Dallas Poised to Adopt Economic Development Policy Focused on Infrastructure And Incentives

Creating infrastructure for housing and commercial development, and providing fast and simple tax abatements to incentivize businesses emerged as priorities during a Dallas City Council discussion on the city’s economic development policy last week. 

The city council is set to adopt revisions to the 2021 economic development policy at a Dec. 14 meeting. 

This year was slated as a “transition year” for aligning the economic development policy with other documents such as the Racial Equity Plan prior to launching its 10-year implementation period. The city hired HR&A Advisors to facilitate the process of “operationalizing equitable economic development in Dallas.”

Andrea Batista Schlesinger, managing partner with HR&A, said her team identified some aspects of city business that get in the way of equitable economic development and revamped them into worthwhile, usable strategies. 

“A year ago, you all took an incredibly bold step of adopting an economic development policy that centers on equity,” she said. “We’ve had the honor of working with you for the last year following the charge that you gave to the city focusing on … what it would take to shift the North Star of all economic development policy, practices, and resources in the direction of equity.” 

Barriers to Economic Policy

Outgoing Dallas City Councilwoman Jennifer Gates chaired the Economic Development Policy Task Force. She said the group met monthly over the past year and heard repeatedly that it was difficult to do business in Dallas. 

“It was challenging to navigate the city programs and opportunities that were available,” she said. “The unpredictability was highlighted several times and the subjectivity currently in place when negotiating incentives. Large or small companies that want to do business in Dallas want to have an idea of what’s important to the council and the city so they know how to address their deals. There were a lot of questions about opportunities for small businesses.” 

There are no drastic changes recommended to the plan that was adopted in 2021, Gates added. 

“It’s really important that you all recognize the impact of other policies ongoing with the city,” she said. “Constant evaluation is going to be essential and crucial to the success of these recommendations.” 

HR&A senior analyst Taylor Kay said new approaches are needed to address the following challenges: 

• The market perceives the [city’s incentive] programs as complex and lacking certainty, with long lead times for disbursement; much of this is driven by the high level of discretion retained by the city in project review and awarding. 
• While the Office of Economic Development structures incentive awards to require certain public benefits, these criteria are not institutionalized as program requirements. 
• Due to decades of disinvestment, southern Dallas faces significant infrastructure challenges that have made it difficult to attract capital and realize new development. 
• Given existing incentive program requirements, small and minority businesses and developers face challenges in accessing and benefiting from available resources. 

Assistant City Manager Majed Al-Ghafry said offering infrastructure and economic incentives is key to recruiting new businesses and retaining existing ones. 

“We’re the ninth-largest city in the country. Our economy is so powerful and diverse, yet sometimes we cannot compete with other cities in the attraction and retention of corporations or opportunities for some of the small and large companies to come into Dallas,” Al-Ghafry said. “We have to play the game the way other cities are doing by offering infrastructure ahead of time or we have to offer the incentives specifically for the infrastructure component.” 

Infrastructure

Council members repeatedly commented on the need to provide infrastructure in order to make it easier for businesses to locate and expand in Dallas. 

The city recently announced a $55 million award in New Market Tax Credits for “impactful investments in underserved areas of Dallas.”

Dallas is the only city in Texas to have such a program for commercial development in underserved areas, said Economic Development Director Robin Bentley. In addition to the toolkit already in place, four new incentive strategies are recommended in the policy slated for adoption this week. 

Areas with a poverty rate of 20 percent or higher have been targeted for new development.

“These are the areas where we want to signal to the development community that this is where we want investment to happen and if they’re willing to make an investment in these areas, we’ll make it as easy as possible to do business with the city,” Bentley said. 

District 8 Councilman Tennell Atkins has championed the economic development policy, housing policy, and Racial Equity Plan as documents that should work in tandem. 

“If they’re not aligned together, it’s not going to work,” he said. “We are in dire need of infrastructure. Some parts of the city of Dallas do not have infrastructure. They’re still on septic tanks, still on dirt roads. We need to have some kind of tool in the toolbox to do infrastructure today. We’re not going to be able to keep lowering our tax rate if we do not invest in infrastructure.” 

Council members also emphasized the need for communication and education on tax abatements and incentives. 

“For the people who may be pushing back against this, I think we are not yet communicating enough the ultimate economic benefit to everybody, not only for individuals but for the tax base in sales and property taxes, which will grow as part of these initial investments,” said District 11 Councilwoman Jaynie Schultz. “That needs to be part of the story we tell.” 

HR&A Advisors will continue to be engaged next year to provide educational videos and communication materials to the media and public, city officials said.