Advocate editorial board opinion: Economic development tool helps city attract business

By the Advocate Editorial Board
Oct. 8, 2011 at 5:08 a.m.

In an economy that could change the course of business at any given moment, we applaud the city for ensuring that a new hotel and apartment complex move to Victoria.

The city was able to nail down the new businesses with incentives it is allowed to offer under a 380 economic development agreement, a law in the Texas Government Code that allows cities to incentivize.

These agreements - 380 and 381 (for counties) - give the city and county quite a bit of flexibility to incentivize," said Dale Fowler, president of the Victoria Economic Development Corp.

"But I hope the council uses it with discretion - when the need is there, use it. I'm pretty pro on the way they did that. Right now, we need some hotel rooms and apartments," Fowler said.

Mayor Will Armstrong said the hotel - a $10 million, 107-room Homewood Suites - would be constructed at 6705 Zac Lentz Parkway near the Victoria Mall.

"The hotel developer is from McAllen and owns 17 hotels. He was going to build in McAllen, but Caterpillar whetted his appetite for Victoria," Armstrong said.

He added that he wanted to make sure the hotel would come to Victoria. So that is why half of the motel/hotel tax would be returned to the developer for five years as an extra incentive.

"We still get one-half of the hotel/motel tax money. We still get all of the ad valorem tax, and we still get all of the sales tax," Armstrong said.

We see a $10 million investment in Victoria, as well. And we congratulate the city for ensuring that the investment is made here.

The new apartment complex - 240 rooms, and owned by Arthur Dunnelly of Houston - located at Ben Wilson and Rio Grande streets, was given a break on ad valorem taxes.

Armstrong said the apartment complex is a $19 million investment. He said at the city's property tax rate of 65 cents for every $100 of value, the tax revenue comes to $123,000 a year. The company would get $50,000 in property taxes back a year for four years, according to Armstrong.

We agree on both of these incentives. And we are excited about these business announcements because they will serve to benefit the local economy.

However, opponents to the incentives say the city should lower the hotel/motel tax, and the businesses would come anyway.

We disagree. When hotel/motel occupancy already is near its capacity, lower taxes wouldn't produce the desired economic results. And incentivizing is a great way to address the need expediently.

We think that currently, there is little room for lodging, if any, in hotels, and available apartments are extremely hard to find.

Fowler said he hears visitors who come in for a day meeting go back to where the airport is they flew in at - Austin, Houston - and stay the night.

"It's happening, but I don't know to what degree," Fowler said.

We think when there is a lack of hotel rooms and apartments, visitors will - indeed - stay in other cities. A clear need for these accommodations is present.

"I'm not willing to gamble - take a wait-and-see stance. We need these businesses. And the need is monumental. And these incentives mean we give up a little to get a lot back," Armstrong said.'

We totally agree. And we are thankful the city and county has the ability to use the 380 and 381 economic development agreements to incentivize.

This editorial reflects the views of the Victoria Advocate's editorial board.



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