PCDC making waves with big deals, aggressiveness

Pflugerville was in need of commerce as well as tax relief when former Councilman Ron Beyer took his place on the inaugural board of the Pflugerville Community Development Corp. in 2001.

"There was not a cotton-picking thing in Pflugerville," Beyer said. "It was kind of a bedroom community to Austin. Almost everybody every day got up and drove to Austin to work."

Beyer and others on City Council spearheaded the creation of the PCDC, and Pflugerville voters approved a ballot measure in 20012: 60 votes in favor to 120 votes against to allot a half cent of sales tax for the development corporations use.

The PCDC has made waves in recent years with its gung-ho style of economic development, which has included attracting businesses from nearby cities such as Austin and Round Rock with the promise of cash and economic incentives.

On Jan. 20 the city announced it inked perhaps the largest land development deal in Pflugerville history, which city leaders say could lead to $1.5 billion in capital investment. The development deal, called Sunshine Village, was helped by PCDC assistance during negotiations and the proximity of the Hawaiian Falls Water and Adventure Park, which was brought to town by the PCDC, City Manager Brandon Wade said.

But it is the PCDCs aggressiveness in courting and incentivizing business that has rankled some who worry of a backlash if big, PCDC-incentivized businesses, such as Hawaiian Falls, fail.

Pflugerville Mayor Jeff Coleman said the criticisms of the PCDC are off base. He said PCDC Executive Director Floyd Akers has been charged with running the organization more like an entrepreneurial small business than a city government office.

Moreover it is the PCDC that has helped lower once sky-high property tax rates and bring in primary jobs, Coleman said.

"If we were not willing to be aggressive, those businesses looking to come to town would not consider Pflugerville," he said. "We wanted [PCDC] to go out and think outside the box and to be aggressive."

Taxes and incentives

By state statute the PCDC can use its cut of sales tax revenue in myriad ways, including park improvements, road projects, water infrastructure and more.

There are more than 1,000 economic development corporations in Texas. Akers said the PCDC left a regional development coalition in 2013 called Opportunity Austin, which includes nearly every Capital Area city's economic development corporation, because it was a major investment and not benefitting the city enough.

One misconception about the PCDC, Coleman said, is that the city increased sales tax to fund it. Rather, voters approved reassigning an existing 1 cent sales tax originally intended for Capital Metro. Half a cent of that tax was redirected to the PCDC; the other half-cent was apportioned to the Travis County Emergency Services District No. 2commonly called the Pflugerville Fire Department.

Voters approved another half-cent sales tax hike for ESD No. 2 in 2014 that the ESD sought from Pflugerville's extraterritorial jurisdiction, which are areas outside the city limits. PCDC opposed the measure because it would limit its tax draw from ETJ areas, if they are annexed, in the future.

All PCDC deals are reviewed by the city and approved by City Council. The PCDC, Akers said, cannot make deals on its own.

The PCDC has many ways to incentivize businesses, including subsidized rent, reduced land prices, advertising assistance and cash incentives. The PCDC also makes performance agreements/financial incentives contingent on conditions, such as a business locating in the city for a certain time and creating a minimum number of jobs.

The PCDC also leverages its sales tax revenue.

"It's a way oversimplification, but the PCDC can make a profit, and cities aren't really supposed to do that," Wade said. "They can then take their profit and turn it back into additional jobs."

Akers said the PCDC expects to profit $5 million on land sales at 130 Commerce Center, an industrial and business park created by the PCDC at the corner of Pecan Street and SH 130.

PCDC board member Janice Heath said purchasing the land for 130 Commerce Center has also helped guide growth.

"When a city starts to grow as rapidly as we have, there is good, healthy growth, and then there is growth that is just happenstance that is not what we want," Heath said.

Heath said the PCDC also promotes business retention by helping companies relocate within the city and providing guidance.

The PCDC awards grants for startups, such as a pending $20,000 grant for Bret Stewarts business, New Sweden Coffee Roasters.

Stewart said he read about a Pflugerville barbecue sauce maker receiving a $7,000 PCDC grant last October and thought his Scandinavian-style bean-roasting enterprise may qualify as well.

If approved he said the grant should help him move his operation out of the commercial kitchen at Lil Mamas Corner Cafe, which also received a PCDC grant.

"My impression, up to then, was that the PCDC [only] did big projects like Hawaiian Falls and 130 Commerce Center," Stewart said.

Although the PCDC invests in smaller startups and city parks and infrastructure, it is one of the PCDCs most visible projects that has drawn public scrutiny.

Making waves

Following November news reports indicating Hawaiian Falls would lay off a dozen full-time employees, a wave of criticism in online forums hit the PCDC and city officials. Water park officials said the layoffs were done because of a difficult winter offseason. About one month prior to the layoffs, the city of Pflugerville approved raising the loan amount for Hawaiian Falls by $1.5 million for increased construction costs.

Coleman, Wade and Akers said the criticism is misguided, considering the benefits the water park has brought to town.

Sales tax is up by 15 percent since the water park was built, Akers said. Now summer months are big sales-tax months for the city in addition to the holiday season.

In bringing Hawaiian Falls to town the city backed a $25 million loan to construct the park. Hawaiian Falls currently pays the monthly loan installments in full. Coleman said he has heard of citizens concerned a Hawaiian Falls bankruptcy would obligate the city to make the loan payments itself and potentially raise taxes.

The PCDCs annual budget is $4.5 million, Coleman said, and Hawaiian Falls yearly payments total about $1.5 million, leaving the PCDC room to accommodate those payments if need be.

Akers and Hawaiian Falls officials have said the company is financially solvent, and ticket sales for the upcoming summer season are better than expected.

Hawaiian Falls location also played a major role in bringing Sunshine Village to town. Taking nearby development into account, the value of the raw land beneath the water park could reach $25 million in the future, Wade said.

Akers said Hawaiian Falls has brought in summer jobs and buoyed sales at nearby businesses. Overall, Akers said that is at the core of the PCDCs purpose.

"We are trying to create opportunities for our citizens," Akers said. "So they don't have to get on MoPac or I-35 in the morning and go to work in that nightmare of traffic thats called the city of Austin."