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Austin may get an economic development corp.

Wednesday, January 22, 2020 by Jo Clifton

City Council appears to be moving cautiously toward creation of a local economic development corporation that would be totally separate from the city but governed by a Council-appointed board of directors. People unfamiliar with such entities may naturally wonder why the city would need such a corporation.

Council heard a presentation about such corporations at Tuesday’s work session. Council Member Kathie Tovo told the Austin Monitor that when she and her colleagues passed the resolution last August, they were specifically thinking about helping the homeless. Sometimes people want to donate money to the city to assist the homeless, she said, but the city is not allowed to take such donations. Sometimes they want to donate to the city because the city has a good process for awarding social services contracts. The corporation “was really intended as a fundraising arm for efforts related to homelessness,” she said.

She added, “The economic development corporation has really been talked about as a broader array of areas of focus.” The South Central Waterfront is one of those areas, Tovo said, noting that the plan calls for a number of community benefits for that area. Planners envisioned that an economic development corporation would help coordinate development as different private developers start to replace old parking lots and buildings, including restaurants like Hooters, Threadgill’s and Zax, with new development.

Several questions about such a corporation arose, as consultant Matthew Kwatinetz explained during his presentation Tuesday. He noted that he and his team had discussed options with a majority of Council, as well as members of numerous departments involved in development and planning, Travis County commissioners, the University of Texas, the Downtown Austin Alliance and others.

Other cities that have successful economic development corporations include New York City, Philadelphia and Atlanta, as well as a number of Texas cities, including San Antonio, he said.

Kwatinetz stressed that he would use the term “inclusive growth,” which he said means “we want the economy to grow because that gives us money, especially when we’re capped off as far as how much tax we can charge, but we don’t want it to grow at the expense of the population.”

He said one job of the corporation would be to “look at what investments will set us up for 15, 20, 30 years in the future.”

Aside from donations, Kwatinetz said such a corporation could earn money by handling the city’s real estate and would be able to assist other entities, such as the Austin Independent School District, in developing their properties also – for a fee. The corporation might be able to sell bonds to raise funding, he said.

One question Kwatinetz wanted Council to answer was whether the board should be composed solely of city appointees or should it include other governments. All of those who addressed the issue indicated a preference to have Council do all the appointments without including other entities. Council members Leslie Pool, Jimmy Flannigan, Ann Kitchen, Greg Casar and Paige Ellis, as well as Mayor Pro Tem Delia Garza, who was leading the meeting, also said they would prefer a city-only entity.

Council Member Alison Alter did not disagree, but she said, “None of this matters if we don’t find a new funding source.” Alter also said the city was not funding all the programs that it currently has through the Economic Development Department. Of course, Council members will not take decisive action on the question of an economic development corporation until they do the budget this summer.

Earlier in the meeting, Council heard a lengthy presentation about efforts by the city and charities such as the Salvation Army to provide shelter for the homeless. Major Lewis Reckline, the area coordinator for the Salvation Army, told Council his group has a $5 million gap in its funding for next year, including a $212,000 gap in funding for the new Rathgeber Center.

Reckline explained that the challenges of serving women, children and families, as well as men, have grown exponentially in the past five years. He stressed the need for more financial support from the city of Austin as well as other partners.

Mayor Steve Adler was not at the meeting, having gone to Washington, D.C., for a meeting of the United States Conference of Mayors.

Photo by Kenneth Hagemeyer made available through a Creative Commons license.

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