Ever wonder how the economic incentive agreements approved by Flower Mound have worked out for the town?
Now there's a report to show the results.
The town's economic development department recently finished consolidating and streamlining data that outlines incentive deals the town has approved – Chapter 380 agreements and/or tax abatements – to lure in businesses.
The result is an economic scorecard that provides actual numbers instead of estimates.
Andrea Roy, the town's director of economic development, said the card shows several things, most notably the deals that have been approved over the years and the current benefit.
There are 24 companies listed on the scorecard, and each one includes year-to-date information such as how much the agreement cost the town (rebates, fee waivers, etc.), the net benefit and the return to the town.
The return is noted as a ratio – for every dollar the town has spent, the town receives that much in return.
In all, the scorecard shows since 2005 the town has spent $6.5 million with these agreements for a return ratio of 2.5 and a net benefit of $16 million.
Roy said the 2.5 return ratio far exceeds the industry standards.
“Of course, there are so many factors,” Roy said. “But if the community puts $1 in and gets $1 out, that's considered a win. A net positive is considered a win.”
For example, Icarus Investments, LTD (Flower Mound Business Park), has yielded a $6.1 million benefit since a Chapter 380 agreement was approved in 2005. It has cost the town $976.904 in incentives, but the return is listed as a 6.2 – for every dollar Flower Mound invested it received about $6.20.
Other agreements that have led to a large return ratio include Ranier Medical Investments (the medical district in The River Walk), which garnered a 15.3, industrial building Duke Realty Limited Partnership (5.9) and The Table 14 restaurant (4.6).
In terms of net benefit, top agreements include Flower Mound Hospital Partners ($1.7 million), Lakeside DFW Land, Ltd., which includes the commercial components of Lakeside DFW ($1.7 million) and Exeter Lakeside Land, LP, two buildings within the Lakeside Business District that include four companies ($1.6 million).
“The scorecard really validates what we’ve always thought, which is the town is deliberate and strategic where we offer incentives,” said Town Manager Jimmy Stathatos. “When you look at our return on investment and the number of jobs these have created, I think any city would be glad to trade places with our economic efforts.”
Even Mi Dia From Scratch restaurant, which the town received criticism for when it approved a Chapter 380 agreement in 2015, has shown to provide a $108,000 net benefit and a 1.5 return ratio.
“Unfortunately, what the report does not reflect is the multiplier effect of these projects and how the presence of some of these businesses has attracted others, and so on,” Roy said. “Many of the developer-driven incentive agreements have paved the way for buildings to be constructed that wouldn’t have otherwise, providing a lease space which can then house a new business. While there is no way to fully quantify the impact of attracting these businesses and projects to the town, it should be noted that the benefits are indeed much larger than indicated in the individual scorecard graphs.”
Roy pointed out that the numbers don't include sales tax figures since those are proprietary to the business.
“Without the sales tax numbers it really doesn't show the whole picture,” Roy said. “There is a lot of sales tax numbers that would blow this out of the water.”
Roy said the scorecard also illustrates the diversity in the companies the town recruits.
She said while the Town Council is always presented benefit estimates, she said the town may lower projections going forward.
“In hindsight, we should bring those down,” Roy said. “We'd rather be over than under so that our ultimate answer is we got more than we thought we would even if the numbers worked out.”
The report shows three deals where the town's cost is higher than the net benefit – Flower Mound Hospital Partners, Courtyard by Marriott and Haag Engineering. Roy said the spillover effect of the hospital will exceed the net benefit numbers, and she said the benefit of the hotel will increase over time since the agreement is so new. She said the improvements made by Haag didn't impact the real property value as much as anticipated, but its presence in the town has multiple economic benefits.
The scorecard includes two businesses that have shut their doors after the agreements were made – Mellow Mushroom and Crossfire. Roy said the town is in the process of seeking reimbursement for costs.