Travis County Commissioners Court
January 17, 2012 (Agenda)
Item 8
>> number 8.
8.
discuss and take appropriate action on draft economic development policy for Travis County.
>> what do you hope to get from the court today on this item.
>> what I am asking the court this morning is for you to have looked at the new economic development policy or at least -- or revised one and give me any comments and suggestions for changes.
we have -- we have members from the -- from the chamber of commerce and city of Austin here.
who have some comments to give.
and --
>> can you tell us how we arrived at this draft?
>> this was -- this was -- this was presented to the -- to the -- most recently to the economic subcommittee in December.
the draft evolved from a previous draft from the subcommittee from 2010.
and did not come to the Commissioners court for a vote.
but now that our policy has expired p.b.o.
>> [indiscernible] new one and -- and.
>> but you are hoping for feedback from the court today.
>> yes.
>> okay.
we may as well get the representatives from the city of Austin and greater Austin chamber of commerce and anybody else here on this item.
we have four seats available.
please come forward.
>> sorry to cut you off there.
>> excuse me, I have a little frog today.
>> when we looked at this once before in the past, of course we had a work session on this same subject matter in trying to get to some -- thank goodness, for this being on the agenda, judge.
trying to get some -- some clarity in the direction we need to go as far as our economic development policy and things of that nature.
during the work session, we had many persons, representatives from not only the state, but from work source, from different chambers, and just a lot of input into this process.
that we had.
of course the city of Austin with the economic development team.
what works for the city of Austin, maybe looking at some things in that nature.
looking at the breakdown of the number of points that can be awarded.
all of these jobs, all of these other kind of things, green facilities.
just the whole nine yards.
my concern is this, though.
my concern is I want to make sure when we proceed in this direction, all the chambers be available to participate in this process, what I am looking for is diversity, diversity meaning many, many, many things to -- to different people.
but my mind diversity is streamlined to the point that we have several input processes where we can get and gather information, example the new president as the -- as the -- with the city -- Austin american chamber of commerce, when -- for an example, african-american chamber of commerce, they didn't attend the last meeting here, but I'm quite sure that was transitional.
I want to make sure we get diversity.
a lot of job opportunities, to track maybe they all aren't high tech jobs, aren't this here, leverage there where maybe manufacturing jobs or other things, diversity, where persons can gain employment.
that's my intent.
as we look through this policy.
my intent is to make sure that happens, if we're going to have a policy, abatement policy or whatever, under 312, chapter 312, I'm looking for some type of diversity in making sure that the chambers are still involved to help us attract that kind of diversity for employment opportunities for this community because we do need diverse jobs in this community.
just not all one side,
>> [indiscernible] that's been -- that's been the intent.
I think the judge hit it right on the head.
where we need to come up with some kind of policy.
there may be a policy.
we are not there yet.
we got an old policy, but I want to let you know where I'm coming from.
I hope that you understand.
thank you.
>> ms. Peterson lay out what you have.
>> the highlights of the new policy, the previous policy, had a
>> [indiscernible] of $100 million in investment for 500 employees.
>> the new policy we have maybe kind of a tiered system, where the asset is $25 million in investment, but then -- but then a -- a company that was seeking incentives to get more percentage depending on large amount of investment, the larger amount of employees they would have, the lead certification for their new building, and also -- also -- also for some -- for some -- some education or workforce training for economically disadvantaged individuals.
it would add an application process to the -- when a company is seeking incentives which would help the planning and budget office tremendously, because then we would get all of the information that we need up front, that would give us a quicker turn around to you to decide whether to offer a company such an incentive.
we also -- we also quite clearly outlined the desired eligible facilities, we -- we outlined the required and preferred criteria and -- and we also have a more defined process for consideration and approval, final approval for the -- for the -- for these agreements.
which the highlights are kind of the new -- the new -- the new items of the policy.
>> so when we arrive athletes say $25 million -- at let's say $25 million, where did that figure come from.
>> I'm not quite sure where it came from.
it's kind of the minimum investment for anything to be large enough worth giving any kind of tax relief for.
we concluded that 100 million was too much, too large?
>> very few opportunities take that are that high.
>> when it started we really were targeting large high tech companies.
so that the change this represents is giving incentives to smaller companies.
>> give them the opportunity at least.
>> give us the flexible --
>> yes.
>> and the list of targeted industries is -- is would indicate a $100 million threshold would be too high for many of the targeted industries that we have listed in the policy.
which -- which we -- we attempted to mirror the -- the targeted industries that have already been identified by the chamber of commerce and the city of Austin.
>> 25 million is I guess a -- a -- a threshold.
>> right.
>> but you are limited as to what incentive you can get, also.
>> right.
>> up to 25%?
>> yes.
>> if you meet the 25 million?
>> yes.
>> minimum?
>> okay.
>> when we were looking at the draft policy, did you have in mind applications that we have received from firms?
>> right now we don't really get applications from firms, we get proposals which vary in detail and -- and if we had an application process that would help us at least -- that we will get the same amount of information, same time lines, right now if we get information that's missing, we have to call back, it delays these processes.
>> when we approve the -- the policy, and I guess process, we will also approve an application.
>> right.
>> we are working on that, on the application.
>> we do have a draft.
we have -- which we will present to you.
>> okay.
any questions for ms. Peterson gibson.
>> just a thank you.
>> yes?
>> judge, Commissioners, dave porter with the Austin chamber.
first of all, just a quick summary of 2011, I think the time -- the time spent on we had a lot of prospect activity in 2011, 35 relocations to the Austin region, 51 local expansions, over 9,000 new jobs, and as we go through -- looking in our inventory of projects, there's a lot of projects coming up in 2012 that I think that -- that this policy can help us be more competitive in landing some of those projects.
first of all, I just want to thank you for more flexible policy.
a couple of quick comments, then I will turn it over to my colleagues with the city.
but it's very important for us to have a consistent process and one that I think that we would want to look at how the city is doing their application, their process and have something as similar as possible to the city to their application process and their policy.
some of my concerns are concerns at the chambers, how can we maximize, how can a company maximize the most, the 80% maximum level.
the tier system is great, it's more flexible.
but there's a big gap between the 25 million and a -- and the 50 million to get to the next level.
I would definitely take a look at that.
also a concern that we have expressed in the past is a requirement to hire 50% of the new jobs with Travis County Commissioners court employees, much the tax base, awful of the tax base will be generated obviously -- all of the tax base with a project that will occur in Travis County, but from a regional perspective, you know, I think what we did at the chamber is promote the region.
Travis County being the largest county, I would think that, you know, that that's kind of a challenging requirement.
plus from your end point, I don't know how you monitor that.
how do you track that?
that is what I would see as your biggest challenge, how do you annually track how many of the new jobs come from residents within Travis County.
so those are just a couple.
the application process, I think is good.
I'm not -- I'm not -- we're a little bit concerned about the application fee.
of a thousand dollars.
that's what the -- what the state of Texas, that's what they charge for their enterprise fund.
the city does not charge or have an application fee.
I think that that is something that we -- that needs to be addressed as well.
but anyway, I just want to thank you again for -- for a more flexible policy and I think that this is going to come in very handy in 2012.
>> what's the application fee supposed to cover?
>> I believe it's to cover probably our -- our time and effort.
and the county attorney's time and effort to go through this.
>> that was the discussion in the subcommittee was that there is significant staff resources to -- dedicated to evaluating these -- these proposals.
as we've seen in the proposals that we've looked at in the last couple of years, it can take several months and considerable planning and budget office and county attorney time to -- to look at the proposals.
and the claimed benefit over a period of time.
>> why 1,000 instead of 10,000?
>> we have well paid valuable assistant county attorneys.
>> a thousand dollars represents about -- about 20 hours of staff time.
and I can assure you that all of the requests require more than 20 hours of staff time.
>> but did we pull that figure out of the air or did we actually sit down and try to calculate.
>> I would defer to katy and the subcommittee for where they come up with it.
I wasn't in on that.
>> I'm not quite sure.
>> I was trying to pat marietta on the back
>> [laughter]
>> there may have been statutory parameters around it, we would have to go back and look.
>> I can get the answer later.
>> okay.
>> we can get a copy of the city's application, though.
>> yeah, I do have a copy of the city's application.
>> yeah.
just shoot that to the court and let us look at it.
>> one concern with regard -- this, too, was discussed at the subcommittee, Ron can back me up on this, there was much discussion about marrying our programs to the city, there was also a recognition that our priorities while very much aligned with the city, will not always be 100% aligned.
in a similar fashion we respect that the greater Austin chamber of commerce is the greater Austin chamber of commerce and is looking at the region.
and I hope that some day we get to a point where we have non-compete agreements with all of our regional players so we are not competing against one another for some of these.
it would be very nice if -- if a proposal came in and whether located in Williamson, travis, hays, it didn't matter because we would all be beneficiaries and have non-complete clauses.
but it's just in recognition that while we are very much aligned it's not 100% aligned and so we -- we decided that we didn't want to mirror the city of Austin application, but we would -- we would do our best to -- to -- to duplicate -- duplicate our requirements so that -- so that the applicant didn't have to duplicate their efforts.
>> let's see the application.
we have representatives here from the city.
>> I'm kevin johns director of economic growth and redevelopment.
>> with me is.
>> rodney gonzalez, deputy director for economic development.
>> good morning.
>> good morning.
>> maybe just some -- some kind of high level thinking.
first we are here to partner with you -- with you all whenever possible.
I think we can get a lot more bang for our buck and be much more effective if we work together and we don't duplicate or -- or have an overlap and I think that -- that the evaluation that you all are doing is very positive and that will help us all put together a strategic direction that will -- that will be more effective.
let me just share a few thoughts, then I will let rodney kind of chamber of commerce in as well.
I think that you know that economic growth and redevelopment services that six divisions, it's essentially everything in the city that generates taxes and jobs.
and so -- so its culture redevelopment, international, music, economic development, small business.
it is -- it is unique, there's only two other -- two other entities like this in north america.
the largest one is the city of toronto has a similar strategy and a smaller one is boulder, colorado.
the focus is to try and -- and capture everything really the lowest common denominator, people that don't have jobs to people who are entrepreneurs all capitalize on growth.
I would like to say our specific focus is try to hit the 10,000 people very hard to employ people identified in the city of Austin, for two reasons, one is because they clearly have a lot of -- there's a human resource, a human capital there that I think deserves to be utilize.
also the biggest drain on our social service delivery mechanism.
we have identified three or four individuals who have a high school education or less, people who are homeless, people who are released from prison and people who are just kind of dropped out of the system.
together that's about 10,000 people, our strategy is to try to find over the next five years, jobs for about six thousand of those people.
it includes more than just the recruitment.
we recognize that the chamber of commerce is probably the best at what they do anywhere in america right now.
to make -- to make a dent in this population that we've targeted, however, I this I that it needs to be -- I think it needs to be a combination of both redevelopment, that is focusing on renovating blighted inner city commercial areas with catalyst developments, so that the people who are unemployed in those neighborhoods can actually walk to those jobs.
secondly, the area is small business.
and I think that -- that we have 33,000 small businesses in Austin.
and we have structured, as you know, a family business loan program to help those businesses at least 10% of them over the next five years, find the mechanism to -- to expand us putting together a -- federal resources for low interest loans that would allow each one of those businesses to hire somebody who fits into that category.
the -- the third category of -- of more of what we're talking about here today is recruitment.
we particularly focused upon trade as it deals with manufacturing and logistics and I would like to publicly thank the chamber of commerce for the u.s.
recruitment recently which was 229, 230 jobs for people who otherwise wouldn't find jobs.
and so that combination of those three areas, both the redevelopment of blighted inner city commercial areas, which we hope that we can do two a year, and by doing that generate over -- over five years, maybe 100 jobs every time that -- that revitalization occurs, the small business redevelopment and small business initiative, we hope that we have four lending institutions that are participating as well as the small business administration and h.u.d.
and with that, we have been able to -- we'll know in about two weeks, looks like it will be a loan pool of about $40 million that we can loan to small businesses that agree to expand and hire people in that population.
we hope over three years that will be 3,000 people.
and then lastly, in the selective recruitment of companies that do manufacturing and that do distribution, we hope to fund two or three recruitments over the next two years, which we are shooting for something like 1800 jobs, so that is kind of a nutshell of our strategy.
not just recruitment, but also redevelopment in small business.
>> rodney gonzalez deputy director for the city's economic development department.
we do want to thank the Commissioners court for continuing to consider an economic development policy and we're glad to see that the investment levels were dropped from 100 million to 25 million, that's certainly indicative of the current state of the economy where we're at.
we look forward to working with the county on future economic development partnerships.
what we wanted to offer today as kevin mentioned future opportunities to eliminate duplication of efforts in terms of economic development.
as you know the city implemented the web loci ...
>> as well with regard to evaluating the -- the applications that you received, we -- we would love to sit down with the county, with leroy and his group as you go through and evaluate those economic development projects.
one other area we could potentially partner on is the compliance review process.
we currently do a that with the samsung agreement, we will be open to engaging with the Commissioners court, with the county in that regard.
Commissioner Davis you are certainly spot on with regard to working with the other chambers of commerce.
we work with the greater Austin hispanic chamber of commerce, the capital city chamber of commerce, and the Texas and the Austin asian chamber of commerce.
we have contracts with each of those chambers for job creation and for assisting with hiring economically disadvantaged individuals in Austin.
I think dave has brought up some points with regard to the economic development policy.
and as Commissioner Eckhardt mentioned the county's policy is not going to mirror the city's policy completely.
there will be some differences.
there are a few just minor adjustments that I would like to present to katy at a separate opportunity, but I certainly thank the county for considering a policy.
>> on the subcommittee perspective, of course Commissioner Eckhardt and Commissioner Gomez and I on part of the subcommittee, we just wanted to make sure that whatever we bring up that deliverables, has a good, positive, end result.
I think that it is leading in that direction.
and I think the flexibility within this -- new aspect of -- of looking at the new policy as we move forward, on the Texas abatement is something that we can kind of lien forward in doing.
-- lean forward in doing.
the effort that we have made looking at those high risk persons that may have dropped out of school or potentially drop out seek us out, talking about employment opportunities, I have asked several times, hey Commissioner Davis I need a job, anything that you can do for us.
I mean this is from the reentry program that we -- the county already embraced along with persons that fall in these other categories, diversity is very important, that's why I want to make sure that it's all inclusive enough where we make sure that every rock is -- is turned over.
we can expose and bring those persons out as far as knowing what we are doing, hopefully be on the same page.
exactly what the city is doing, I think it's all complimentary as far as going into the direction that we need to go in as far as making those achievements.
I want to applaud you for what you do.
we're not there yet.
but we're leaning there.
I felt very good about another situation, it was on a rebate, on a chapter 381.
but how the city and the county were basically involved in -- in initiatives with the solar panel which is now the webberville of solar project out in eastern Travis County where we did get involved together, of course, that now is a reality of -- just from last Thursday.
so it is -- it is levels of work, employment opportunities created, jobs, what not.
but I think it shows we can work together.
>> [one moment please for change in captioners] .
>> one point to the Travis County re-entry program.
I think you're aware that in u.s.
farathane, both our team and the chamber negotiated to make that a priority.
and that had to include members who passed through that system that at least gives them an opportunity to apply for a job.
>> what the judge years ago -- we both looked at this situation where we were trying our best then when the thing first started coming around, the judge brought up good points on how we could get those persons that are -- that ex-offenders program and stuff of that nature, how we can integrate that back into society so we do not have the recidivism and the recidivism rate was just escalating to the point.
so the re-entry program -- we said at that time we agreed that if we're asking other employers to hire ex-offenders and the re-entry type situation, then why not Travis County.
why not Travis County being an employer, being one of the employers?
and thank goodness we have achieved that as far as making sure that there are persons that work for Travis County, have gone through this re-entry, ex-offenders program and are currently working for Travis County.
so my hat goes off to a long visionary process and hoping, and as of now you're saying it's a requirement for folks to do the ex-offenders program or re-entry program program.
and I abroad you for that because we have stood firm on this court to make sure those things happen.
and I think the leadership of this court have allowed this to take place.
>> Commissioner Huber and then Commissioner Eckhardt.
>> I wanted to say I'm not on the subcommittee and I haven't been involved in the revisions to this, but I have been watching it from afar and I wanted to respond to the thousand dollar application fee.
because I have been concerned since I've been on board here that we have been committing so much staff time to these evaluations when we unlike the state and city, do not have staff 100% dedicated to evaluation of economic development programs. So I really abroad and appreciate the city's effort to reach out to us for the evaluation process of potential projects because that is a void in our structure that we can really capitalize on and have a better end result by that comparison.
by the same token I would like to see the chamber be a part of that process as well.
>> Commissioner Eckhardt?
>> one thing I would very much -- I know you have been in discussion with this, but we could really use your assistance and there are two major differences with county and city that we could possibly bridge with more conversation.
one is that we're more reliant on property tax, so some of the things the city might consider, we would not because we don't get the benefit of the sales tax bump.
but another cool tool that you have in the tool box that we don't have is doing a disparity center in order to give our hub tools some piece, which you all have and utilize exquisitely and we might want to look at that in the future.
>> the 10,000 employed persons, that's 10,000 city of Austin residents or --
>> that's correct.
>> are you more city of Austin oriented than regionally?
>> the study that we did we wanted to make it finite since we can only incentivize companies that locate within the city.
we can only control our own redevelopment and our own efforts.
so the study that was done was zeroing in specifically on people who don't show up and on employment compensation, but just for the city.
we have not done a study for the region.
I'm sure it would be much greater in this case.
>> and I did hear your description of the three initiatives.
so where would the economic incentive come into play with those three programs?
>> the economic incentives primarily, that we're talking about here today, I believe have to do with recruitment.
so the recruitment of manufacturing and distribution companies.
those are excellent candidates for incentives because we have a niche need that we've identified recently.
the chamber -- I think that you heard a little bit from dave, but they have kind of a new pipeline in that area that seems to be opening up.
in the areas of revitalization, and regenerating commercial inner city areas and helping small businesses, it's our goal to use the low interest loans of the family business loan program as one element of that to incentivize the local businesses to expand.
>> and what's the source of that grant money?
is that hud or what?
>> there's several sources.
of course there's four local lending institution that have agreed to participate so they will be providing their own fund.
there's the department of commerce, small business administration, which has the sba loans, which we're leveraging into the mix, and then the hud 108 loans.
so there's a combination of factors.
you will notice that none of those are city of Austin funds, however.
so we're leveraging other people's money to do what I think is very important, and that's to help small businesses get a life line.
and so I think that we can follow wherever the city's planning department has created a master plan for redevelopment, we'll follow that in, work with the local businesses and get four or five businesses in each area that qualify a loan to begin to put up scaffolding in that neighborhood, hire locally, and then we'll move on to another blighted area so that we'll create a feel that anything could be done in these areas.
so we'll be using that particular loan -- we've a few final details that I've been assured are moving forward next month.
>> I have a few more questions.
so what is the city's minimum capital investment?
>> actually, we don't have a minimum capital investment, sir.
our policy has that flexibility to where we can consider as low as one million to two million, but as the Commissioner pointed out, the county primarily works with property tax and the city works with property tax and sales tax.
and so that gives us a flexibility for not having a minimum floor investment.
the minimum that you've established no doubt would create the property taxes which then you could use as an incentive and we're certainly glad that the county has reduced it from 100 million to 25 million.
>> we have provided and recommend in this draft that existing leased facilities not be eligible for incentives.
what is the city's position on that?
>> I would offer that you open it up to leased facilities because you can find tenants up to 25 million in those facilities.
with farathane, the company that we just subsidized, they went into a leased facility.
it was one of the dell buildings of 250,000 square feet.
so the city of course doesn't provide an incentive for the value on the tax rolls, but farathane will add a tax value of up to 25 million with that facility.
we'll be rebating property taxes on the 10 meant improvements, so we ask that the Commissioners' court be open to looking at leased facilities.
>> we have additional language.
is that meant to cover the example he just used?
he he he we say if leased property be utilized for new construction which is granted a tax incentive.
>> I think it would be similar to what we did on solar farms, that was on leased facility.
>> can we do this later?
can we look at city's language on leased facilities and see how it compares to ours?
and also let's revisit our rationale.
we've also excluded leased facilities, right?
I'm missing our rationale for doing that.
I know we had a good one.
I just need to be reminded.
>> one of our considerations with regard to leased facilities is that the staying power of the entity that was getting the rebate, the idea is you want somebody to move here and stay here and invest in community.
and at least in the past our rationale has been if it were a leased facility, they were less invested in the community and more likely to just stay as long as the rebate was available to them and then leave as soon as that benefit was no longer in place.
>> the other aspect of leased facilities, if in fact you have a company come in to Travis County and they do not do any lease hold improvements, then we don't get any additional tax dollars.
through the effective tax rate our tax rate will go down if in fact that building, since it's occupied and maybe tcad is doing a net income approach to a valuation, it can double in value and we don't get a cent more in tax revenue because the effective tax rate goes down proportionally.
so that plays into the lease, but I think the city has address that had by identifying lease hold improvements.
we can look at those aspects and I would just encourage the members of the court that are not on the subcommittee, that if in fact you see areas in this, if we can get them to katy and the subcommittee so that they can work through them and get a policy that is closer to meeting any other additions or subtractions that you would like, because it is difficult without a policy to deal with these requests.
we're just getting requests in.
and you know, we're just -- we need to have a policy, I think, but we need to have it where we have hopefully a unanimous vote on the court to adopt the policy.
>> so we hope to take action in two, three, four weeks?
>> that would be the adeal, yes.
>> so in the back of our minds, target three weeks from today?
>> okay.
>> yeah.
if the court could get any additional comments to katy and the subcommittee, then they could integrate it into another draft and we could bring it back first part of February.
>> I'll send you the draft of the application that we have created and the copy of what the city uses now.
>> okay.
let's get the city's policy also.
>> okay.
>> three weeks from today is --
>>
>> [inaudible - no mic].
>> you will be here that day, miss porter?
>> [ laughter ] thank y'all very much.
>> thank y'all.
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