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Kitchen, Tovo to push for speed in addressing housing, cultural preservation efforts

Tuesday, June 18, 2019 by Chad Swiatecki

City Council members who have in the past pushed to create an external entity to pursue public/private partnerships and other opportunities focused around city priorities appear ready to direct staff to accelerate the process.

In a report completed late last month, the Economic Development Department found it would need 12 months of work with an outside consultant to determine how to structure and create an economic development corporation or assorted local government corporations, the two entities state law allows cities to use for pursuing development agreements that benefit the community.

Staff and Council members have voiced frustration that the slow movement of city processes makes it difficult to work with the private sector to create public/private partnerships that can address issues such as affordable housing, preservation of cultural spaces and creation of workforce housing.

An economic development corporation could operate much like a business entity but with the benefits of the city and state legal framework that would make it possible for private business funds to be used effectively.

Local government corporations are less business-focused and operate like nonprofits, allowing them to receive private donations in service of a specific community need. The city already has organized local government corporations dedicated to the improvement of Waller Creek and for some purposes connected to the Mueller development.

The one-year time frame has already met with concern from Council members connected to the effort, who told the Austin Monitor that city staffers need to move faster and possibly forgo the outside consultant process altogether.

The report spells out the legal requirements and abilities of each of the external structures, with the economic development corporation option available to Austin under state law presenting challenges because the city can’t steer any of its sales tax revenue into funding for the entity.

Local government corporations are seen as easier to start and fund, but their nonprofit nature prevents them from pursuing business-related objectives.

Council members Ann Kitchen and Kathie Tovo said when Council returns after the July break they expect to have staff give a briefing on the EDC/LGC analysis, with likely direction to pursue a faster route to creating one or both types of entities.

“I appreciate the recommendation on next steps to bring expertise on board to determine how to do it, but I’d be thinking a whole lot faster than one year because we’ve been working on this for quite some time,” Kitchen said. “This is something that could be useful to help with the cultural trust, and things are passing us by too quickly in terms of challenges we have and this kind of entity could really make us more nimble as a city. It’s a matter of what kind of expertise do we need, because we should be able to move faster than that.”

Tovo, whose staff is currently in discussion with Economic Development Department staff to create a local government corporation that could serve as an ongoing fundraising tool to fund services for the homeless, said the previous and continued use of external business-focused entities by the city should provide a path to move more quickly.

Her preference would be to create an economic development corporation that was initially focused on affordable housing and cultural preservation.

“I believe we can and should accomplish this more quickly if there’s a will on Council to pursue an EDC,” she said. “This Council and the previous one both weigh in that we should create one and think we can accomplish that in less than a year. A lot of the groundwork has been laid with the local government corporation for the Sobering Center … that was accomplished in a relatively short amount of time and we did that without five consultants. I’d want to hear from staff why that’s the approach here.”

David Colligan, acting assistant director of EDD, said the scope of possible development deals across the city makes it important to properly structure whatever entity Council opts to pursue.

“We’ve been very project-focused with our creation of these entities, calling us to steward specific projects. I think what Council is looking for is something that’s a little more holistic in nature, with what you’re seeing requested through the Downtown Austin Plan or the South Central Waterfront district plans and the need for an external entity that can work in the development space on behalf of the city,” he said.

“That leads us through the discussion of what entities can be created, which is where we fall into the EDC or the LGC. It’s going to matter on the scope of the entity.”

Photo by Peter French made available through a Creative Commons license.

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