Council advances plan for Austin's economic expansion, business recruitment

This spring's action was needed in part to address strained city finances by expanding its revenue base, Watson said. After years of seeing new business naturally flow into town, increasing competition is now resulting in lost opportunities, and he said new investment should be pursued more intentionally.

“Austin has a reputation as being passive when it comes to this. And I think that costs us when people think about Austin," Watson said. "I don't want us to be in that situation.”

The May vote launches a monthslong process to draft the city's new policies. They'll feature an inventory of Austin's existing economic tools, analysis of recruitment priorities and a small business development program. Other aspects will include:

• A framework to identify and market "large-scale development sites," including city property, for major projects
• New global strategies and partnerships, including support for international companies seeking a U.S. presence
• Required evaluations of public infrastructure and utility capacity during economic development deals
• A "public accountability architecture" including annual performance reports and a public dashboard of city incentive agreements
• New protocols for partnerships at the regional and state levels
• Minimum standards and compliance mandates for community benefits attached to future development

The context

Previous incentives with companies like Apple and Samsung led to more than $5 billion in local investment, created or retained nearly 14,000 jobs and generated hundreds of millions of dollars in city property tax revenue. New financial deals aren't frequent; officials approved three in recent years—one of which later fell through—and are now moving to finalize a fourth for a resort project at Circuit of the Americas.

Mayor Pro Tem Chito Vela said Austin is already "demanding" of companies who seek city incentives, a trend he expects the new policies would continue. Council member Ryan Alter, who co-sponsored Watson's resolution along with Vela, said he anticipates it'll lead the local economic and institutional ecosystem to expand.

Susan Davenport, president and CEO of the economic partnership Opportunity Austin, said the area continues to see a full pipeline of new projects and high job growth relative to both state and national trends. She also said the region is moving into a new phase of economic growth, and that the city's new policies will provide a predictable playbook for interested business.

"When they see resolutions and opportunities like this put forward, it reassures them that the companies would be welcome, but it also reassures them that this is a place they can be successful and grow into a good, strong quality of life for them and their employees," she said in an interview. "It’s a statement: We’re open for business, we really want you here.”

Those in favor

The new planning effort was largely supported by members of Austin's business community, including chambers of commerce. Representatives said the increased focus is needed to spur activity in the city, support local business and boost public finances.

“This resolution is an important step toward reestablishing Austin as a proactive, strategic leader in shaping our economic future. It recognizes that a strong, intentional and resilient economy is a foundation for everything we care about as a city," said Jeremy Hendricks with Laborers’ International Union of North America Local 1095.

Several hoteliers also testified to the impact of economic growth on their operations. And other representatives said the city should expand its focus to different kinds of business and seasonal draws.

“We have reached Austin’s capacity, and that is money that the city is leaving on the table," said Liv Welsh, head of business development with Lonestar Soccer Club. "Youth sports is a growing $40 billion industry. The council has an incredible opportunity to better position the city of Austin to capitalize on the economic activity of families who travel, stay and spend because they have a young athlete.”

Those opposed

On the other side, many residents turned out against the measure in May. Opposition mainly centered around the inclusion of artificial intelligence and defense technology as "target economic sectors" in an initial version of the proposal.

While references to those sectors were removed from the council-approved materials, dozens of Austinites petitioned against any city deals with companies involved with the military or AI.

“Subsidizing a small number of jobs to facilitate the displacement of thousands more is seen by many, including myself, as completely unconscionable," said Justin Schwausch, a resident who said he was worried about the health and labor impacts of AI.

Others including resident Claire McCaslin voiced concern about big technology or defense additions resulting in affordability pressures. Several noted a lack of benefits for everyday residents from major economic deals and city incentives.

“We’ve heard before that this type of development will boost the economy, but those of us here who experience it only continue to see our neighbors suffer more and more," she said.

When passing the resolution, officials said they agreed any companies seeking Austin's support must align with local values. Some also shared hesitancy about welcoming certain industries or projects like data centers—which the resolution did not highlight, despite public attention on that topic. Council member Paige Ells said she's now working on additional policy to ensure Austin isn't "blindsided" by the tech developments that consume significant public resources.

What else?

City management also recently detailed a new economic development roadmap for Austin. With that process already underway, Watson said council's spring vote serves as an added directive to ensure that ongoing process corresponds with his proposal.

The resolution also calls for a full-time director of the city's economic development department to be onboarded "as soon as practicable." Executive recruiter Mosaic Public Partners is hiring for that position, which Watson said he hopes to see filled by mid-June.