Texas Enterprise Fund agrees to hand over $22 million to successful Texas company

[sonias]

http://www.statesman.com/business/content/business/stories/technology/04/29/0429rackspace.html">AAS 4/29/08
Texas Enterprise Fund agrees to hand over $22 million to successful Texas company
Secretary of State says money helps keep companies in Texas

Rackspace Inc. doesn't fit the profile of a company that needs taxpayer money.

The San Antonio-based Internet hosting and data services company has received more than $30 million in venture capital backing and enjoys solid profits and rapidly growing sales. And it just filed for an initial public offering that could raise $400 million.

But in August, the State of Texas' Enterprise Fund agreed to pay $22 million to Rackspace over five years, provided the company meets hiring targets. The state fund has paid $5 million of that total so far.

Critics of the enterprise fund say the Rackspace deal is evidence that the state awards unnecessary grants to corporations.

Critics are right. Perry's uses this slush fund to help businesses that apparently don't need any help and in the end don't create many jobs for Texas either. Perry is in essence giving his buddies zero interest loans of taxpayer money. Remember all the hype about Cabela's four years ago? They've missed their job hiring targets 3 years in a row now.

Ft Worth Star-Telegram 4/23/08
Cabela's to pay back local tax incentives

AUSTIN -- The Cabela's Inc. store in Buda must pay back $173,000 in local tax incentives after missing job targets for the third straight year. The outdoors retail chain will probably also have to return some money it received from the governor's Texas Enterprise Fund.

The incentive contract between Cabela's and local governments requires the company to maintain the equivalent of 225 full-time positions. In January, company officials told local officials that its sprawling Buda store and museum had 190.4 full-time positions at the end of 2007.

Cabela's will pay $5,000 per full-time position below the target, Buda Finance Director Sarah Mangham told the Austin American-Statesman. The city will get $77,521, Hays County $38,648 and the Buda Economic Development Corp. $56,831. Including those amounts, Cabela's has returned $260,500 of the grants provided by the Buda and Hays County governments.

Corporate welfare.

:grr::mad::grr:

Sonia

[Gman]

1. However.....!!

Rackspace also moved into the vacant Windsor Park Mall. Windsor Park has been closed for several years now. Many say it closed because the gang situation got completely out of hand. The turning point was probably when a woman was shot and killed at a bus stop at the mall during a gang shootout.

That being said, WPM has been vacant and was unused. Rackspace moving into this mall is creating a much better area and is a needed economic shot in the arm for this area. The jobs Rackspace created are high paying, high tech jobs. The skills levels are very high and they're hiring in San Antonio. (My son thought he was pretty good at Linux and other advanced systems came back from an interview at Rackspace with his tail between his legs. He said he felt like the interviewer was saying "Get out of here you Windows, newbie script-kiddie!)

Overall I think this is money well spent as Rackspace is creating some damn good jobs. Yeah, it's corporate welfare, but in this particular case there is a lot of benefit to the community.

[sonias]

2. However - they probably would have done it anyway

They aren't being lured from an out of state location. They were already here. They're doing very well financially. They obviously are in a good position to borrow the money or raise the money in the "real world" on their own.

In the case of Rackspace, a fast-growing company in strong financial shape, Baylor said, "it seems its expansion plans would have proceeded with or without assistance from the state."

Let's just see if this one makes their job goals, or if like Cabela's end up having to repay some of the money.

Sonia

[fudge stripe cookays]

3. Wow.

I had heard WPM was in bad shape, but didn't know how bad. I used to hang out there all the time in high school. Even though I lived over by Madison and went to Northstar a lot, I think Windsor had the first Express. And back in the 80s, it was the HIP place for chicks to shop.

Then I got wise and realized all their clothes were junk, and would either shrink or fade whenever you washed them. Aah, memories.