So let’s talk about Tyson (Corporate Handouts are not Economic Development)

My opponent this mayoral race is using my opposition to the Tyson Foods incentive in 2019 as ammunition against me in this campaign.  So here is detail, from my February 4th, 2019 blog post on the issue of this particular incentive.  We need to compete, not hand out unwarranted incentives just because businesses ask for them.  We have to be more strategic and targeted in how we incentivize.  My opponent sees this as anti business… and he is absolutely wrong in his thinking.  Unwarranted, untargeted incentives (corporate handouts) are not economic development. They are just a race to the bottom for our economy.  My position is absolutely pro-business and pro-Denton.  Details below… 

Tyson Sales and Distribution Inc. is a subsidiary of Tyson Foods, Inc.  Tyson Foods Inc. is a very large and well-established U.S. company that sits at number 297 on the Fortune Global 500.  With revenues over $38 Billion and Profits over $1.7 Billion, it is hard to fathom a legitimate need for Tyson to receive an incentive package from the City of Denton, Denton County, or the State of Texas to offset risk and development costs for this 350K square foot cold storage and distribution facility.

My bottom line is that the project doesn’t warrant an incentive. There is no substantial risk for the operator.  If there was some risk, Tyson wouldn’t want to locate here because no incentive (no matter how big or small) can overcome the long-term negative impacts a bad location decision will have on a company.  We have already put in the transportation and utility infrastructure to develop this industrial corridor for uses such as what Tyson has proposed. We made this investment to make this area attractive and project-ready – not so that we would have to offer incentives to attract business. We have seen similar cold storage and distribution facilities come in and operate successfully. We have the transportation access at the I-35 east/west split that Tyson needs in this region.  We have the workforce access they need to staff their 100 full time employees.

Further, even without granting Tyson the 25% annual tax abatement they are requesting, they would still qualify for the Economic Growth Rider from Denton Municipal Electric (DME).  Denton’s 2018 Policy for Tax Abatement and Incentives identifies “significant consumers of municipal utilities” as a recruitment target because large customers in sectors like manufacturing and refrigerated/frozen food distribution use energy consistently around the clock. Steady industrial users allow DME to purchase power at a lower price and receive a better rate of return overall, which helps keep rates steady for all ratepayers. DME’s Economic Growth Rider (EGR) is an economic development tool used to recruit customers like Tyson to Denton. Available only to qualified customers, the EGR is a five-year, sliding scale reduction to a customer’s demand charge (50% down to 10%). Based on preliminary calculations, Tyson will be eligible for an estimated $449,886 EGR if it meets the qualifications. The demand charge over the ten-year period is $2,549,354.

The site, the market access, the existing infrastructure, and the EGR from Denton Municipal Electric should be enough to land Tyson.  I want us to start playing more aggressively  to our strengths (of which we have plenty) and not be in the game of doling out corporate handouts to global companies with over $38 Billion in revenues.  Let’s use incentives as a tool in a more targeted manner to develop and recruit smaller, established and emerging businesses from around the world and in our own backyard.

Orginally posted 2/4/2019 in this post: