Feb. 3--Plano fell victim to the worsening economy last fall when a city incentive deal to lure video game developer Ensemble foundered.

But instead of scuttling the deal, the Plano City Council is keeping the incentives on Ensemble's empty office space to offer to a new tenant.

The decision highlights the increasingly desperate straits facing cities across North Texas as they seek to create jobs and spur new business activity in the midst of a bad economy.

Leaders in McKinney are mulling the future of a stalled convention center and hotel project. A few large-scale projects in Dallas have halted despite millions in public financing. Irving may offer tax breaks to ailing retailers for the first time ever. And incentive deals in the early stages have fallen through in Arlington.

"We've definitely seen a slowdown," said Robert Sturns, Arlington's economic development manager.

City halls have emphasized job creation in recent years, pouring millions of public dollars into tax incentives, marketing blitzes and sophisticated recruitment efforts to lure new firms to town.

Yet with the economy faltering, budgets tight and the competition for new jobs more cutthroat than ever, cities are having a harder time closing deals despite offering sweeteners such as tax breaks and upfront cash.

'No surprise'

"When you're in a serious downturn like today, it is no surprise that many economic development projects are not proceeding," said Bernard Weinstein, an economics professor at the University of North Texas.

Hopeful business leaders point to evidence that Texas' economy has held up better than the rest of the nation.

Job losses are rising but remain lower than elsewhere. And Texas housing prices have not witnessed precipitous drops like in other states.

"Texas as a whole is consistently outperforming the rest of the nation," said Lyssa Jenkens, vice president of business research at the Dallas Regional Chamber of Commerce.

Still, the region is hardly immune to the downturn.

"What we are experiencing is wide and deep and impacting everyone," said James Brooks, an expert in economic development with the National League of Cities in Washington, D.C.

Last May, Plano offered Ensemble about $230,000 in incentives, including a seven-year property tax break, to relocate to Plano's Shops at Legacy.

In exchange, Ensemble, owned by Microsoft, agreed to bring 120 jobs and add more than $10 million to the city's tax rolls. The deal died in September, when Microsoft shuttered Ensemble before the incentives were to kick in.