SAN ANTONIO - They are some of the biggest names in business: Toyota, Kohl's, Allstate, and Nationwide. The city lured them to San Antonio by offering to waive, or reduce, their property taxes in exchange for a promise to create jobs. In the past 5 years the city has handed out $16.5 million in such tax abatement deals.
News 4 San Antonio Trouble Shooter Jaie Avila's investigation found some companies haven't lived up to their promises to deliver jobs.
Toyota is an example of a corporation that has fulfilled its job creation claims. Toyota's deal with the city required the company to create 2,800 jobs in exchange for tax breaks. Last year it reported it 3,077 employees.
Sandra Lopez can't understand why big companies that move here get help with their property taxes. As the owner of Frank’s Paving, she has tripled the number of employees at her construction equipment business, but she doesn't receive any property tax breaks.
“It hurts to hear that because yes, they're nice, big corporations that come here to town and offer some type of jobs but they gain more than we do, due to their making more money being here in San Antonio,” Lopez says.
Sandra thinks someone should at least be checking to make sure those companies really created all those jobs.
“If they say they're going to do it, they should do what they say,” Sandra told us.
So we examined all the agreements in the past five years where companies were given tax breaks by the city in exchange for creating jobs. The city calls them tax abatements. We found some of the companies haven't lived up to their part of the bargain.
KLN Steel Products received a ten year, 100% tax abatement, plus a $400,000 grant from the city. By the end of 2010 KLN said it would maintain 500 full time jobs, but documents show it only employed 325 people.
Tindall Corporation got a similar deal: ten years, no property taxes. They were supposed to create 250 jobs by the end of 2012, but their last report showed only 81 jobs created.
Allstate got a 6 year, 65% tax abatement by committing to create 598 new jobs by the end of 2011, but it only reported 368 jobs.
Kohl’s, which has a 6 year 50% tax break, fell short of the 675 jobs it said it would provide by the end of 2011, coming through with only 581 positions.
So what does the city do when companies fail to back up their job creation promises? Cancel the agreement? Demand they return the unpaid taxes? It doesn't work that way.
The City of San Antonio’s Economic Development Director Rene Dominguez says the company is given a "cure period", a second chance to come into compliance.
“You know I think what's important is, the downturn in the economy occurred and there was difficulty in hiring people from San Antonio, we want to work with these companies to make sure they are healthy companies and they continue to grow,” Dominguez said.
The problem is, KLN Steel Products filed for bankruptcy before that cure period was over, laying off dozens of employees.
A new company then came in and bought the business, and kept the name KLN.
The new KLN is still doing business in San Antonio and employs more than 200 people. However, under the terms of the reorganization it is not responsible for the tax abatement agreement.
The city is now stuck trying to collect more than $457,000 in abated taxes and grant money through the bankruptcy court.
Jaie Avila asked Economic Development Director Rene Dominguez if the city will every get any of the money back.
“It's still in legal proceedings so I can't answer that,” Dominguez said.
It's a similar situation with Tindall Corporation. The city is giving the company two years to get its job numbers up. During that period it will have to pay full taxes, but the city isn't demanding back-taxes from previous years.
“It seems like when a corporation doesn't hold up its end of the deal you're not very quick to hold them accountable,” Avila told Dominguez.
“I would say just the opposite of that, we have very strict monitoring policies,” he replied.
Dominguez points to the fact he reduced the size of the tax breaks given to Allstate and Kohl's because they fell short of job creation requirements.
Our investigation found the optimistic job projections made at news conferences and ribbon cuttings, don't always become reality. We contacted the companies in our story for their comments. Some didn’t respond but Allstate told us it is trying to add jobs, and just held a San Antonio job fair.
Those interested can find information at Allstate’s job page: http://www.allstate.com/careers/job-search.aspx