Texas
Is Texas losing its edge in the economic development incentives game?
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.
Rendziperis, along with the company’s CEO and founder King White, watch what companies consider when evaluating where to place an operation and what other states are doing to streamline the incentive process at a national level.
A lot of the office, headquarters and software-development operations that attracted incentives pre-COVID have dissipated significantly post-COVID, White said.
“We’re having to go back in and restructure a lot of those programs we’ve done for clients in Texas, and that’s been a big challenge,” he said.
A report released by Dallas-based commercial real estate services and investment company CBRE Group Inc. showed corporate relocations cooled to 18 through October 2023. That’s compared to the high of 137 in 2021.
Lately, the incentives world has been focused on manufacturing and industrial projects, which is right in line with the hope Texas’ JETI Act will help it tread water alongside its traditional Sunbelt competitors and emerging threats in the Midwest.
Dallas-Fort Worth has an abundance of talent in the manufacturing and industrial space, which is a double-edged sword.
“Now that the metro is so large, it’s become a bit saturated, and it’s about finding those other tertiary markets where you can find specific skill sets,” Rendziperis said.
“There are more cities outside of Texas within the southwest starting to generate their own talent pool,” she said. “That’s more attractive from a site selection perspective because you’re not competing as heavily for jobs.”
Other states also are investing more heavily in establishing mega-sites and even smaller sites ready for development of industrial operations, including data centers, White said.
“In Texas, we don’t have strategies as it relates to that because everything is more developer-controlled, whereas these other states are finding where the companies can buy them,” he said, noting a company wants to own a site with heavy industrial due to the investment.
There are states, such as Kentucky and the Carolinas, that have partnered with utility companies on site readiness, meaning a utility company is actively participating in preemptively preparing attractive sites with adequate infrastructure.
That’s typically a setup you’d find in a state with a more centralized approach to incentives.
Autonomy at a local level in Texas makes sense given the majority of a community’s revenue comes from property and sales taxes. It also means cities have more independence in offering incentives.
States such as Indiana, Ohio and Kentucky have started extending incentives that equate to payroll rebates. While it’s a lucrative benefit, Rendziperis said Texas doesn’t have a state income tax on individuals.
“This is kind of my motto: It’s so important to accurately calculate the cost of doing business in the state before you ever even fold in the value of incentives,” she said.
“So often we’re focused on the value of the incentive package and that’s all we’re looking at, but you have to be looking at the overall picture.”
Evercore ISI senior managing director Mark Mahaney joins Varney & Co. to discuss the departure of Netflix Chairman Reed Hastings and to address questions about the company’s future leadership and strategy.
The state of Texas announced a lawsuit against streaming giant Netflix on Monday, accusing the company of spying on children and other consumers by collecting their data without consent and designing the platform to be addictive.
Texas claims that Netflix has falsely represented to consumers that it didn’t collect or share user data while it actually tracked and sold viewers’ habits and preferences to commercial data brokers and advertising technology companies.
The lawsuit, filed by Texas Attorney General Ken Paxton, claims that “Netflix’s endgame is simple and lucrative: get children and families glued to the screen, harvest their data while they are stuck there, and then monetize the data for a handsome profit.”
The state of Texas announced a lawsuit against streaming giant Netflix on Monday. (Nikos Pekiaridis/NurPhoto via Getty Images)
“When you watch Netflix, Netflix watched you,” Texas added in the lawsuit.
NETFLIX CO-FOUNDER REED HASTINGS TO STEP DOWN, DEPARTURE IS ‘SPOOKING INVESTORS’
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NFLX | NETFLIX INC. | 85.39 | -2.10 | -2.40% |
The complaint quotes comments made by former CEO Reed Hastings who said in 2020, while he was still leading the streaming company, that “we don’t collect anything,” amid questions over Big Tech companies’ data collection practices.
Netflix was also accused of quietly using “dark patterns” to keep users watching on its platform, such as an autoplay feature that starts a new show after a different show ends.
NETFLIX RAISES SUBSCRIPTION PRICES ACROSS ALL PLANS
Texas Attorney General Ken Paxton filed the lawsuit. (Cheney Orr/Reuters)
Paxton said in a press release that Netflix “has built a surveillance program designed to illegally collect and profit from Texans’ personal data without their consent, and my office will do everything in our power to stop it.”
The attorney general said he’s charging Netflix under the state’s Deceptive Trade Practices Act and seeks to require Netflix to stop the unlawful collection and disclosure of user data, require Netflix to disable autoplay by default on kid’s profiles, and to secure injunctive relief and civil penalties.
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FOX Business reached out to Netflix for comment.
Reuters contributed to this report.
Six people were found dead inside a cargo train boxcar in a Texas city along the southern border on Sunday, officials said.
The bodies were found in a Union Pacific train at a rail yard in Laredo, around 160 miles south of San Antonio, just after 3:30 p.m. local time, said Jose Espinoza, a public information officer with the Laredo Police Department.
The circumstances of their deaths are unknown, said Laredo police spokesperson Joe Baeza, according to CNN affiliate KGNS, and an investigation is underway.
Union Pacific operates across the border and is the only railroad that services all access points into Mexico, according to the freight company’s website.
Temperatures on Sunday afternoon in Laredo were in the low-mid 90s, though it’s unclear whether heat was a factor.
Union Pacific said it was saddened by the incident and is working closely with law enforcement to investigate.
Laredo police said they received a call around 3 p.m. from an employee at the Union Pacific rail yard, KGNS reported. The bodies were discovered during a routine rail car inspection, police said. No survivors were found.
CNN has reached out to Laredo police for more information.
“It’s a very early phase of the investigation. There’s not a lot to reveal right now,” Baeza said, KGNS reported.
The immigration status and ages of the deceased are not yet known, Espinoza said.
US Customs and Border Protection referred CNN to the Laredo Police Department, saying “The incident remains under investigation by Laredo Police Department and Homeland Security Investigation and Texas Rangers.”
CNN has reached out to the Department of Homeland Security, HSI and the Texas Department of Public Safety.
“It’s a very unfortunate event,” Espinoza told CNN. “It was too many lives that were lost.”
This story has been updated with additional information.
Gov. Greg Abbott on Sunday directed the Texas Division of Emergency Management to activate state emergency response resources as a massive storm system threatens much of the state with hurricane-force winds, giant hail, and the risk of tornadoes.
Severe weather in Texas
The severe weather, expected to last through Monday morning, covers a vast footprint including West, North, East, Central, and South-Central Texas. Forecasters warned the system could produce wind gusts exceeding 75 mph and hail larger than 2 inches in diameter.
What they’re saying:
“Texas is prepared to confront the severe storms that pose a threat to communities all across our state,” Abbott said in a statement. He urged Texans to monitor local forecasts and warned motorists never to drive through flooded roadways, invoking the phrase, “Turn Around, Don’t Drown.”
Heavy rainfall is expected to be widespread, with some areas potentially seeing isolated totals of 3 to 6 inches, which could lead to significant flash flooding. As the system progresses, the threat is expected to shift toward the South and Southeast Texas coasts.
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In preparation, the governor has deployed a wide array of state assets to assist local officials, including:
- Search and Rescue: Swiftwater and floodwater rescue boat squads and urban search and rescue teams from Texas A&M Task Forces 1, 2, and 3.
- Aviation and Marine Support: Helicopters with hoist capabilities from the Department of Public Safety and Texas Parks and Wildlife, as well as Tactical Marine Units.
- Infrastructure and Recovery: Texas Forest Service saw crews to clear debris from roads and Department of Transportation personnel to monitor highway conditions.
- Medical and Utility Support: Emergency medical task forces with ambulances and all-terrain vehicles, along with monitors from the Public Utility Commission to coordinate power outage responses.
State agencies are also monitoring the state’s natural gas supply and water quality as the storms move through.
Officials encouraged residents to assemble emergency kits and check road conditions at DriveTexas.org before attempting to travel.
The Source: Information in this article is from the Governor Greg Abbott Press Office.
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