During last month’s episode of Economic Development Secrets, Jim Gandy, President of the Frisco Economic Development Corporation, shared with us the types of performance requirements that projects must comply with in order to receive an incentive package. The EDC monitors these requirements in several different ways. See what Jim had to say about the various measures that projects must adhere to when receiving an incentive to relocate to or expand in Frisco:
We’re trusted with these public funds as we’re funded by a half-cent sales tax. We’d make an effort to approach these incentive deals and opportunities on a conservative basis. In most cases, all of our incentives are paid on an earn-as-you-go basis. We rarely ever offer any economic incentives up front. The danger in that is that you could offer an incentive and pay that incentive to a company based on their plans and their commitment to do certain things but unfortunately, if things happen and if for some reason, the company does not meet all those requirements, then you may be in a position that have to go back and recapture some of those incentives and ask for the company to pay back some of the incentives they received but unfortunately, maybe did not totally earn.
If you flip that around and just offer the incentives as the company achieves the agreed upon performance requirements, then you don’t have to impose a call-back provision because you never provide them more incentives than they’ve earned or qualified for. We often get asked about what are the performance requirements. While the performance measures and requirements can obviously change from one project to the next based on the size and the scope of the project but often, we used things such as now, they may need to purchase a piece of a property or they might purchase a building. We’re looking for them to produce documents that say they have closed on this real estate transaction.
On our office deals, most of the time, we get confirmation and then verify that they have signed a lease to occupy a certain amount of office space within our community. Then, we’re looking for that company to provide us a certificate of occupancy which is an easy thing to get. We can verify it from the city that the company has been issued a certificate of occupancy. Along with that, we want to make sure the company is physically actually moved into the space. We have had an occasion where a company got a seal to move in but then they never did.
It’s important to go by and make sure they have actually moved in. We also sometimes require them to document that they’ve spent a certain amount of dollars in investing in the property which in an office arrangement would probably be interior, finish-out improvements. We also have some thresholds that they must achieve in business personal property investment in their business personal property of the company. These are things that add to the tax base and property tax revenues of the city.
We’re also always looking at certain amount of some job creation or job retention requirements. These are jobs that are either transferred and are created in the company. These are typically going to be people that work at that facility and not people that are working for the company but then maybe they may have an office or some place that’s out of our city or even out of our state. We generally do not count those more remote jobs.
Like what you read? You can check out our full interview with Jim Gandy below.
