The City’s Economic Development Department is proposing to create an incentive package to keep Hunt Oil in Downtown Dallas. The City Council will be briefed on the proposal this Wednesday. A copy of the Council’s upcoming briefing is available here: Council Briefing
Hunt Oil (no relation) has been in Downtown Dallas for 68 years. Right now, they rent their office space (and pay no property taxes), but plan to build their own headquarters. Dallas is competing against Irving as the location for the headquarters.
Hunt Oil proposes to construct a $120M building on the west side of the Dallas Museum of Art. Currently, a parking lot and small building sit on the land.
The property taxes the city currently receives on the proposed construction site are minimal. Hunt Oil’s new headquarters will add over $120M to the site’s taxable value. That is more than 7-11’s new headquarters. (Earlier this year, the Mayor led the effort to provide more than $9.75M in incentives to keep 7-11 in Dallas.)
The proposal before the City Council is to abate $6.3M in property taxes from the new building over ten years. It is important to note that the proposal calls for the city to abate taxes that we do not currently receive, and would not otherwise be getting from the site. We’re not taking money from the general fund and giving it to Hunt Oil. Instead we would be taking new tax dollars generated from the headquarters building and rebating 79% of that for ten years. (We would still get 21% of the new property taxes for ten years ($3.87M), then receive 100% starting at year 11 ($1M/year).)
The only legitimate argument against granting the tax incentives is that another company would come along and build on the site without incentives. Unfortunately, recent history shows that hasn’t happened (witness the $60M in public money incentives that the Mayor fought so hard for on the Mercantile project and the $9.75M for 7-11 because the projects weren’t getting built without incentives).
The economic reality of today is that cities must fight to attract and keep large companies that create jobs and increase our tax base. Currently, the suburbs are winning that battle, and the burden of financing our city’s infrastructure is falling more and more to homeowners via residential property taxes. If we want to continue letting the suburbs take away our tax base, we can dig our heels in and tell these companies to go away. But in the end, we lose out.
Dallas has come around to creating business development incentives very late in the game. We lost EDS. And Frito Lay. And Mary Kay, Hagger, Perot Systems, Dr. Pepper, Mobil… and the list goes on. We can’t afford to lose another Dallas business and all the money and jobs that go with it.