In this article for Austin Business Journal, BLS & Co. Managing Director Tracey Hyatt Bosman provides insights into Texas' new incentives tool. Read more below.
A year after the sun set on the much-criticized — yet much-utilized — Chapter 313 school property tax abatement program, its replacement is here, offering an incentives tool that companies and local governments alike consider crucial as they aim to bring large-scale projects to Texas.
Chapter 403, which is now being called the Texas Jobs, Energy, Technology & Innovation Act, or JETI, went into effect Jan. 16, about six months after the Texas Legislature narrowly passed the bill that created it. That means companies can start filing applications with school districts now, and the Texas Comptroller's Office can start processing them and posting them online.
The impact of the new program on Central Texas — and the state as a whole — remains to be seen. Those involved with economic development said it should provide a boon for the region's economic growth after a slower-than-usual start to the year in 2023. Chapter 313incentives in the past helped secure major projects such as Tesla Inc.'s billion-dollar gigafactory in Travis County and Samsung Electronics Co. Ltd.'s chipmaking plants in Austin and Taylor. The program was so useful to such companies, Samsung rushed to lock in Chapter 313 agreements for expansions in the coming decades that may or may not happen.
One thing is clear: Despite not landing a Samsung or a Tesla-sized project in 2023, Austin will continue to be on the short list of destinations for companies, with or without incentives.
That's because there's a misconception that incentives are the end-all, be-all when it comes to companies picking a location, according to Tracey Hyatt Bosman, managing director for New Jersey-based site selection firm Biggins Lacy Shapiro and Co.
She said incentives will never make a "bad site good." Instead, they are useful when companies reach the "pricing exercise" of their potential investments to lower project costs. While Texas is known for its positive business environment, she said, it doesn't offer as much in incentives as other states and has relatively high costs of doing business — think property taxes — compared to some others. She credited the state and local communities for offering what they can.
"I do think that any time you have a new program like the one that is being considered, that opens a conversation with companies. It gives us a way to open a door and sends a message that the community or the state wants new investment," she said.