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Council debates merits of creating committee on economic incentives

Friday, May 25, 2012 by Charles Boisseau

In a lively discussion, City Council members on Thursday batted around a proposal to create a City Council Committee on Economic Incentives that would hold public meetings and investigate developing uniform contract terms for incentives provided businesses bringing jobs to Austin.


Council Member Mike Martinez sponsored the resolution to create the committee along with Council Members Kathie Tovo and Laura Morrison, both of whom voted against incentives for Detroit-based auto parts manufacturer U.S. Farathane Corp.


Both Mayor Lee Leffingwell and Council Member Bill Spelman raised objections to the committee proposal. Leffingwell noted that Council appoints committees and positions on the committees are based on seniority. Council committees are not self-appointed.


According to the proposal, several issues have emerged in the last few months which “include, but are not limited to: wage floors, worker safety and training, domestic partner benefits, demonstration of need for an incentive, employee health care benefits, consideration of hard-to-hire employees, provision of community space, small business incentives, and fee waivers.”

Martinez had hoped that Tovo and Morrison – both skeptics of recent incentive packages – would join him on a committee that would hold monthly public meetings throughout the summer. Perhaps he hoped they would craft a policy everyone could support. But just getting the committee appointed proved problematic.


After some discussion, Martinez agreed that the members of the committee be determined later, and Mayor Lee Leffingwell suggested the council vote on the resolution, including membership of the committee, at the Council’s June 7 meeting.

Leffingwell, who has supported incentive deals to lure jobs, defended the incentive packages Austin has provided. Austin has approved only eight economic development deals in recent years, which Leffingwell said pales in comparison with peer cities in Texas that have OK’d hundreds of such deals. The mayor also defended Austin’s current process, which now includes a  provision that requires the details of an incentive package – information that businesses want to keep private for competitive reasons – become public a week or more before the council votes on such matters. 

“What we have now is working. It’s not broken,” said Leffingwell, who added that all the economic development packages approved by the city council have been with unanimous approval, except for one. “We have a very tight and thorough policy right now. … And I want to make clear we’ve not doing this because the process is broken, in my opinion. We are looking for ways to refine a very good process.”


Morrison said it’s been three or four years since council last improved the economic development process for so-called Chapter 380 agreements. She said it’s time to reconsider how to improve the process and determine “how do we protect the proprietary information and balance with the public’s right to know and our need to get input.” 


“Now it’s time to take a fresh look,” Morrison said. “The community has matured in how we look at this and there are things that very important parts of the community conversation. So having a phase two is an important part of the process.”


In December, Council voted 5-2 to approve $213,000 in incentives for U.S. Farathane Corp. in exchange for creating 228 full-time positions over three years, a package that drew criticism because the company pays the lion’s share of the workers an average wage of just $10.81 an hour.


Council Members Morrison and Tovo voted against the Farathane deal, saying they could not support incentives for a company that won’t provide all its employees a living wage.

More recently, the Council unanimously OK’d in March $8.6 million of tax breaks for Apple Inc., which plans to build a facility that that it says would bring up to 3,600 jobs.

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