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Venue rent relief seen as goal of new incentives programs

Friday, July 14, 2017 by Chad Swiatecki

As Economic Development Department staff worked on plans to update the city’s economic incentives program, the department’s top executive gave a preview earlier this week of how the creative economy could be helped in the coming years.

At Monday’s meeting of the Austin Music Commission, Economic Development Director Kevin Johns said the city is examining ways to give a break on property taxes for property containing music venues. In addressing the commission while introducing Erica Shamaly as the new manager of the Music and Entertainment Division, Johns said the idea is to grant some property tax relief for property owners who pass the savings along to music venue tenants in the form of rent reduction.

That is an important consideration for the businesses with notoriously small profit margins and higher expenses than traditional watering hole bars. Johns said the research on the benefits and implementation of the incentive scheme should be complete by the fall, and that the city has historically seen a nearly 250 percent return on investment for its economic incentives programs.

That granular information shows how city officials are turning much of their attention to improving the financial stability of artists and creative-focused businesses, and is also the first glimpse of what could be in store for the city’s Chapter 380 agreements.

In March, City Council passed a resolution calling for the city to refocus its incentives to address middle-class workforce and affordability issues, with the goal of adding “middle skill” jobs and retaining existing small businesses. That emphasis would be a shift from the previous goal of recruiting large, high-profile employers like Apple and Samsung.

David Colligan, the city’s manager of global business expansion, said the venue rent relief is a finer detail than the systemwide analysis that began last month with a series of workshops that were geared around different areas of the economy like business expansion, recruitment, workforce development nonprofits and the creative sector.

“Helping venues has been identified as a desirable outcome and we know we have to address place-based issues, but the current policy doesn’t really allow us to do that in the way we want to,” he said. “The policy we have in place now has lots of attachments and we can’t create the right kind of partnerships, so it’s a question of are you willing to clean out the current policy and make an umbrella (policy) to address these things. We’ve not identified the exact solutions yet.”

Colligan said the existing incentives programs, which were originally drafted in 2002, were made to help Austin recover from the tech industry crash in 2001 by attracting as many jobs and developers to the area as possible, with the Domain coming online as a result as well. With the city now a center of job and population growth, the needs of the business community and residents have changed.

Mayor Steve Adler has identified workforce training and creation of more jobs paying between $30,000 and $60,000 a year as a priority of economic development, and Council’s call to rework incentives follows that goal.

Colligan said the June sessions produced hundreds of ideas and observations on how Austin can improve programs for small businesses and creatives, and said input will be taken through an online survey. The next step after that will see the various proposals and suggestions get reviewed by area private sector economic development professionals, and then staff will create a list of recommendations for Council by late fall that could then be crafted into policy.

“We’re drilling into the data around the different themes, and we heard a lot of great things from the different groups that showed up in force,” Colligan said. “We can do some good things because Council has opened up the opportunity to look for some more tools to put in the toolbox.”

Photo by Stuart Seeger made available through a Creative Commons license.

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