Updated Dec. 1, 2013 at 2:52 p.m. CST

City of Cedar Park spurs construction, entices new companies

Economic development leaders in Cedar Park are seeing the fruits of their labor as a Fortune 500 company plans to open its research and development facility in the city by March.

The city's 4B Community Development Corp. approved a 10-year, $1.2 million incentive package for Dana Limited Corp. on Nov. 12. The deal aims to bring $12 million in capital investments and 80 jobs to the city by 2019, Economic Development Manager Larry Holt said. The agreement was approved by City Council on Nov. 21.

"The Dana Corporation by itself, with its spending and income and employees, will generate $115 million for the city and the state. The indirect impact is $277 million," Holt said. "The capital investment at a minimum is $12 million. They are going to have 80 jobs with an average salary of $100,000. And there's also the intangible value of a Fortune 500 company doing a new location in Cedar Park."

The performance-based incentive package for Dana will piggyback two of the city's active economic incentive deals with Scottsdale Crossing Commerce Park and Fallbrook Technologies Inc.

"This project is happening because of things we started many years ago," 4B board member Ryan Wood said. "Those two dominoes have fallen, and now we are getting the third to fall. I'm really excited to see what else staff can do."

Thrice the incentives

Dana, a supplier of automotive and off-highway drivetrain, sealing and thermal-management systems products, is slated to occupy the first of seven office buildings at Scottsdale Crossing Commerce Park, a mixed-use project at Toll 183A and Scottsdale Drive that broke ground in January. The city of Cedar Park offered the site's developer, TIG Real Estate, $681,891 toward infrastructure and construction of the first building, which was completed in early summer.

Ultimately the business park is expected to host shopping, restaurants and professional offices that abut an 84-lot neighborhood. TIG Principal David Alsmeyer said about 14,000 square feet is being added to building Dana plans to occupy, and construction of a second, unleased 30,000-square-foot office building will begin mid-March.

Rob Smithson, Dana vice president of powertrain innovations engineering, said his company began considering Texas for its new research and development facility about a year ago when Cedar Park–based Fallbrook Technologies announced a new partnership with Dana.

"For us, a big part of the draw was to be close to Fallbrook Technologies, which is a company we licensed [and developed] new technology from," Smithson said, adding that Dana considered opening its facility in Ohio. "But Dana likes to use technical centers as a way to expose the company to outside ideas, so certainly the entrepreneurial culture of the Greater Austin area is a great draw as well."

In 2011, the city approved a $1.6 million economic incentive agreement with Fallbrook that requires the company to employ at least 125 people in Cedar Park by the end of 2013. CEO William Klehm III said the company is in line with the agreement and has added 14 employees in the past year, almost all of them in Cedar Park.

Details of the agreement

According to the 10-year agreement, Dana must meet annual employment and capital investment performance benchmarks to receive funding from the city. The initial financial incentive totaling $509,517 would be awarded during 2014 if the building, located at 5900 Toll 183A, is occupied by March 1.

If Dana fulfills at least 90 percent of its annual employment and capital investment requirements, it will receive about $101,900 each additional year through 2019, according to the agreement. Further incentives include $5,000 for each Dana employee who buys a home within the city of Cedar Park, with a maximum allowance of $250,000 through 2019. As a condition of the agreement, the company will be required to report employment totals to the city every year through 2023, even after the financial incentives cease, Holt said.

The small neighborhood, Scottsdale Crossing, next to the commercial park is being developed by Milestone Community Builders. President Garrett Martin said his company is in early talks with the developer to determine how to help employees capitalize on the city's stipend and nearby living accommodations.

"There are quite a few people who are going to move in on Day 1 and we want to be able to provide homeownership options as long as [the commerce park is] generating employees," Martin said. "People want to work close to where they live. Fulfilling that need was one of our original goals with the community in terms of pairing up with the city of Cedar Park to put the whole vision together."

Businesses migration

In December, additional incentives for Dana in the form of tax abatements are expected to go before City Council, Holt said. Staffers are asking that property tax payments to the city be waived on the Dana research and development center for the first five years of occupancy, with a total savings for the company estimated around $250,000, he said.

Dana is one of several companies that has been drawn to Cedar Park because of some type of incentive. California-based National Vendor Inc., an insurance settlement litigation firm, purchased a building on Bagdad Road in October and plans to move 50 employees—the majority of its staff—to the city in early 2014, CEO Randy Barnaby said.

Though not directly incentivized by the city, Barnaby said the market conditions in Texas, and specifically Cedar Park, far outweigh what is available in California. He said California's high state income tax on individuals earning more than $250,000 per year penalizes small businesses and makes it difficult to stay competitive.

"I have an extra 15 percent cost every year in the form of personal income tax that my competitors in Florida or Texas don't have. So how do I stay competitive when 15 percent of my profits are gone?" Barnaby said.

"Cedar Park has been a breath of fresh air with trying to get something done. I've been able to walk into City Hall without an appointment. You don't do that in California," he continued. "My experience with Cedar Park city officials is that they want me here. There are rules that have to be followed, but they want me up and running as quick as possible so I can get to hiring people."