Tyler Council Approves Incentives Guidelines By MALENA OGLES, Staff Writer-Tyler Morning Telegraph   |   Nov 13, 2008

A financial incentives policy intended to promote economic development by providing guidelines and criteria for granting incentives to businesses looking to expand or relocate to Tyler was approved by the Tyler City Council Wednesday.

Councilman Nathanial Moran said the business incentives policy is not a firm agreement with any particular business, only a guideline for the city council to use when discussing incentives with a business looking to move to or expand in Tyler. The final decision on whether to offer incentives to a business will be at the discretion of the city council.

"I think the public needs to understand that this is not a shift in policy. This is putting in place on paper what our policies have been," Moran said.

According to the resolution, funding for the business incentive packages will come from money not budgeted or earmarked in the city's general fund and not from the Half Cent Sales Tax, which is to be used for public infrastructure improvements.

Moran said regardless of the national economic situation, the policy was not decided on recently. The creation of business incentives was a recommendation that was put forth in Chapter 9 of the Tyler 21 Plan initiated during the tenure of former Mayor Joey Seeber.

"Despite what is happening in the macroeconomic realm, that is not a reason to institute this policy, but I think it is going to help the local economy and sustain us through any rough times we might have," Moran said.

Council members said that offering incentives packages to businesses is nothing new for the city.
Often businesses wanting to add expand or relocate to Tyler are offered land, facilities, equipment and infrastructure grants.

Moran cited a recent business incentive where the city helped offset the cost of a new traffic signal for one Tyler company when it wanted to build a new research and development center.
But prior to the business incentives blueprint, incentives were offered on a case by case basis.

"When there is a great economic opportunity for Tyler we have never passed on it and we will never pass on it," Moran said. "This policy puts in place, on paper, what our expectations are as far as numbers of jobs pay out of jobs and types of businesses we want to incentivize."

Even though not having a written policy has worked in the past, council members said having a policy will give the Tyler Economic Development Council a tool when talking to prospective businesses about the types of incentives and how many incentives the city could offer.

"It gets the city involved earlier in the process and provides an understanding as to the process that everybody is going to go through in order for incentives to take effect," he said. "Perspective business, we don't want to waste their time and we don't want to convey any false impressions about what our goals are in the city."

Under the business incentive guidelines the city will take into consideration the size of the business as well as the annual pay, benefits and number of jobs that will be added or retained by the employer.

City Manager Designate Mark McDaniel said the guidelines outlined in the resolution will be use to promote, encourage and enhance the creation and retention of primary employers and jobs, which in turn enhances the city tax base and local economy.

According to the resolution, to be considered a primary employer, a business must sell at least 70 percent of its goods or services to customers that located more than 50 miles from the center of Tyler. The business must also agree to give preference and priority to Smith County manufacturers, suppliers, contractors and laborers. McDaniel said that the exception to the rule is when it is not reasonable to use a Smith County business without added expense or inconvenience.

Additional guidelines and criteria for granting business incentives will include:
• The creation and retention of at least 50 jobs;
• The project must be implemented within two years;
• The project must be within the city limits within two years.

Early in the eligibility process, the business must undergo an impact study paid for by the city that will include the estimated economic impact of incentives. The study will help the city determine if giving economic incentives will be cost effective.

"If we are not going to make that money back up it's a harder decision to make to spend those dollars," he said.

If a business receives a grant, they are subjected to annual inspections to ensure all standards required for incentive eligibility are met.

According to the policy, if a business fails to comply with the agreement requirements, the business owner may be required to refund or forfeit any incentive provided by the city.

Council members said when they consider any incentives package they will look to the Tyler Economic Development Council for feedback during the implementation phase.