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Commissioners grapple with offering tax incentives to lure businesses

Thursday, June 28, 2012 by Michael Kanin

The continuing debate over how, when, and even if Austin area jurisdictions should offer tax incentives to draw companies to Austin returned to the Travis County Commissioners Court on Tuesday.

 

During the course of a rare morning-long public hearing on the matter, commissioners heard from both sides of the debate. Business interests showed up to argue that the incentives were part of an important set of tools to bring jobs to the region. Critics urged commissioners to severely restrict any use of incentives.   

 

Ostensibly, at least, the debate was over a pending set of guidelines which, if adopted, would offer Travis officials a moderately firm measuring stick for any future economic development agreements. Commissioners took no action Tuesday.

 

As it currently stands, the draft of the economic development guidelines would give a company either a tax rebate or tax abatement that would range from between 25 percent and 45 percent of its property tax bill. Those percentages would depend on the size of the firm’s Travis County investment: A project that costs $25 million to $100 million would net no more than the minimum base incentive; a $100 million to $200 million project would be eligible for up to 33.5 percent in incentives; and investments of more than $200 million would result in a potential 45 percent incentive package.

 

Under the current version of the guidelines, interested companies would have to meet additional criteria to qualify for the county’s incentives packages. These include a promise to fill at least 50 percent of its positions with Travis County residents, a quantitative analysis of the economic value that the company would bring to the county, and a benefits package that includes same sex and domestic partner benefits.

 

Companies would be eligible for incentives above the 25-to-45-percent limit if they create more than 50 additional jobs, build to a LEED certification, and/or hire economically disadvantaged county residents. All told, however, the tax incentives could not exceed 80 percent.

 

Longtime activist Susan Moffat emailed commissioners a host of suggested changes on Monday. She urged them to “(d)irect county staff to work with the Austin/Travis County Health & Human Services Department, WorkForce Solutions, and UT’s Ray Marshall Center to develop policies and mechanisms to ensure investments are carefully aligned with targeted well-researched needs.”

Among other suggestions, Moffat said the court should “(r)equire all incentive agreements to include monitoring of specified outcomes,” and “(r)etain the previous county requirement that a company receiving incentives must guarantee 500 new jobs in place within the first year of its agreement with the county.”

 

“Do not lower this number to 50 jobs, strung out over an unspecified number of years, as proposed,” she wrote.

 

At the hearing, Moffat argued that companies didn’t really need all that much incentive to move to the region. “With an 18 percent population increase over the past five years, Austin is one of the nation’s fastest-growing cities and Travis County is clearly attractive to thousands of individuals and businesses on its own merits,” she said. “It is imperative that any future public economic incentives be used in extremely limited and highly strategic ways to address clearly identified problems and to meet a very high bar of specified outcomes.”

 

The Austin Chamber of Commerce offered testimony from two chairs: current chair Clarke Heidrick and immediate past chair Bobby Jenkins. “We’ve learned painful lessons in the past when we have ignored economic development as we did in the latter part of the 1990s when we began to believe…(that) we were so good that we were just going be covered up with companies wanting to come here without any stimulus,” Heidrick said. “In 2001 to 2003, Austin actually lost 38,000 jobs.”

 

Commissioners offered no specific date for future action on the new guidelines. County Judge Sam Biscoe said only that he and his colleagues would come back to address the issue “at the appropriate time.”

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