San Antonio Express-News (Sunday)
Economic development crankiness eases
Let’s say you wake up on a Saturday on the wrong side of the bed. Your coffee tastes like mud. Out of sheer spite and vinegar, you decide to exact sweet revenge on the world by finally looking up what kind of economic development deals your city has been cutting for private companies.
So you go to the website where the city Economic Development Department agreements — generally known as Chapter 380 and 381 plans — are listed alphabetically.
After one hour of spreadsheet work — I’m pretty good at boring documents — I learned some stuff from the city of San Antonio’s website.
The city lists deals for 60 companies made since 2005. Some Chapter 380/381 agreements give tax abatements on property. Some give grants, usually linked to the number of new hires. Some give loans on favorable terms, such as zero interest. One involved reduced energy costs and another a city pledge not to annex property.
In return for these benefits, the companies generally promised to invest a certain amount of money in property improvements or hire a certain number of workers, often at an agreedupon “living” wage, originally $9.06 per hour, now up to $12.38 per hour.
“Monitoring” of agreements — the public authority’s obligation to monitor companies’ compliance with the terms of their agreement — begins on the start date of the deals and stretches decades into the future. Some of the 2005 deals will be monitored through December 2022. Some recent deals on the list — struck in 2019 — require monitoring until December 2039.
The largest tax abatements were for $16 million (in a 2013 deal with Microsoft) and $4.8 million (Toyota, 2009 deal). The largest amounts for a grant or loan disbursed were for $4 million (to USAA in 2017) and $3.2 million (MiniMed Distribution Corp. in 2009). The largest promised investments come from Microsoft, Toyota, heavytruck maker Navistar International and an affiliate of discount retailer TJMaxx.
Of course, after an hour, the combination of spite, vinegar and bitter mud coffee begins to wear off. Ideas about better things to do with one’s time begins to seep in. And that, I think, is where the other guys have won. I lose interest. You lose interest. Nobody working in economic development when these deals were cut will still be working in that same job 20 years later.
Is anybody still thinking about the Petco deal in 2010 under then-Mayor Julián Castro?
Or the Pelican Therapeutics deal in 2017 under Mayor Ron Nirenberg?
Officials reported their excitement at the time. In both cases, the promised jobs haven’t materialized, according to the economic development department’s website.
The website is updated through the end of 2020, so the 10-month lag might also be part of the problem.
A clear-eyed, multidecade analysis of costs and benefits is
impossible. As a rule, I hate these deals. But I admit I am as unable to prove their awfulness as their proponents are to prove their effectiveness. I’m left mostly complaining about disclosure and transparency.
The last time I wrote about “economic development” disclosure in San Antonio and Houston, both cities had just received failing marks by a transparency-oriented think tank.
To be fair, San Antonio is no longer a complete zero in terms of transparency. I managed to see and learn a few things within an hour without having to file an open records request. The answer I received from San
Antonio economic development officials about transparency concerns in 2017 was: “We provide information upon request.” Which was an absolutely terrible standard. So this is better in 2021.
Since I’m a deeply skeptical guy about the efficacy of these Chapter 380 deals, I, in my paranoid way, think the tedium of follow-up is precisely the point.
My colleague Greg Jefferson recently bothered to write a post-mortem on an economic development Hall of Shame winner, the misguided, VC-style investment of $10 million in mostly public funds in San Jose, Calif.-based InCube Labs in
2010.
So I appreciate him, remembering this 11 years later. He must have found some extra bitter mud in his coffee that morning.
And this is happening all over the state, all the time.
I don’t pick on San Antonio because it is the worst. The San Antonio website disclosure is marginally better than in, say, Houston, where there’s not any kind of database with viewable basic terms to scan through. They just post PDFs by company name on a website, and you can only open them one by one — which, again, nobody is going to do. And no Chapter 380 deal has been uploaded to the city of Houston’s economic development site since 2015. The economic development department did not respond to my query about whether any 380 deals have been cut since then.
The city of Austin has a better website. Of course it does, those smarty-pants.
Still, in the absence of state requirements, local subpar disclosure will be the norm in Texas.
This all makes me mad, but I do have a happy update from the Department of Incremental Fiscal Improvements Passed by the 2021 Texas Legislature. House Bill 2404, signed into law in September, should significantly improve transparency on these deals.
Starting in January, every Chapter 380/381 economic development deal from every local entity in Texas must be reported to the state comptroller’s office. So that’s a beginning.
By September, the comptroller’s office promises to have a searchable database for every new and every renegotiated Chapter 380/381 incentive deal. This is excellent news for anyone who wakes up mad on the weekends about economic development deals.
The comptroller’s office is quick to clarify to me that they do not negotiate these deals. They do not regulate these deals. They have no particular oversight except to enforce this disclosure mandate. But the database is a start.
In a personal diet and personal budgeting context, we use the cliché: “You can’t improve what you can’t measure.” In those areas, improvements begin almost as soon as you start to measure and disclose — if only to yourself — what your behaviors are. Are you really going to eat that doughnut if you have to record it in your food diary? Are you seriously going to pay $5.25 for the venti latte if you have to account for the expenditure? (In my case, yes to both, but whatever. The flesh is weak.)
I’m hoping that disclosure of Chapter 380 agreements via a statewide searchable database could potentially have a positive effect, like writing down the doughnuts and the lattes.
Once everybody can see what the local incentive deals are about — in an easily searchable format — will local entities be more reluctant to give out these private benefits from public coffers?
I hope so.