Aerospace manufacturer Bell Textron said last month it was willing to invest $429 million in Fort Worth, provided it secured tax breaks from Texas' new Jobs, Energy, Technology and Innovation Act. did.
Acronym program. Incentive business is pronounced like this: Star Wars Jedi was launched at the beginning of the year as a replacement for the controversial Chapter 313 tax relief program.
The JETI Act allows companies to receive up to 50% to 75% of the value of their property over a 10-year period if their job-promoting project is located within an Opportunity Zone. This compares to a 100% reduction in Chapter 313 school district taxes. The new program also excludes green energy projects.
“Texas has a high property tax burden compared to many other states, so the JETI Act is critical to the attractiveness of future capital-intensive projects,” said the Dallas-based Department of Economic Incentives. Principal and Leader Kelly Rangepelis said. Site selection group.
“However, there is still a lot we don't know about how competitive that program will be,” she says.
Textron Corp.'s Fort Worth-based subsidiary, Bell Corp., said in its JETI filing with the Texas Comptroller's Office that it is acquiring large-scale advanced manufacturing projects in multiple states and that tax breaks are key to making that happen. revealed that it is an element. I work in Denton County.
Construction of the facility, which will be used to produce aircraft components, could begin as early as July.
The tension between Texas' high property taxes and its oft-debated business-friendly state will be a balancing act for those in the economic development game. They believe programs like the Jetty Act and the Texas Enterprise Fund are essential to competing for major projects that bring jobs and prestigious business names to the state.
Texas has won Site Selection magazine's Governor's Cup Award for the 12th consecutive year, but the state faces increasing competition across the country as other states become more aggressive with incentives. . The conflict between the states deepened with the passage of the CHIPS Act, which lured companies into land-based semiconductor manufacturing operations with tens of billions of dollars in direct subsidies and tax breaks. Candidates have also emerged in the Southeast and Midwest in recent years.
Of the top 94 U.S. projects ranked by amount of economic incentives tracked by Site Selection Group in its monthly market report for January and February, only two were located in Texas. Illinois, Indiana, Iowa, Ohio State and Tennessee came up frequently.
Site Selection Group is not affiliated with the magazine, but works with businesses across the country to identify and secure incentives. We also assist with post-incentive compliance.
Rangepelis, along with King White, the company's CEO and founder, will discuss what companies consider when evaluating where to locate, and what others are doing to streamline the incentive process on a national level. We are watching closely what the states are doing.
White said many office, corporate and software development operations that attracted incentives pre-pandemic have largely disappeared post-pandemic.
“We had to go back and rebuild a lot of the programs we had for customers in Texas, and that was a big challenge,” he said.
The number of corporate relocations will be limited to 18 by October 2023, according to a report released by Dallas-based commercial real estate services and investment firm CBRE Group. This compares to a high of 137 in 2021.
The recent focus on global incentives on manufacturing and industrial projects is right in line with hopes that Texas' JETI law will help Texas get on its feet. Traditional Sunbelt competitors and emerging threats in the Midwest.
Dallas-Fort Worth has a wealth of talent in the manufacturing and industrial sectors. It's a double-edged sword.
“Metro has gotten so big that it's a little bit saturated now. The key is to find other tertiary markets where you can find specific skill sets,” Rangeperis said.
“A growing number of cities outside of Texas are starting to create their own talent pools in the Southwest,” she says. “There's not as much competition for jobs, so it's more attractive from a site selection standpoint.”
White said other states are also investing heavily in establishing large and smaller sites for the development of industrial operations, including data centers.
“In Texas, we don't have a strategy around that because everything is more controlled by developers, whereas these other states are finding places where companies can buy them,” he said, adding He pointed out that companies want to own sites with heavy content industrialization through investment.
Some states, such as Kentucky and the Carolinas, partner with utility companies for site preparation. This means that utility companies are proactive and actively participating in preparing attractive sites with appropriate infrastructure.
This is a setup typically found in states that take a more focused approach to incentives.
Self-governance at the local level in Texas makes sense, given that the majority of community revenue comes from property and sales taxes. It also means cities have more independence in providing incentives.
States such as Indiana, Ohio, and Kentucky have begun extending incentives equivalent to payroll rebates. Rangeperis said that while this is a lucrative benefit, Texas has no state income tax for individuals.
“That's kind of my motto: It's really important to accurately calculate the cost of doing business in the state before factoring in the value of incentives,” she said.
“A lot of times we focus on the value of the incentive package and that’s all we focus on, but we have to look at the big picture.”
