Mike Kueber's Blog

January 10, 2013

Corporate incentives gone awry in San Antonio

Filed under: Issues,People,Politics — Mike Kueber @ 9:51 pm
Tags: , ,

In preparation for running for the San Antonio City Council, I started drafting some talking points or brief position papers.  Among the first issues that came to mind are (a) limited government (Pre-K 4 SA), (b) transportation, (c) development of downtown, (d) employee pension reform, (e) sanctuary city, (f) corporate incentives, and (g) water. 

Regarding (c) and (f), I drafted the following:

  • Development of downtown.  A vibrant downtown is important to the future of San Antonio, but the city should not try to impose its will on the free market.  Modest encouragement of downtown development is appropriate, but the city should not try to manufacture an unnatural demand.
  • Corporate incentives.  Although public entities in Texas have been criticized for giving too generous incentives for employers to re-locate, I support such incentives provided their cost to our taxpayers does not exceed their benefit to the city.

An article in today’s local newspaper reported on a controversial matter that hits on both of the aforementioned issues.  According to the article, the San Antonio City Council has approved a wide-ranging collection of corporate incentives (a ten-year tax abatement, a $400k grant, and $500k of free water) for a solar-panel manufacturer to build a facility on the South Side.  In addition to those incentives, however, the city has included a $12 million discount for some city property, and the city’s three Northside councilmen have objected to this as too generous.  Mayor Castro’s response:

  • Are we doing a little more because it’s a South Side investment? Sure,” Castro said Wednesday. “We want to create momentum there in a traditionally economically depressed area.”

So it appears that my talking point about the development of downtown is too narrow.  Yes, the mayor wants the Northside, at its expense, to encourage the development of downtown, but he also wants the Northside to encourage the development of other parts of San Antonio at the expense of the Northside.  This is clearly an effort for the city to impose its will on the free market.  Modest encouragement of downtown development is appropriate, but the city should not be favoring one part of town over the other for the placement of jobs. 

In the long run, distorting the market will prevent San Antonio businesses and San Antonio itself from being competitive.   

Incidentally, the city of San Antonio would not be bribing the solar-panel manufacturer with millions of dollars to locate on the South Side if CPS hadn’t given the manufacturer the option to locate anywhere in the CPS territory.  By granting this option, CPS incompetently gave the manufacturer the ability to play several small municipalities and San Antonio against each other.  Let’s hope our public servants learn from this multi-million dollar mistake.

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