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Spelman questions proposed incentives for National Instruments

Friday, March 1, 2013 by Michael Kanin

An economic development agreement with National Instruments could bring the City of Austin 1,000 new jobs, a net fiscal profit of $7.6 million, and the creation of a pipeline project to create the next generation of local engineers.

 

Still, concerns linger about the potential deal. Some of these come from Council Member Bill Spelman, who wonders about the practicality of what could be the importation of much of the new labor. Others come from workers’ rights advocates who – in light of the confusion associated with a recent incentives deal with White Lodging — used a presentation about the agreement to argue for the implementation of a city economic development policy.

 

According to staff, the proposed 10-year agreement with National Instruments would grant the local firm $18 million in tax incentives over the life of the agreement. In exchange, the company would build a research and development facility near its current campus at 11500 North MoPac Boulevard.

 

The deal will also come with 1,000 new jobs with an average annual wage of just over $72,000. National Instruments has agreed to an $11 an hour wage floor for both new employees and the construction workers that build the new facility.

 

Still, a majority of the 1,000 new employees would likely come from outside of the city. As noted in yesterday’s Whispers, Spelman continued to question whether this was an appropriate characteristic for an incentives deal fueled by city dollars.

 

In his methodical professorial fashion, Spelman broke the situation down into a logic problem. He noted that if a firm hires new employees from Austin, any incentive provided by the city is made up for with new taxes. That equation, he argued, is upset if the new employees move in from outside of the region.

 

“If the people are coming from outside of Austin, Texas, they represent a new obligation” – a new strain, he implied, on city services. That Austin waives a set of taxes in order to bring those employees to the region compounds the problem, Spelman argued, because it leaves a gap in the number of dollars it would otherwise take to support the new residents.

 

That discussion prompted Council Member Laura Morrison to wonder if the analytical system used by the city to determine the fiscal pros and cons of economic incentives was the correct one for city needs. Economic Growth and Redevelopment Services Office Director Kevin Johns assured Morrison that the system is “state-of-the-art,” but that he would look in to her concerns.

 

That aside, the deal seemed to charm Morrison. She prompted Johns to discuss the “engineering pipeline” that the deal might accomplish.

 

Johns told Council members that this portion of the deal was unlike any he had ever seen. “They are committed to help train 1,000 children every year,” he said.

 

This, Johns argued, would locally create the next generation of “scientists and robotic experts.”

 

Morrison also noted the local pedigree offered by National Instruments. “(It) is one of Austin’s success stories,” she noted. “We’re looking at (an)…agreement for the expansion of a homegrown company.”

 

There was clear support for the deal from community advocates who praised National Instruments for their willingness to include the wage floor. However, representatives from Austin Interfaith, the Workers Defense Project, and other advocacy organizations who have been working with city officials on a set of economic incentive guidelines brought up the recent troubles with White Lodging.

 

White Lodging is the development company behind the construction of the new JW Marriott hotel at 2nd Street and Congress Avenue. In early February, advocates accused the firm of violating an agreement with the city that called for prevailing wage for construction workers on the project. Workers, they argued were not all receiving prevailing wages.

 

White Lodging representatives maintained that city officials allowed them to use an average prevailing wage instead of individual amounts (See In Fact Daily, Feb. 5, 2013). This week, lobbyist Richard Suttle sent a letter to the Council  asking for a halt to an audit of the project.

 

As they had before Travis County Commissioners on Tuesday, workers’ rights advocates suggested that the White Lodging situation should be the cue for Council members to vote on a set of economic development regulations proposed by a subcommittee in November.

 

The deal will be back at Council for a vote next Thursday. Travis County Commissioners are set to vote on the deal on Tuesday.

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