Friday, Nov. 21, 2008

Council gets first look at proposed incentive policy

By SARAH JUNEK

The Keller City Council gave cautious support to a broad incentive policy pitched by an advisory board during a joint meeting Monday.

The council seemed warm to the tactics outlined in the proposal, but asked for analysis of their potential impacts on city budgets and the local business climate.

"I like the idea of a fresh, new approach" to luring commercial development during tough economic times, Mayor Pat McGrail said.

The policy would allow for a sales tax break of 1 percent – the maximum allowed in Keller – over a business’s first three years, waivers of all impact fees for targeted businesses and rebates of development and permit fees.

"There’s a reason those impact fees are put there," Councilman John Baker said. "I would want to know the budget implications" of waiving them.

Impact fees are assessed to offset the increased demand for public services brought by development. Under state law, they may only be waived for developments in designated areas called Neighborhood Empowerment Zones, said Joey Grisham, the city’s economic development director.

Establishing those areas, which requires council approval, is a legal hurdle that must be cleared before incentives are offered, even with a policy in place. And before the council will vote on a policy, city staff must iron out details such as compiling a list of targeted businesses, setting other criteria to qualify for incentives and determining performance benchmarks, Grisham said.

A vote is not likely before January, he said.

The city expects to collect $1.7 million this year in development and building fees and permits. One percent sales tax is expected to generate $4.5 million.

Of the 8.25 percent levy on consumer goods, Keller collects 2 percent: 1 percent to pay for day-to-day costs at Town Hall; a half-percent for parks; a quarter-percent for streets; and another quarter-percent for police. The other 6.25 percent goes to state coffers. Taxes for parks, streets and police may not be offered as incentives.

The policy discussed Monday was a rough outline hashed out by the Keller Economic Development Board a week earlier. It is aimed at jumpstarting recruitment efforts.

Board Chairwoman Alison Benton said development has stalled due, in part, to: the city’s lack of highway access; the tough, local competition for businesses; and Keller’s anti-growth reputation among builders. Benton called Keller a "hole in the donut," referring to the relative strides by neighboring cities, which causes Keller to lose sales tax dollars and ability to choose developments.

"We don’t want to be backfilled with class B development," she said.

A policy is only one, though major, step. Other key pieces are marketing the city and streamlining the development process.

The city unveiled a new Web site, www.kellertxsites.com, this week to achieve better communication with developers, Grisham said. It lists available commercial property and will contain other information, including an incentive policy, once finalized.

The Community Development Department also plans to implement a fast-track program to speed up the permitting process for businesses requesting certain timeline requirements.

In addition, the department plans to begin in January interviewing new businesses to determine how the development process could be improved. An impact fee analysis is scheduled to begin in January as well, giving the development community a chance to weigh in on changes they would recommend.