City to study its role in economic development, incentives and what works

The City of San Antonio’s program for attracting and retaining new businesses is being revamped.

Leaders of the Economic Development Department told a city council committee on Monday that they would launch a strategic planning initiative to examine the city’s role in economic development and update the guidelines used to qualify business investments for various tax breaks and subsidies.

The planning process will begin after the selection of an industry consultant in February, said department manager Brenda Hicks-Sorenson, who was hired in July 2021 shortly after the introduction of a set of lines. guidelines proposed but never finalized.

Since then, and in the wake of a pandemic that has hit the local economy, the ministry has worked to embark on a strategic plan initiative that will define the city’s role in economic development and identify effective guidelines in in terms of incentives.

This includes determining the fiscal impact of projects that might be incentivized and how those projects serve the community’s goals of equity and sustainability, Hicks-Sorenson said, adding that she views incentive policies as an investment strategy.

“If I never had to do an incentive deal in my career, that would be fantastic,” she said. “One of the things we look at when making policy is how to make a solid investment for the community that really serves [the] long term?”

Although state law requires tax entities like the city of San Antonio to assess their guidelines for granting tax breaks every two years, the entire process has been delayed by the pandemic. There is no such review mandate for grant and loan agreements.

The guidelines proposed in June 2021 were designed to allow city staff to assess a business seeking economic incentives based on criteria across several categories: targeted geographic areas, economic benefits to the city, character of the job and workforce creation, and infrastructure. impact – rather than a promise to meet certain conditions and fixed numbers.

Staff would then assign a score to the company that correlates with incentive levels and the length of the agreement. Austin-based public policy consultancy TXP helped develop the new guidelines.

One of the main proposed policy changes was to use tax breaks for larger and larger projects, those requiring an investment of $ 200 million or more, and to give only tax breaks to smaller projects. . It has also been proposed that the minimum wage for workers in incentive projects be increased to $ 15 an hour.

Brenda Hicks-Sorensen, Director of the City of San Antonio Economic Development Department. Credit: Courtesy of the City of San Antonio

“I certainly have questions and concerns” about the proposed plan, Hicks-Sorenson told members of the Economic Development and Workforce Committee. “We really focused a lot on politics, but I think we need to step back and look at the process. “

In his presentation to committee members, Hicks-Sorenson outlined a planning process that includes gathering feedback, analyzing best practices, and training city leaders on policy administration.

It will also include a “perception study” to determine why a company would not consider investing in San Antonio to address and improve those perceptions, she said. Such a study has never been done in the context of economic development.

“One of the questions I ask myself with our partners is, ‘Are our incentives impacting our current business flow?’ Hicks-Sorenson said. “Which means, is there a perception of our incentive policy that maybe prevents people from expressing an interest?” “

Council members said they would like to see incentive guidelines that contribute to the city’s housing needs, workforce development, higher wages and gender pay equity.

City councilor Manny Pelaez (D8), who chairs the committee, said he was concerned that the incentive policies being developed have the potential to discourage investment from companies like Toyota.

The Japanese automaker chose San Antonio for its $ 2.1 billion Tundra assembly plant in 2003 after receiving more than $ 1 million in incentives from the city and more from the county and state. Most recently, the city gave Toyota nearly $ 10 million in incentives for a major expansion at the plant.

“Do we rub so hard to find out where, if we had to do [that] again, what would be the result? Pelaez said.

Hicks-Sorenson said the planning process would also look at projects “with hindsight” to ensure the city attracts the businesses it wants while declining to offer incentives where appropriate.

The updated set of economic development incentives guidelines are expected to be presented to council for consideration in the fall and for approval in December.

Comments are closed.