On the north side of the upscale Clearfork development along Chisholm Trail Parkway, a vacant 25-acre plot of land across from The Shops of Clearfork could soon become home to a luxury automobile showroom, retail and office spaces, and multifamily units.
The expansion was made possible by a $22 million incentive package approved unanimously by Fort Worth City Council in May.
Although city officials and staff laud the move as a boost to Fort Worth’s economic profile, economic development experts call the deal a poor use of taxpayer dollars.
Nathan Jensen, professor of government at the University of Texas at Austin, said incentivizing expansions, like in the case of Clearfork, is often problematic. Community benefits local governments typically consider when offering tax incentives to businesses are new job creation or redevelopment of an economically depressed area.
“The logic behind an incentive is often to provide some up-front support where additional economic spillover would impact the community,” said Jensen, who teaches courses on government economic development strategies and business-government relations. “Ideally, additional development would pay their taxes and not receive additional grants. This isn’t a great model for economic development.”
The Shops at Clearfork is home to luxury retailers like Neiman Marcus, Louis Vuitton and Tiffany & Co., as well as office space, upscale dining and residential units.
The proposed $400 million expansion of Clearfork would add 200,000 square feet of Autobahn automobile showroom; a 1,750-space parking garage; 300,000 square feet of commercial space for retail, office or a combination of both; and 350 new multifamily units. None of the units will be classified as affordable housing.
The city offered a $48 million incentive package in 2014 to the Clearfork Development Company for the first phase of the project, completed in 2018. That first agreement notes the developer should create at least 50 full-time jobs.
At this time, the city has paid $7.7 million to date for that 2014 package. This means money has been provided to the developer for every requirement it met that is laid out in the agreement. That money is usually paid out over the course of the agreement’s duration.
The 2014 agreement is expected to last 15 years. The city will stop paying the developer for the first phase in 2029.
Michael Hennig, economic development manager for the city, said the city always expected the developer, Cassco Land Company, to expand its shopping center as part of the project’s original plan.
The city is satisfied with the impact and performance of the first part of the project, which makes officials optimistic about the expansion, Hennig said.
Incentivizing the $400 million expansion gives the economic development department an opportunity to guide what is going to be delivered and ensure it happens “sooner than we believe it would otherwise be the case,” Hennig said.
These packages are one of the state’s tax incentive programs, known as the Chapter 380 and 381 agreements. They allow cities and counties to give public money to companies as grants to encourage economic development projects.
The Chapter 380 agreement between the city of Fort Worth and Cassco Land Co. for the expansion has not yet been finalized and posted to the Texas Comptroller’s website as required per state law.
Kasia Tarczynska is a senior research analyst with Good Jobs First, a national policy resource center that promotes corporate and government accountability in economic development.
Although the terms of the deal have not yet been finalized, Tarczynska said she did not see any affordable housing or job creation requirements – or any other community benefits in the proposed deal, which is problematic.
“While an office might create jobs and have an economic impact on the area, retail might not,” Tarczynska said in an email. “Retail tends to shift where people spend their money, from one place to another. An exception to this might be providing public money to a grocery store in a food desert.”
Jensen of UT said there is “very little logic” to having an auto dealer as the anchor tenant to a subsidized development. As part of the deal, luxury car dealer Autobahn will move about five miles from 3000 White Settlement Road to Clearfork.
“Is the idea that people will want to live near an auto dealer? That an auto dealer makes this a destination that makes people want to shop here? Hard to think of a worse anchor tenant for a development like this,” he said.
Dearth of community benefits
Fort Worth’s Autobahn is home to luxury car brands such as Land Rover, BMW, Jaguar and Porsche. Autobahn is currently located on White Settlement Road at the intersection of University Drive.
That existing location of Autobahn on White Settlement Road is near the area planned for redevelopment for the Central City / Panther Island project. City officials are overseeing the economic development portion of Panther Island near downtown, while the Tarrant Regional Water District and the federal U.S. Army Corps of Engineers are handling the flood control elements.
The city’s economic department’s view of the project is more about advancing the future of the local economy rather than focusing on a specific number of jobs created, Hennig said. There are no requirements for job creation or salaries, according to the city.
According to the city’s economic development department, that will be up to the developer and the tenants it will bring to the project. In this case, the primary objective is to ensure the delivery of the real estate project itself and the number of jobs created is considered “an ancillary benefit.”
“The more investment in real estate and the entire quality development that we’re able to see in Fort Worth — that has a real impact on the kind of economy the public has, the kind of business activity that can take place,” Hennig said.
Clearfork developers selected Autobahn as the main tenant of this part of the project because of changing market conditions that are no longer favorable to traditional retail spaces, Hennig added.
Having a car dealership as the anchor tenant of a planned development like Clearfork has never been done in Texas before, Hennig previously told the City Council. Tesla, however, does have showrooms in high-end shopping centers, such as Southlake Town Square and Legacy West in Plano.
The Cassco Land Co., located on South Hulen Street is the development arm of the family-owned Edwards Ranch. The ranch once spanned 7,000 acres across Fort Worth. The company is responsible for the creation and construction of projects like the retail, dining and office area known as the Shops at Clearfork, the commercial mixed-use development called Clearfork, and residences at Riverhills, among others.
Paxton Motheral, a Tarrant Regional Water District board member, is the vice president of Cassco. Other directors include members of the Edwards family, such as Crawford Edwards, Chandra Edwards Geren, Mary Martha Edwards Richter, Matilda Lucia Edwards Rodgers, Beauford Erwin III, Clayton Hook, Eva Geren Motheral and Sheryl Laboyteaux.
The current president of Autobahn is Brendan Harrington.
In an email statement, Motheral told the Report that the Chapter 380 agreement was “a significant milestone in the development process,” but that a lot of work remains to be done for this second phase. More details will be provided at a later date through a formal announcement, he said.
Autobahn did not respond to the Fort Worth Report’s several requests for comment.
Fort Worth Mayor Mattie Parker said Clearfork has long been “an amazing economic development partner for the city” that the city will continue to support as they plan future expansion of the development.
“I felt like it was the right move, not just for the city of Fort Worth, but also as we look at the potential for tourism into the city when it comes to retail,” Parker said. “We compete fiercely as well with our eastern partners in Dallas, and we had to have an answer to that.”
Mayor Pro Tem Gyna Bivens said residents’ comments and input are important to council when deciding whether to enter into an economic agreement like the one for Clearfork’s expansion.
And in this case, she said, she had not heard any concerns.
“Keep in mind, we don’t have the ears of every one of our nearly 1 million citizens. But those who are engaged, make it a point to either email us, they come to speak or they make inquiries. I didn’t hear any ounce of hesitation from citizens,” Bivens said. “If I had heard any concern, caution, pause, negativity from any citizen, no matter where they were, about that, then I would have reason to dig deeper into the validity, the credibility, the opportunities that this project brings. I heard nothing like that.”
Council member Chris Nettles declined to comment on his vote for the project. Council member Jared Williams’ office said he was unavailable to comment. None of the other seven council members responded to the Report’s request for comment.
When the Clearfork expansion deal was first made public during a May 16 council work session, city staff and council members spent around 30 minutes discussing the multimillion-dollar incentive package.
When it came to voting on deciding to enter into a Chapter 380 agreement with Cassco Land Co. on May 23, the deal was unanimously approved through the consent agenda. The consent agenda means council members do not comment on the agenda items before voting on them.
An accelerated timeline
Chapter 380 deals have come under scrutiny in the past for a lack of transparency and accountability measures to ensure the money promised in these deals is well spent. A 2021 statewide investigation by the Houston Chronicle highlighted a few examples in North Texas:
- In 2015, the city of Arlington gave $50 million in oil and gas drilling revenue to the developers of Texas Live!, an entertainment district between the Dallas Cowboys and Texas Rangers stadiums. The city also gave the builders of an adjacent luxury hotel up to 30 years of rebates on the property, sales, beverage and hotel taxes generated there.
- Another Arlington deal paid homebuilder D.R. Horton $5.5 million in grants to relocate its headquarters to the city while bringing 350 jobs. The city will also pay back 87.5% of the sales taxes that the company generates over 40 years. That is one of the longest-running incentive deals in Texas, the Chronicle investigation found.
- Fort Worth signed a deal in 2006 with Acme Brick for the city to exempt collecting 100% of the sales taxes Acme generated for 32 years in an effort to keep the company here. In return, Acme — who had 150 employees when the deal was signed — was expected to retain 100 jobs in the city for 15 years. By the final year of the agreement, the target drops to just 15 jobs.
The subsidizing of a luxury car dealership in an upscale shopping center benefits only the privileged few, according to Tarczynska of Good Jobs First.
“The developer and the dealership will sell luxury cars to wealthy people, for which it will get public money, money that will not go to programs that eliminate inequalities such as childcare support, public health programs, or others,” she said.
Jensen of UT said a good economic development agreement often has job creation clauses that include the number and quality of jobs, as well as clawbacks if the company does not meet the requirements. Other common local benefits include affordable housing.
City staff expects Fort Worth to make a return on its 15-year investment within five years, based on all the new revenue that will come to the city from property and sales taxes, Hennig said.
“The project is an attractive opportunity to support the expansion of a major center of economic activity that serves as a regional draw, and which exemplifies the type of dense, high-quality mixed-use development that is sought for Fort Worth – especially within the central city,” the city’s economic development department said in a statement. “The project will add significantly to the commercial tax base of the community – which reduces the City’s fiscal dependency on residential properties – supporting the City’s efforts to reduce tax rates as it has in recent years.”
Investing in this project allows a development of Clearfork’s scale to be completed in just five years rather than 10 years, Hennig said, thus generating additional revenue that otherwise would not have been there.
This payback period is based on how long it will take for new tax revenue generated by the project to equal or exceed the full value of all the incentives the city has offered to the developer.
“(The city) effectively is able to profit off of this development on an accelerated timeline,” Hennig said.
This deal is also about showing developers and investors that if a project like this can be successful in one part of the city, it can be done anywhere in Fort Worth. Hennig calls it a “cascading” effect.
“The less risky a project or development seems to a developer of a particular kind, the easier it is for them to convince other investors to participate in a project with them,” Hennig said.
Alison Wakefield, a manager at Pew Charitable Trusts with a focus on economic development, said government incentives should be targeted toward development that builds out a city or state’s entire economy. Retailers like car dealerships rarely do that, she said.
“Incentivizing a retailer or locally serving business like a restaurant doesn’t grow the overall economy,” Wakefield said. “You’re most likely supporting one of those businesses at the expense of another restaurant in the area because overall spending of the population doesn’t increase.”
Such incentives are one tool in a city, county or state’s toolbox, Wakefield said. But those programs are meant to encourage projects that would not have taken place if not for the tax incentives.
This is often referred to as the “but for” test.
“Governments in general try to avoid rewarding businesses for what they would have done without an incentive because, in that instance, they’re foregoing revenue that they otherwise would have captured or collected,” Wakefield said. “So if you’re rewarding a business with an incentive for something that they had already planned, then you’re not getting that revenue.”
Sandra Sadek is a Report for America corps member, covering growth for the Fort Worth Report. You can contact her at sandra.sadek@fortworthreport.org or on Twitter at @ssadek19.
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