Fort Worth intensifies Dell courtship
By John Pletz
American-Statesman Staff
Wednesday, November 22, 2000
Fort Worth's City Council voted Tuesday to begin a round of "Let's Make a Deal'' with Dell Computer Corp. in hopes of luring the computer maker to make a bigger investment there.
Dell has leased a sales and support call center near Alliance Airport that will house 500 to 1,000 workers in the next two years. But Fort Worth is angling for a bigger presence.
The city's economic-development officials know all too well the kind of prosperity Dell created for Austin and Round Rock -- where the company employs about 21,000 people and helped make the region's name synonymous with high-tech.
``Obviously, we get all excited when we see Round Rock,'' said Tom Higgins, economic development director for the City of Fort Worth. ``Is that ever going to happen? I don't know. They have not said that's what we're going to get. They've made no promises."
Fort Worth is anxious for a slice of that rich economic-development pie. But Dell doesn't give out forks and plates to just anyone. Fort Worth will have to ante up in the form of tax breaks. The council authorized staffers to begin negotiating with Dell next week.
Dell likes rebates on sales and property taxes. When Dell agreed to build a new campus in Round Rock in 1993, the company negotiated a lucrative deal that gave it a 100 percent rebate on property taxes for the first five years, 75 percent the second five and 50 percent thereafter. The city also rebates 31.2 percent of sales taxes.
Round Rock received from Dell an estimated $150,000 in property taxes and $15.7 million in sales taxes in fiscal 2000, said David Kautz, the city's finance director. Even with the rebate, Round Rock gets about 38 percent of its $28.6 million in sales-tax revenue directly from Dell.
When Dell went to Nashville, Tenn., about 18 months ago, it received a large chunk of free real estate, a 100 percent rebate on property taxes for 40 years and a subsidy of $500 per employee to pay for infrastructure improvements. The package is estimated to be worth about $166 million.
Fort Worth is considering a deal to rebate half the revenue it would receive from tax collected on sales of Dell products and services. Fort Worth receives 1 percentage point of its total 8.25 percent sales-tax levy for its general fund.
Based on Dell's sales projections from that facility of about $33 million annually, the city would rebate about $330,000 in sales taxes a year to the company, Higgins said.
The city also would create a tax-increment financing, or TIF, district near the Alliance Airport.
In a TIF, property-tax revenue the city collects there would be frozen and any additional future revenue would be used to pay for infrastructure improvements in the area.
The theory is that the project would attract other business to the area. The added tax revenue would be used to pay for infrastructure improvements.
Once those improvements are paid for, any excess tax revenue would be used to rebate Dell's property taxes. If there's a shortfall in tax revenue needed to pay for improvements, Dell makes up the difference.
These incentives are based solely on Dell's immediate call-center plans, but clearly the city hopes it can encourage the company to do more expansion in the future.
``My understanding is they've got 500 acres of property under option'' in addition to leased space near Alliance, Higgins said.
Dell -- which is characteristically tight-lipped about plans, especially in real estate matters -- did not return calls for this story.
``Dell is in the computer business, not the land business,'' Higgins said. ``For 1,000 people, there's a lot of space left over on a 500-acre site.
``It's up to us to make it attractive enough financially so that when they look at expansion, they look at Fort Worth as well as Austin, Round Rock and Nashville."
It's hard to tell exactly what Dell has in mind these days. There was speculation in the spring that the company was in the hunt for a third manufacturing site.
But at least one person familiar with the process said Dell has been looking for an outlet for sales and service workers in its Home and Small Business group, the company's fastest-growing division, when it settled on Fort Worth.
Although the company has committed publicly only to 1,000 jobs by 2002 in Fort Worth, internal discussions sought to accommodate growth of up to 5,000 employees within three years, the person familiar with the plan said.
``Dell has not been specific with us in terms of what kind of operations might be in Fort Worth should they choose to expand in Fort Worth,'' said Reid Rector, vice president for economic development at the Fort Worth Chamber of Commerce.
``If nothing other than (sales and support) happens, we're very excited to have Dell in the community. Five hundred or 1,000 jobs is still a nice project for Fort Worth. You're adding a Fortune 100 company and another tech company, diversifying your economy."
You may contact John Pletz at jpletz@statesman.com or 445-3601
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