In 2003, Austin voters elected Will Wynn mayor. He prompted numerous policy changes encouraging companies to remain in Austin. Wynn has labored to make the city less dependent on the semiconductor and software industries, and 2004 brought Austin its first positive job growth in three years.
High-paying jobs, a thriving entertainment scene, premier universities and mild climate continue to draw loyal and talented people from across the country to Austin - and those people don't leave. The city has doubled in size every 20 years since 1900, yet still has a relatively low population of 703,000 people.
The positive growth looks to continue as Wynn lobbies for more companies to relocate to Austin. In this interview, Wynn describes Austin's decision to attach benchmarks to tax incentives in detail.
Q: What benchmarks did companies have to meet to receive property tax incentives?
The Austin City Council adopted an economic development matrix in 2004, [which] serves to score companies seeking economic incentives from the city. Each company is researched and evaluated based on several criteria deemed important to the City Council.
Criteria or benchmarks include: Where in the city is the development planned? Will the company comply with current water quality standards? What is the expected economic impact of the project? How large is the project investment? How many jobs? What kinds of salaries? What is the expected impact on the city's infrastructure? What types of jobs will the project produce? What types of cultural impacts will the project have on the city? Is the company a target industry for Austin? What type of diversity plan does the company practice?
The project must be competitive, meaning other cities either in the U.S. or globally must be competing for the project.
Q: How did you arrive at your list of benchmarks?
The mayor's task force on the economy in 2003 heavily influenced the city's current development efforts. After the tech downturn in 2000, Austin began developing new methods for weathering downturns and exploring ways to diversify our economy. The result of the task force is the current incentive program, the formation of the city's economic development department and other initiatives to promote and guide our economy.The city utilized an economic development consultant who helped develop the framework for our current economic development policy and continues promoting our efforts.
Any components of our current economic development incentive policy were a result of failed projects during the tech boom. Several companies approached the city during this unprecedented growth with big plans that did not come to fruition. The city entered into a couple of deals that did not produce economic fruit and left a sour mark on our economic development efforts.
The new policy carefully measures components of the project prior to awarding a public/private partnership. Our incentive policy is based on performance of the company, which insures the city against projects that end up not moving forward.
Q: What surprised you when laying out these benchmarks for companies?
Austin has a very active citizenry. During development of the current policy, city management and elected officials became aware of the desires of the public in terms of economic development.
Austin is a city with very few economic negatives or detractors. Our economic development efforts are different from a traditional city seeking to spur growth. The city is an "easy sale" to most types of companies, and our policy reflects that fact. Companies seeking new opportunities
in Austin are easy to locate, therefore, our development efforts operate at times in the "growth accommodating" mode.
After 2000, we realized the city's economy could not rely too heavily on one industry. The high-tech and semiconductor industries have been very good to the region for years, but when an outside force causes slow growth in that sector, all of Austin is affected.
Due to this fact, our current incentive policy reflects a diverse mix of business development measures.
Q: You faced some detractors of your business tax incentives. How could you tell you won the debate?
In the first incentive deal after the tech bust, the council voted 7-0 for the project. The project proved a good investment with an employment goal of 500 and investment goal of $400 million.
During and after the third economic development incentive deal passed, positive press could be seen in various publications. This third deal is an effort to attract Samsung's new 300 mm fab - a [semiconductor wafer-making facility] worth more than $4 billion in investment.
The city has seen interest by many Fortune 500 companies. [They] see the city as a good place to do business and expressed confidence in our willingness to work with them.
The city is a lead investor in "Opportunity Austin," a five-year economic development program designed to tell the Austin story. [It] has raised more than $14 million in public and private money, which is a statement regarding the local interest in economic development.
Q: You're trying to make Austin less dependent on software and semiconductors by diversifying the city's economy. How are you attracting new industries, and how successful has the effort been?
Through Opportunity Austin, the economic development team developed a target list of companies that fit into our local business model. This list ranges from our current strength in technology to headquarters, automotive, wireless technology, financial services and clean energy.
Austin Energy is one of the largest municipal electric companies in the United States. This offered many opportunities in attracting and growing quality companies. Companies requiring large amounts of reliable electricity at affordable rates are seeking opportunities in Austin. Austin has become a favorite to Fortune 500 data centers.
These centers process large amounts of critical data and require quality electric power. Austin Energy is also actively involved in the development of clean energy and sells more renewable energy than any other electric utility in the United States.
Austin is utilizing a new airport by taking an old Air Force base and converting the property. This asset is still developing and will continue to provide economic development opportunities, especially with a new interstate highway being developed on the eastern side of the airport. The airport is also being utilized in terms of opportunities with NAFTA [North American Free Trade Agreement]. Austin is situated in the crossroads of Texas and close to the Mexican border.
Recently Austin has been considered as a likely location for new or relocating headquarters. Austin's quality of life and highly educated work force make our region attractive for companies seeking locations to place their headquarters.
With the largest public university in our backyard [University of Texas], Austin utilizes many of the programs that UT operates. These programs help spawn new companies with innovative new products that begin production here in Austin.
Q: How often do you meet with companies to persuade them to locate to Austin?
I meet with companies often. Opportunity Austin meets with a new business prospect weekly. The mayor's office often meets with companies that have promising criteria and would like to learn more about our local public government and amenities.
The city's economic development office works with
more than 30 companies annually. We expect to have four to five major announcements each year with existing expansions or new companies placing facilities in our city.
Q: What companies have you met with lately, and how did the meetings go?
Companies seeking opportunities in Austin range from big financial service companies, semiconductor makers or suppliers, software companies, data centers, biotech, headquarters, and clean energy.
The meetings are always exciting due to Austin's attributes we are able to place on the table. The mayor's office always enjoys getting the "customer" in the store and making the pitch.
Austin often makes the final cut or at least gets a second look at a project the company may consider at some future time.
Q: Some think Austin should switch from building roads to expanding public transportation. How viable is public transportation in Austin?
Austin has a terrific public transportation alternative, Capital Metro. While Capital Metro is independent of the city government, I work closely to ensure the best service to get people out of their cars and off major roads. We double in size as a community every 20 years and have since 1900.
To prepare for this growth, we must radically change our land use patterns, offer the best public transportation and pursue energy alternatives for vehicles.
Q: What made you interested in developing alternative energy, and what is Austin doing to stimulate it? What kind of profitability is the industry showing in Austin so far?
Austin placed an order for 600 plug-in hybrid vehicles to boost interest from manufacturers. Last month, I held a press conference to a packed house at the National Press Club regarding our Plug-In Hybrid program. I was proud to see large, bipartisan support by national elected leaders and overwhelming support from fellow big-city mayors.
A long time ago, people predicted high fuel costs and devastating impact to clean air by vehicle emissions. As one of the 20 largest cities in the United States, Austin has paved the way for alternative fuel and public transportation.
We recently supported a rail initiative that passed overwhelmingly with public support. I will continue to work for increased rail and other public transportation alternatives while working on changing our land use patterns and supporting cleaner fuel emissions. I like to say, if we have to use our cars, I'd like to see us burning west Texas wind rather than Middle East oil.
