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City, NXP to help fund child care through Chapter 380 agreement

Friday, September 15, 2023 by Jo Clifton

City Council heard from more than a dozen people talking about the city’s proposed Chapter 380 agreement with NXP Semiconductors at Thursday’s meeting. Almost every one of them praised the company, which has been in Austin since 1974, operating two facilities.

Mayor Kirk Watson called on Sylnovia Holt-Rabb, director of the Austin Economic Development Department, to explain exactly what would be involved should Council approve the agreement. Holt-Rabb said the base inducement for NXP would be $1,026,332. The estimated fiscal benefit for the city is estimated to be more than $2.5 million over the five years of the contract. The company will invest an estimated $290.8 million.

Although the city incentive is not a large amount of money, the 380 agreement is a critical piece of the company’s plan to modernize its plants in Austin. Without the agreement, NXP would not be eligible for funding from the federal CHIPS for America Act, which offers millions of dollars for chipmakers to upgrade their facilities. NXP operates five lines that produce semiconductor wafers, the vast majority of which are used in automotive manufacturing. One of the plants is in Oak Hill and one is on Ed Bluestein Boulevard. The name of the improvement proposal is Project Live Oak.

At Tuesday’s work session, Council Member Vanessa Fuentes and Mayor Kirk Watson expressed the need for the company to assist its employees and the city in providing child care.

On Thursday, Watson said the company and the city recognized that the Chapter 380 agreement was a way for the parties to promote child care in a way that was new and different.

Holt-Rabb told the Austin Monitor city staff worked with NXP to provide more money for child care by taking money originally designated for training and setting it aside for employees’ child care. Altogether, the 380 agreement will provide $157,000 for child care, she said.

The city will use about half of that money to provide child care through contracts between providers and the city’s health department. NXP will use its share of the funds to provide child care for employees through Workforce Solutions, she said.

Under the agreement, the company is expected to create and retain 53 cumulative full-time jobs before Dec. 31, 2026.

Chris Jensen, executive vice president of NXP, told Council the company would enhance efforts to provide child care for its employees by “providing priority enrollment for our team members” and providing free membership to employees in a program that helps people find after-school programs for children.

While the majority of those who spoke were NXP employees, each of whom praised the company, not everyone was on board.

Bill Bunch of the Save Our Springs Alliance said that he personally opposes all 380 agreements. However, speaking for the SOS Alliance, he said he was particularly concerned about subsidies going to companies operating in the Barton Springs watershed. The Oak Hill plant is in that sensitive watershed and the community has had a policy for at least 40 years to not subsidize plants over the watershed. When he first learned about the project, Bunch said he reached out to NXP, who alleviated some but not all of his concerns.

He said he understood that the Oak Hill facility would not be expanding its footprint. Bunch said he was told that the investments would be primarily to upgrade the equipment to make newer modern chips. He said he was hoping that NXP would upgrade the plant’s water quality controls, noting that he had been told that the plant would improve its water use efficiency since chipmaking is very water-intensive.

Council will hold a second hearing at next week’s meeting and then vote on the agreement.

Photo by Stas YosupovCC BY-SA 3.0, via Wikimedia Commons.

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