Texas’ incentives game changing
Aerospace manufacturer Bell Textron Inc. revealed last month that it’s ready to invest $429 million in Fort Worth on the condition it wins tax breaks through Texas’ new Jobs, Energy, Technology and Innovation Act.
The acronymic program, pronounced in the incentives business like a Star Wars jedi, kicked in at the start of the year as a replacement for the contentious Chapter 313 tax abatement program.
With the JETI Act, companies can get up to 50% to 75% of property value abated for 10 years if a jobs-bolstering project is located within an opportunity zone. That’s compared to Chapter 313 s 100% abated on school district taxes. The new program also excludes green energy projects.
“The JETI Act is incredibly important in terms of attractiveness for capital-intensive projects moving forward since Texas has a higher property tax burden than a lot of other states,” said Kelley
Rendziperis, principal and leader of the economic incentive division of Dallas-based Site Selection Group.
“A lot remains to be seen about how competitive that program will be though,” she said.
Bell, the Fort Worth-based subsidiary of Textron Inc., made it clear in its JETI application to the Texas Comptroller’s office that it is shopping the large-scale advanced manufacturing project in multiple states and that tax abatements are a key component to making it work in Denton County.
Construction could get underway as soon as July on the facility that would be used to produce component parts for aircraft.
It’s the tension between Texas’ high property taxes and the state’s much-discussed business friendliness that becomes a balancing act for those in the economic development game. They consider programs like the JETI Act and the Texas Enterprise Fund vital to compete for major projects bringing jobs and prestigious corporate names to the state.
While the state won Site Selection magazine’s Governor’s Cup distinction for the 12th consecutive year, Texas is facing stiffer competition across the country as other states get more aggressive with incentives. The inter-state rivalry deepened further with the passage of the CHIPS Act, which enticed companies to onshore semiconductor-making operations with tens of billions of dollars in direct subsidies and tax breaks. Contenders have sprung up in the southeast and the Midwest in recent years.
Of the top 94 projects in the U.S. ranked by value of economic incentives tracked by Site Selection Group in its January and February monthly market reports, only two were in Texas. Illinois, Indiana, Iowa, Ohio and Tennessee made frequent appearances.
Site Selection Group, which isn’t affiliated with the magazine, works with companies across the U.S. to identify and secure incentives. It also assists with compliance after incentives are granted.