New employees, companies boost economy
Austin City Council approved economic incentive deals Feb. 20 with two companies that will bring 640 jobs to the city. This includes 470 jobs from Websense Inc., which could relocate its headquarters to North Austin, and 170 jobs coming from Dropbox Inc.
These deals represent two of 12 active company-based economic incentive agreements the city has that will bring more than 8,300 jobs and a $45 million net benefit to Austin during the lifetime of the agreements. The city also has one project-based agreement with The Domain.
Central Texas is no stranger to new jobs. The five-county area of Bastrop, Caldwell, Hays, Travis and Williamson counties had a net gain of 206,000 new jobs in the past 10 years, according to the Greater Austin Chamber of Commerce's Opportunity Austin program, which is dedicated to job creation.
Many employers are attracted to North Austin because of its large blocks of Class A office space and developable land. However, in the past couple of years, that space has dwindled because of companies relocating or expanding in North Austin.
"We're starting to go back to our bread and butter, which is smaller deals, [and that] is fine, but the bigger deals typically require an incentive," said Dave Porter, senior vice president of economic development with the GACC.
He said incentives played a minor role in the reduction of available space and are primarily used for game-changing deals.
Rewarding performance
The city's incentive program— formally called the Chapter 380 Economic Development Program—was started in 2003. Since then, City Council has approved 21 economic development agreements. The agreement with the TV show "Friday Night Lights" is the only incentive deal that has been completed because the show ended. Incentive deals typically span 10 years.
Seven companies dropped out of the program: The Home Depot, eBay Inc., LegalZoom, Hewlett Packard, HelioVolt Corporation, Advanced Technology Development Facility Inc. and SunPower Corporation. Natalie Betts, global business recruitment and expansion coordinator in the city's Economic Development Department, said companies drop out when they will not be able to meet the terms of their agreements.
Betts said the incentive amount is based on the investment and number of jobs a company will create.
"We essentially want the incentive amount to be as little as possible while still bringing in the project," she said.
In 2013, the city fielded more than 50 inquiries from companies about its incentive program, said David Colligan, manager of the Global Recruitment and Expansion Division in the Economic Development Department. Incentive deals are rare for the city, he said, and city employees only bring forward options that result in a great benefit to the community. Betts said city employees are strict to ensure companies comply with their agreements before the city issues any payments.
"A common misconception is [a company] comes to the city of Austin and says, 'We're going to put our office here if you write us a check.' People think that we issue payment and then monitor what it is the company said it would do. We're the opposite side of that," Colligan said.
Recruitment efforts
Through an agreement with the city, the chamber acts as the marketing branch to field requests about the incentive program and encourage companies to relocate to Austin.
On a recruiting trip in 2009 to California, Porter and former Opportunity Austin chairman Gary Farmer made a cold call to secure identity firm HID Global Corp. The company was not yet interested in moving to Austin, but Porter and Farmer stayed in touch with HID Global until it decided to consolidate four manufacturing sites and relocate its headquarters into a new 200,000-square-foot facility, which opened Jan. 13 in North Austin.
"Austin recruits a lot of good-paying tech jobs, but we need more HID Globals," Porter said. "HID Global does not require a college degree, [and] they're good wages. We need more of those to fill in the middle class."
The chamber's big success from 2013 is National Instruments Corp.'s deal to build a 300,000-square-foot research and development facility at its North Austin headquarters and create 1,000 new jobs.
"What they do is they hire straight out of college and train their own employees," Porter said. "That's a really good use of incentive money because we were competing with other locations like Malaysia where they were planning an identical R&D center."
As part of its agreement, National Instruments committed to reaching 1,000 students each year through its science, technology, engineering and math, or STEM, program.
Analyzing the impact
The city of Austin uses a software tool called WebLoci to analyze the costs and revenue generated by a project that could receive an incentive. The software also produces an estimate of the benefits of the company's investment, including from new employees moving to the Austin metro area, buying houses and spending money.
Porter said WebLoci does not look at the spinoff of other jobs a project creates such as retail, restaurant and service industry jobs.
"Some of these tech jobs and manufacturing jobs spin off two to three other types of jobs, but the city doesn't look at that," he said.
For companies like HID Global that bring in manufacturing jobs, the effect of job creation is also seen in community involvement. HID Global partners with job training organizations such as Skillpoint Alliance and the Texas Workforce Commission to relay their needs and work with residents on other skills such as interviewing techniques, said Kimberle Marquardt, HID Global's director of human resources for the Americas.
"That's the kind of partnership I'm talking about—not only routing us candidates, but we also invest in the community that they're supporting," Marquardt said.
HID Global has hired about 70 of its planned 276 positions that include machine operators, material handlers and quality technicians. More information about available positions may be found at www.hidglobal.com/careers.
Marquardt said the majority of these jobs do not require a college degree, and the company provides training for entry-level positions. This allowed the company to draw local support, including from Travis County Commissioner Ron Davis, who represents Precinct 1, where HID Global is located.
"We couldn't have made the progress as quickly as we've made it without everyone backing us up," Marquardt said. "I really feel like it was a partnership."
