The URL can be used to link to this page

Home My WebLink AboutItem 01 - Economic Goals and IncentivesITEM 0 0 MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, ACTING CITY MANAGER MEETING DATE: DECEMBER 5, 2005 SUBJECT: ECONOMIC GOALS AND INCENTIVES WORKSHOP — TXP Attached for your review is a draft of the presentation that will be made during the workshop on Monday by Jon Hockenyos of TXP. The discussion portion of the presentation is the last three to four pages. Most of the workshop will be spent getting your thoughts/reactions to the information presented so that we may begin to develop a more clear, more effective economic development strategy/policies for both recruitment and incentives. The meeting, in our Conference Room at City Hall, will begin at 5:30 p.m. with dinner from Cafe Italia to be served at that time. BR/sgr Attachment L k M M M The Economic and Demographic Context for Grapevine, Texas City of Grapevine Presented by TXP December 5, 2005 ..................... '� Presentation Outline • Process Overview and Expected Outcomes • U.S. & Texas Economic Outlook • Economic Trends Influencing the Dallas -Fort Worth region • Grapevine's Economic Development Position • Planning for Grapevine's Future • Next Steps r r rr r r� r rr �r �r rr rr r� rri r� rr ■r r� r TXP Background Economic Analysis and Public Policy Consulting Firm • Public Policy Analysis and Strategic Planning • Economic and Community Development • Research and Forecasting • Economic and Fiscal Impact Analysis • Environmental Economics • Healthcare Policy r� r� rr rr r rr �r rr rr rr rr �r rr r� r� r■ rs r� Process Overview & Expected Outcomes • Presentation I — Grapevine's Economic Dev. Position Establish context going forward • Presentation 2 — Strategies to Guide Grapevine's Future Emphasis on public policy r r rr r r r r r r rr r r r r r r r r National Economy Overview • U.S. economy continues to expand at solid pace, but concerns are growing about sustainability. • Firms are still spending on equipment and information technology — not m11rh �,n Plantnd less h-i-ri-ng z-harp- - - -- would normally be expected for this level of economic growth. • While aggregate wage growth is solid, there are more worries about prices than in the last five years. Energy impact beginning to change consumer behavior. • Interest rates are set to gradually rise — will this burst the housing bubble and derail the economy? r r r r rr r r r r r r r r �r rr ■�r rr rroil............................................... 0 National Economy Overview • Outsourcing is here to stay — many companies looking for ways to maintain U.S. headcount, but shift growth overseas — opportunities for U.S. firms. Some backlash against i rend. • Inflation concerns are mitigated by productivity gains. • Expectation is that job growth will largely be in the service sector, not production — skills are the issue. • Most of the uncertainty is probably on the down side — combination of higher costs and interest rates could offset improvement in demand. rr r r r r1r rr rr rr r r rr Ir ar r1i r r �r rr0 National Economy Economic growth remains solid 6%7 ---- --------------- 4% 2% 0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Bureau of Economic Analysis, TXP rr rr r ri r� r rr rr r rr rr rr rr r1 rr rr rr r� 011 National Economy While the unemployment rate continues to decline 8% 6% 4% 2% 0% Jan -00 Jan -0 I Jan -02 Jan -03 Jan -04 Jan -05 Source: Bureau of Labor Statistics, TXP r r r1 r r 1r rr rr r r r r r r r r rr r National Economy But wage growth is not keeping pace 6% T - ---------- 4 % +----------------- - -- - 2% 0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Bureau of Economic Analysis, TXP National Economy And job growth is weak zll 135 130 #41 120 Jan -00 ............................... �') Jan -0 I Jan -02 Jan -03 Jan -04 Jan -05 Source: Bureau of Labor Statistics, TXP r r r r r r r r r M r MMMMM r ........................... (I National Economy The economy has been driven by low mortgage rates $250 -------- -- -- ----- ----- =Totalome Equity Cashed Out $200 $150 --- ---------------------------------------------------- N C O ---------------------------------- $100 ____ ____________________ ---_ -_ ---------------------------------- $50 ------------- ---- ----------- --- -- W------------------- I 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (F) (F) (F) Source: Freddie Mac, TXP National Economy With refinancing influencing retail sales $300- -- II C Retail Can outnc $250 $200 $150 $100 Jan -00 Jan -01 Jan -02 Jan -03 Jan -04 Jan -05 Source: U.S. Census Bureau, TXP National Economy Hurricane Katrina/Rita Impact • Broadest impact is on prices, especially oil and goods shipped through Gulf ports — already priced into market in most cases, making impacts fairly short-term. Gulf coast economy is essentially_ shut down-- witl-tead-to- - - loss in overall national economic output of about I percentage point in 3Q/4Q 2005. • Rebuilding efforts will reverse above — growth next year will be higher than anticipated. • Longer-term — tourism, oil, etc. will rebuild quickly — slower pace for other sectors — permanent out -migration? M M M M M M r M M M M M M it M M Dallas -Fort Worth Area Economy Recent D/FW Economic Trends Improvement in employment growth continues, although mostly outside manufacturing sector of the the economy. • Sales tax collections have turned the corner, reflecting both building activity, improved consumer sentiment, evacuees, and actual economic growth. • Signs of price increases for a variety of goods and services. • Job growth begins to replace impact of lower interest rates. M M M r M M M M M M M M M M M M Dallas -Fort Worth Area Economy Recent D/FW Economic Trends Most real estate sectors are solid, although stiff competition among builders is holding down prices. Office leasing picks up, an indicator overall economic health. • Airline industry still suffering from cost issues, although holiday demand looks good. • Some optimism returns, although worries about sustainability — national and international issues now assume a higher profile. MMM MM M DFW Area Economy The region continues to grow 7,000,000 - - - - 4, 000, 000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Texas Workforce Commission, TXP .............................I. �'� DFW Area Economy At a faster pace than the state as a whole 3% - ------------------------------ DFW ■ Texas Population growth rate -------------------------------------------- I% - 090 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Texas State Data Center, TXP Oil................................................ DFW Area Economy The employment outlook is improving IA 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Texas Workforce Commission, TXP DFW Area Economy While the unemployment rate continues to decline 10% T------------- DFW Unemployment Rate ----- 6% 4% 2% 0% Jan -00 Jan -0 I Jan -02 Jan -03 Jan -04 Jan -05 Source: Texas Workforce Commission, TXP M r M M M irr r r r� DFW Area Economy DFW Employment Breakdown - 2005 Q Trade, Transportation, & Utilities Professional & Business Services Government Manufacture I Education & Health Services Leisure & Hospitality Financial Activities Construction Information Other Services Natural Resources and Mining Unclassified 0 I I I I I I I I I I 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I � I I I � I � I I I I I T 200,000 400,000 600,000 Source: Texas Workforce Commission, TXP DFW Area Economy Wage growth remains positive but slowing $50,000 $40,000 $30,000 $20,000 $10,000 $0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Texas Workforce Commission, TXP Grapevine Area Current Economic Situation Grapevine appears to depend strongly on regional consumers & tourism — both are in pretty good shape. • Local labor market and retail base are both performing well — indicators are more positive than elsewhere in the region. Challenge is to build on strengths and defend current "market share." Grapevine's Current Position Grapevine Population Trends rnnnn----------------------------------------- - - - - -- 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: U.S. Census Bureau, TXP ....... ') Grapevine's Current Position Employment Trends Zip Codes 76051 & 75261 75, --- --- Employment volatility is largely driven by DFW Airport ------------------------------------------------------ 65, 000 N d d G 60,000 55,000 50,000 1998 1999 2000 2001 2002 2003 Source: U.S. Census Bureau, TXP Grapevine's Current Position Grapevine Labor Force Participation 40,000 ------ - ---- ------------------------------------ ------------------- 30,000 ------------ 28,895 - 27,829 20,000 ------- ---------------- ----------------------- ----------------- ------------- Unemployment Rate: 3.7% 10,000 ------- ---------------- -------- 1,066 N Labor Force Employment Unemployment Source: Texas Workforce Commission, TXP Grapevine's Current Position Grapevine Unemployment Rate 10% --- - ----------------------------------------------------------- 9% --- - ---------------------------- ------- 8% ------------------------------------------------- 7% - 6% - ---------------- ------------------------------------ 5 % --- -------------------- 4%----------------------------- 3% ---------3%--------- ---------------- 2%-------------------------------- ------ — ------ ------------------------------------ - I% ------------------------------------ ----- 0% -- Feb-05 Mar -05 Apr -05 May -05 Jun -05 Jul -05 Aug -05 Sep -05 Oct -05 Source: Texas Workforce Commission, TXP ............................... � �' Grapevine's Current Position Gra evine Ma'or EMDto ers NUMBER OF PRINCIPAL LINES NAME EMPLOYEES OF BUSINESS D/FW International 16,420 Airport Service Gaylord Texan Resort and Convention Center 1,800 Hotel/ Convention Grapevine-Colleyvi lie Independent School District 1,640 Education UPS 1,200 Postal Service Baylor Medical Center 1,000 Health Services GameStop 600 Electronic/Software Distribution/Assembly City of Grapevine 540 City Government D/FW Hilton Inn 400 Lodging Simuflite Training 300 Pilot Training Wal-Mart 250-500 Retail Store Source: City of Grapevine Grapevine's Current Position Grapevine Total Taxable Retail Sales 0 E $1,000 -�--- $900 - --- --- --- --------------------------- --- --- $800 ----------- -- --- --- --- - $700 -------------------------------------------------- --- --- --- --- --- - $600 ------------ ------------------- --- --- --- --- --- --- - $500 ----------------------------------------- --- --- -- --- --- --- - $400 ------------------------------------ --- --- --- -- --- --- $300 ---------------------------- -- --- --- --- -- --- --- --- - $200 --- - -------- --- --- --- -- --- --- --- --- --- --- --- $100 --- --- --- -- --- --- --- --- --- --- --- $0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Texas Comptroller of Public Accounts, TXP ................................... ..... �') Grapevine's Current Position Grapevine Retail Sales vs. DFW Region (2004) Grapevine Farmers Branch Southl ake Lewisville Irving Texas Dallas $6,,549 Ft Worth $5,893 Coppel I $5,831 Carrollton $5,135 Keller $r ,533 Colleyville $3,862 Flower Mound $3,781 $0 $5,000 $19,741 $12,519 $1 1,530 $8,579 $8,086 - Per Capita Taxable Retail Sales $10,000 $15,000 $20,000 $25,000 Source: Texas Comptroller of Public Accounts, TXP M M M M M M M grapevine's Current Position grapevine Retail Sales Total Tax Allocation $25.0 - - - Allocation Historical Summary $20.0 ----------------------------------------------- $15.0 2 0 $10.0 $5.0 4----------------------_--�-- $0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005* (Nov) Source: Texas Comptroller of Public Accounts, TXP r■ �r r �r �� r r r r r r r r Ir r■ r0 11................................. .1, .... 0 Grapevine's Current Position Grapevine Hotel Trends 90% ---- - ----------------------------------------------------- ------------------------------------------------------------------------------------------ Overall Occupancy Rate 80% ----- ---- --- -------------- --------------------- 70% -------------------------------------- ------------------------------------- ---- 60%--- -------- -------- ---------- ---- ------- 0 ----- I -------- ---- 50% 2000 2001 2002 2003 2004 2005 Source: Office of the Governor Economic Development & Tourism, TXP �r �r rr it rlr rr �r Ir rr rr ■r r� r r Ir r r rroil.................... I ...................... ..1. 0 Grapevine's Current Position Real Estate Trends -Tarrant County $6.0 $5.5 $5.0 $4.5 $4.0 2000 2001 2002 2003 2004 2005 Source: Tarrant Appraisal District, TXP M w M w w M w M r w w r w w Planning for Grapevine's Future Beliefs About Economic Development In the old economy, people believed that: In the new economy, people believe that: Being in a cheap place to do business was Being a place rich in ideas and talent is the the key. key. Attracting companies was the key. Attracting educated people is a key. A high-quality physical environment was a Physical and cultural amenities are key in luxury that stood in the way of attracting cost- attracting knowledge workers. conscious businesses. Regions won because they held a fixed Regions prosper if organizations and competitive advantage in some resource or individuals have the ability to learn and skill. adapt. Economic development was government -led. Only bold partnerships among business, government, and the nonprofit sector can bring about change. ........................ Planning for Grapevine's Future Place -Making as Economic Development • Recent trends in global economy —industrial clustering and specialization, workforce diversification, and reintegration of home and work —are placing a 0 - on community character and Quality of life. Growing realization that talent a large determinant of economic success — workers want to live in places with destinations, public and civic spaces, vibrant social life, recreational opportunities, public safety, and reasonable commute. • Place -making is an important component of urban economic development. ■ M M M M M M M M M r M Planning for Grapevine's Future Incentives -Peer Communities Southlake, Ft. Worth, Frisco and most other communities in the area are prepared to offer incentives — normally property tax abatements. Case-by-case evaluation; usually tied to some combination of capital investment, strategic location, and target industry. More sophisticated analysis also includes some sense of City costs, as well as impact on existing local businesses. • TI Fs, Ch. 380 agreements, etc. are also used to facilitate development —typically projects (especially mixed-use), rather than companies. Ali ■ M r== M� it r M r M M r M r Planning for Grapevine's Future Incentives -Peer Communities (continued) Frisco has been among the most aggressive in the region — has offered sales tax rebates as well as property tax rebates. Community has sales tax for economic development ava-Ti abi-e. "Suying market share." • Smaller communities beginning to focus more on projects, rather than industrial recruitment — retail/residential/office/recreation, rather than production. • Move toward infrastructure and other "non-cash" benefits rather than straight abatement deals. ............................................. �') Planning for Grapevine's Future DFW Economic Development Sales Tax Revenues (2004) Frisco McKinney Mesquite Grand Prairie 4A Sales Tax Allen ■ 4B Sales Tax Lewisville ■ CoppelI Roanoke Total annual DFW Cities ED Sales Tax in Excess of $92.5 million $0 $2 $4 $6 $8 $10 $12 $14 $16 ($ millions) Source: Texas Comptroller of Public Accounts, TXP ■ r■■� �■r r r �r r �■■ r r r r �■■ r r �■■ w r Planning for Grapevine's Future Discussion Topics What counts as success for economic development efforts? • How does Grapevine's economic and demographic position compare to other. FV -communities? What target business or economic development makes sense for Grapevine? • How should Grapevine protect and expand its retail base and sales tax revenue? rr rr �r rr r rr rr r� rr r r rr r� rr rr �r r ::::::::::::::::::::::::::::::::::::::. Planning for Grapevine's Future Discussion Topics Strengths, Weaknesses, Opportunities, and Threats ? • What will drive economic growth over the next 5-10 years? • Define and determine specific areas of tourism that Grapevine should attract. MMMMM .............................. �) Planning for Grapevine's Future Discussion Topics -Incentives Would this project happen without incentives? • How much local economic activity will be generated as a result of the project? • What is the total present value of the incentive package? • What return can government expect in terms of tax revenues from the project? • Over what time period will the benefits accrue? TXP Next Steps • Review input provided by Council • Prepare a series of preliminary high-level economic development policy guidelines and strategies • Present the policy guidelines and strategies in January 2006 • Mommy the preliminary strategies and guidelines • Develop brief document that articulates City Council's position of economic development