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Houston to require firms to give more to get tax breaks

May 16, 2018

HOUSTON (AP) — Houston on Wednesday approved new rules outlining additional community benefits companies seeking tax breaks for development projects will need to provide in order to get financial incentives from the city.

The new benefits — including improved training and affordable housing for the local workforce — are geared in part toward helping development in economically challenged communities.

The city “took an important step in bringing balance, fairness and equity to our economy,” said Michelle Tremillo, executive director of the Texas Organizing Project, one of several community organizations that had been pushing the city to improve its guidelines for what companies and developers need to provide in return for tax breaks.

Mayor Sylvester Turner said the changes to the city’s tax abatement program — approved during a city council meeting — were part of an effort to strike a balance between economic development and trying to incentivize companies and developers to work with the city on revitalizing communities in need of help.

“Does it go as far as others would like us to go? No. But even those who would like us to go even further all acknowledge what we approved was a significant improvement over the status quo,” Turner said.

The Texas Organizing Project and other groups had unsuccessfully pushed the city to also include family-sustaining wages, workers’ compensation and on-site monitoring of work sites as some of the additional community benefits.

New benefits approved by the city included: 20 percent of units in some new residential projects will have to be affordable to low income residents; good faith efforts must be made to hire residents from low income communities for 25 percent of a project’s jobs; and jobs must be advertised with a city program that finds work for ex-offenders.

“The city is responsible for making sure its tax dollars are leveraging positive things for Houstonians,” said Laura Perez-Boston, campaign director of the Texas Organizing Project.

The discussion in Houston over its tax abatement program is similar to others that have been held in other cities around the country over how communities can get the most from programs that offer tax breaks to spur economic development.

In 2016, voters in Detroit passed an ordinance aimed at making sure developers get input from community members on benefits local residents would like to receive from companies in exchange for tax breaks on some projects. St. Louis has been discussing approving an ordinance similar to Detroit’s.

The costs associated with tax incentives in the U.S. have tripled since 1990, reaching $45 billion per year, according to a March report from Timothy Bartik, an economist at the W.E. Upjohn Institute for Employment Research in Michigan.

The report found that 80 percent of jobs targeted by tax breaks would have still been created without them.

“State and local governments thus give away more than $30 billion a year in incentives that create zero jobs,” Bartik said.

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Follow Juan A. Lozano on Twitter at www.twitter.com/juanlozano70

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