City Council Gives Zale Corp. $450K to Sort-of Move to Dallas

The area is actually in the heart of the suburbs.

Zales-Corporation-Moving-Headquarters-Map

The Dallas City Council just voted this morning to grant Zale Corporation up to $450,000 to move out of Irving. Luring a corporate headquarters to town is generally considered an accomplishment worth crowing about, but take a look (above) at where the company plans to build its new $45 million complex.

The dark gray line represents the city limits. You can see on the map that Zale’s plan is to move just a couple miles away to the little island territory of Dallas around North Lake, as part of the Cypress Waters development. It’s an area even farther from the center of Dallas than is Zale’s existing headquarters. Some of you may not even have realized that land was part of the city. It was annexed back in the 1950s when Dallas Power and Light (which became TXU) needed a cooling reservoir for a new electric plant.

In return for the city’s largesse, staff members estimate the economic impact to the city of $11.3 million over 10 years. Outlaying $450,000 for a return of $11.3 million obviously seems like a no-brainer.

However, when Councilman Mark Clayton probed for more information about the estimate during the council’s discussion period, it was disclosed that only about $800,00 would come back to the city as direct tax revenue. The vast majority of that $11.3 million is based on estimating the impact of the hundreds of new employees that will, according to the underlying logic, come to live, work, and play in Dallas (spending money all along the way).

Take a look again at North Lake. It’s surrounded by suburban territory. It’s in the Coppell school district, not Dallas ISD. Where are most of the 1,100 employees that Zale is pledged to eventually have working on the site most likely to live? And are they any more likely to play in Dallas than if the Zale HQ stayed put?

Clayton was one of a few council members who expressed skepticism that the payoff for Dallas will be anywhere near the staff’s estimate. Councilwoman Carolyn Arnold pleaded with her colleagues to have tougher standards for where economic development grant money like this is spent, considering that so much of her own district lives with “third-world-country conditions.”

Councilman Rickey Callahan countered that the economic effects on his constituents — the “artisans” and “tile-layers” likely to be contracted to build the Zale headquarters — will be significant. Councilman Lee Kleinman noted Zale’s history of philanthropy within the city. And Mayor Mike Rawlings saw any chance to bring a quality business like this back to Dallas a win.

The vote was 9-6 in favor, with Clayton and Arnold joined in opposition by Adam Medrano, Philip Kingston, Sandy Greyson, and Scott Griggs.

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Comments

  • Joe

    Good job Dallas. not

  • Don Brosey

    Ah, yes, the good ol’ economic impact numbers

  • MattL1

    At least the city ONLY gave them $450k?

  • Wylie H Dallas

    So we’re giving the company $450,000 to move further away from Dallas neighborhoods?

  • Mavdog

    Yes Councilperson Clayton, the staff was pulling the wool over your eyes with the $11.3 Million “economic impact”. There is every reason to believe that the vast majority, in fact it seems the figure is somewhere close to $10.5 Million, will not accrue to Dallas.
    While Rickey believes that his constituents in southeast Dallas County might get some employment out of the construction, that is mere speculation. There are many trades who live much closer to the site of Zales new building and could factor in lower expenses in their bids. Also if those constituents do get the work their net will be less as the cost of travel to the project will eat into their pay.
    On the whole if the $800,000 figure is correct the deal provides a 7.34% IRR to the City. I’d still do the deal but also castigate the staff for their misleading info provided.

  • bmslaw

    And how much more is the city spending to provide basic city services to this detached island? Emergency response (fire and police), water, street services, code compliance, etc? The true subsidy that Dallas is giving Ms. Billingsley is far greater than this half a million.

  • Derek

    How do they calculate that benefit? Property taxes will be $360,000 per year to the city of Dallas alone. Should they provide the benefit? Probably not, but the numbers presented are bunk.

  • John Lewis

    I’m a bit surprised by this, as Signet, the parent company of Zale, Kay and host of other jewelry firms (and names) they acquired over the years historically moved all headquarters operations to their complex in Akron, OH. Zale staying in Texas would not be in keeping with the control of the various divisions Signet is noted for.

  • COV

    >Councilman Rickey Callahan countered that the economic effects on his constituents — the “artisans” and “tile-layers” likely to be contracted to build the Zale headquarters — will be significant.

    When he says constituents – does he mean the tile layers bosses?