08-23-04 La Porte Development Corporation Minutes

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Texas Economic Development Incentives 2003 Page 3 of 29 forms to the Comptroller's office, compared with 446 the previous year. By fiscal 2001, that number jumped to 523 corporations. Cities report that job creation and retention are the preferred activity for these corporations with infrastructure projects a close second. In fiscal 2000, 290 corporations reported "job creation/job retention" as a primary economic development objective; 229 corporations listed "infrastructure/projects"; 91 listed "sports facilities/recreation"; 89 listed "tourism"; and 78 listed "other." For fiscal 2001, 286 corporations listed "job creation/job retention" as a primary economic development objective; 283 corporations listed "infrastructure projects"; 106 listed "sports facilities/ recreation"; 99 listed "tourism"; and 117 listed "other." Many corporations had more than one primary objective, so the total number of primary objectives is more than the number of corporations reporting. In fiscal 2001, 523 corporations reported a total of$493.7 million in funds available for economic development purposes, for an average of $944,0 11 per corporation. That was an increase of $82.6 million from fiscal 2000 funds, which totaled $411.1 million. Total fiscal 2001 funds available for the 199 ~4A corporations amounted to $164 million, compared with $329.7 million for the 324 ~4B corporations. The average ~4A corporation in 2001 took in $824,372, up from $753,561 for the 189 corporations in 2000. Section 4B corporations reflected the largest increase in funds per corporation. The average ~4B corporation in fiscal 2000 raised $892,810, compared with average funding of$l million in 2001. The ~4B increase is largely attributable to a marked increase in bond proceeds and loans. From an accounting standpoint, bond proceeds and loans are not considered revenue. They are included here because they are a significant part of the funds available to corporations in their economic development efforts. In fiscal 2000, 490 corporations reported outlays of$366.9 million. Fiscal 2001 showed a decrease from 2000 with 523 corporations reporting total disbursements of $350.1 million. Capital acquisitions were the largest costs for corporations in both fiscal years with $153.3 million reflected in 2000 and $121.3 million for 2001. Next came debt service, with $80.7 million for fiscal 2000 and $73.1 million for fiscal 2001. Capital acquisitions and debt service are not expenditures in the accounting sense, but are included here to show how the economic development corporations use available funds. Coming in third was direct business incentives, with $49.3 million being reported for fiscal 2000 and increasing to $64.2 million for fiscal 2001. Evaluating ~4A and ~4B Activities from ~4C Reports Efforts to evaluate the effectiveness of economic development expenditures by ~4A and ~4B corporations have proven difficult. The corporations are not required to file information on the actual or expected impact of their activities, thus providing no measure of their impact on local economic growth. The Research Division of the Comptroller's office contacted MGT of America, Inc. in June 2002 to discuss possible approaches to determining the impact of local economic development corporations' use of tax revenues on efficiently and effectively promoting local economic growth. As a result of these preliminary discussions, it was determined that http://www.window.state.tx.us/specia1rpt/ ecodev03/06ch3 .html 9/27/2004