San Antonio could make it harder for big businesses to get city tax subsidies
Downtown San Antonio is seen Nov. 23, 2020, behind the Scobey Moving and Storage complex on the city's near west side. San Antonio officials could create higher standards for high-profile companies weighing whether to relocate here to obtain lucrative tax subsidies from the city. Under a new set of proposed guidelines, prospective employers would have to pay workers at least $15 an hour, promote gender equality in the workplace and invest more in their own businesses to get tax breaks and cash grants. Companies relocating to San Antonio could get even more in city dollars if they set up shop in poorer parts of the city and commit to hiring more locals. The nationwide practice of using tax dollars to lure private companies to states and cities has in recent years become more controversial as critics scrutinize whether companies truly need the money and communities get a proper return-on-investment in the form of higher-paying jobs. The proposal will help San Antonio stay competitive while “not giving away the farm,” Mayor Ron Nirenberg said during a City Council briefing on the matter Wednesday. “I think that sends a signal that we’re no longer to be relying on tax abatements to bring in businesses here,” Nirenberg said. The proposed guidelines would give companies greater hurdles to clear in order to get tax subsidies. Under the current policy, employers have to create 50 jobs or invest at least $10 million into their business to qualify for a property tax break. If City Council approves the proposed guidelines, companies would have to meet that minimum jobs target and invest $200 million. At least 15 percent of the company’s workforce would have to be made up of graduates from Nirenberg’s Ready to Work program — the $154 million sales tax initiative aimed at helping out-of-work residents get higher-paying jobs. Employers would have to prove they have “gender pay parity practices,” meaning they must show they promote women into leadership positions and provide decent maternity care benefits, among other criteria. They also would have to pay female employees as much as male workers, Assistant City Manager Alex Lopez said. “That’s what we’re going to be looking for,” Lopez said. Companies would have to pay a living wage of $15 an hour — a bump from $12.74 under current city policy. The city could award more subsidies if companies meet other criteria. For example, if a company decides to locate in a poorer part of town, they could receive tax breaks and grants over a longer period of time. District 6 Councilwoman Melissa Cabello Havrda, who represents the city’s far West Side and parts of the South Side, chafed at that. Locating in a poorer part of the city should be a requirement, not something an employer does for more money, she said. “It doesn’t mean you’re going to get a deal,” Havrda said. But other council members hinted that shouldn’t matter. District 4 Councilwoman Adriana Rocha Garcia, who represents the Southwest Side, recalled a meeting she and her staff had with a developer looking to build on the South Side. “This developer said, ‘when investors hear the South Side, they shut down, they don’t want to hear it,’” Rocha Garcia said. Nirenberg didn’t let that phase him. “Those are late birds that don’t get the worm,” Nirenberg said. “Let them do that.” District 8 Councilman Manny Peláez pointed out that ponying up more subsidies for companies that located in poor areas will undoubtedly drive gentrification in those parts of town. “What you’re going to see is poor people in blue-collar jobs getting pushed out of this economy,” Peláez said. “We have to be honest with folks that this is part of this conservation.” Prospective employers could also get more in subsidies if 50 percent of their new hires already live in San Antonio. To District 10 Councilman Clayton Perry, that seems too restrictive and would take “leverage” away from companies to bring in their own existing employees — who then buy homes and contribute to the city’s property tax base. All of these potential new requirements could scare new businesses off, he argued. “I think we’re shorting ourselves by taking that flexibility away from companies,” Perry said. City Manager Erik Walsh isn’t worried. “At the end of the day, if someone’s going to move to San Antonio because of all the great things and potential opportunity, this isn’t going to make or break them,” Walsh said. City staff also proposed adding some of the same criteria for local small businesses to receive city tax subsidies — which the city hasn’t offered before. Smaller firms would only have to create five new jobs to qualify. But they could get more subsidies if they meet other criteria, including if they are owned by a person of color or woman. Perry complained that a “small business that’s owned by a white man” wouldn’t get as lucrative of a package — though they could still earn points on other matters. “I don’t think that the color of skin should preclude you from getting up to a certain percentage for operating a business or trying to start a business or grow a business,” Perry said. District 3 Councilwoman Rebecca Viagran shot back — pointing out that communities of color in San Antonio still suffer the lingering effects of racist policies in the 20th century, like redlining. “If there were a way I could add more points for ‘owned by people of color and women,’ I would,” Viagran said. City Council will vote on the proposed guidelines in August.