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Council keeps growth incentive fund, but cuts World Trade franchise

Tuesday, September 14, 2010 by Michael Kanin

The city’s Office of Economic Growth and Redevelopment will keep a $1 million fund designed to lure businesses to Austin, but it will come at the expense of a proposed World Trade Center franchise. The move came on an amendment tacked on to the city’s fiscal year 2011 budget by Council Member Sheryl Cole Monday morning.


Cole’s action stripped the portion of the incentives budget that was to come from Austin’s general fund and replaced it with the money that would have otherwise gone toward paying for the World Trade Center. The $1 million will be used to attract corporations whose respective Austin arms will have a lesser economic impact than those who receive Chapter 380 development incentives.


Its funding will be split roughly into thirds, with one portion coming from Austin Energy, one portion coming from the Austin Water Utility, and one portion coming from Economic Growth. However, because Austin Energy is the primary funder of the Economic Growth office, it will account for about two-thirds of the fund.    


“There were several Council members that were concerned about the (incentives) funds coming from the general fund so basically we took that funding and added that (which could have gone to the World Trade Center and its accompanying global commerce strategy) so that we kept $1 million in the incentives fund and put the remainder back into the general fund,” Cole explained to In Fact Daily.


The contribution that would have come from the general fund—nearly $400,000–was then reallocated to the city’s department of Health and Human Services. In taking on the Economic Growth budget, her action may serve as something of a preview for next year’s budget debate.


From the dais, Cole suggested that though the Economic Growth department had seen success this past year, she wasn’t quite ready to sign off on its global commerce strategy. “We have recruited Hanger Orthopedic, LegalZoom, and also Facebook,” she said, “but we recognize that this would be a policy change in a different and increased direction that simply needs more research and due diligence before we take it.”


Council Member Laura Morrison portrayed the bump in the Health and Human Services budget as a necessary move in tough economic times. “We…need to recognize that this has been a challenge this past year with increasing demands for social services as Austinites have been attempting to weather the economic storm and our service demands continue to increase and be at record levels,” she said. “Our Health and Human Services Department last year was one of the departments that found savings, in the amount of $1 million, and I believe that in these extraordinary times, we should find ways to shift those savings that Health and Human Services had found to meet the increased needs and service demands.”


She then made the motion to award the department its extra funds.


After the hearing, Economic Growth and Redevelopment Services director Kevin Johns gave his take on the vote. “They’ve asked to defer those dollars so that we can have a comprehensive discussion–and they’ve had some very interesting ideas which they would like us to help them vet out,” he said. “And so I look forward to the process. I have to say that I have been very ambitious to find jobs for low and moderate income people and I’m glad that they’re on board with the concept even if we’re going to go forward a little slower.”


He still sees a call for something like a World Trade Center in Austin. “Our survey found almost 400 small businesses that said ‘if you help us figure this out, we’re ready to go (international),’” he said. “And so we’re going to just…ease in to it and get the Council’s feedback.”


Next year, that could include a smaller contribution from Austin Energy. Though it didn’t happen this time, Cole promised that she’d push for a closer examination of the utility’s role as the major funder of Johns’ department. “My intention…was to allocate significant sums (back) to Austin Energy,” she said. “But once we made the decision that we were not going to go up in any significant amount on the property tax rate that became very difficult to do, so that is something that I plan to put some effort in to this…coming cycle.”


For his part, Johns said that his department was responsible for $45 million in 2009 Austin Energy revenues. His deputy, Rodney Gonzales, also noted that the utility was not the only one in the country to help fund a city’s economic development. “Our survey of the other public power utilities (found) that two-thirds of them do economic development,” he said, noting that private electric companies are also getting into that practice.

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