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Council questions proposal for World Trade Center franchise

Friday, September 10, 2010 by Michael Kanin

Executives at the City of Austin’s Economic Growth and Redevelopment Services office are excited about the idea of developing a one-stop shop for international trade in Austin, including an agreement to purchase a World Trade Center franchise. The $385,000 price tag, they say, is well worth it.

 

That franchise and the other elements of boosting international trade are part of the budget for the upcoming year, which the City Council is scheduled to consider on Monday. Additional budget sessions are scheduled for Tuesday and Wednesday, if necessary.

 

Several Council members said this week they are not fans of such an agreement. Mayor Lee Leffingwell and Council members Bill Spelman, Laura Morrison, and Sheryl Cole said they are not likely to support the franchise purchase.

 

According to Rodney Gonzales, the deputy director of the city’s Economic Growth office, a World Trade Center franchise would be something of a one-stop shop for international trade in Austin. Gonzales told In Fact Daily that the facility would be used to host education programs and serve as a general connection point for local businesses interested in extending themselves overseas.

 

“We need to provide some education — how do you export, how do I as a business develop an export program?” he said. “What are those resources and those tools that they need … so that they can get their export underway? Is it some barrier related to insurance, is it some barrier related to that they don’t know how to ship overseas, is it some barrier in that they don’t know what the market is in the global commerce for their product? All of those are services that we can provide through partnerships to these businesses within the World Trade Center.”

 

Economic Growth Director Kevin Johns said that the center would also help break down language barriers, currency issues, and offer services that would help local businesses find legitimate overseas partners. “That extensive (World Trade Center) network … provide(s) assistance to businesses in their respective communities that feel that trade is a good thing for both sides,” Johns said. “It’s a unique global network that fits in with the American way of doing business.”

 

Gonzales linked the center directly to economic growth in Austin. “If (local businesses) can export their goods, that means that they’re going to be creating more product, and that means that they’re going to be creating more jobs to make that product,” he said. “What a World Trade Center does is it supports your local economy by increasing exports from your local economy.”

 

He and Johns suggest that the construction of an inland port near Austin-Bergstrom International Airport could also help the city create jobs. They argued that Austin’s proximity to I-35 and a possible shift in the Union Pacific’s freight line, coupled with the scheduled 2014 increase in the tonnage capacity of the Panama Canal, make the city a natural spot for a major distribution center.

 

To entice that sort of development, Johns and Gonzales want to create a first-of-its-kind high tech commercial corridor that would provide easy passage across the Mexican border and from Asia through the canal, directly to the Austin area. “Our thought right now is to do that by working with the Federal Highway Administration and the Texas Department of Transportation to look at creating technology — sensors, scanning — along the … I-35 corridors to allow a savings in time for the trucking that comes through,” Johns said about Central American trade. “It could be repackaged, relabeled, and moved to other lines here.”

 

As for the Asian trade, he suggested that Austin could “develop relationships with (Texas water) ports for the small amount of trade that will go beyond those cities.”

 

He added that the cost of land, the cost of transportation, and the setup of the trade areas in the city would have to be made competitive in order to draw distribution firms to Austin. If successful, the port could create 900 to 1,000 jobs per distribution center. Johns said that some of these would be far above the minimum wage rate.

 

In an April report to Council, the Economic Development office said that Austin accounts for just $7.4 billion of the State of Texas’ total $190 billion worth of exports. “If we just get one percent of that … that’s, what, $1.9 billion?” Johns said. Gonzales noted that one study had estimated that each addition $1 billion worth of exports “sustains 19,000 jobs.”

 

Though he is not in favor of the World Trade Center concept, Leffingwell said he likes the idea of an inland port at the airport. “That makes sense, but the part about the World Trade Center and the duty free zone — I’m not exactly sure how that works yet. I think that (Council member) Spelman is going to propose doing away with that.” Leffingwell said he would not want to harm economic development but he could see better uses for the money planned for the World Trade Center franchise, including putting the money back into Austin Energy’s coffers.

 

“We’ve done so much work on economic development,” he said. ”We need to get some more information …but right now it doesn’t smell very good.”

 

The cost of the World Trade Center franchise is $200,000 with a $10,000 yearly membership fee. The Economic Growth team is also seeking $50,000 to lease a building for that project.

 

Other costs associated with the global commerce strategy include $125,400 for what the department calls “trade development and education.”

 

Council Member Cole echoed the mayor’s skepticism, saying, “I am a strong supporter of economic development, not only in the U.S. but worldwide. However, we simply have not done the research or made a policy decision to move in that direction, to commit any level of funding without that research.”

 

For Spelman, his concerns about the proposed World Trade Center franchise have as much to do with public perception as anything else. “The plan is a nonstarter in my book,” he said. “It does not make any sense at all to license the name World Trade Center. Everybody who sees those words is going to be thinking 9/11. It’s counterproductive to even use the words, much less pay $200,000 for the license fees.

 

“There’s no reason for it at all, so we should just say, ‘No, we’re not going to go there.’”

 

For her part, Council Member Morrison laughed when asked if she thought there might be difficulties resulting from franchising the World Trade Center name. “I can see that there could be some negative sides to that,” she said.

 

Council Member Randi Shade told In Fact Daily “I guess I don’t know enough about what comes with that” franchise. “It may be premature to fund it without knowing more about it and what the benefits are.” Council Member Chris Riley also said he was not certain whether he could support funding the project.

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