Economic Development - Investment Created
Strong Local Economy
Status Indicators: Proceeding as Anticipated | Monitoring Progress | Reviewing for Improvement | Information Unavailable
Proceeding as Anticipated
Reviewing for Improvement
Please note that Q1, Q2, Q3, and Q4 refer to the first, second, third, and fourth quarters of the Fiscal Year. The City’s Fiscal Year runs from October 1st – September 30th and is denoted by FY.
A strong sign of economic vitality within a community is the continued capital investment or new capital investment made by existing or new companies, respectively. Staff utilizes tax abatement agreements, direct incentive performance agreements, and Chapter 380 sales tax agreements to draw companies to locate or remain in Sugar Land. In return, these agreements will require the company make investments, create new jobs, or bring other economic benefits to the community. These agreements can be utilized for both recruitment and retention purposes. Given this initiative, the following investments have been created in the third quarter of 2018:
- $2,000,000: First Colony Mall (FCM) Improvements Development Agreement – Development agreement (FCM to receive lesser of $750K or 37.5% of total project costs, reimbursed) approved by City Council on June 5, 2018. To keep the mall competitive, FCM approached the City with a proposal to make improvements to the fountain at the lifestyle center by turning it into a plaza with a lawn, games, shade structures, and a screen to help activate the area, draw in new tenants, and increase sales. FCM will complete improvements, with City to reimburse FCM the lesser of $750,000 or 37.5% of the total project costs dependent upon the mall meeting all other agreement requirements. These requirements include a minimum project investment of $2M, retaining at least 50 jobs, project construction being completed by 12/31/18, and generating new growth in local sales tax revenue above the baseline established in the agreement. This project benefits the community by adding amenities to the area, increasing sales tax revenue, and retaining jobs.
- $55,500,000: Accredo Packaging, Inc. Phase III: Tax abatement (10 years, 55%) approved by the City Council on June 19, 2018; direct incentive ($200,000 paid over 10 years) approved by the SLDC on June 5, 2018. Accredo had two previous phases completed in 2006 and 2010, respectively. Given the growth experienced in recent years with current and new clients, the packaging company has decided to move forward with their Phase 3 expansion that includes a 200,000 SF facility and creates 175 new jobs. The company is anticipated to invest $18.5M in real property, $34M in personal property, and $3M in inventory. This project benefits the community by adding value to the tax rolls (which increases tax revenue), creating new jobs, and retaining / expanding an existing Sugar Land business.
Total investment created in Q3-2018: $57,500,000.
Total investment created in 2018 year-to-date: $59,000,000.
Capital Expenditures Investment are required in a company’s performance obligations, which are set forth in Economic Development Incentive Agreements (SLDC Performance Agreements, Tax Abatements or Chapter 380). For the purpose of this measure, the numbers will be reported in the fiscal year in which the agreement is signed and approved.
This measure encompasses Capital Expenditures Investment, including investment through the full life of the incentive agreement, for all incentive agreements approved and established during a fiscal year. The City of Sugar Land’s fiscal year runs from October 1 through September 30.
Capital Expenditures Investment: Funds spent on materials, design, and for construction of the agreed upon improvements and for any applicable (if included) personal property to furnish and equip the improvement, not including land costs.
The target is ≥$40,000,000, which is based on performance better than or equal to the trailing 10-year average of investment created, as required in a company’s performance obligations, through the full life of the City’s various incentive agreements. Excluding the Schlumberger project, which drastically skews the annual averages, historical data shows that the 10-year average annual capital investment created through incentives is over $30,000,000.
Capital Expenditures Investment is a key component of economic advancement resulting from economic development incentive agreements between the City of Sugar Land and corporations or developers. Furthermore, it is a strong sign of economic activity and growth within the City.