{"id":232687,"date":"2014-11-17T00:00:00","date_gmt":"2014-11-17T08:00:00","guid":{"rendered":"https:\/\/sdnews.com\/for-city-subsidies-it-takes-money-to-get-money\/"},"modified":"2014-11-17T00:00:00","modified_gmt":"2014-11-17T08:00:00","slug":"for-city-subsidies-it-takes-money-to-get-money","status":"publish","type":"post","link":"https:\/\/test.sdnews.com\/es\/for-city-subsidies-it-takes-money-to-get-money\/","title":{"rendered":"Para los subsidios de la ciudad, se necesita dinero para obtener dinero"},"content":{"rendered":"

Por Lisa Halverstadt |\u00a0Voz de San Diego<\/em><\/a><\/p>\n

San Diego leaders have a message for businesses seeking subsidies: You\u2019ve gotta give us something before you get something.<\/p>\n

The city\u2019s three most recent\u00a0business incentive deals<\/a>, doled out to a biotech company and two breweries, require each company to deliver new tax money before those businesses can collect tens of thousands of dollars in tax or permit rebates.<\/p>\n

In a handful of cases, companies that have signed deals with the city in the past haven\u2019t reaped all the money they were promised because they didn\u2019t live up to what they pledged.<\/p>\n

\"Tax<\/a>
Tax credits enticed Ballast Point to open a new production facility in San Diego (Courtesy Ballast Point)<\/figcaption><\/figure>\n

\u201cWhen it comes to tax incentives and tax rebates and reimbursement, it\u2019s always performance-based and we\u2019re looking to make sure they\u2019ve done everything they\u2019re supposed to do before we pay out that money,\u201d said Russ Gibbon, the city\u2019s business development manager.<\/p>\n

That\u2019s not necessarily how it works in other places.<\/p>\n

Nevada\u2019s offering of upfront cash<\/a>\u00a0was reportedly among the reasons Tesla opted to build a car battery factory there. Texas is also known for\u00a0writing checks to lure businesses<\/a>\u00a0before they\u2019ve had a chance to prove they\u2019ll actually bring new jobs or tax money.<\/p>\n

Many cities and states also don\u2019t track whether such subsidies pay off in the long run. A\u00a0recent survey<\/a>\u00a0of about 1,200 cities and municipalities nationwide found at least a quarter of them don\u2019t measure the effectiveness of business incentives they offer or even perform cost-benefit analyses before handing out help.<\/p>\n

The report released by the Washington D.C.-based International City\/County Management Association also found almost 45 percent of respondents never or only sometimes inked performance agreements with the businesses that benefited from local incentives.<\/p>\n

San Diego\u2019s not offering money up front, and it tracks the cash it does dole out more closely than some other cities that took part in the survey. (The city says it participated.)<\/p>\n

In San Diego, the metrics officials use to measure success often come down to a few simple questions: Did the company maintain or create new jobs? Did it stay in San Diego? Did the company pay more taxes?<\/p>\n

City officials say they\u2019ve tried to structure subsidy deals so the city doesn\u2019t reach into its coffers unless those metrics are met.<\/p>\n

The formula to determine whether those companies actually get a check varies by the deal.<\/p>\n

Biotech manufacturer Illumina is\u00a0set to receive a tax rebate of up to $1.5 million plus interest<\/a>\u00a0if it keeps about 300 manufacturing jobs in the city and tax revenue in excess of what it\u2019s already paying, which would presumably be associated with increased business here.<\/p>\n

The company\u2019s 10-year contract with the city approved this summer requires annual reports on manufacturing jobs associated with the subsidy. Illumina\u2019s rebate would drop $15,000 per job if it can\u2019t maintain them.<\/p>\n

Deputy Chief Operating Officer David Graham, who oversees San Diego\u2019s economic development department, said the city would judge the subsidy a success if Illumina delivers what it promised in the deal.<\/p>\n

Increased business equals more tax money for the city, he said.<\/p>\n

\u201cAt the conclusion of the incentive, that company is still here and the expansion is still here and we continue to get 100 percent of the revenue,\u201d Graham said.<\/p>\n

Graham had a similar take on deals approved with brewers Ballast Point and AleSmith, which offset their spending on city permits and other fees associated with renovations and expansions in Miramar. Each will receive reimbursements of more than $150,000.<\/p>\n

Per their agreements with the city, the brewers won\u2019t get those rebates until they produce new tax revenue associated with their new locations.<\/p>\n

At Ballast Point, city staffers have projected a $50,000 net increase in cash for the city.<\/p>\n

Companies that don\u2019t meet the requirements of their city incentive deals don\u2019t get subsidies.<\/p>\n

Gibbon said semiconductor supplier SGS-Thomson didn\u2019t receive promised incentives in the late 1990s after it failed to supply all the jobs detailed in its city agreement. Electronics company LG Infocomm also lost out during the same period when it moved its manufacturing facilities elsewhere.<\/p>\n

And biotech firm Biogen Idec lost out on roughly $350,000 of a larger incentive deal in the mid-2000s with the city because it didn\u2019t participate in separate reclaimed water and tax reporting programs. Idec later shuttered its University Towne Center complex, which now houses Illumina.<\/p>\n

The city didn\u2019t lose out on any money in those deals because they were structured to protect taxpayers if the companies didn\u2019t follow through, Gibbon said.<\/p>\n

Similar incentive deals are likely in the future. Mayor Kevin Faulconer has said he\u2019s eager to offer assistance to businesses to help them add new jobs.<\/p>\n

Not all companies will get them, though.<\/p>\n

Businesses that offer well-paying jobs, significant tax hauls and prestige have a leg up. Companies with more political connections and more influence on the city\u2019s tax base are also more likely to seek and get government help.<\/p>\n

But city officials have made it pretty clear: If you\u2019re going to get city money, you must first offer something concrete.<\/p>\n

Editor\u2019s note: This article is part of Voice of San Diego\u2019s quest digging into the difficulties \u2014 real or perceived \u2014 of doing business in San Diego. To read previous articles from this quest, visit voiceofsandiego.org\/category\/quest-business-climate<\/a>.<\/em><\/p>\n

\u2014Lisa Halverstadt is a reporter at Voice of San Diego. You can contact her directly at lisa@vosd.org<\/a> o 619-325-0528.<\/em><\/p>","protected":false},"excerpt":{"rendered":"

By Lisa Halverstadt |\u00a0Voice of San Diego San Diego leaders have a message for businesses seeking subsidies: You\u2019ve gotta give us something before you get something. The city\u2019s three most recent\u00a0business incentive deals, doled out to a biotech company and two breweries, require each company to deliver new tax money before those businesses can collect […]<\/p>","protected":false},"author":773,"featured_media":232688,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"11557","_seopress_titles_title":"For city subsidies, it takes money to get money","_seopress_titles_desc":"","_seopress_robots_index":"","jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"footnotes":""},"categories":[11547,11557,11551],"tags":[],"class_list":["post-232687","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-features","category-mission-valley-news","category-news"],"_links":{"self":[{"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/posts\/232687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/users\/773"}],"replies":[{"embeddable":true,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/comments?post=232687"}],"version-history":[{"count":0,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/posts\/232687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/media\/232688"}],"wp:attachment":[{"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/media?parent=232687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/categories?post=232687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/test.sdnews.com\/es\/wp-json\/wp\/v2\/tags?post=232687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}