HispanicBusiness

Ten years ago, Midlanders passed a 4A economic development tax with the aim of bringing a vein of diversification to the historic boom-and-bust cycle of the oil and gas industry.

In addition to diversification efforts, job creation in industries including the energy sector has become a focus, and Midland Development Corp., a product of the sales tax addition, has since signed contracts with more than 30 businesses or organizations that created nearly 900 jobs, according to contracts signed by the MDC.

Revenue also has been used to bolster education and research programs, as well as for infrastructure improvements such as the extension of Garfield Street and the water lines planned for along State Highway 191.

Those who've been involved with the organization said its 10-year anniversary marks just a step in the process. While MDC officials claim several successes, true economic development is a long-term investment that can require decades of work to yield true transformation, they said.

"We didn't become an oil community just yesterday. ... We're on a 50-year horizon," said John James, city councilman and former MDC board president. "Diversification, infrastructure -- all of those things are critical. This is a 50-year development."

Critics of the tax said it has run its course. Some argue the government never should have taken a role in incentivizing the private industry, while others said the idea of recruiting a large-scale non-industry employer simply is not feasible in Midland's oil-based economic cycle.

"There is no penalty for failure, and that's quite obvious because we've got 10 years of empirical evidence that says they've soaked up nearly $30 million in taxes out of the economy and have zero to show for it," said Doug Heck, a longtime opponent of the 4A tax and site administrator of the blog Jessica's Well.

The quarter-cent tax is charged through sales tax and is to be used for economic development activities that either keep existing jobs and businesses in Midland, attract new businesses from target industries, improve areas of town that meet the city's development objectives, among other objectives. Midland's 4A corporation -- the MDC -- is one of 222 statewide, according to the Texas Comptroller of Public Accounts. After sales tax receipts are collected for the end of the fiscal year, the MDC should have in excess of $23 million on hand, city Finance Director Bob McNaughton said.

The use of the tax varies between cities, which is part of why success is difficult to gauge clearly, according to some development experts.

"One of the great challenges in economic development is measuring success," said Terry Clower, director of the Center of Economic Development and Research at the University of North Texas. "It's always a matter of how efficiently and effectively you spend the money."

The MDC has spent more than $19 million since its inception, according to copies of audits and financial statements the MDC provided through a Texas Open Records Request. Of that, more than $6.5 million has been paid through direct incentives to business, more than $3.78 million to advertising and marketing and more than $5 million on administrative costs. Another $2.3 million has been spent on infrastructure projects, and $6 million is committed for the planned water line.

Some agreements, such as the recent contract with Apache Corp., have yielded more jobs and local investment than was promised. Others, such as Countrywide Wide Home Loans Inc. and Trace Engines, have been canceled or amended to require far fewer jobs than once was stipulated and MDC money provided to be repaid.