Coalition Wants Tax Abatements To Require Help For Houston Economy

Jobs presser

A coalition of groups wants the City of Houston to require more jobs when it awards tax abatements. A new study from the Texas Organizing Project says Houston is missing an opportunity by not requiring more from companies getting tax breaks.

The Mayor’s Office of Economic Development works to attract business owners into relocating or expanding their companies in Houston. One of the tools used is tax abatements. But a new report from the Texas Organizing Project says in 39 tax deals over a dozen years, the city hasn’t required much in return. Raymond Brackens with TOP says the city should include specific requirements to help communities.

“Based on the findings on this report, that means passing a strong financial policies ordinance that requires all developers receiving tax breaks from the city (to) pay family-sustaining wages, and include affordable housing on residential development.”

According to the Mayor’s Office of Economic Development website, projects that qualify for a tax abatement must retain or create at least 25 permanent jobs throughout the years of the agreement. But Laura Perez-Boston with TOP says the job creation requirement often is not enforced.

“And more than half — 56 percent of the projects — include no commitment to create even one job.”

Perez-Boston says if they don’t create jobs, most abatements are just a windfall for the private sector. We reached out to the mayor’s office, but didn’t hear back by deadline.

This story originally appeared 7/6/2017 on Houston Public Media.

Tax Breaks for What?: A Community Report on the City of Houston’s Economic Development Deals

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On July 6, 2017, Houston4All partners from the Texas Organizing Project, SEIU Texas, the Sankofa Research Institute, the Texas Gulf Coast Area Labor Federation, and the Workers’ Defense Project gathered at the River Oaks District shopping center to release a report on Houston’s tax incentive programs. Also present were representatives from Rice University, IUPAT88, Texas Low-Income Housing and Information Services, LiUNA, Harris County Commissioner Ellis’ office, the Harris County Labor Assembly, and Houston Unido.

The report “Tax Breaks for What?: A Community Report on the City of Houston’s Economic Development Deals” looks at the 39 projects that received tax breaks through the Chapter 380 and tax abatement programs between 2004 – 2016. The report asks what is the return on investment for struggling families and neighborhoods for these tax giveaways and what are the City’s values and priorities that these projects narrate.

Key findings include:

  • Lack of proactive strategic economic development goals
  • No regular reporting neither on basic compliance nor measures of equity
  • Cost per job promised: $74,971 (approximately 10x higher than Dallas and Austin’s cost per job promised)
  • The majority (56%) of projects do not include a promise to create even 1 new job
  • The City failed to include basic job standards such as higher wages or benefits for project employees, local hire and second chance hiring
  • Of the 5,480 housing units, the City did not require developers to set aside even one unit as affordable housing
  • The City failed to estimate the projected incentive value for more than 1 in 4 subsidized projects
  • No overarching requirement for public hearings in advance of a council vote on a project
  • Multiple community-initiated lawsuits involving city-subsidized developments
  • Weak enforcement

The report also includes:

  • Public policy recommendations for the City of Houston
  • Best practices from around the Lone Star State in economic development
  • A community report card
  • An overview of the 380 and tax abatement programs
  • A spreadsheet of basic information on all 39 projects; and
  • An interactive map of the 39 projects with details on the incentive value, recipient, new jobs promised and other information

Learn more about the city-subsidized projects with this interactive map built by January Advisors.