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Council mulls deal to entice company promising 276 jobs

Thursday, September 13, 2012 by Michael Kanin

A pending economic development agreement with HID Global Corp. would benefit Austin to the tune of roughly $2.2 million over 10 years if the company decides to locate a production facility in Austin, according to the City of Austin’s Economic Growth and Redevelopment Services Office.

 

The Irvine, Calif.-based company, a manufacturer of secure entry systems, expects to create 276 jobs, with an average wage of just more than $51,000 a year, at a new $36 million production and distribution facility.

 

In return, the city is considering offering the company what staffers call a “performance-based economic development grant.” If approved by Austin City Council, the grant would represent the value of 60 percent of the real and personal property taxes brought in by the project. All told, city staff puts tax rebate figure at more than $920,000.

 

Last week, Texas Gov. Rick Perry announced that the state’s Texas Enterprise Fund would provide the company with $1.9 million in state funds in return for HID locating its facility on a site selected in Northeast Austin (see In Fact Daily, Sept. 6, 2012). The company also is considering a site in Memphis, Tenn.

 

Still, as Council members heard these figures as part of a special-called meeting on Wednesday on the proposed deal, there was some interest in ensuring that construction workers contracted to build HID’s new complex receive reasonable wages.

 

Mayor Pro Tem Sheryl Cole announced her proposal for additional language for the agreement that would instruct HID to “make good faith efforts to ensure that 15 percent of non-licensed construction work hours are completed by disadvantaged workers who have graduated from a construction craft training program.”

 

Under Cole’s terms, a disadvantaged worker would be defined as an individual who lacks a high school diploma or General Educational Development (GED) diploma, has a criminal record, or whose family income is less than 60 percent of Travis County’s median family income.

 

“We had a few people testify about the safety net,” Cole said. “When we have more and more workers and families fall into the safety net, and as we make outreach to companies from around the world to come to Austin and create opportunities, we do not want anyone left out of those opportunities.”

 

Cole will make the language available to parties interested in the agreement. Expect to see some form when Council members return Sept. 27 for a public hearing and vote on the proposed economic development agreement.

 

Council Member Laura Morrison later informed her colleagues that, in addition to Cole’s proposal, she would like to see her colleagues consider adding a wage floor somewhere around $15 an hour for the disadvantaged construction workers mentioned by Cole, who’d been through vocational training.

 

Morrison also pitched a $12 an hour – or prevailing wage, whichever figure is higher – floor for all other construction workers who build the HID facility.

 

Officials with HID told Council members that roughly 85 percent of the jobs created by the Austin facility would go to prospective employees who lack a college diploma. They also noted that, because of the firm’s contracts with the federal government, they engage in affirmative action-based hiring practices that would reflect the diversity of any community they hired from – including Austin.

 

According to testimony at Wednesday’s hearing, officials have been working on the potential agreement with HID for three years. However, Dave Porter, senior vice president for economic development for Austin Chamber of Commerce, told Council members that HID was still hearing from other cities about incentives that could take the company away from Austin. “The people in Tennessee – in Memphis – are really putting the pressure on, knowing what we put on the table,” Porter said.

 

Council members did not offer much reaction to Porter’s statement. Instead, they turned to focus on the economic bottom line offered by the deal. As it became clear that multiple Council members would be interested in some kind of wage floor agreement for the construction workers who build the HID facility, Mayor Lee Leffingwell noted that the economic agreement would kick in after construction on the project had concluded.

 

The push for construction worker protections on the HID project came from Gregorio Casar and the Workers Defense Project, a group that advocates for low-wage workers. With promised efforts on a more general set of guidelines for economic development – that may well incorporate Workers Defense’s concerns about construction worker wages and safety – not yet complete, Casar and his colleagues again returned to Council chambers to renew their call for worker protections.

 

HID’s Vice President of Supply Chain Kevin Teehan told In Fact Daily that the project was not yet developed enough that he could discuss pay for the workers who might build the new facility. However, he added that HID’s “culture” would mean that the company would “absolutely work with the Council, the city, and the state.”

 

Teehan added that he appreciated Morrison and Cole offering suggestions that he could take back to his company.

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