• September 17, 2014

Killeen performance agreements offer opportunity at a price

Print
Font Size:
Default font size
Larger font size

Posted: Sunday, January 5, 2014 4:30 am

Performance agreements between the Killeen Economic Development Corporation and three businesses could create more than 450 jobs and additional taxable revenue in Killeen.

Agreements with Stewart & Stevenson Power Products, an oil field equipment manufacture, and Solix, a customer care and program management center, provide incentives for the companies to create local jobs.

“At the end of the day, you want to be able to demonstrate that you can get your money back in some way,” said John Crutchfield, EDC secretary, about the performance agreements.

The Killeen EDC will pay Solix, a company based in Parsippany, N.J., about $387,500 if it creates 175 full-time jobs within its first five years.

According to the agreement, Solix will receive $2,000 for the first 100 full-time employees hired. For more than 100 positions, the rate increases to $2,500 each.

The company must hire 60 employees within the first year of operation in Killeen, 30 workers in its second, third and fourth years and 25 in the fifth year.

The agreement was approved by the EDC on Thursday. Solix already started renovating the building it leased at 402 E. Avenue D in Killeen but hasn’t started hiring.

Crutchfield said Solix’s downtown location should help energize development and sales in the area.

More traffic means more sales tax revenue for the city.

“Anytime you can get a critical mass in an area, it will create more (spending) opportunity,” he said.

The EDC agreement with Houston-based Stewart & Stevenson Power Products is similar to Solix’s. The manufacturer will be paid $3,500 per job for the first 100 employees it hired at its 710 Swanner Loop location in Killeen, according to the agreement.

However, if more than 100 employees are hired, a bonus incentive of $4,500 per full-time employee could be paid up to 200 total employees, for a possible total of $800,000 in EDC incentives. Jobs must be created within the first 10 years of operation to be eligible for the payoff.

In October, Stewart & Stevenson applied to receive payment for the first 40 full-time positions filled in Killeen.

Crutchfield said the EDC agreements accomplished “a lot of things.”

“First of all, you have a building occupied and someone is paying taxes for it,” he said.

“Then you have 40 good-paying jobs.”

Stewart & Stevenson renovated parts of the Swanner Loop building it purchased from Oshkosh Defense, whose operations were dwindling in the area, which increased its property value, Crutchfield said. Creating jobs also means more people will be living and spending money in the community.

Crutchfield said businesses like Stewart & Stevenson prove Killeen can support manufacturing operations.

“Our production cost here is very low,” he said.

Other incentives

The performance agreements offer other incentives, including some sales and property tax rebates and help with startup and construction costs.

Stewart & Stevenson’s agreement allowed for some sales tax rebates, but the company didn’t seek them from the city or county, Crutchfield said.

In the Solix agreement, the Killeen EDC will fund $300,000 in street improvements, with additional funds allocated for site renovations.

In a performance agreement with SH 201 Development, the EDC will spend $235,000 to extend the city’s current storm sewer through the 2200 and 2300 blocks of Clear Creek Road.

In exchange for the funding, the developer will construct a 40-bed long-term care facility on Clear Creek, including 36 beds for Alzheimer’s patients and 40 beds for patients who need ventilators or dialysis.

Once the facility is completed, the developer also agrees to create 98 jobs and make a $13.4 million investment in the community, according to the agreement.

“We have an employee standard, a construction standard and an investment standard they have to meet,” Crutchfield said about the SH 201 Development agreement. “The incentives are relatively low compared to the capital investment.”

Into the future

While the EDC organizes and manages funding for performance agreements, the city of Killeen provides the funds via a formula drafted in an annual ordinance.

Since the EDC does not receive sales tax revenue, the performance agreements are one of only a few incentives the EDC has to lure businesses to Killeen, Crutchfield said. Tax rebates also can be offered to businesses through city-generated agreements.

The EDC is working on developing performance agreements with at least three other businesses and others will be sought as businesses show interest in locating in Killeen, Crutchfield said.

“Of the other three we are working on, one of them is pretty much a done deal,” he said.

“There is one a little behind them, another is four or five years in the making.”

Crutchfield could not release details, because the agreements are still being negotiated.

More about

More about

More about

Rules of Conduct

  • 1 Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
  • 2 Don't Threaten or Abuse. Threats of harming another person will not be tolerated. AND PLEASE TURN OFF CAPS LOCK.
  • 3 Be Truthful. Don't knowingly lie about anyone or anything.
  • 4 Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 5 Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
  • 6 Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

Welcome to the discussion.

1 comment:

  • Viktor posted at 4:54 am on Sun, Jan 5, 2014.

    Viktor Posts: 316

    City should make a performance agreement with EDC. Contribute to business growth or dissolve the EDC. Cove & Harker Heights have Market Heights, Sams Club and Five Hills Shopping Center. Killeen EDC has dragged their feet while others get the action and tax revenue.