2018-154a Project NamesDate: October 12, 2018 Report No. 2018-154
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Economic Development Project Names and Non-Disclosure Agreements (NDAs)
EXECUTIVE SUMMARY:
This Informal Staff Report was prepared in response to a request for information from
Councilmember Armintor on project names used in economic development recruitment.
Information on non-disclosure agreements also is included, as they are sometimes a part of
recruitment.
One of the key functions of Economic Development is to attract new businesses to Denton. The
site location process is competitive and often involves sensitive or proprietary information, the
release of which can take Denton out of the running for a project.
Project names and NDAs are two widely-used tools for protecting confidentiality during the
location process. Denton’s competitor cities around the state and nation use these tools. If Denton
wants to compete for and win projects, we must be able to use them, too.
Staff understands the need to balance confidentiality with the City’s core value of transparency.
To put the issue in context: since 2015, only three of the 18 incentive items that went before
Council used a project name at any point in the process.
DISCUSSION:
Project Names and NDAs in Economic Development
The use of project names is a well-established practice in the field of economic development in
Texas and nationally. Private sector business and industry operate in a global marketplace, and
there are many reasons why confidentiality is important during the recruitment process. Disclosure
of a company’s name too early in the process could affect: real estate transactions by increasing
the costs of property; work force; profits and stock value (if the company is publically traded);
giving a competitive advantage to another business or bidder; local negotiations; and relationships
with vendors, suppliers and other third parties. Some companies may also have sensitive or
proprietary information relating to a particular technology or intellectual property, which could
harm the business if it were to be released.
During the recruitment process, cities may be asked to sign an NDA. NDAs also are a routine part
of economic development activities across Texas and around the country, and may be required to
receive preliminary information about a project, such as the company’s actual name instead of a
project name. NDAs are not just related to the negotiation of incentives – they allow staff both to
provide and to seek information from the company. This allows for cost/benefit analysis of the
project to help determine whether the project is a good fit for Denton. Often, the types of projects
that require NDAs are desirable – headquarters relocations, publicly traded companies, or
technology or tech-enabled companies.
Date: October 12, 2018 Report No. 2018-154
Staff researched the use of project names and NDAs in 10 Texas cities, Economic Development
Corporations (EDCs), and Chambers. The entities that were contacted are included in Exhibit 1.
All 10 use project names, and 8 of 10 use NDAs.
Leads and Project Names in Denton
The City of Denton receives leads in the form of Requests for Proposals (RFPs) from the Office
of the Governor’s Economic Development and Tourism Division, the Dallas Regional Chamber
of Commerce, the Fort Worth Chamber of Commerce, and directly from site location consultants.
It is important to note that when City staff receives an RFP, a project name has already been
assigned by the state or regional economic development entity or consultant. Local economic
development staff only knows the project name, not the actual company name, at the point of RFP
response.
On rare occasions, City staff receives a lead directly from a company. In this case, staff may assign
a name to the project if the company requests confidentiality.
Incentives and Project Names in Denton
The table below provides a summary of the incentives awarded from 2015 to 2018. 2015 was one
of the most active years of incentive investment. Of the 18 incentives and amendments listed,
project names were used for only three of the projects, all of which were new locations to Denton.
WinCo Foods was named Project Ranger One/Denton–Tarrant PRW, LLC; Buc-ee’s Travel
Center was named Project Cartoon, and Unites States Cold Storage (USCS) was named Project
Rail Load.
Retention and expansion of current Denton companies is another critical function of the City’s
economic development program. Five of the incentives in the table below were awarded for
expansion projects for local businesses, which helped to expand the tax base and retain industry
and their suppliers in Denton. Project names were not used for these retention and expansion
projects.
Incentive Activity 2015-2018
Agreement/Amendment/Lease Ordinance Date Approved
2015
Peterbilt Motors Expansion I 2015-049 2/17/2015
Business Air Expansion Terminated* 2015-096 4/7/2015
West Gate 380 2015-097 4/7/2015
WinCo Foods** 2015-170 6/16/2015
Victor/MOHR Expansion Terminated* 2015-251 8/18/2015
Railyard Agmt and Commercial Lease 2015-300 9/15/2015
Railyard DEC Management Agmt. 2015-328 10/30/2015
O'Reilly 380 2015-330 11/10/2015
Allegiance/Red Development-Rayzor Ranch 3rd Amd. 2015-331 11/10/2015
O'Reilly Management Agmt. 2015-332 11/10/2015
Date: October 12, 2018 Report No. 2018-154
Buc-ee’s Travel Center** 2015-374 12/1/2015
USAG Expansion Terminated * 2015-377 12/15/2015
2016
Peterbilt Motors Amd. Expansion II 2016-144 5/3/2016
Sally Beauty Co. Morse St. Expansion 2016-341 11/1/2016
West Gate 380 Amd. 2016-342 11/1/2016
West Gate TAA 2016-343 11/1/2016
2017
Allegiance/Red Development-Rayzor Ranch 4th Amd. 2017-113 4/4/2017
BAM Lease Assignment to USAG/Sykes-Vaughan 2017-177 6/20/2017
2018
US Cold Storage** 2018-1065 7/17/2018
*Agreements were terminated due to the grantee not meeting contract thresholds or for the purchase of the company by another
entity.
**Project name used at some stage of the recruitment/incentive approval process
Confidentiality, Transparency, and Process Improvements
As economic developers within a city government, we must balance confidentiality with
transparency. Departmental practices to promote transparency currently include:
Informing incentive applicants at the outset that transparency is a core value of the City
and advising them to disclose their company identity as early as possible in the process.
Minimizing the use of closed sessions related to economic development matters; only two
economic development closed sessions have been held since October 2016.
Since October 2016, staff also has made the following improvements to the incentive process:
Updated incentive application requiring more complete project data
Fiscal analysis presented to both the Economic Development Partnership Board and City
Council in public meetings
Council work session a minimum of two weeks before a vote on an incentive application,
allowing time for Council to receive feedback from citizens prior to a vote
All agreements will have caps on both the dollar amount and the term length of the
incentive
Going forward, incentive request analyses will be presented on a 10-year time frame, even if the
incentive term is shorter than 10 years. This is a best practice that allows for “apples to apples”
comparison of the costs/benefits of different types of economic development projects over a
consistent time frame.
CONCLUSION:
Denton’s use of project names and NDAs is well within the norm of economic development
industry standards and the practices of other cities around Texas and the nation. If Denton cannot
ensure confidentiality when necessary, we will not be able to compete to locate new companies
here.
Date: October 12, 2018 Report No. 2018-154
Staff recommends continued use of project names and NDAs when confidentiality is required. To
receive Council direction on the topic, staff will schedule a work session this fall to present the
following options:
1. Do not use project names or NDAs under any circumstances
2. Allow use of project names and NDAs with parameters, such as the disclosure of a
company’s identity before a public vote is taken on an incentive request, and a minimum
of two weeks between disclosure of a company’s identity and a vote on an incentive
request.
3. Allow use of project names and permit the City Manager or his designee to sign NDAs
if needed, any negotiated deals then are shared with Council following an Economic
Development Partnership Board recommendation and vetted in public similar to a zoning
case.
STAFF CONTACT:
Caroline Booth, Director
Department of Economic Development
940-349-7751 or Caroline.Booth@cityofdenton.com
Exhibit 1: Project Name Comparison by City/EDC/Chamber
Entity
City/EDC/
Chamber
State or
Local
Partner
Assigned
City/EDC/
Chamber
Assigned
NDA
Used
Primary Role Incentive Process Project Name Released Comments
Arlington X X X City
Internal Committee (Council, Ed and
Legal staff); City Council
Project name until City Council
level, unless business allows
disclosure
Were a Type A and B in the past, NDA's
mainly for larger projects
Austin X X X
Chamber
initiates, City
follows
Tier I: approved administratively
through CM, Tier II, single Council
item, Tier III public hearing Council
Chamber led initially, Chamber
typically signs NDAs, public at
Council level
Ch. 380 grants only, allow time for
public comment
Carrollton X X X City
Staff review & recommend to City
Council for approval
Project Name released as requested
to City Council prior to incentive
process. If recommended by staff for
incentive, name released publicly.
Dallas X X City
Incentive application includes TIRZ,
there is a design panel that reviews the
TIRZ projects and implements
guidelines
Project names used for executive
session meetings, names not
disclosed until formal action with
Ordinance
Dallas Regional Chamber typically signs
NDAs; TIRZ is gap focused and requires
bank commitments; National
Development Council (NDC) does their
underwriting
Fort Worth X X X
Chamber
initiates, City
follows
Staff review & recommend to City
Council for approval
Project name until City Council
level, unless business allows
disclosure
Legal department prepared an NDA
template
Frisco X X X EDC Leads
Approval through Executive Board,
utilize Sales Force CRM
Project name until approval level,
unless business allows disclosure
Lewisville X X X City Approval through City Council
Project name until City Council
level, unless business allows
disclosure, or if project pulls out
Provides a confidential report to Council
on a quarterly basis
McKinney X X X EDC Leads
Approval through Executive Board
appointed by Council
Project name until approval level,
unless business allows disclosure
EDC is Type A and Community
Development Corp. is Type B, have a
standard NDA that they use for all
agreements
North Richland
Hills X City Advisory Board; Council
Park & Recreation Facilities Corp. Type
B, 10% of the 0.5 sales tax allocated for
Economic Development
City of Plano X X City
Project name until approval level,
unless business allows disclosure
Project Names Used