Friday, April 1, 2016, by Richard Weber, Publisher of the Arlington Spectator
All of the Arlington City Council Candidates were asked to answer this question:
The council is approving a growing number of public-private partnerships, which are view by some citizens as a type of corporate welfare. Many of these partnership involve high-density apartments, and some are for office and retail. Where do you stand on this practice? Where would you draw the line regarding what is acceptable and not acceptable?
Kelly Canon, challenger District 1
Corporate welfare by definition bestows government subsidies to established businesses or industries, that do not need them. At the local level of government, the phrase is often glossed over by those in elected office, claiming that it’s “good for the city”, or “the city needs to be able to attract new business with tax incentives”. No matter how glossed over it gets however, at the end of the day it’s government picking winners and losers, and it’s unfair to businesses that do not receive them. And when some of those subsidized businesses fail for whatever reason, the taxpayers are left holding the bag, so-to-speak. We also run the risk of preferential treatment of one business or industry over another. This can also be referred to as “crony capitalism”. March 22’s news of the redevelopment project on Division St in downtown Arlington, is the latest example of corporate welfare, and crony capitalism. The developer wants to refer to this project as an “adaptive redevelopment”. The incentives (our tax dollars) being offered to the developer for this plan are outrageous. Close to $1 million! For one small city block. This would be the “line” I would draw. Government subsidies distort the free market forces, and I will work to diminish or eliminate them, if elected.
Chris Dobson, candidate District 7
Victoria Farrar-Myers, candidate District 7
As a starting point for answering this question, I will use a more neutral term of “business incentives” rather than the term “corporate welfare deal”, which I will discuss below in my response. Incentives for businesses can take on many different forms, including public-private partnerships, specialized financing programs (e.g., TIFs, PIDs), tax rebates or other tax-based incentives, performance-based incentives, direct contributions or co-investment, or agreements to pay certain costs. There are some key principles that I believe should guide whether and to what extent the City should offer business incentives.
First, there should be some public purpose and tangible public benefit connected with the business incentives. Further, the greater the incentives provided by the City, the more tangible and substantial the public benefit should be. Some public benefits can be defined. One example of this is the $2 million in annual rent plus $500,000 from naming rights revenue that the Dallas Cowboys pay to the City in connection with AT&T Stadium. Other benefits may be for the community generally, such as the possibility of additional employment opportunities referenced in the question. In any event, the City council should identify what the public purpose and benefits of any proposed business incentive transaction before granting such incentives.
Second, business incentives that are effectively self-financing should be preferred over ones that constitute direct uses of existing City resources. For example, tax increment financing (TIF) is a way to capture value resulting from redevelopment or infrastructure projects to satisfy immediate financing needs to get the project started.
Third, business projects that have a greater impact on the community beyond their immediate purpose, such as being an economic driver or providing the City with some unique opportunity, should be given consideration. At some point in the next few years, the City will need to decide what it is willing to do with respect to the Texas Rangers. It is important to keep in mind the impact that the Rangers have had, presently have, and will continue to have on Arlington from being an economic driver that attracts out-of-town dollars that are spent not just in Globe Life Park but in surrounding businesses to helping Arlington develop a brand and distinct identity of being a “can do” city. Although there always should be limits on what incentives the City would be willing to provide to any private business, unique opportunities like the Rangers should not be easily dismissed.
By granting incentives, the City is effectively investing in a certain project. Accordingly, the decision to make such an investment should be based on a reasoned, rational expectation of a return on that investment. Although there may be other principles like the ones above to guide the decision of whether and how much public incentives should be granted to private interests, the key point is that if the City council utilizes principles like these, it will be more likely to receive the expected benefits. Only when the City loses sight of its guiding principles or perhaps makes a decision contrary to the principles would a proposed investment turn into a true “corporate welfare deal”, where the City would be giving away its money with no expectation of a return on investment.
Candidates refusing to respond: Charlie Parker, Chris Dobson, Sheri Capehart, and Robert Shepard.
Richard Weber, publisher of the Arlington Spectator, is that rare citizen who devotes time to civic duty and involvement. For doing so, he receives little thanks. Most citizens have more important things on their minds—TV, football, enjoying their retirement, etc. Not Richard. You’ll find him at City Council afternoon and evening sessions, at school board meetings, publishing Arlington Spectator, and helming AARG (Arlington Alliance for Responsible Government). Richard is not welcome at Mayor Cluck’s City Hall, where every effort is made to muzzle Richard and any other citizen who believes taxpayers should have a voice in government. Richard’s selfless effort is one of the things that inspired us to begin publishing Opinion Arlington.