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Economic Development
1. Why does the City provide Economic Incentives in some cases?
The City is committed to the promotion of job creation and high-quality development in all parts of the city and to an ongoing improvement in the quality of life for its citizens. In so far as these objectives are served by the enhancement and expansion of the local economy, the City, on a case-by-case gives considerations to providing incentives. Incentives are a tool used by cities, states and federal agencies to promote development, cities typically consider and provide incentives to ensure high quality growth, diversification of their tax base, job creation and/or community amenities. Rowlett has taken a strategic approach that was developed as part of the RR2020 community vision to target incentives as part of catalyst type projects in identified growth areas. That strategic approach has led to over $1.5 billion in private investment to date!


The City of Rowlett, like many other municipalities, provide economic development incentives to promote development in their communities. Attracting businesses or development, keeping them, or getting them to expand operations often involves a request for some sort of incentive. While this may appear to be corporate welfare to some, cities are motivated to provide such incentives to ensure higher quality growth, diversify their tax base, bring in jobs, and/or provide amenities that may not currently exist. Every city competes with other cities to attract businesses or development – every city! Sometime, cities even compete with each other for the same deal. The challenge is attracting development that provides a benefit to the community, or else why would a city provide a financial incentive? Each project has to be viable and make economic sense.


2. Why doesn't Rowlett have an Economic Development Corporation?
These incentive deals are often very complex. But, not every city has the same tools in their toolbox. For example, some cities have economic development corporations that are funded by a portion of the sales tax. These cities, referred to as 4A/4B cities, utilize a portion of the second of the two cent sales tax rate that cities are allowed under the State of Texas.

Rowlett doesn’t have a second cent on the tax rate. Instead, Rowlett is a founding member of the Dallas Area Rapid Transit system. When Rowlett voters elected to become such a member in 1983, the City had to give up the ability to levy one of the two cent sales tax cities are allowed under the State of Texas. This means that cities like Rowlett do not have access to cash for economic development and must use other tools that are available. These include property tax rebates, waiver of roadway/water/sewer impact fees, land grants, and public/private partnerships, some of which are available under Chapter 380 of the Texas Local Government Code. The incentives granted by the City typically require performance agreements and “claw back” provisions, should the business or developer not meet the criteria.


3. What kind of projects are awarded incentives?
There is an old adage in business that you have to spend money to make money. That is very true in economic development. Without providing economic development incentives, the City would be unable to attract the kind of high quality businesses and development our community wants to see in Rowlett. Sometimes it doesn’t make sense.

Here are two examples, one that did not make sense and one that did.
• In 2012, the City turned down a deal to bring in a Kroger’s grocery store. In order to make the deal, Kroger wanted ten years’ worth of tax rebates and a land contribution from Rowlett which was worth considering. However, Kroger also asked for a $1.8 million cash contribution which Rowlett did not have at that time. That was untenable and not economically viable. The City did not approve the deal.

• In 2014, the City approved the Terra Lago deal with no cash upfront. Instead, the City agreed to rebate 57% of the annual property taxes collected for ten years. At the time the incentive was approved, the City was collecting $4,855 annually. Once built, Rowlett will collect $160,642 per year for the next ten years or 33 times the amount of taxes it was collecting!


Please view the Policy Statement on Economic Development Incentives (link below) available on the Economic Development website, www.rowlettonthemove.com.


Policy Statement on Economic Development Incentive

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