In the previous article, “Let Me Introduce You to Cisco Development Corporation”, I gave a little background on how the CDC was formed and why. Now, I get to explain what we do and how we do it. This is the part that gets exciting!
The goals of the CDC bylaws are to: (1) assist existing Cisco businesses with efforts to retain and expand operations that will create new employment opportunities through financial assistance, job training, consultation, planning and research activities for qualified applicants; (2) create new employment positions by providing assistance toward the formation of new businesses; (3) make Cisco more competitive in the attraction of business and industry facilitating the creation of new, sustainable jobs including the strengthening and expansion of the skills of the Cisco labor force; and (4) strengthen and revitalize the Community through qualified public projects that will help make Cisco a better place to work and live.
It sounds simple, right? Not exactly. The CDC is made up of two different types of corporations. The “A” Corporation was created to fund industrial development projects. According to the Texas Comptroller’s website, “Type A Corporations are used for business infrastructure projects, manufacturing and research and development. They can also fund job training classes, certain infrastructure improvements that promote or develop new or expanded business enterprises. The maintenance and operating costs associated with Type A projects can also be funded.”
“Type B Corporations may use funds on all projects eligible for Type A Corporations. Other projects allowed under Type B Corporations include parks, sports facilities, museums, and affordable housing. Funds spent on administrative costs and allowances are more restricted under Type B Corporations. Eligible expenditures for the Type B Corporations include acquisition of land, equipment, construction costs, planning and professional expenses related to a project, administrative and other necessary expenditures.”
Fortunately, as the economy has greatly improved in Cisco, the city has seen an increase in sales tax revenue. As the sales tax revenue increases, so does the negotiating power of the CDC to be able to offer more incentives with larger returns on the investment.
You may be wondering how a business qualifies for your tax dollars. At times, the CDC actively recruits business to Cisco, other times businesses may be referred to the CDC, and on some occasions businesses come directly to the CDC through research of what amenities, incentives, and needs there are in this area.
Whether a business is sought by the CDC or the prospect comes to us directly, everyone follows the same process. The first step is to properly apply for assistance by submitting an application with all the required documentation such as a comprehensive business plan that includes the number of employees to be hired, projected balance sheet and income statement along with monthly cash flow analysis for year 1, and a copy of a current credit report. Depending on the request and project, other information may be required as well. A written proposal detailing the project, projections of costs and all sources of funding outside of the CDC support, and the projected direct and indirect economic impact on the City of Cisco is usually required, especially for a public project.
Once the application is received for assistance, the Executive Director will analyze the information and compile a summary of all the information. The request will then be placed on an upcoming meeting agenda for the board of directors to consider. The main requirement for a business to receive assistance is that it will insert new money into the local economy. The Texas Legislature voted in 2003 to require that certain projects create or retain primary jobs. The board will review all the information presented and often ask the applicant or business making the request questions concerning the business and their experience with the business or project type. At times during a board meeting when sensitive or confidential information needs to be discussed, the board will enter to Executive Session to maintain confidentiality.
The board will often make a motion during regular session and take a vote to either approve or deny a request for assistance. Occasionally, the board will request more information to make a more educated decision, tabling a vote until a later meeting.
If the request is approved by the board and depending on the size of the request, the project may need to be presented to the City Council for approval. If required, a public hearing date may then be scheduled with proper notices. Assuming that there is no proper objection to the project, CDC assistance for the project is implemented.
The assistance is implemented through an Agreement for Financial Assistance. By Texas law, we cannot simply give proceeds to a person or business. The CDC is required to enter into a written performance agreement with any and every project that is funded. The very least that an agreement must contain is a schedule of additional jobs to be created or retained, the capital investment to be made by the business, and the terms for repayment of the CDC’s investment in the event that the recipient fails to meet the specified requirements listed in the agreement. The estimated time frame from submission of application until funding could be as long as thirty to ninety days.
The spending of your sales tax dollars is taken very seriously. There is considerable oversight from the local to state level with every project and agreement being audited annually. The Executive Director is required to present the City of Cisco with a Significant Action Report for the previous fiscal year annually. This report informs the city council and constituents of all of the projects sponsored by CDC funds and the status of those projects. It also informs the council of all conferences and seminars attended by staff to meet all educational requirements and to understand the ever-changing laws that the CDC operates under.
If you are an existing business or would like to start a business, the CDC wants to help. We can also offer resources beyond or in addition to financial assistance. You are welcome to call us at 254.442.4200 for more information.