. Cain wants to see fairness between cities in the same proximity and make sure everything follows the intent of the sales tax legislation. We don't want to penalize 4A and 4B cities that are doing a good job. It's a complex issue."

Lawmakers will undoubtedly get plenty of input on what some are calling "poaching." The Texas Economic Development Sales Tax Association, a branch of the Texas Economic Development Council, decided at its state meeting July 25 to formulate a legislative position that will include a statement on cash incentives.

Locally, the cities of Addison, Plano, Richardson and Farmers Branch - whose half-cent sales tax goes to fund Dallas Area Rapid Transit - say they may call for new legislation to prohibit using the money for cash payments for close-in moves.

For their part, Rockwall officials insist they've done nothing wrong, saying the city looks at job expansion when competing for a project.

'Fair use' of money

In the case of EZ-FLO, the company's executives contacted Rockwall from the company's California headquarters, according to Pam Mundo, executive director of the Rockwall Economic Development Corp. With Texas Book, the company's executives live in Rockwall County, Mundo said.

Rockwall is paying EZ-FLO $180,000 over two phases of its new, $10 million project at the Rockwall Technology Park. It offered to pay Texas Book $350,000, plus provide a $500,000 loan at 3% interest, sources close to the proposal say.

Greenville, for its part, is agreeing to pay Texas Book $250,000 over a seven-year period for its new project at the Greenville Technology AirPark.

A 4A city since 1996, Rockwall has used some of its $2 million annual sales tax money to build Rockwall Technology Park, a $5 million, 223-acre business park, and outfit it with $300,000 in state-of-the-art fiber-optic infrastructure.

EZ-FLO's project will boost Rockwall's commercial and industrial tax base by 16.5% and add 100 jobs.

"We don't compete with other communities," Mundo said. "We market Rockwall and its superior facilities. This is a fair use of the money. If we don't respond, some other community will.

"A company's decision is not based solely on incentives; incentives are a small part of the decision," she said. "They look at environment, opportunity, facilities, location, real estate, the market they're serving, their suppliers, growth potential. If you take the 4A out, then they would still move. The incentives don't drive the decision."

Charisse Reaume, executive director of the Allen EDC, echoed that opinion.

"This infighting among a few cities is having a ripple effect on the entire state," she said. "Economic development is a very important tool for rural areas, and it has helped keep the state on track, especially during economic downturns. In my opinion, the issue of cash incentives needs to be worked out locally. Most of the time, companies don't move just because they get incentives."

Reaume advocates agreements between neighboring cities. That's the case between the Sherman and Denison EDCs, who have policies they won't steal from one another, according to Eric Davis, president of Sherman's 4A-sales tax-funded agency.

In fact, when Sherman lacked a building large enough for a corporate expansion a couple of years ago, Davis took the company to see a site in Denison. The company and 300 employees ultimately moved to Denison instead of Oklahoma, Davis said.

"We all benefit from companies staying in the region," he said. "Neighboring cities need to have policies in place that they won't steal from one another. ... How do you make a law that says I can't do a project that Denison can't handle? My guess would be that you can't write a law that's going to make any sense."

Winningham also is skeptical, and opts for self-policing. Greenville, which passed the 4A usage on May 1 after eight years of trying, currently has only $320,000 annually for economic development.

"Greenville just passed the 4A on May 1 and has been under the gun, especially from Rockwall," said Winningham. "I don't mean any disrespect to our friends in Rockwall, but when the 4A passed 10 years ago, it was the intent to bring companies to Texas. It was certainly not intended as a shell game just shifting business from one city to another. Rockwall won in the short-term. But in the long-term, I hope we don't all lose."

[MustangMonkey]

The Richardson city council seems to think it wrong for one city to give incentives to lure a company away from a neighboring metroplex city, but that dosen't mean they won't participate as long as it's legal -I guess!

Blue Cross likely to get tax incentive for office (http://www.dallasnews.com/localnews/city/richardson/stories/042403dnricincentive.5d4e1.html)

Move would be a boost to company's efforts to establish 2nd site in city


04/24/2003

By SARAH POST / The Dallas Morning News


The City Council is expected to approve a tax abatement incentive Monday that would allow Blue Cross and Blue Shield to open a second Richardson office and bring in as many as 640 jobs from a Dallas office.

These are new jobs for Richardson, but they are not new hires for Blue Cross and Blue Shield, company officials said.

City officials have tentatively agreed to a 50 percent abatement of business personal property taxes for a period of 10 years. The deal is pending a public hearing and council discussion at 7:30 p.m. Monday in council chambers at City Hall, 411 W. Arapaho Road.

The incentive would apply only to Blue Cross and Blue Shield's new location at 2400 Lakeside Blvd., where the company intends to lease 130,000 square feet. With business personal property valued at $7.5 million, the company would save $17,919 a year as a result of the tax abatement.

Richardson would receive $65,854 a year through the remainder of business personal property taxes, additional property taxes and taxes on improvements at the location.

The company is planning a move to the Greenway II office building on Lakeside Boulevard in August. The owner, Crescent Realty, will add a deck level to the parking garage, an improvement valued at $1.5 million, which will provide 150 to 180 additional parking spaces.

The taxable value of the property, after abatements, is expected to be $13,781,390.

In addition to the Dallas employees, 110 employees will move to the site from Blue Cross and Blue Shield's main campus, a 26-acre facility at Spring Valley Road and Central Expressway. Blue Cross and Blue Shield occupies 500,000 square feet there and has received approval to build up to 1.3 million square feet of additional office space at that location.

Crescent Realty broker Bill Rudd said the abatement is a step in the right direction for Richardson.

"Richardson has done a great job of branding the Telecom Corridor, but the city is 100 percent behind bringing in new business and expanding existing businesses," he said.

Mr. Rudd said his company has seen a "flurry of activity" from companies not related to the telecommunications and software industries. He said having a company such as Blue Cross and Blue Shield is a real win for the city because the company weathers a recession well.

"They provide a service and a product that's always going to be in demand," he said.

Deputy City Manager Dan Johnson said the jobs would help decrease the office space vacancy rate.

"Any consolidation like this has the ability to strengthen employment and really brings with it the prospect of activity," Mr. Johnson said. "Employees have their daily activities that generate sales tax to the community regardless of where they live. Some will be prospects for home ownership."

[gc]

yeah that's great......that bothers me to death. I can't wait to see the day when there are no jobs or companies located "inside Dallas", but rather in all of Dallas's suburbs.

[MustangMonkey]

Well I don't know about that, but it just seems very odd that they are proposing legislation to stop exactly what they are doing.

No jobs have been created; therefore taxpayer money is just being given away, without the area having anything to show for it.

I feel robed. Jobs are taken from my city and moved to my school district. Gain 0 cost >0