Austin Mayor says stringent requirements led to National Instr...
http://www.bizjournals.com/austin/news/2014/06/10/mayor-says...
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Jun 10, 2014, 4:00pm CDT
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6/13/14, 7:53 AM
Austin Mayor says stringent requirements led to National Instr...
http://www.bizjournals.com/austin/news/2014/06/10/mayor-says...
Mayor says stringent requirements
led to companies ending
incentives deals
Robert Grattan
Staff Writer- Austin Business Journal
Email | Twitter
Austin Mayor Lee Leffingwell has released a statement saying he is concerned
about the city's "greatly diminished" economic incentive program following the
recent decision of three companies to end their agreements with the city of
Austin.
Leffingwell, who has been City Council's staunchest advocate for economic
incentives, fought against Council's decision to add conditions to the deals such
as a living wage requirement and other reporting standards. He has argued
that the conditions attached to the deal dissuade companies and jobs from
coming to Austin.
On May 22, both National Instruments Corp. (Nasdaq: NATI) and Dropbox Inc.
chose to end their previously signed incentive deals with the city. National
Instruments put on hold altogether a plan for 1,000 new jobs. Dropbox will still
add its planned 200 but without city subsidies. The Mayor also cited the end of
the US Farathane agreement, though it's not immediately clear when that deal
was ended and whether the company is scaling back its expansion plan.
"Over the past few weeks the City of Austin has learned that three
companies, well respected on the global scale, have opted out of
economic incentive agreements which would have assured their
expansion in Austin. The Dropbox, National Instruments and US
Farathane agreements represented close to 1,400 quality jobs,
potentially for Austin residents… some of which would have paid an
average annual wage of up to $72,000 a year, just about what I
make as Mayor of this great city. I have long championed the
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6/13/14, 7:53 AM
Austin Mayor says stringent requirements led to National Instr...
http://www.bizjournals.com/austin/news/2014/06/10/mayor-says...
benefits of economic incentives and strongly believe they have
contributed to our City’s economic success. In recent months, Austin
City Council action instituted stringent requirements in regard to
economic incentives. It concerns me that we have greatly
diminished the effectiveness of our incentive program by placing
burdensome conditions into the agreements. These obligations
range from exceedingly difficult reporting requirements, to new
provisions regarding prevailing wage and minimum living wage, and
other requirements. The disappointing news from NI, Dropbox and
US Farathane brings a total of nine companies out of twenty-one
deals that have canceled for various reasons. I maintain that these
incentives have played an important part in Austin setting the pace
in regard to our unemployment rate, and well respected national
economic standing. We must remember that past and present
success is no guarantee of future success."
Previously, eBay Inc. had also dropped out of a city economic incentive deal,
citing the cost of complying with the agreement as well.
Dropbox, which canceled its deal while citing reporting requirements, is
maintaining a similar deal with the state of Texas to bring jobs to Austin. The
company needed the city's deal to be eligible for the $1.5 million in state tax
breaks, but does not need to maintain the city deal to keep access to the larger
state incentive.
It's less clear why National Instruments canceled its deal with the city, though it
appears market forces may mean the company won't be adding the jobs in
Austin. A spokeswoman for the company didn't immediately clarify whether the
company would still be expanding.
Still, it appears some companies are deciding that the city's reporting standards
aren't worth the incentives offered. As the mayor states, nearly half of the city's
economic incentive deals are now defunct for various reasons.
Robert Grattan covers government, courts and economic
development for the Austin Business Journal.
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Austin Mayor says stringent requirements led to National Instr...
http://www.bizjournals.com/austin/news/2014/06/10/mayor-says...
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Austin Mayor says stringent requirements led to National Instr...
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