New Caney
An unincorporated area in southeastern Montgomery County, Teas, New Caney grew rapidly during the 1980s and 1990s with an estimated population of 8,000 in 1980 and 17,189 by 2000. The primary factor driving population growth is its proximity to the Houston metropolitan area. In 1997, New Caney's community leaders established their own improvement district, the East Montgomery County improvement District or EMCID. Its sole purpose was to carve out a niche for economic development within the surrounding high-growth sprawl of greater Houston.
In order to achieve this purpose, two goals were defined: first, traditional economic development through the creation of shovel-ready sites capable of supporting high-quality jobs along with robust infrastructure that would make them competitive; and second, EMCID's sponsoring of a new state-of-the-art community center that includes community college offices, a library, EMCID's offices, and the East Montgomery County Chamber of Commerce.
Once these goals were agreed upon, EMCID's board applied for initial financing to the Texas Legislature in 2007 for approval of additional taxing authority under a provision known as Request for Allocation of Sales Tax Funding that allows successful applicants to levy additional half-cent sales taxes to use for development projects. By this stage EMCID's board had also decided to extend its development commitments to Earthquest, a private sector-driven combination theme park and museum and/or institute and to designate it as EMCID's primary investment project.
When completed, the new five-hundred-acre complex will house a full-scale "green" theme park and "dinosaur city" institute styled along the lines of a modern paleontological research center. The EMCID board is projecting growth of more than $1 billion annually and ten thousand jobs. Frank McCrady, EMCID's president, fully appreciated the risks involved but thinks the potential gains are so significant that even partial success will guarantee ample rewards.
The story behind EMCID and New Caney's success is one of taking the decade -old statewide Texas local sales tax proposition to heart. This sales tax provision, approved by the Texas Legiislature in the mid-1990s, is designed so that local development entities such as EMCID may apply to the state for authorization to levy 4(a) and 4(b) additional half-cent sales taxes. These new taxes are authorized specifically to fund local development projects. The laborious approval process can take months from inception to completion, and since the Texas Legislature meets only once every year, this can further delay getting the green light.
EMCID's board conducted its own research and then went a step further, successfully lobbying the legislature for passage of its uniques hybrid version of the enabling legislation, HB 4015, which received approval in the 2007 legislative session. This bill allows EMCID to focus additional sales taxes and ad valorem taxes within the development district on special economic projects. Each project, in turn, creates a special tax zone from which can be imposed additional food and beverage, hotel occupancy, ticket admissions, and property taxes, leading to the funding of development projects such as Earthquest.
According to Karin Richmond of Austin's Intelligent Incentives Inc., this legislation gave EMCID the most powerful economic-development tools in the state. By the time its proposal reached the statehouse door, EMCID had already performed some traditional economic-development work so that its campaign to get the proposal passed had a leg up from the beginning because of an established track record, including its well-received Earthquest presentation.
In decision-making on exactly what its development projects should be, the EMCID board fully understood the importance of its SWOT analysis, and its members agreed that something special was required in order to attract attention from the investment world. Following up at this point, the members further decided that instead of asking private sector clients to pay the freight for considering their local, EMCID needed to front the risk capital for an economic business case-study analysis (which ultimately totaled about $500,000).
The Baker Leisure Group of Orlando, Florida, a firm with long experience in the themed attractions industry, was retained by EarthQuest's original sponsors to conduct a warranted-investment study. This essentially is a study using language familiar to financial professionals that lays out the economis-development encentives and risk-reduction inducements of a development project. A clear-cut warranted-investment model is applicable both to private investors and to publicly traded companies. In addition, Baker aksi advised the EMCID board memberes on what products would work in East Montgomery County, including what the return on investment, or ROI, would be for typical investors.
After EarthQuest was chosen as the primary development project, EMCID now had a business proposal for potential investors that was specific to EMCID's locale and was written employing language familiar to the financial community. In addition to BLG, EMCID hired exoerts from ITech of Orlando, Florida, Contour Design and Dezignskape (started by former Disney Imagineering / Design employees) of Los Angeles to do the blue-sky conceptual designs, master land-use plan overview, and visitor experience narrative.
Now potential investors could study a multilayered design model that helped them to more fully appreciate the investment fine points behind the numberse. Last, but most assuredly not least, EMCID co-marketed with EarthQuest's initial principal sponsor the necessary research to find the right investor group and for the prospectus for the initial investor solicitiation that was aimed at either private or publicly traded firms.
Finally, EMCID's last steps at this stage were to option and gain site control of necessary highway frontage property. At this point, EMCID had market intelligence, a unique sales tool in its warranted-investment study model, site control. And incentives to offer prospective investors. The recommendation to use these specific investment tools was made by me in my role as economic -development consultant to EMCID.
As a further measure of validation, I also recommended that Karin Richmond of Intelligent Incentives be hired to provide third-party validation of EarthQuest's investment worthiness......
I used the successful experiences of New Caney and EMCID as examples of what could be done.....
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