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This article first published June 29, 2007.

Governments often offer economic incentives to entice a major employer, such as a nuclear power plant.

Exelon Communications Director Craig Nesbit said incentives didn’t play a part in choosing Matagorda and Victoria counties for its proposed location, but agreed they can be important.

“They can have an impact, and I say that from the standpoint of property taxes on these things are huge,” he said. “The Braidwood plant in Illinois paid last year $13.2 million in property taxes. Three-Mile Island in Pennsylvania paid $570,000.”

It all depends on the state where the plant is located, how the tax structures are set up and what other taxes they pay, he said.

To help cut the costs and urge companies to set up shop, cities and counties offer tax abatements.

At the county level, companies often receive tax breaks, said Victoria County Judge Don Pozzi.

“Generally, it’s in the form of tax abatements for the city and county both,” he said. “Our abatement process is generally over a 10-year period. Because the process is so extensive, we may be looking at 20 years before we realize the full determinative value of what it would mean to Victoria County or any other county.”

The nuclear plant is in its beginning stages, though, so county officials have not discussed possible incentives.

The city of Victoria offers incentives, City Manager Charles Windwehen said, depending on where the company locates.

“A large industrial-type operation most likely would not try to operate within the city limits, or maybe not even close to the city limits,” he said. “If it was real close, it could be considered for annexation.”

Victoria has more control over incentives for companies located inside city limits.

“The city could consider tax abatements or partial abatements for up to 10 years on the added value they brought to the tax base – the equipment and buildings, things like that,”Windwehen said. “There might also be a rebate on sales tax.”

Companies outside Victoria’s limits, however, are another story.

Many times the Economic Development Corp., however, provides money for infrastructure and to extend water and sewer lines. At times, the city can offer water rights to a large development, Windwehen said.

“It’s going to depend how much water someone’s talking about and how far away from the city it is,” he said. “If it’s a small amount, like for consumption and it’s close to the city, we can run water lines from our treated water system to them.”

Large industrial complexes often require more and probably won’t want the treated water, Windwehen said, but the city owns water rights to the river and can sometimes lease to companies long-term.

Another incentive, which people often overlook, is the quality of the area, he said.

“One of the best things a city can do for a large type development in our region and in our county close by is make our city a community where people want to live, where companies want to locate,” Windwehen said. “And that includes everything we do.”

It’s things like the area’s theaters, educational system and diverse retail opportunities, he said, that help attract corporations because quality of life is important to employers and employees.

“It’s a nice place to live – it’s got the small-town atmosphere but it has many of the amenities of the larger cities,” Windwehen said. “And that’s one of the best things we can do to make it an attractive place for a company to locate.”

It takes teamwork on the local, state and federal levels to close a deal, said Ted Royer, a spokesman for the Texas governor.

“At the state level there is the Texas Enterprise Fund, which is a deal-closing fund,” Royer said. “Essentially how it works is a local community works with a prospect company to bring a new location or additional jobs to their area and then the state will come in and help close the deal by offering the employer cash incentives to locate in Texas.”

The company signs a contract detailing how many jobs will be created and how long they’ll be maintained, Royer said. If they fail to meet the contract’s terms, they pay the grant back.

“Basically the local communities hook them on the line and the state helps reel them in,” he said.

The Emerging Technology Fund also can come in to play, he said, which gives cash grants to start-up companies to help them get off the ground.

Incentives are a big part of the process, but they’re not all a corporation looks at, Royer said.

“There are a lot of states that don’t get it,” he said. “They think that incentives are the end-all, be-all of the battle for jobs. Incentives aren’t the cake. They’re the icing.”

Allison Miles is a reporter for the Advocate. Contact her at 361-580-6511 or amiles@vicad.com.