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Council discusses economic incentives for Dropbox, Websense

Friday, February 14, 2014 by Michael Kanin

Austin City Council members Thursday got their first public look at the data behind a potential incentives deal designed to lure two more technology companies, Websense and Dropbox, to the city. Though whispers – and Council debate over an eventually successful development agreement with Athenahealth – leading up to that briefing indicated some level of concern about what has been routine approval of such deals, only minor objections materialized at the briefing.

 

The concerns centered on Websense’s posting of job listings well before they made their first appearance before Council members in search of an incentives deal. To some, this seemed to be evidence that the company had already committed to an Austin relocation, and therefore incentives were not needed.

 

According to city staff, the Websense deal would result in the creation of 470 new full time jobs in Austin over the next 10 years.  Those jobs would come with an average annual salary of $82,000. The company would contribute $2.6 million in leasehold improvements and $7.33 million in business personal property.

 

All told, staff calculations put the total net dollar figure for the city at $1.76 million over the 10-year period. In return, city officials would fork over $438,000 in non-property tax-based incentives during that run. The State of Texas has committed to contribute $4.5 million worth of tech incentives through Emerging Technology Fund. However, those dollars are contingent upon the city’s agreement.

 

Websense would relocate from San Diego.

 

Dropbox would create 170 new full-time Austin jobs with an average annual salary of $59,000. The company would commit to hiring all of those employees locally, as well as to making $4 million in leasehold improvements and $1.5 million in business personal property.

 

Staff put the total city net for the Dropbox deal at $594,680. That would come after $244,500 in non-property tax based incentives from the city and $1.5 million from the state.

 

Websense’s job postings resulted in a letter from city officials. There, Economic Development Department head Kevin Johns wrote to the firm. Johns noted a phone call between the parties that addressed the matter, and the company’s explanation: That they hadn’t yet made a decision to relocate to Austin.

 

Thursday, company officials broadened that statement to include an assertion that the ads were their way of testing the market.

 

Council members did not directly challenge that statement. They are set to vote on the matter and the proposed Dropbox incentives at a special called meeting Feb. 20.

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