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County OKs $745,000 in incentives to lure company

Wednesday, October 3, 2012 by Michael Kanin

Members of the Travis County Commissioners Court voted Tuesday to approve the terms of a $745,000 economic development agreement between the county and HID Global Corp.

 

If finalized, the county would be the third Texas jurisdiction to award incentives to the Irvine, Ca.-based secure identity products manufacturer in exchange for the company building a 200,000-square-foot manufacturing and distribution center in North Austin that would employ 276 people.

 

Last week, the City of Austin approved a $920,000 property-tax based grant to HID, following the State of Texas’ pledge to provide the company $1.9 million in incentives.

 

The county’s approval came over the objections of Commissioner Sarah Eckhardt, who tried to attach a series of wage protections for construction workers who would build the HID facility. While she also told her colleagues that she felt that HID would bring needed positions to the county, Eckhardt expressed doubt whether economic development incentive agreements are truly effective. “Tax rebates are a very expensive, largely ineffective way to build jobs,” she said.

 

With Eckhardt opposed, the final tally was 3-1. Commissioner Margaret Gomez was absent.

 

The county’s vote adds what seems like a happy ending for proponents of the HID story, provided the company chooses Austin to build the plant. HID spokesman Kevin Teehan told commissioners that the firm was looking forward to making its final decision about where to locate its facility soon. The company also has been considering Memphis as a possible location.

 

City and county officials will now shift their attention to how to improve economic development agreements with companies that pledge to bring jobs. Future agreements may be somewhat different: Both city and county officials are looking more broadly at how they award economic development incentives.

 

The county’s Planning and Budget Office, headed by former City of Austin Chief Financial Officer Leslie Browder, could have an economic development policy ready for court discussion as early as this month. Meanwhile, a city subcommittee headed by Austin City Council Member Mike Martinez is also working toward its version of what could be a very similar document.

 

In exchange for the governmental incentives, HID has promised to create 276 jobs in the next few years. The company has told both county and city officials that it would do its best to hire employees from Austin and Travis County – and, indeed, thanks to stipulations that go with HID’s federal contracts, the company must come up with a workforce that reflects the community in which it operates.

 

However, the bottom line is HID can satisfy the terms of the incentive agreements by hiring employees from any county in the Austin Metropolitan Statistical Area, a region that includes Travis, Williamson, Hays, Bastrop, and Caldwell counties. (See In Fact Daily, Sept. 26, 2012.) City and county officials have raised objections to this, and they will undoubtedly look at is whether a company can gain incentives by hiring employees from outside the city and the county.

 

Still, the HID deal earned the blessing of city council members, who acted unanimously after an attempt to attach a prevailing wage clause to the deal failed. At last Thursday’s Council meeting, a robust showing of Workers Defense Project and union representatives could not convince Council members that it might be worth risking the deal for wage protections for construction workers. (See In Fact Daily, Sept. 28, 2012.)

 

Workers Defense and its allies ended up with the same fate on Tuesday in front of the county commissioners. County Judge Sam Biscoe felt that the groups’ efforts came too late for this round of negotiations. However, Biscoe indicated that a discussion about construction wages should be included in the forthcoming policy discussion.

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