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Report to Council indicates economic incentives paying off for city

Friday, January 18, 2013 by Michael Kanin

Officials with the Austin Chamber of Commerce and the city’s Economic Growth and Redevelopment Services Office painted rosy pictures of the past and the future of incentivized business growth in Austin Thursday.


In presentations to Council, the Chamber’s Senior Vice President of Economic Development Dave Porter and the director of Austin’s Economic Growth Office, Kevin Johns, showed off dramatic figures that illustrated the past success of their programs. The pair also suggested that the second re-boot of the Opportunity Austin joint development effort could drive down poverty figures.


“I appreciate your ability to use words like ‘diversification,’ ‘education and talent,’ ‘child poverty rate,’ and all the rest of this stuff to be able to sell an economic development program to a hardcore incentives cynic like myself,” said Council Member Bill Spelman. “If you can sell me on the idea of economic incentives, this is the way to do it – and you’ve done a wonderful job so far.”


Johns and Porter came to Council with something of a wrap on the most recent period in incentivized economic development. Their presentations looked back on what was known as Opportunity Austin 2.0, a period of targeted incentives that will expire in 2013.


Up first, Johns went over data collected by his office about the eleven incentivized relocations brought to Austin by EGRSO and the Chamber. Of the eleven, data was available only for seven companies: Advisory Board Company, EBay, Facebook, LegalZoom, Hanger Orthopedic, HelioVolt, and Samsung.


Johns said that data about the other firms – Visa, HID Global, Apple, and U.S. Farathane were not included because they were not fully operational in time to be included in the most recent available study.


The available figures were impressive. Instead of the 963 combined jobs that the seven companies were required to create by the end of 2011, Johns reported that the firms had actually brought in 2,043 jobs. “It means one of two things,” Johns said. “Either they’re hiring faster or they’re going to hire more people.”


The results for the required investment of each firm were similar: By the end of 2011, the companies had combined for $4.77 billion in verified local investment. They were required to contribute only $2.5 billion.


Porter was up next. He told Council members that the next period in economic incentives for the city – called, not surprisingly, Opportunity Austin 3.0 – would find the city expanding the role of economic development. “We want to reduce the poverty rate,” he said. “We want to see more people get a college degree, go and have a career path.”


Over a period that will stretch from 2014 through 2018, the Chamber hopes to use economic development to continue to drive Austin’s economy, but also as a wedge against poverty and congestion. He presented Council Members with a chart that suggested Opportunity Austin 3.0 could bring about a 6.2 percent decline in the overall poverty rate, a seven percent decline in the childhood poverty rate, and a nearly three percent decline in the number of Austinites who drive alone.


Council Member Spelman wondered about how all of that might happen. “I would like to know how is it that we’re going to translate these exactly on target goals of Opportunity Austin 3.0 in to reality, given the means at your disposal,” he said.


Johns said that it would “require a lot of teamwork.” He added that he did “believe it is possible,” and that “there are good models around the country.”

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