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Thursday, September 29, 2022
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City Council Greenlights $3 Million in Incentives for New Vehicle Facility

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Ford Mustang Mach-E | Image by Tramino

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Last month, the Dallas City Council voted to approve a $3 million tax incentive and grants to attract a new $160 million Ford Motor Co. and Argo AI self-driving vehicle facility.

Dallas is up against two other finalist cities in California hoping to be chosen as the next facility location for the partnership between Ford Motor Co. and Argo AI. If Dallas is selected, the development would be built near the western perimeter of Dallas Love Field Airport.

According to city documents, should the Ford Motor Co. pick Dallas as its new vehicle facility site, the company partnership would be eligible to receive more than $3 million in tax breaks over five years.

The city would also give the company another $200,000 in grant money if it creates jobs that meet certain salary thresholds and another $50,000 for construction costs.

To receive the tax abatements, Ford and Argo would have to invest $160 million in capital expenditures in Dallas, such as property improvements and equipment at the facility by the end of 2027.

Estimates say the new facility would provide at least 250 jobs for Dallas residents, according to information presented in the city council agenda.

The incentive approved by the Dallas City Council also compels Ford Motor Co. and Argo AI to develop workforce training initiatives for students at Dallas College and Dallas and Richardson school districts.

Offering grants and tax breaks to companies to incentivize their relocation to Texas has been the subject of much debate in recent years.

President of the Center for Economic Accountability John C. Mozena claimed these grants “make local economies less free, less fair, less inclusive, less resilient, less entrepreneurial, less innovative and more biased in favor of large incumbent businesses,” saying “academic research and real-world experience demonstrate that economic development incentives do not create any more jobs or economic growth than would have happened otherwise.”

In 2019, researchers from the University of Austin published a report stating a number of companies had amended the agreements they made to get the funds, “usually committing to fewer jobs created, or their hiring schedule, or how headcount should be computed.” The report noted that sometimes these “contract amendments are made right before a company would otherwise be subject to clawback provisions. For example, in one case an incentive agreement was changed to reduce the number of jobs required one day before an employment deadline.”

The authors of the report also observed that the recipients of the grants were often resistant to providing information through public records requests, especially after a contract had been amended, which the Texas Public Policy Foundation said “raises important transparency issues regarding the objective benefits of the program,” in an analysis of the Texas Enterprise Fund (TEF).

The TEF was an economic development program that allowed the governor’s office to offer financial incentives for companies who are considering expanding or relocating in Texas.

According to the TEF, their taxpayer-funded grants grants resulted in 103,202 committed direct jobs and $33.5 billion in committed capital investment, but the Better Cities Project argued that these types of funds actually resulted in additional costs for cities “in the form of reduced revenues and increased liabilities.”

Some advocate groups such as Texans For Fiscal Responsibility and the Texas Public Policy Foundation urged the House to get rid of the TEF and instead increase business tax cuts, although the Taxpayers Protection Alliance has also criticized such programs offered by county officials, saying they offset taxes for corporations but increase taxes for residents.

Last year, Texas House members adopted an amendment to the budget defunding the $100 million TEF. The funds were reallocated to the property tax relief fund.

Ford told The Dallas Morning News that it is focused on building a profitable autonomous vehicle business.

“Scaling this technology is key, driving us to explore a variety of cities in the U.S. to expand our self-driving services. We will share more information about our self-driving business in the future,” Ford said in a statement to the Dallas Business Journal.

It is not clear when Ford will make its final decision.

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