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Split Council passes economic incentive deal for Athenahealth

Friday, January 31, 2014 by Chris Thomas

City Council members approved on a 5-2 vote an incentives package aimed at bringing Massachusetts- based Athenahealth to the city. The move came as Council Members Laura Morrison and Kathie Tovo continued to question the appropriateness of the city providing incentives during times of economic success, and voted against the measure.


Ultimately however, their concerns were not enough to dissuade their colleagues. Mayor Pro Tem Sheryl Cole, who admitted she struggled with her vote on the matter, said that she would not hold up the deal. “As frustrated as I am with the lack of public benefits from the Seaholm development, I will not use that as a reason to hold up the transaction before us today with Athenahealth”


In the deal, Athenahealth will get almost $5 million in concessions over a 10-year period. In return, it will create 607 jobs that will pay an average of $132,000 a year.


For his part, Mayor Lee Leffingwell continued his robust support of economic incentive agreements. “This may come across as corny but we’ve powered this jet to 35,000 feet  and if we cut off the engines now, we’re not going to stay there.”


Council approval came with a series of amendments from Cole, designed to address a set of broader concerns that appeared to be shared by her colleagues. The first stripped language from the deal that would have mandated that the company be located at the Seaholm development. The second added measures requested by the LGBT community protecting gender identity and sexual orientation. The final amendment memorialized a commitment by Athenahealth to pay construction workers at least $11 an hour.


Council Member Chris Riley was enthusiastic about the amendments. “In this case, these incentives pass whatever test we apply. It will be a helpful buffer in economic downturns like we had around 2001, in that health IT is not as tied to economic cycles as other industries are. People are still going to need healthcare technology even in times of economic distress.”


Morrison did not doubt the added value that the company might bring but it wasn’t enough to gain her support. “I do believe that it’s OK for us to say we believe in our economy and we hope that you come here but we need to be very, very careful with taxpayer dollars. I think it’s time for us to say that we would very much love to have you here but incentives aren’t the way to do it.”


Tovo agreed. “I support using incentives even in times of high growth as Austin is currently in but I agree that the ‘but for’ test should be in the forefront in our evaluation of these decisions and for me, I’m not persuaded.”


Though the Cole amendments allow for Athenahealth to locate anywhere they would like, all signs point to the company being the main tenant in the Seaholm building.


Over concerns that the building will not be open for public use, an Athenahealth representative, suggested that the project could be a marquee downtown attraction with the possibility for tours.


As for city staff, when asked if being before the City Council asking for incentives hurts dealing with the companies themselves, Rodney Gonzalez, deputy director for the Economic Development Department, said, “What we understand from the companies is that this is a part of the process. When you deal with public incentives you have to get in front of a public body and the public and it’s a public process.”

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