Christine Taylor, Denton’s assistant city manager, presented a proposal at the May 6 Denton City Council work session to redirect budgeted portions of expiring economic-development incentives to the city’s Catalyst Fund.

Taylor said the goal is to create a sustainable, recurring funding source by taking the portion of incentives that had been budgeted in the general fund and, once those incentives expire, rolling that budgeted amount into the Catalyst Fund subject to annual budget review. “Staff’s recommendation is to relocate expiring economic development incentives to the Catalyst Fund,” she said.

The Catalyst Fund was created in 2022 and had an ending fund balance of about $5,300,000 in the most recent fiscal year, Taylor said. The fund was initially seeded with a one-time transfer of $2,000,000 from utility (water and wastewater) funds, carries an annual dedicated $150,000 contribution from mixed beverage tax revenue and this fiscal year includes a $1,000,000 budgeted data-center revenue contribution. The fund is intended for job-based grants, entrepreneur/tech grants, infrastructure assistance, headquarters grants, deal-closing funds and land acquisition or state and federal matching funds.

Taylor showed a 10-year forecast that, if council opted to roll eligible, expiring incentive-budget amounts into the Catalyst Fund annually, the fund balance could approach roughly $9,000,000 — a level consultants recommended in Denton’s 2021 economic-development strategic plan as improving the city’s competitiveness in the North Texas market.

Taylor described likely program parameters from the forecast: an average estimated cost per job of roughly $1,700, entrepreneur/tech grants around $25,000 (with an expectation of issuing roughly 18 over 10 years), occasional infrastructure-assistance grants, deal-closing awards that could be on the order of $250,000 depending on project, and potentially two land acquisitions over a 10-year period for large catalyst projects.

Council members asked whether the rollover would be automatic or subject to annual budget deliberations; Taylor said the ordinance wording would make the transfers contingent on the budget process so council could decide year-by-year how much, if any, to roll into the Catalyst Fund. “We’d show the amount of the expiring incentive during the budget process, [and] be able to have a conversation with council,” she said.

Several councilmembers expressed support for the concept while emphasizing flexibility. A councilmember identified in the record as Representative, District 6, called the proposal “a start” and said the approach would not take funding from existing programs: “We’re not cutting positions anywhere. We’re not drawing it from anywhere that it’s being used right now,” the councilmember said, adding that the funding would act like a savings account to increase competitiveness.

No formal vote was taken during the work session. Taylor said that if council recommends moving forward, staff will return with an ordinance to the Economic Development Partnership Board and then to the council for formal consideration.

The discussion closed with council members confirming that the proposed transfers would be evaluated as part of the annual budget process so that council could weigh general-fund needs, data-center revenues and other pressures before directing any rollovers.