The Dallas City Council approved amendments to the City’s Economic Development Policy along with a new Economic Development Incentive Policy on Wednesday.
The expressed purpose of these policies, according to a City press release, is to “proactively address economic inequalities and outcomes in historically underserved communities through policy, public investment, and partnership.”
These policies are also intended to align with the City’s Racial Equity Plan passed last year.
“This amended Economic Development Policy will allow us to work collaboratively with the task force to address limitations, while we generate new revenue, create new jobs and drive more equitable and competitive outcomes for our City,” claimed City Manager T.C. Broadnax, according to the press release.
The policies were approved unanimously by the City Council and both took effect immediately.
“This Economic Policy has been years in the making, but today we finally have our north star,” said Councilmember Tennell Atkins, chairman of the Economic Development Committee.
He continued, per the press release, “This Economic Development Policy is an overarching strategic plan that is right in line with the City’s Racial Equity Plan and gives us specific goals and practices to address the economic disparities that have plagued southern Dallas for too long.”
According to the City, the new Incentive Policy directs incentive programs toward designated “target areas,” most of which are in southern Dallas.
“The Incentive Policy keeps all the existing tools that have made Dallas competitive and adds new tools that institutionalize a living wage, streamlines the process for smaller developers, creates a new fund to address infrastructure challenges, and prioritizes investment in certain target areas,” said Assistant City Manager Majed Al-Ghafry, per the press release.
The new Incentive Policy includes various tools including “as-of-right tax abatements,” community development grants and loans, predevelopment loans, and infrastructure investment funds.
As-of-right tax abatements, according to the City, incentivize real estate development and job creation in lower-income areas while creating “living wage” jobs and growing the City’s tax base, as per the release.
However, some have criticized “living wage” enforcement as posing a threat to a city’s broader economy.
In an article for City Journal, Steven Malanga writes that government-incentivized “living wages” are “bad news for cities.”
“The living wage poses a big threat to their economic health, because the costs and restrictions it imposes on the private sector will destroy jobs — especially low-wage jobs — and send businesses fleeing to other locales,” he writes.
“Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages,” Malanga continues. “It includes opposing privatization schemes, strong-arming companies into unionizing, and other economic policies equally harmful to urban health.”
According to a Fraser Institute article by Niels Veldhuis and Amela Karabegovic, “living wage” programs actually hurt lower-income communities.
“The imposition of living wages reduces job opportunities for the very families they are intended to help,” the article states. “When wages are legislated by government above those that would result in a competitive market, employers respond by reducing the number of workers they employ and/or the number of hours their employees work.”
“That means living wage laws lead to higher unemployment for low-skilled workers and reduce opportunities for those entering the workforce to gain valuable skills and work experience,” the article continues.
Another element of the City’s Economic Incentives Policy is that it prioritizes women- and minority-owned businesses.
As with the “living wage” issue, however, this kind of incentive toward “racial equity” has vocal critics who allege it interferes with market efficiency and opens up the potential for discrimination.
These kinds of incentive and preferential bid programs can be rife with abuse and full of loopholes, according to Governing. These loopholes can lead to qualified businesses losing bids for contracts or chances at incentives, which critics say constitutes discrimination.
“There are no consistent definitions because there is no consistent, well established system,” said Maureen Berner of the University of North Carolina, according to Governing.