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City creates retail incentive framework
By Bill Conrad, bconrad@starlocalnews.com, @Bill_PlanoStar on Twitter
The city of Plano does not traditionally hand out economic incentives to bring retailers to the city, but a new framework has been put in place in case the right retailer comes knocking.
City Manager Bruce Glasscock presented the framework to the City Council late last month, laying the groundwork for incentives to be offered. Still, he said the city does not plan on offering incentives to retailers at the current time.
"We have never really done that unless it was a major targeted business," Glasscock said. "One of the reasons is that retail is highly competitive, and the feeling is that retail needs to fund itself. For the city to get involved and give incentives to one retailer over another, we feel that would be giving somebody a competitive edge."
Glasscock said he didn't feel giving the grant to Collin Creek should be considered a retail incentive, since it was given to a developer, not an individual company.
"This grant was given to the owner of the mall, a mall that is a major economic driver," he said. "[The rejuvenation of Collin Creek] is an issue that has been important to the council for a number of years."
The framework includes 16 questions for the retailer, including the amount of sales per square foot, what effect the project will have on nearby neighborhoods and what additional infrastructure will be required at the proposed site.
"We want to make sure the retailer is going to generate significant new sales revenue and tax revenue for the city and that it is a unique retail business that is going to attract from a larger target area than just Plano," Glasscock said. "A company like Nebraska Furniture is an example. That type of development is going to eventually be a positive revenue flow for the city. It is a huge development that will attract additional businesses around it. That falls into the niche of unique retail projects that we would entertain some sort of incentive for."
The Frisco Economic Development Corporation uses a similar framework when determining whether to give incentives, said Jim Gandy, Frisco EDC president. He said the EDC targets all companies, but admitted retail is tricky because it is so competitive.
"There is the belief that if you are doing it for one, you have to do it for the other," he said. "Most cities adopt some sort of a policy regarding retail incentives so they can implement it on a fair basis."
Gandy said putting a minimum square-foot requirement on retailers looking to receive incentives is fairly common, which means a large percentage of the incentives are handed out to larger, big-box retailers. Still, he said, this would be only one of many criteria that is considered when looking at incentives.
"A lot of cities including Frisco have offered incentives to developers to bring big retail developments instead of offering them to specific retailers," he said. "That project could be half a million square feet, which will include many retailers -- some of which may be big-box retailers."
What is in the framework?
The city of Plano has two options when attracting businesses to the city.
The first option, which is funded by money from the city's general fund, is a Chapter 380 grant used for economic development. These grants are given to companies in order to get them to relocate to the city, or expand current operations in the city. The second option is a tax abatement, where a company's taxes would be deferred for a specific amount of time.
Under the new framework, all companies wishing to receive incentives must meet the following criteria:
A. For tax abatement agreements for business personality, no business personality shall be relocated from any other reinvestment zone in the city;
B. A minimum number of jobs or sales tax revenue must be maintained consistent with the Chapter 380 agreement;
C. Right of inspection to the premises must be provided to ensure compliance with the Agreement; and
D. The right of recapture of previous incentives if Applicant fails to materially comply with the terms of the incentive agreement.
In addition to the four requirements, city staff will also consider the following questions when determining which companies will receive incentives.
1. Is the retail establishment unique or will it compete with existing retail business present in the community?
2. Does the retail establishment provide goods or services to an underserved market?
3. Does the retail establishment draw consumers from outside the trade area?
4. What are the current and/or projected retail sales per square foot?
5. What is the value of sales that will be subject to sales collection by the City of Plano?
6. Will additional infrastructure investment be required from the City of Plano at the proposed site(s)?
7. Is the development of the project likely to contribute to the revitalization or enhancement of adjacent development?
8. Will the retail establishment serve as an anchor that draws ancillary retail development?
9. Will the establishment of the retail business/development help realize a community goal or planning objective?
10. What effect would the project have on existing residential neighborhoods?
11. Will development of the project create any environmental impact (air quality, water quality, visual quality, etc.)?
12. Will any zoning changes be necessary to accommodate the project?
13. Is the project compatible with the City's Comprehensive Plan?
14. What is the history of the company including: Philanthropic support and/or community involvement?
15. What is the average store tenure and location commitment of a prospective retailer?
16. What are the competitive, financial or other issues associated with this request for incentives consideration.
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