Travis County Commssioners Court
August 5, 2003
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Item 34
Now, number 34, consider and take appropriate action on Travis County financial incentives policy to stimulate job creation and economic development.
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>> and we came up with that figure, thinking that if we really were looking for economic impact, then that amount needed to be substantial. We were also mindful of our last tax abatement policy that really was geared to the number of employees, but in order to qualify each employee had to have a capital investment of I think $250,000.
>> per job.
>> per job.
>> per position. The point being that we were looking for major projects and not just any project for economic development. That said, 27.004 on the guidelines and criteria, we indicated there that we were looking for at least 750 regular or permanent full-time jobs. And in my view, those really are the two that are geared to economic stimulus. The other thing that I think is real important is in order for us to figure out tax revenue benefit for Travis County, we would look at what revenue we received today, we would look at what the increment or additional revenue would be, assuming the project were completed, and we would expect the additional revenue to be substantial. We kind of left it general like that, I think, when we're looking for big numbers. As you can tell from the policy, there are a lot of other specifics that we put if there for the court's -- put in there for the court's consideration. We realize that the three of y'all have only seen this the last few days. And in my view, what we ought to do is get all the questions out and requests for additional information, have this item back on the court's agenda for action next week. I'm not sure that I think that we ought to be ready today unless I'm wrong.
>> no. I would just like to have a little bit more detail about the permanent full-time jobs, what that would entail. Certainly we can talk about that.
>> okay. Anything else?
>> just a couple of things. I can already tell you that the greater Austin chamber of commerce has generously volunteered in terms of any expertise that they can bring to the table. They were waiting for us to get it to a point where it is something presented to all of the members of the court, so now that it is presented to the court, at least in a draft plan, they were very willing to put whatever information perspective that they could to this policy. I think the judge and I when we were going through this and looking at this, we wanted to have at least some general consistency with how the city of Austin was handling theirs because it was our thought that basically where they were going, obviously if it's in the city of Austin, it's also in Travis County, with the exception of the stuff out near motorola in Williamson county. So we try to as much as possible so that there would be things that could piggyback on each other related to information that was being developed. And I think that I'm especially mindful of requirements related to monitoring based on what we did and the experiences that we had with samsung, and that is that if you're not extraordinarily detailed about what information you want up front and in what form, it makes it very difficult to then when somebody comes in and says I have fulfilled your requirements, for us to be able to do that. So for me the 100-million-dollar mark was important in two ways. A, it basically said it's something big that we want to be able to trigger and make happen, but also I also don't want the planning and budget office to be having a thousand of these things out there related to monitoring, so it had to be with a form attached up front with some things that reflected what we were seeking, not only in terms of a capital project that would be good for Travis County, but for other taxing entities within Travis County. And I will also tell you that in terms of what kinds of things are out there in terms of what could take advantage of this, it really is intended to be the big i'll say out of the box kinds of things. I can see where some of the big semiconductor -- the big fab plants, that is certainly something that would hit easily the 100-million-dollar mark. And Commissioner Davis, in terms of you wanting to have good things happening in precinct 1, which I'm extraordinarily mindful of and was listening to, I think the robert mueller redevelopment is something that could come under this policy, given the appropriate projects, and that would be extraordinarily good things for the city of Austin for precinct 1 and for Travis County as well. So those would be the comments that I would make at this time is say up front what you want in the way that you want it. The other thing that we did put in our policy that I don't believe was in the city's that was very important to me is that these incentives would not be offered to anybody that had a project on the aquifer or the contributing zone. That is a fight I do not wish. And therefore if we say up front that we want this to happened in the desired development zone, then we are being extraordinarily consistent with what the city of Austin has laid out about where they would like for development to occur or any other city that has a similar kind of desired development zone. So that is very important for me to have that in here is nothing on the aquifer, not going there.
>> on the third page we indicated a maximum financial incentive of 50%. That's in our discretion where appropriate. We also indicated maximum number of years of 20 on the top of page 4. Obviously if you achieve the financial incentive before that time, then it would basically ex-pier on its owe expire on its own. We did talk about the robert mueller development project. I think I would take this out of this. Either we partner with the city of Austin on development or we don't. In a sense they're the ones ta take the lead on that, but to the extent that a private company were to come, I don't know that this would be mandated. So I'm flexible on that. Christian, anything further? Commissioner Davis?
>> yes. I would like to thank the subcommittee for looking at this; however, in June, June 5 I submitted to each one of you and I also submitted it to ms. Gerard. And at the time I asked that the following language be added to the Travis County property development incentive policy. It read as follows: within the preferred development zone -- and that development zone has to be defined by this Commissioners court. I want it to be an amount of money to be at least $10 million, and it should be performance-based incentive. And the reason I requested it that way was because in precinct 1, we do not have or has not had the opportunity for small growth. We have seen some of the larger corporations come over there. And I can go back as far as the enterprise zone. We can go back that far. I remember when that came up through the city and the state enterprise zone, city enterprise zone in that area. And yet we have not grown and have not prospered economically as we should have and should be in that area, especially in the unincorporated area.
>> you don't mean precinct 1, you mean east Austin.
>> I'm saying precinct 1.
>> applied materials and (indiscernible) were both tax abatement projects when I was the precinct Commissioner.
>> right. What I'm saying economically and looking at the enterprise zone and then looking at the area that came in, and under that enterprise zone concept of course there was a lot of problems with some of that stuff. But at any rate, the larger did come in, and as you mentioned, I hadn't got to that part, judge. Thank you for bringing it up, but I was heading in that direction. The samsung and the other folks that received the incentive package to locate and establish themselves in that particular community, but there are still some things that are missing. And of course, as you know right now, the high-tech industry isn't faring too well here in this community. It's really been a down, down, down, down slide of economic prosperity in this area because of whatever the reasons for high-tech not being where it should be. Now, it appears to me that the backbone of the community has been small businesses and the small businesses have continued to be the mainstay of the economic theme and scheme of things here, not only here in Travis County, but I think throughout the nation. And by placing this policy at $100 million, I think actually does something to the small business folks who employ a whole lot of folks in this community. A good example of some things that we do not have in precinct 1 in the unincorporated area or in the incorporated area, to give you an example, for folks who want to go to a movie, they have to go all the way down south to tinseltown and places like that to places that show the first rate movies. I've heard folks in the community say, Commissioner, why don't we have an h.e.b. Or wal-mart somewhere in between elgin and manor? We don't have a home depot. We don't have all of these kind of things. And those kind of things would take less than $10 million from what I understand to bring about. And they also bring about job creation. Job creation I think is going to be very critical in not only Austin-Travis County, but throughout this community. And how we do job creation I think is going to be very necessary. These are some of the reasons -- and also performance based. I want to make sure that we're still looking at performance-based policy. If they will create jobs and if they will do this and have commitment over 20 years as far as an incentive package here. So I want to allow the smaller businesses not to be included and have incentives as we provide for the larger businesses in this area. So that's the reason why I brought this up earlier and I submitted this to ms. Gerard back in June to make sure that we do allow these kind of performance packages that we also include small businesses in this thing. So I'm still leaning towards it and we're not going to take action today, but I want to have --
>> you think the cap should be set at $10 million?
>> pardon me?
>> so the minimum ought to be $10 million?
>> yes.
>> and you're convinced that we would generate businesses in the entear prize zone of over $10 million. If you set -- if the minimum is --
>> no. The minimum $10 million. If you want to go up to 100 million, that's fine. But I think that the h.e.b., The wal-mart, the movie theater, the anchor tenant and folks that like to have an incentive package, I think that we can present to them also -- I think we need to be included. It looks like on one end we have the extreme and we're not looking at the businesses on the other end of the extreme. I think we need to look at both.
>> (indiscernible) dis.
>> I'm not saying it's a good example, but it's still a business. There are anchor tenant and h.e.b. Has been an anchor tenant in this community for a long time, along with others. So that was just an example. Normally where they locate there are normally other tenants that come around. So I'm just pointing out some point as far as what the folks in the community are asking me to ensure that we look at, economic development, but let's look at it from the point of also addressing the small business needs in this community with what has really been the catalyst of holding this community together. There's been a lot of unemployment and a lot of layoffs a and other things as far as the high-tech industry is concerned, so I think we need to look at all perspectives and all instances. And if I had to have a range, I think a range is appropriate so we can also look at small businesses. That was basically my input to that. And that's due to the fact that folks are asking me and have asked me, Commissioner, yes, this area is growing and we --
>> can we get somebody who would with 10 million and one dollar they would establish a business in the area that we're talking about in precinct 1? If they would just let me know between now and next Tuesday, I would like to see it.
>> judge, I'm not going to put it like that. If you can tell me that you have -- if you can tell me that you have somebody that has $100 million and i'd like to see the same thing from you next week. What I'm trying to say is that we need to have a policy that can address a lot of things. I have asked and have talked with the chamber of commerce, and they are willing to work with me as far as precinct 1 is concerned to bring those type of development jobs to this community. Now, I have already done those kind of things. Now, all we're going to bring economic development to all parts of the county or are we going to let it just be particular parts of the county? And I think by small businesses being a part of this, I think we need to address the policies so we can address both. That's my point. There's nobody right now on the table, right now at this point, that we're looking at it, maybe the comain domain property, their deal is beyond this 100-million-dollar investment approach, but right now I don't see anybody on the table right now that's coming up with this. But there are for expansion purposes and purposes for people to move out in the community, folks are asking for that. And if we need an incentive for that, we need to address it just like we do these others.
>> what do you think the minimum number of jobs should be?
>> I don't know, judge. You've got a figure of 750 here in the particular policy. I'm looking as to what the item 35, it has temporary -- 1500 temporary positions and also current positions. My whole point is that a collection of small businesses that I think are the crux of this community, and it's the backbone of this community now, combined how many do small businesses employ throughout all of Travis County. I really don't know. But the point is that combined they do allow for a number of people to be employed in this town. And I guess their numbers vary also.
>> so you think at a minimum 750 jobs is all right?
>> as we go into it on that end as far as the job aspect of it, but 750 is quite a few -- is quiewt a few jobs. I would have to look at it and revisit it. Like I say, we're putting the questions on the table teend come back with finals next week. So I would like to have an opportunity to look at that too.
>> could I offer a suggestion here? The chamber of commerce can be extraordinarily helpful here because they are daily getting inquiries from potential folks that either want to build or expand within Travis County. From the report that we take up to new york, they have a very good cumulative list of the businesses that have come in over the last year with numbers of jobs, and I bet that they could give us some very good input if they think 100 million is too high, and if they do, if there is a job that they think is one that would do more or bigger activity, but Commissioner, we did discuss your 10-million-dollar figure, and I appreciate where you're coming from, but that seemed too low to me in terms of what we were trying to do in kind of a down economy, we still had almost two billion dollars in new construction occurring. Prohibit is we had a huge loss of other stuff as well. So it may have been intended to do good things there, but I think you would be find that you would be triggering a whole lot of activity in a whole lot of other places and not necessarily where you're trying to get it. Maybe the chamber could be of assistance here related to jobs, the kind of industries that they're seeing making the confidential inquiries to find out what's available, what's out there.
>> Commissioner, i've asked the chamber to assist me in this and i've talked with them directly, and I'm quite sure that they are willing to continue to assist me in this as we try to bring economic development to this area. So I won't shut the opportunity off to cut off my discussion with the Austin chamber of commerce and anybody else that would like to help.
>> judge?
>> anything else from the court?
>> just a couple of things. If we're looking for people that might be able to help us aside from the chamber, I have spoken with eddie voice of capco. And capco apparently, they say that they have a very sophisticated model to use for looking at these sort of things. I don't know if y'all -- you guys ever talk to capco. I mean, i'll follow-up on this to see what kind of model they put this thing through. And judge, I know that you and I sit on that and I'm willing to get some information together this week so you can take a look at it. The only other thing I have to say is that, Commissioner Davis, I appreciate the intent of what -- of what you would be trying to do with this 10-million-dollar total, but the biggest issue that I have on all of this is the unlevel playing field that you create if you don't watch what you're doing. I mean, the thing that you don't want is you don't want everybody that comes out here and wants to go and find them a plot of land and to put down some sort of business that they don't have a substantial amount of dollars into, because then you really start creating -- for example, if you were to go and try to find a wal-mart site, a home depot side in precinct 1, I think precinct 1 takes in st. John's and i-35 and there's a home depot there.
>> my home depot. Yes [ laughter ]
>> rundberg as far as the bird flies --
>> and target is also located in precinct 1 in capital plaza.
>> between rundberg and i-35. But if you get that thing so small, before you know it, you've got everybody that wants to develop every six, seven, tennessee-acre tract. And even though real estate is not part of this deal, you start developing something that this thing is then becomes a war with people in this community because we have seen the project -- for example, the best one that I think has gotten the most acclaim in this community is the whole foods and border -- not so much whole foods, but borders and whoever it was that was -- that had waterloo and some of the other people up in arms because they were being offered things that the other people weren't going to be able to compete with. And I understand the spirit of this, and it is not a bad idea, it's just one that I think that you've really got to think through and see -- for example, when you start to be a little arbitrary about what you're doing -- now, I realize that some people don't feel like that they want to take on water quality issues, but, for example, most of precinct 3 has a lot of water quality issues. Now, it's going to be real difficult for me to say when somebody comes to me as the Commissioner and says, do you know what, I want to do this and I own this property and I have met all of the s.o.s. And every other thing. Why can't I have this project as well because you have arbitrarily we have in this that we're going to do these things except for there are some caveats here that you can't deal with. And I realize that -- and it is legitimate when somebody says I don't want to fight that fight because that is the fight that most of us don't want to fight in this community. And nobody wants bad water. But there are things that I think that we do need to think about because we are setting a policy that we probably can't -- I guess we could go back and redo if we elected to say, do you know what, we thought we were getting into a good deal, and boy, after we really got into it, we really couldn't monitor it, we couldn't really determine are we getting all the benefits that we thought that we were going to gain? And so I'm glad that we have another week because I do think that everybody needs to look at what you all have put together. But for -- as a friendly suggestion, Commissioner Davis, that would be the only thing that I would say let's watch the 10-million-dollar deal because we really could start pitting smaller people against smaller people and then before you know it -- i'd love to have a property that, do you know what, I didn't have to do that. Do you know what, i've got some considerations that for eight or 10 years or for 20 years I got to operate and I didn't operate on the same rules that the guys that built their project in 1988 built their project, but the 1988 people have got all of those things that they have to meet, but if you're somebody new, you may not have to meet all the things. But anyway, that's what I have to say.
>> thank you for those comments, Commissioner. Again, that was a big -- as far as the new construction, some of the things that I mentioned would be about that amount of money. So that's why that figure was as is. But I do know this, we're going to have to do something here along with the city and everyone else here in Travis County to stimulate this economy as much as we possibly can. And of course, I think this is the -- is a stimulus situation, stimulus package or leaning towards a stimulus package for and those type of incentives whereby we can create and have job creation. I think the way we're going to have to get out of this thing is to be aggressive. And as far as the downturn in the economy, is to be aggressive and be on top of it and do innovative things to make some change in this community. Otherwise without this, I just think that we're spinning our wheels. So again, I am going to look at this. We've got a week to look at it. I will encourage and invite the chamber of commerce to assist me as i've asked them to assist me up to this point and I'm going to continue to ask for their assistance. So we'll look at this again next week.
>> it's real important that we do have a sunset provision attached to this. It's basically for two years. At the end of two years the court is going to modify or eliminate policy. And that's actually doesn't scint with where we were in the infamous tax abatement issue, and that is it was appropriate for the time. And during the time period that we have the tax abatement policy, I was asked to vote on two and only two things that met the minimum 50 million -- judge, was it 50 million was the minimum? For some reason that is the number that sticks in my mind.
>> (indiscernible).
>> plus the 250,000 per job. And it only happened twice. One was samsung and the other was a photo masking outfit called photronics. And I don't regret either one of those. It did what it was supposed to do and that procedure went away. But I can tell you if amd it indeed made Austin its side sooit for its new headquarters, I would have been right there in terms of saying we need to get that policy back in terms of an incentive program to get amd to continue their investment, which is already huge.
>> Commissioner also, the thing that I think we also have to be very mindful of, during desperate times you do some desperate things. And these are pretty desperate times in this community. I mean, because all you have to do is pick up the paper. And we all realize the economics that we are looking down the barrel of. But sometimes I think you need to try to get beyond -- and it's not that we all need a crystal ball. All of us know that this community will at some point in time get back to the vibrant community that we had even pre-tech, the tech world. And unfortunately, the iew euphoria that we have lived in for the last 10 years, I think all of us know is not reality. It was not reality. And we probably will never witness that again. But when you -- and all of us have stories to tell about, you know, I do -- I do a posting for a job and it's a 30,000-dollar job, and I get 200 people apply to this job. We know that -- I will tell you that the county -- our hr department can tell you, and they're overqualified. They're people that are used to making three times that much money. But if you predicate some of these things that we are being asked to do and not really be very mindful of -- there almost need to be a list. You really need to sit down probably with the applicant and say, okay, if you all were on the other side, let's all come up with what are the bad things about this? It's not -- maybe bad is not the right word. It's not like this is bad whether we do it or whether we don't do it most likely. But there are things that we all need to say let's play the devil's advocate and say what would be something that we really do need to identify right now that this could be an issue for us? And I think the obvious things are that you have to button these things down so tightly and to make sure that somebody does spend $100 million on something and that you don't get tricked with it. Somebody says here's the loan that I took out. I mean, I'm not saying that you're assuming that somebody is going to be dishonest with you, but from the standpoint of the number of people that are going to question us about why would you do that? I mean, tell us how you really got comfortable with that. Those are issues that I think that we all have to address because I'm sure that some people will be wanting to ask us about those things and might even put it in black and white and let 177,000 people read it. So I would like to know that all of these things can be answered and that we can do this in a very mindful way because all of us want to get this economy kick started again because all of us are behind that and some of you are behind making money, and that's how the world works and I appreciate that. So I work forward to coming back next week, judge.
>> it will be back to the agenda neck week. If you have language changes you would like to recommend, if you could get them to the rest of the court by close of business on Friday to give us the weekend and Monday to consider them. That would be appreciated.
>> mayor, could I ask -- mary, could I ask if you have a word version of that policy as it is, if you could send that to all members of the court because that might be the easiest way for us to send it on to interested parties is to be able to just forward on your forward.
Last Modified: Wednesday, August 6, 2003 4:52 PM