Economic development incentive amendments OK'd by Austin City Council

After more than two hours of public speakers on the subject, Austin City Council revamped future economic development incentive agreements at its Oct. 24 meeting by establishing eligibility standards for applicants to fulfill so they can take part in the program.

The topic was a contentious issue, with more than 250 people signed up in favor of it, though very few were signed up to speak against it. In particular, speakers focused on the requirement of a prevailing and living wage in order for a business to be eligible for an incentive agreement.

"This is not about trying to stop, stifle or hurt job growth or the economy," said Councilman Mike Martinez, who sponsored the resolution. "In fact, it's the exact opposite. It's about creating the jobs we need in Austin with the companies that we need here in Austin, who understand the values we are trying to impart in this policy."

The resolution created a matrix for staff and council to use to approve incentive deals. Part of that matrix criteria includes requirements for an applicant to provide a prevailing wage for construction workers. For prevailing wages that fall below the city's living wage, companies applying for an economic development incentive must provide a living wage for construction workers. The resolution also requires the applicant to provide at least a living wage for full-time employees and contract employees.

The city's living wage is about $11 an hour, and the city uses Travis County's prevailing wage determination. A prevailing wage is the hourly wage, benefits and overtime for a job type in a geographical area.

David Ford, president and CEO of the Central Texas Chapter of Associated Builders and Contractors Inc., said his organization's concern was that requiring both a prevailing wage and living wage would drive potential businesses away from the city.

"When companies are considering coming to Austin and they see this increase in construction cost, they may consider going elsewhere," Ford said. "We need construction in Austin. Nobody wins when companies go elsewhere. You're going to hinder the [Greater Austin Chamber of Commerce's] ability to bring companies to Austin."

Austin resident David Butts also spoke at the meeting. He said he could not believe that the living and prevailing wage issues were even up for debate and that the city should get something in return for the incentives.

"Quite honestly, if [companies] want to come here on their own and do whatever they do, then that's their choice," Butts said. "Now if they want tax dollars for benefits from the city, that's a different matter."

Several members of the council were concerned over the potential increased cost to development if the prevailing wage aspect remained a requirement as well as the potential job loss.

"If it does kill any jobs, here are the jobs that [the resolution] is going to kill," Martinez said. "It's going to kill jobs that pay a poverty wage. It's going to kill jobs that require folks to be on other government assistance, thus costing all of us."

Councilman Chris Riley amended the resolution so that the prevailing wage requirement, like the living wage requirement, could be exempted.

"I do think there might well be times that we would be in danger of losing jobs that would be valuable to this community if we maintain the rigid expectation of prevailing wage in all cases," Riley said. "What we've seen in cases like US Farathane [Corp.] is that there may well be good reasons why a firm may need to pay something less than a prevailing wage or even a living wage in some situations."

Some of the more notable businesses to receive economic incentive agreements with the city include HID Global and Apple Inc.

Councilwoman Kathie Tovo, a co-sponsor of the resolution, said that if she had been left on her own to craft the resolution, it would look different, but she was happy overall with the way the item turned out.

"I think, [overall], it is a very good balance of allowing us to have a robust policy that will attract companies to our town and still making sure that we do have a taxpayer return on investment," Tovo said.



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