Paris Economic Development Corp. looks for opportunities to attract new industrial prospects while it gives support to companies already here as Lamar County and the Red River Valley recoup from the challenges of a year-long battle with the novel coronavirus.
Although the local economy may have not suffered as much as other parts of Texas, as indicated by increased sales tax revenue, the lifeblood of the economic engine, future sales tax revenue remains uncertain with the closing of several retail outlets within the city.
To prepare for uncertainties, the newly expanded seven member PEDC board, up from a previous five members, in early February took a look at the organization’s financial status and has since brought on board both a local accounting firm and a legal firm to ensure the organization stays its course.
Working at a one-day retreat Feb. 3 at Love Civic Center, directors surmised that going forward, PEDC is expected to remain on firm financial footing, although it will take several years to build reserves after the organization attracted a major industry and offered substantial workforce retention and growth incentives to a number of established companies in Paris and Lamar County in recent years.
Directors took a look at long-term financial projections and its land inventory and agreed that the retention and growth of locally established industries is equally as important as the attraction of new companies, which historically take a much larger incentive package than for already established local industries to expand.
Based on a 10-year increase in revenue from sales taxes, Treasurer Mihir Pankaj estimated cash flow projections could take a dip to roughly $416,000 by end of fiscal year 2021 based on tax revenue of $1.44 million, an operating budget of $502,550, job training, $25,000, total business incentives $1,931,550, debt service, $148,823 and $420,000 in new industry and land investments. Of the $1,931,550 in incentives currently on the books, $1 million of the amount does not come due until 2028, and another $171,000 likely will not be awarded based on a company’s job numbers.
Using a tax revenue of $1.45 million for the next four years, and the same operating budget, job training costs and debt service payments, Pankaj estimated an ending cash balance of $1,189,265 in 2022, $1,962,892 in 2023, $2,736,501 in 2024 and $3,510,146 in 2025.
Although excited about continued upward projections during the coronavirus pandemic, Pankaj expressed some concern about the trend going forward.
“We want to see that upward trajectory keep going, but what about the aftermath of department stores and other retailer closures?” Pankaj said. “That makes me nervous.”
Recent events, however, particularly the sale of 37 acres of the Gene Stallings Business Park on SW Loop 286 to the Texas Department of Transportation for future expansion of its Paris footprint, reduced liabilities somewhat, and continued strong sales tax revenues paint a bit more optimistic picture than what directors saw in February.
As recently as an April 20 meeting, PEDC executive director Maureen Hammond, giving a March financial report in the rare absence of Pankaj, noted that six months into the current budget year, “we’re higher in revenue and under expenses so we’re tracking well for the year.” The report also showed cash at $1.65 million with March sales tax revenue at $130,000, roughly $17,000 higher than a year ago. She noted plans are to convert $243,000 to cash in the next 60 days from taxes receivable, and also noted a roughly $250,000 reduction in total liabilities after applying receipts from the TxDOT land purchase to loan principal, reducing total liabilities to $1.27 million.
With incentive packages used frequently in the past to attract new industry, the board in February took a look at how incentives rank among other factors that influence company decisions. Based on a survey of corporate real estate executives performed in October 2020 by Site Selection Magazine, incentives ranked low on a criteria list after ranking high a decade ago.
The board recognized a highly skilled workforce is key to industry attraction, as workforce skills and workforce development rank first and second on the Site Selection Magazine survey. In order of importance, other rankings include transportation infrastructure, ease of permitting and regulatory procedures, state and local tax scheme, utilities (cost, reliability), quality of life, incentives and legal climate (tort reform).
“To be successful we need to keep what we have; grow what we have and attract new,” director Stephen Terrell said at the close of the February retreat, pretty much summarizing the consensus of the day. “To be successful you have to have all three. I think we have a magical moment with the right leaders and the right team who believes in the vision.
Evidence of the board’s intention to “keep and grow what we have” came about a day after the Feb. 3 meeting with the announcement of a $160,000 incentive program for Metro Gate and Manufacturing Co. in return for 40 new jobs and a capital investment of roughly $3 million at its plant 7.5 miles west of Paris on Highway 82. The incentive includes $120,000 for 40 new jobs over the course of a five-year term with an average wage of at least $18 an hour plus benefits. Another $40,000 is to assist with the acquisition of new machinery and equipment, according to the agreement.
Two weeks later came the announcement that TxDOT purchased 37 acres of the 150-acre Gene Stallings Business Park. The property joins its Paris District Office on SW Loop 286. Plans are to relocate the Paris District Office complex from its North Main Street location. In addition to the sale, the deal retains roughly 160 jobs in Paris with an average wage of $60,000 year or more, Hammond said.