Tuesday, October 23, 2007

Austin is giving away more than it is getting through its economic development deals, according to a report to be released today by Texans for Public Justice. The Austin-based watchdog group, which typically focuses on the nexus of power and money in state politics, found that the city will invest a total of $81 million but lose $8 million on its five current agreements given to individual companies, including Samsung Austin Semiconductor LLC.

Austin loses money on incentive deals, report says

Texans for Public Justice review disputes value of economic development agreements.

By Kate Alexander
AMERICAN-STATESMAN STAFF
Tuesday, October 23, 2007

Austin is giving away more than it is getting through its economic development deals, according to a report to be released today by Texans for Public Justice.

The Austin-based watchdog group, which typically focuses on the nexus of power and money in state politics, found that the city will invest a total of $81 million but lose $8 million on its five current agreements given to individual companies, including Samsung Austin Semiconductor LLC. An analysis from the Greater Austin Chamber of Commerce, however, has said otherwise.

The analysis does not cover two other projects that have received incentives, including the Domain, because the information from the city was incomplete, Lauren Reinlie of Texans for Public Justice said.

The city's economic development deal with the Domain, a high-end retail project in North Austin, has stirred up frustration among small local businesses who want to prohibit similar deals by changing the city charter. The businesses say the city is subsidizing their competition.

The report concludes that "while many cities now routinely dole out incentives, Austin is different. It should capitalize on its difference by managing its inexorable growth ? rather than feeding it."

A chamber of commerce analysis, however, found that the city will generate $93.6 million more in tax revenue than it will rebate for the five projects examined.

There are some variations in the deals reviewed in the two studies. But the primary difference is that the chamber analysis looks not only at the direct financial benefit but also the investments' ripple effect on the economy.

Dave Porter, the chamber's senior vice president for economic development, said the companies that get these tax incentives create jobs and wealth in the community far beyond their own walls.

"At the end of the day, nobody may like incentives, but they're important" for Austin to compete with other cities to land these jobs and investments, Porter said.

A coalition of nearly 400 local businesses is gathering petition signatures to change the city's charter and prohibit incentives for retail projects. Campaign organizer Jeff Heckler said the coalition has collected about one-third of the 18,000 signatures needed to qualify the amendment for the May ballot.

But other incentives deals have not generated the same kind of outrage.

Nobody voiced opposition last week when the Austin City Council granted a tax abatement deal to HelioVolt Corp., a six-year-old company that is planning to build a factory to develop advanced solar energy panels using a new technology.