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Council OKs economic development deal with California firm

Friday, September 28, 2012 by Michael Kanin

Members of the Austin City Council approved a proposed economic development agreement with HID Global Corp. on Thursday evening – a 7-0 vote that came after the failure of an attempt to attach a prevailing wage clause that could have scuttled the deal.


The city is offering the company a $920,000 “performance-based grant” over 10 years as an incentive for HID’s promise to bring 276 jobs and build a proposed 200,000-square-foot operations facility at it a site in Northeast Austin.


Attention now shifts to the Travis County Commissioners Court, where Travis Commissioners will vote Tuesday on whether to grant a $745,000 “economic development grant” to HID Global, a Irvine, Calif.-based maker of secure-identity equipment. Texas Governor Rick Perry has already announced $1.9 million in incentives for the company from the Texas Enterprise Fund.


A key question is whether HID should be able to earn the city and county incentives if it hires residents who live in nearby counties. The “local” employee issue recently emerged as city staffers confirmed the incentives package only requires the company to hire the employees from the five-county Austin Metropolitan Statistical Area, meaning workers could come from outside Austin and Travis County. Travis County Commissioner Pct. 2 Commissioner Sarah Eckhardt has promised to vote against the deal if at least 50 percent of the facility’s workforce is not hired from Travis County – with substantial portions of that group drawn from economically disadvantaged zip codes (see In Fact Daily, Sept. 26, 2012).


On Thursday, Council members returned to what has become a recently familiar discussion: A Council mandate that construction workers who build the facilities that come with economic development incentives be paid at least a prevailing wage. Council Member Laura Morrison, who drew support from Council Members Martinez and Kathie Tovo, introduced the idea. The trio make up a committee that has been dealing with such questions.


Riley summed up the other side of the argument. “I absolutely support a prevailing wage for construction workers, and I’m hopeful that we’ll get to a recommendation along those lines from the committee, and I expect to support that as being part of our policy,” Riley said. “But unfortunately, that’s not where we are tonight. We haven’t gone through that process; we haven’t adopted that this is standard policy.”


Riley went on to suggest that the only process he and his colleagues had gone through was the one in front of them. “I am very reluctant to put at risk an economic development agreement that offers very significant benefits for the very workers that we’re all concerned about.”


It quickly became evident that the discussion of the specifics of the HID deal could not be extricated from the broader questions of just what it is that the city wants out of it economic incentives packages. For Council Member Bill Spelman that means a well-vetted, set policy that lays out exactly what Council expects of its economic development applicants.


Martinez disagreed. “I don’t want to put any notion out there that I think we can come up with a policy that this council is never going to have to worry about again,” he said. “In fact, if we could, none of us would be here tonight.”


Martinez went on to explain just how difficult he sees the balancing act involved in creating economic development incentives. “There are a lot of competing values, and there are a lot of good folks in this room on many sides of this issue,” he said. “We’ve got a great company that’s bringing in some sorely need jobs for the hard-to-employ and the under employed. We’ve got a workforce, we’ve got contractors who are doing everything they can to try to be good contractors, good actors, pay their employees well, provide them with necessary benefits, but also maintain a competitive edge. 


“And then we have our workforce,” Martinez continued, “who are doing everything they can to lift themselves up and provide opportunities for themselves and their families. These are serious competing interests.”


The success of the HID deal would seem to hinge on the Tuesday vote in Commissioners Court. HID Vice President of Supply Chain Kevin Teehan refused comment until then.

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