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<br />Texas Economic Development Incentives 2003 <br /> <br />Page 6 of 29 <br /> <br />funds were used to establish a special training program in a high-demand industry <br />sector. <br /> <br />. Clear delineation of economic development roles and responsibilities. Most <br />communities have multiple interest groups in the economic development arena, which <br />can be a problem when there is little coordination or communication. The City of <br />Victoria, through its strategic economic planning process, has clearly delineated in <br />writing, the roles of each and every economic development organization. The <br />Victoria Economic Development Corporation also facilitated the creation of an <br />oversight commission designed to provide policy oversight and communications <br />among Victoria's economic development players. This practice helps establish clear <br />expectations and helps avoid duplication of efforts and unproductive turf wars. <br /> <br />. Providing performance-based incentives. Several of the communities that provide <br />financial incentives to new or existing businesses link the assistance to specific job <br />creation goals. The City of Taylor offers financial assistance loans, which become <br />grants when performance criteria are met. This practice helps protect the public's <br />investment. <br /> <br />. Limiting financial exposure and risk. The Development Corporation of Abilene <br />assists some businesses through loan participation. Using this approach, DCOA funds <br />are used to help lower the interest rate charged by a private lending institution. <br />Although there is no "one-size-fits-all" approach to structuring incentive packages, <br />the use of loan participation or guarantees helps limit the city's financial exposure <br />and risk. <br /> <br />Policy Issues <br /> <br />Texas lawmakers have expressed an interest in receiving more information about the <br />effectiveness of the economic development sales tax and other business incentives. <br />Currently reporting requirements for the economic development sales tax are limited and do <br />not provide the information necessary to evaluate the effectiveness of the tax as a tool for <br />promoting and sustaining economic growth in local Texas communities. The reporting <br />requirements provide basic information on the general objectives of the economic <br />development corporation, and the corporation's revenues and expenditures. The mandatory <br />reporting, which is by law no longer than one page in length, does not ask for information <br />on economic development outcomes, such as jobs created or retained. <br /> <br />As a result of this analysis, a range of policy options exists, which lawmakers may wish to <br />consider. There is no definitive approach to assessing the effectiveness of the economic <br />development sales tax. Indeed, most of the evidence showing the positive effects of the tax <br />is qualitative or anecdotal. One or more of the following policy options may help improve <br />the effectiveness of the tax in fostering economic development, while also providing local <br />communities with the tools they need to maximize the use of this important economic <br />development incentive. <br /> <br />Policy Options <br /> <br />. Conduct performance reviews of economic development corporations. Following <br />the model ~fthe Texas School Performance Review, Texas lawmakers could direct <br /> <br />http://www.window.state.tx.us/specialrpt/ecodev03/06ch3 .html <br /> <br />9/27/2004 <br />