Cities that award economic incentives to private companies take a big risk. This is best illustrated by a botched deal between Richardson City Hall and the...
DiGaetano is a talented salesman who can sell. As he told city leaders in one 2023 email, “Alamo is far away the best cinema eatery in DFW given our unique programming and scratch-made kitchen. When we have seats that rival our competitors coupled with an advertising campaign promoting this facelift we are confident our guests will return.”
City leaders proved able enough in their negotiations. They knocked the numbers down from $1 million to $400,000. They told DiGaetano he could have $200,000 when building permits are issued and the work begins.Plus, DiGaetano promised to keep the theater in Richardson until at least 2034, and he promised that he’d use theater money to pay for another $1 million in additional improvements.
Flash forward to June, six months after the signing. City leaders learned the bad news from a resident who found it on Reddit: DiGaetano’s company had imploded.Fortunately, the city didn’t make the final payment. The loss is $200,000 in taxpayer money. The city, a listed creditor in bankruptcy records, hired a lawyer to recover as much as possible.Business funding is a gamble
This failure illustrates the gamble in doling out economic development money to private companies. Aside from playing favorites, it’s a risk to give away taxpayer money. The goal is that a project will benefit a city as a whole, whether it be increased future revenue or new jobs. In this case, both were goals.The Watchdog can tell this story, because I’ve studied several hundred pages of open records I requested.What I learned is it could have been a lot worse.
I asked city spokesman Greg Sowell, “Is it fair to say the city was blindsided by this announcement?”. “During the grant funding negotiations, there were no signs of financial distress,” he said.Customers enter the reopened Alamo Drafthouse in Richardson on Aug 9, 2024.DiGaetano was a franchise owner of the parent company based in Austin. DiGaetano’s company opened its first theater in Richardson 10 years ago. More theaters came after that.the parent company in Austin.
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