Travis County Commissioners Court
August 28, 2007
Item 40
Let's pick up 40 and come back to the collections item.
>> I will need to discuss 40 in executive session later this afternoon but there is an open court discussion we made as well have right now because we do representatives here. 40 is, we do have revised language, consider and take appropriate action regarding a request from spansion llc to nominate it as a project to the governor's office under the Texas enterprise zone program pursuant to section 2303 Texas government code and a request to conduct a public hearing on September 4, 2007, as required. If we can get y'all's names first.
>> judge, Commissioner, my name is kerry barreden with ryan and company. I have with me sheren will house also with ryan and company. We are working to assist spansion in getting their nomination on this enterprise project and we are available to answer any questions that you may have about the process and/or the project.
>> what is the spec request of Travis County--specific request of Travis County? Make sure we understand that.
>> request is to --not nate spansion and to the governor's office so they can compete statewide with the projects that the governor's office has available.
>> and the deadline is?
>> September 4, 2007.
>> and that was why we went ahead and scheduled that public hearing for September 4. I think there is like a seven-day notice requirement. We got this last Wednesday or theirs and if we waited until day we would have been cutting it close or missed it by one da.
>> can I ask where that comes from?
>> the applications are submitted eight time during the bienium and it's the first working day of September, March, June and December. Of each year during the bienium. The first working day for the governor's office, normally is September 1 but because that falls on a weekend, September 4 is the first day to submit an application.
>> for the order and everything to be ready by September 4.
>> --nomination from Travis County. We have been working with spansion to draft. We would need an order to pass establishing participation in the program and you would also be designating a local liaison for the project.
>> there are some things that have to be included with that application.
>> correct.
>> the county will have to be certifying everything in there.
>> correct. We have that documentation.
>> let me ask question. This location, is this within the city limits or the county?
>> it is in the city of Austin as well as in Travis County.
>> since it is in the city limits, did you go to the city council and ask for them to designate this area as an enterprise zone under the same requirements you bring to Travis County?
>> yeswhat did they say?
>> I talked to mr. Brian hamilton with the city of Austin and under the time line to actually get this done, they weren't going to be able to meet that time line and recommended if we could go to Travis County. By way of statute, because the population of Travis County, the project could either go to the city or to Travis County for a nomination as an enterprise project.
>> so it's not within the current designation of the city's enterprise zone or anybody else's. This is outside of any established zone. That is what you are saying?
>> the enterprise zone has change since September 1, between, where it's now based on a census population of a broke group. So by statute, any block group in the state of Texas with 20 percent plus poverty is considered an enterprise zone.
>> all right.
>> that is how, it's not, prior to September 1, 2003, there was mapped out areas that the local communities determined to be the enterprise zone mow it went to a statewide level based on the census information. Or they could be in a federal zone. An enterprise zone would be, or else it could be a distressed county. Travis County is not a distressed county so it goes to the block group. And spansion is located in a block group of 70 percent plus poverty.
>> secondly, there have been instamps, I understands what you are saying, 35 percent this, 25 percent that, you want to be sure you capture a minority population as far as employment practice is concerned, that is part of it. However, there has been demonstrations in the past that have indicated that there has really not been any participation as far as making sure that the minority population has actually been hired, and yet the recipient of the benefits as far as all the benefits, I guess, stars the enterprise zone company, has benefitted and yet the people haven't. So I'm trying to make sure that whatever we do, I'm really not there right now, on this, and I want to make sure that what we do, especially the minority population, the poor folks over there, get a chance to have stable employment, whan kind of guarantees can be made on that. Secondly, it would be good for, I think, the county to know how this will be monitored and then what does the county benefit out of it. In other words, we don't collect sales tax revenues. The only thing we get out of anything is property taxes.
>> correct? So what is the benefit for Travis County, per se? Sales tax revenue and all these other kind of revenue generating things is really born by the city of Austin. This is in the city limits. So we still can't cross the city limits boundaries and demand things like the city can in its enterprise setting.
>> correct.
>> so can you tell me what Travis County will benefit out of this is this.
>> okay. The spansion commits to 25 percent of all their new hires, or turnover positions, to be either economically disadvantage or enterprise zone residents. Sphar the benefit to travis countirb the investment will be over 300 minimum dollars, which ideally would impact the trapt tax by making that kind of investment by default would increase the property value. The machinery and equipment and everything that is being purchased to change from a 200 fab to 300 fab so that they can compete with others in their industry. So it would--
>> expansion purposes.
>> yes, they are investing over $300 million in the next three years.
>> but part of the problem, and history may bear me out, and we can go back and check the record but part of the problem is that in exchange for the investment that you are going to make and exchange for that, we are hiring low income, economically disadvantaged persons in the community, that number has been kind of a mystery. And that is my concern.
>> yeah, currently the office has compliance and it does go under audit. Both payroll and refunds that they request and it is a refund of the state portion only of sales tax paid on qualifying purchases.
>> right.
>> the hiring criteria is verified and it does go under review and audit at the comptroller's office. The process is in place and it currently does exist.
>> it would be good to know as far as the investment, especially on the capital end of your investment, the expansion purposes, the amount of that investment in exchange for what you are saying we are going to receive of this as far as the county, it would be good to know like I say again, the property tax value of that property, and it's kind of, it's really a lot of things that need to be uncovered. Right now I'm not too clear on some things but I'm posing the questions and hope you understand what I'm talking about.
>> yes, I do.
>> okay, but I'm not clear. I guess in executive session main they can clear some things up for knee.
>> you are asking for approval of the project under the enterprise project. And if the governor agrees with us, basically you may be able to access funding that the governor's offers controls.
>> correct. Currently the benefit is a refound of the sales and use tax already paid.
>> we don't get that though.
>> correctthe county doesn't get--
>> the county doesn't get that.
>> only the state portion. The county is to the being asked to put up any--
>> I understand that. As far as being, that's all right. I can ask the questions in executive session. I'll refer to that.
>> that part is not readily apparent because in exhibit a that you sent us, there is a long list of possible incentive.
>> that are available in the community of Travis County.
>> so when we see countiwide, it has no reference to Travis County government. That is countiwide geographically. You still are asking us for the nomination, basically.
>> correct. Spansion is looking for the nnm nation to the governor's office to be an enterprise project. What is listed in exhibit a, we can discuss in more detail too, a list of incentives that are available in the community. If they are not available in the community, then it's, of course, that would be taken off of exhibit a. But this, when looking into tax abatements are available in the community. They are not asking for a tax abatement but they are available within a community. The govern's office likes to have the community list the incentives available in the community. Those are incentives you do have available. Spansion is looking for a nomination to the governor's office as an enterprise project.
>> the request seems to be pretty easy and simple to me. If it's what you say so. So the documents that you provided us basically reinforce the interpretation you have given us today.
>> correct. And they would also need to be reviewed by the county attorney to agree that that is what it i.
>> okay and your request to us is basically for help with the designation as our agenda says.
>> exactly.
>> that is how I interpreted that when the request came to u.
>> that is what we are after, just Travis County to nominate spansion's project to the governor's office.
>> any other questions?
>> I have a few.
>> okay.
>> as you had said, the benefit is a refund of sales and use tax. Correct?
>> correct.
>> at the state level.
>> yes, state portion only.
>> of between 2500 and 7500 per employee.
>> correct. This particular project because of the capital investment, 2500 goes for single designation, 5,000 goes to a double jumbo designation, and 7500 goes to a triple designation. The cutoff limits for those particulars, if there is a capital investment of over $5 million over a 5-year period, then it would be 2500. If there's a capital investment over $150 million, then the benefit per job would be 5,000. Spansion is spending well over 250 million so they would qualify for a triple jumbo designation which would allow them to receive up to 7500 per job.
>> you all are talking about 250 to 300 million investment in capital expansion?
>> expansion, yes, for machinery and equipment.
>> and how many employees do you all currently have that fit the criteria. The criteria being in the economic development zone or being, is it 25 percent--
>> correct, currently spansion has over 1200 jobs at the facility. The benefit for the program is maxed out at 500 per job, 500 jobs. So they would certified 500 jobs for the 7500 to maximize the benefit. But they have to commit to the governor's office that 90 days prior to the application for the purpose of this application it would be April 23, 2007. The existing level of employment that occurred on that day, which is 1271 jobs, they would commit to retain those positions for the five-year designation period. If they do--
>> or not go below that.
>> yes, they can increase their level.
>> unless they are committing to--
>> commit to go retain.
>> to have at least that.
>> yes, they have to commit to the existing level of employment which is 1271 jobs on April 23, 2007. They can only receive benefit for up to 500 because the program is maxed out.
>> are there plans to increase that 1271?
>> at the present time right now the project is to do the job retention. They hope to increase based on the fact that they are trying to become competitive by increasing from the 200 fab to the 300 fab. As of right now they are not commit to go the governor's office or to Travis County that there will be an increase.
>> they can do the incentive but still do exactly what you are doing without incentive.
>> the send different is to retain the job. If they don't do the project or keep investing in the community they will go below that level of employment because technology is very competitive and if they don't spend that kind of money to retain the jobs. This is a state benefit.
>> this is the total number of employees that are from the desired, from the economic development community, correct?
>> the 1271 positions is the entire employment level at that facility. Any jobs that turn over or any new positions that they have of that 1271 would have to mete the 25 percent hiring criteria. So if somebody leaves within the next year that position, that turnover position or the position during that five-year period would have to meet that hiring criteria. So they are retaining the jobs plus anybody that they hire to replace those jobs.
>> let me restate my quempt of your 1271 employees that you currently have, how many of that set are from the economic development zone, fit the economic development zone definition?
>> I don't currently have that number for you. I can get that number for you but I don't currently have that number for you now.
>> and is that baseline required by the state's program to know how many fit the criteria in your employees currently and not fall below that is this.
>> no, it's not required to have historically been hiring 25 percent. It's on a go forward basis based on the designation. They make a conscious effort and they have to meet the 25 percent hiring criteria to hire out of the enterprise zones hire economically disadvantaged individuals.
>> how would you show to us as Travis County Commissioners court in our decision to nominate you for this, how would you show to us that you would, that by your nomination, you would increase your numbers of individuals that fall into this definition rather than just do what you would anyway because of market forces?
>> okay. There's different measures that they use to actually track. We assist spansion with trying to track their employment levels. As they hire individuals, we check to make sure that either they are in a zone or motor in a zone. Another one is during the hiring phases, to actually have a form, and it's called a post employment form, to track economically disadvantaged individuals.
>> so does spansion currently use that?
>> no, but that is what their intent is, their hiring practic.
>> you would even on have prospects, you would not have the ability to see whether the incentive action change the behavior with spansion because they are not implementing the tracking program until after they get the incentive, right?
>> yes, they have to go to the come troller's office to certify the jobs and prove the requirement. If they do not meet the requirement they would not receive the benefit.
>> my an understanding is from our own projects with the state, the state looks more favorably on projects if there be local incentives provided before they would consider (inaudible). Is take your an understanding?
>> the projects are favorable as more incentives are offered, ye.
>> okay.
>> my only other question, and then I'll ask legal a little later, but to you, let me say this to you first. Part of the problem is that when you have capital investment versus the number of economically disadvantaged employment opportunities for the residents, it appears to always fall short, for whatever reason, the capital investment, of course, increases but the number of people that are hired, which all intents and purposes, that is the way it should be especially with the low and moderate income people in this community who need job opportunities desperately, but it has not matched properly. I know there is a ratio, number of capital investments you make, the amount of capital investments you make. We hire this many folks. That hasn't always, there's loopholes in there that folks have gotten around where by the community ends up being the low income persons in the community that need employment opportunities end up coming to the short end of the stick. I just want to bring that to your attention. And so, I guess county, I don't know, have we ever dealt with enterprise zone before? We never have.
>> . Okay. There are a lot of things that I need to ask in executive session to uncover a bunch of stuff to be sure that whatever Travis County is doing, this is the first attempt to deal with a lot of this stuff, and a lot of these things are guaranteed and without that requirement, incentives toward Travis County is kind of tough. Anyway, those are questions I need to ask folks in executive session but I wanted to pose that to you. I don't know of any example in the county where enterprise zones have been established, whether it be city, state, federal, whatever they are, where by the investment, capital investment amount of money has matched the commitment to hire economically disadvantaged persons in this community. It's been a miss. If you can show me an example of that, I would appreciate it, of where that is a perfect match.
>> I think you all are seeing that one of the things is there are questions and the urgency of you all staying on this is something that may be all of us see. There are obviously things that are going to take longer for us to pass as responses come from legal. Is the drop dead date really September 4? Or is there, is that the drop dead date for announcement of a public hearing? And what is the real date that you would need to know something from ?
>> --from Travis County.
>> the date we were going for is because the project will be occurring during take time period. Going to a September application the project would already be started and the changover from the 200 fab to the 300 fab will already be occurring. So our application is more to the governor's office to let them know that the capital investment will actually occur during this particular time period, which goes back to the 90 day, April 23. If it goes to a December application, it would have been after the July. But they are already moving towards that right now. So a lot of the capital investment and everything would not be captured at that particular time.
>> okay. Have you all been working or thinking that the city of Austin was going to be the agent that was going to make the recommendation to the state? How is it that Travis County has August 28 and we are being asked to do something by September 4?
>> the city of Austin, brian hamilton had recommended to try to go to Travis County because he understood that getting designation on September 4 would be the best date for us. He had--
>> when did he tell that you?
>> it was only about two weeks ago.
>> that is what--
>> exactly.
>> it always makes you nervous when somebody has a deal that they need for you to do. Especially when you say, we need to go into executive session to start asking legal questions.
>> you want from us a nominatio.
>> yes.
>> no financial incentives.
>> that's correct.
>> and the retention commitment is the 1271, not the 500.
>> 1271. That is what they commit to retain? Correct.
>> judge, I mean, even though that is the answer to that question specifically, that being we are just asking for you all to designate us, it is very clear that after that happened, then the next round is coming to us to say, now we really need incentives. Because it's very clear that without local incentives, that the state doesn't look at it as favorably. Is that correct? So we're most likely just in the beginning stages of you all coming. Now we really need to start meeting each of you at your offices and letting you know why we need for you to be involved from the incentive standpoint. Is that pose likely what is going to happen?
>> no, a representative from spansion will actually be here next Tuesday. The question can be directed towards them. They will tell that you they are not looking for any additional incentives and it will be held in a public hearing. So that should solve your concerns coming back. Should address your concern.
>> what I would like specifically now, I think this is the case, 324 employees that either live in the e z, enterprise zone, or are economically disadvantaged. I'd like to know how many employees you have currently that fit that description.
>> I can get that information for you. I would not be able to tell if you they are economically disadvantaged--
>> it doesn't do me any good.
>> I can tell you which are enterprise zone residents. Economically disadvantaged, would you have to go back and have 1271 individual go back and fill out the paperwork.
>> I understands the difficulty. As I look at the map and hearing what you are saying, I am looking at the purple areas and there are many of these areas that I'm looking at that have economic disadvantage purple. And I know that part of travis heights is in a purple area. That doesn't indicate to me, doesn't prove up to me the benefit of a tax refund designation.
>> the areas that are in purple are the enterprise zones. They are not meaning economically disadvantaged. Those are the enterprise zones befind by the statute. 20 percent plus poverty based on the 2000 census information.
>> exactly. I am hearing what you are saying as far as what the state is requiring of you. You are asking for the county to do something for you as wellve and the county can hold you to a higher standard. I think that the deal from the court, at least the vibe I am getting, and I'm trying to find out, we would hold you to a higher standard than the state. To merely employ people in the economic development zone, in my mind as the Travis County Commissioner, isn't an excuse to give you a nomination. What is an excuse to give you a nomination, my an understanding the goal of this program is to employ the economically disadvantaged. So the mere fact that lives in one of--someone lives in one of these purple areas is not going to get you my vote. What I want to know is that you are going to increase the numbers of economically disadvantaged people over what you currently employ because of this incentive.
>> okay.
>> so let us know by e-mail over the next few days whether you think you can do that.
>> okay when you are saying above and beyond, can I ask you to define.
>> let me see I understands what you all understand. The 25 percent that is required, that number applies only to new hires and replacement hires.
>> that's correct.
>> after.
>> correct.
>> so that, like if they only hired four people, new hire or replacement, they would only have to hire one. And that would meet the requirements. Correct? Correct. Because it's a retention proces.
>> retention. That is going to be, that is why the number that you would get would be prospective. And may or may not be a large number depending--
>> so are you saying that if they only hire four people, only one of those people has to be a resident of the e z.
>> it would depend on growth and attrition.
>> that is incredible. I want that deal.
>> over a five-year period. There's a lot of turnover in any industry in a five-year period.
>> attrition, I use that because I'm not good at numbers so I want to be able to give you a 2525 percent. I knew that--a 25 percent. You know, it would be based on their attrition, their turnover and new hires, growth.
>> so the 125 percent--25 percent only--
>> place to new hires and attrition.
>> that is the program. That is how the state established.
>> I am not holding you responsible for a state program that really doesn't incent the hiring in the e z. I hear you.. I totally understand why you are asking for it. I'm just wondering whether I should do it.
>> let me just add a little bit of clarification. In the Travis County heights area you do have housing that is affordable for people who meet certain poverty levels. And I think that was an attempt to try to locate that kind of housing all over the city of Austin and not just relegate it to east of I 35. So you are beginning to see that kind of housing for people who are poverty level. And so, it is part of the enterprise zone. And so, just a bit of clarification.
>> thank you. We'll discuss this matter in executive session and decide what to do this afternoon.
>> thank you very much.
>> thank you for your patience this morning.
>> I hope you didn't mind the questions. Those I think need to be asked.
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Last Modified:
Wednesday, August 29, 2007, 18:30 AM