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Doing more to get tax breaks

We’ll see about this.

BagOfMoney

Companies seeking city tax breaks soon could get a boost if they commit to providing additional community benefits – such as workforce housing, paid internships for low-income students or jobs for those who previously were incarcerated – as part of a retooling of Houston’s tax abatement program before City Council on Wednesday.

The new guidelines harken back to Mayor Sylvester Turner’s campaign proposal to ensure that recipients of city tax incentives pay their employees “decent wages with decent benefits.”

However, the recommended changes suggest rather than require that companies offer those additional benefits, prompting concern among advocates that they could have little impact.

“When you start talking about workforce affordable housing and livable wages, all of those things are critical components as we look to rebuild not only streets, but neighborhoods and communities,” Turner said Tuesday. “I think this is one way of moving the ball further down the field and completing some of the things that I’ve talked about earlier, over the last year and a half.”

Houston’s tax abatement rules already favor companies that commit to offering health benefits, purchasing locally, providing jobs within a designated area or providing opportunities to minority- and women-owned businesses. The city is looking to add to those categories as part of a biennial renewal of its tax break protocol, as required by state law.

[…]

Government accountability advocate Greg LeRoy was more skeptical, saying such preferences need an enforcement mechanism to be effective.

“In this era of economic development, where there’s so much money getting spent and so many recurring accountability problems, soft language doesn’t cut it,” said LeRoy, executive director of the Washington, D.C.-based policy group Good Jobs First. “Absent black-and-white requirements, which are carefully monitored and enforced, any kind of community benefits – wage and hour standards, geographic targeting, local hiring, set-asides of any kind – just don’t happen.”

Even Houston’s explicit prerequisites for tax breaks have been set aside in recent deals. Council waived a requirement in at least two of the six tax abatements approved in the last two years.

In backing a $6.5 million tax break last month for Fairway Energy Partners to store oil in underground caverns, council agreed to forgo its typical requirement that a business create at least 25 on-site jobs. Two months prior, council signed off on a $1.5 million tax abatement for oil field services giant Halliburton even though city rules block companies from receiving such deals if they already have announced or begun construction on their expansion plans.

Count me in agreement with Greg LeRoy that enforcement is key, and with Ginny Goldman of the Texas Organizing Project that it shouldn’t be so easy to waive these requirements. I get the argument for offering incentives, but it always feels like the “they’ll locate outside the city” reasoning is granted far more weight than any consideration of whether we’re getting sufficient value in the deal. How about an annual review of each deal, with a public accounting of what was promised, what’s been done, what’s still left to do, and what the timeline is for doing them? I don’t think that’s too much to ask, and if it winds up embarrassing any of the recipients of these incentives, then I submit they needed to be embarrassed. Surely at a time when budgets are squeezed and money is tight, the city needs to do all it reasonably can to ensure it is getting the best return on its investments. Give me a public review of these rebate/incentive deals, or give me a good reason why we shouldn’t just do away with them altogether and let the free-market chips fall where they may.

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3 Comments

  1. Steve Houston says:

    I’m in complete agreement Charles. Every one of these deals that has been scrutinized after the fact seems to show the companies not living up to material aspects of the contracts yet nobody has taken them to task in the past. On a related note, we’re still paying for Astrodome upgrades that Bud Adams demanded to stay here and he left anyway, the city-county having to swallow the loss as part of getting the expansion team so this is nothing new.

  2. Jules says:

    Totally agree Charles. Plus the City should publish the total amounts promised for each agreement and the totals promised and paid per year on a website. It’s time to start accounting for our tax dollars!

  3. Jen says:

    Agree completely with all. Just like with rubber-stamping of setback waivers, resulting in well-shaded bungalow neighborhoods becoming treeless white-building wastelands, the damage is permanent. The City has well-known money problems, this fact should be used to hold a strong position during negotiations. We really shouldn’t be granting any tax concessions. Or, for that matter, setback waivers.