Council OKs Economic Incentive Rules
BY MARTY TOOHEY - AMERICAN-STATESMAN STAFF
Thursday October 24,2013
Austin set a higher bar Thursday night for any company seeking an economic incentive deal to move here, requiring that any such deal comes with a guarantee that all employees and construction workers earn at least $11 an hour.
Though council members were still debating minutiae at deadline, a City Council majority had agreed late Thursday to add a “living wage” requirement to any economic development deal that involves waiving city taxes. The requirement is part of a larger, more nuanced incentive policy approved by the council that business groups warned could ask too much of interested companies and ultimately push their jobs elsewhere.
Under the new city policies, companies will have to pay workers more than previously required, but companies can also secure a bigger tax discount. The council also gave itself the wiggle room to waive the $11-an-hour standard in exceptional circumstances, such as with a company agreeing to hire ex-convicts and other difficult-to-employ people. In slow economic times, some day laborers could be making near the federal minimum wage of $7.25 an hour, according to labor advocates.
“We have these 11 agreements (the city has signed in recent years), and they’re working, … but I think what we’ve done over time is make economic incentives a right, not a privilege. We need to make it a privilege, not a right,” said Council Member Mike Martinez, who proposed the new incentive policy along with fellow Council Members Laura Morrison and Kathie Tovo.
The new policies are intended, in part, to make the city’s expectations clearer at the outset of negotiations. The council’s tendency to negotiate last-minute provisions into deals blew up in the council’s face this year when an unusually structured, $3.8 million incentive deal between the city and the developer of a downtown JW Marriott hotel fell apart. The two sides disagreed about how much the company, White Lodging, had actually agreed to pay construction workers, which led to the city’s conclusion that White Lodging was paying less than it had promised. The city then terminated the deal, a decision being disputed in court.
Many labor advocates, including Austin Interfaith and the Austin-based Workers Defense Project, had been pushing the city for more than a year to adopt stricter pay standards to accompany any incentive deals. On Thursday, more than 200 people, many of them wearing the orange T-shirts of the Laborers International Union, gathered on the steps of City Hall to call for the $11-an-hour minimum.
Jeff Santori, the business manager for Southwest Laborers’ District Council, said the argument could be summed up as: “It’s about the American dream. … How much is enough for these corporations?”
The vote even drew David Butts, an influential political consultant who has played a key role in the election of every council member save Chris Riley, but who rarely speaks at City Hall.
“It seems incredible to me that this is even a point of discussion … considering the amount of money made by the corporations who’ve come here,” Butts told the council. “There’s a lot of money being made, and they’re not willing to share it, even with the people who helped them earn it.”
A living wage isn’t the only new provision the council approved. Companies seeking economic incentive packages also would have to pay a “prevailing wage” when a prevailing wage would be higher. For instance, some electricians would make $25 or more under prevailing-wage standards, which are established by the federal government — a threshold that labor advocates fought for, but that business groups and the city’s economic-development department said could drive away interested companies.
“No other city in the state of Texas requires a prevailing wage” in economic development packages, nor do peer cities such as Phoenix, Memphis, Raleigh or Denver, said Dave Porter, the Greater Austin Chamber of Commerce’s vice senior vice president for economic development. “The more things you add to the branch, the more likely it is the branch will fall.”
“This will cost us jobs,” Mayor Lee Leffingwell said.
The new policy also would lay out nine “community benefits” a company could provide, such as committing to building to certain environmental standards or filling at least 75 percent of new, full-time jobs with current Austin residents. The city would use a matrix to determine the value of those benefits and the overall economic impact of a company; a high enough score could result in the city waiving all of its property taxes over the life of the deal.
Business/work
Local
An enacted policy that has been passed to help with a problem/issue that individuals face
This is important because it affects individuals in the workplace in the Austin area. This can have a great impact on the amount of income that is being brought in and distributed by corporations around Austin.
I think that these new incentive rules are going to have a
positive impact on the workers of Austin. It’s about time we actually get what
we deserve when it comes to being paid for our work. I think that this will
help the attitudes and presentation of workers internally as well. When you
feel that you are receiving what you deserve for a certain amount of work, you
are more willing to show up and be productive. As a working citizen, getting
paid minimum wage at certain jobs where I feel I am working like crazy and not
making near what I feel I should be for the work that I put in. I also like the
idea of the exceptions that can be allowed for hiring convicts and difficult to
employ people. I feel that they should not be paid the same amount as someone
with higher standards as an employee, and that everyone should be paid for
their specific work standards and positions. I agree greatly with Mr. Butts on
the fact that this should not have even had to go through discussion. Corporations
do make tons of money and are much too selfish and greedy with it. They should
be willing to share this wealth with those employees who are the backbone, and
have helped bring in the wealth of the company. The company would be nothing
without its hard working employees!
