Council Special Committee on Economic Incentives - 9/26/2012

We're going to get started.



E got a full agenda and

several speakers signed up.



,

september 26, 2012, and a

quorum is together.



I'll call to order the

meeting and first item on

the agenda is approval of

the minutes for the





[14:04:01]





august 27th regular

meeting.



And I'll entertain a motion

for approval.



Got a motion by

councilmember morrison and

I'll second that.



Any discussion?



All those in favor please

say aye.



That motion carries on a

vote of 3-0 with the mayor

temporarily absent.



We'll go to citizen

communication, everyone will

have three minutes and we do

have quite a few citizens

signed up.



Susan moffett.



Welcome, you will have three

minutes.



>> Good afternoon.



For the record, I'm susan

moffett speaking to you

today as the vice chair of

livable city.



You should have received an

electronic memo regarding --

and I want to be clear this

memo is not intended to be

exhaust sieve and livable

city is continuing to review

possible additional

recommendations including

the issue of local hiring

requirements.



In the four years since

livable city's original 2008

incentive study, austin has

experienced significant

growth and change.



Recent incentive deals allow

the opportunity to better

understand how current

policies play out and to

identify areas that may

benefit from adjust systems.



Livable city believes this

is a time to review the

incentive policies and

appreciates the work of the

subcommittee.



To that end we respectfully

recommend the following

improvements.



1, Employ a public process

to identify specific goals

the city intends to achieve

through the use of economic

incentives and revise the

city's written policy and

evaluation matrix to align

with these identified goals

and ensure accountability.



And I want to stress that

public involvement in

establishing these roles is

a key to countering a

growing perception that

these are all just closed

door deals that don't have

much benefit for actual

austin residents.



2, Require companies

receiving city subsidies or

incentives to provide living





[14:06:00]





wages and health care for

all workers.



We do not want to have to

pick up the tab twice for

basic services for underpaid

employees.



3, Adopt essential reforms

for the process of

evaluating and granting

incentives.



These include, a, require a

city council briefing in

executive session before the

city manager contacts the

applicant with a proposed

letter, and that is

permitted under the texas

open meetings act

specifically.



B, require confidential

disclosure of competing

localities by the applicant

so councilmembers who wish

may do their own due

diligence, and the ag has

found members of a

governmental body are not

prohibited about making

statements about the subject

matter of an executive

session so you would be

within your rights if you

wanted to make a

confidential phone call to

your counter part in another

city.



C, require supporting

information for each element

of the matrix attached to

the matrix and available for

all city council briefings,

public postings and public

hearings.



We need to be able to see

how the scores are arrived

at and compared with

previous deals.



And finally, 4, create a

unified economic development

budget and produce an annual

report tracking current

incentive agreements, and

again, the public needs to

be able to see easily where

our investments are and how

they are doing.



Now, there is the bigger

philosophical issue of

whether it's ever

appropriate for government

to pick winners and losers

in the marketplace, but I am

going to leave that debate

for another day.



In the meantime, we do

believe these nuts and bolts

recommendations will

strengthen transparency and

result in greater community

trust and by-in for any

future incentive deals.



Thank you for your time and

consideration.



>> Martinez: Next speaker

is scott johnson.



Welcome.



You will have three minutes.



Frank and anyone else, if

you want to sign up to

speak, you still have time

to do that for citizens

communication.



>> Thank you,

councilmembers.



Regarding this, I'm

interested in part as I was





[14:08:00]





at the recent talk by

christopher lineburger who

 david's church

and I asked him a question,

I said regarding economic

policies that incentivize

business relocation or

expansion, do those policies

work for or always work

against walkability in urban

areas or in this area

suburban areas.



And he answered that the

incentives that cities give

or counties give or

governmental entities give

only would rank somewhere

close to 8th or 9th in

terms of the reason why

these businesses would

expand here or would

relocate here, and that was

a bit eye opening.



And he went on and I hope

that presentation will be

shown in its entirety on

channel 6 because they were

filming at that particular

time.



There definitely is a public

process where the city makes

it easy, relatively easy for

citizens to engage but this

is not one.



It seems to be that when you

give grants or money to

nonprofits that don't get

their wish by being part of

the budget, there's not a

public process on that

either where the citizens

can chime in and say, well,

did that nonprofit earn that

funding for this coming

year.



One of the items that's

mentioned here in the

presentation to come by

 oden would look at

things such as air quality

or water quality and when

the toyota plant was looking

at cities within texas, they

looked at dallas' air

quality and whether or not

they were in compliance with

standards, and they weren't,

and that is one reason why

they decided to move to

san antonio to open this up.



So I wish that the council

would revamp the process and

I support changes that would

happen or plan to happen

this year or early next

year.



Thank you for your time.





[14:10:01]





>> Martinez: Thank you,

scott.



Councilmember tovo has a

question, I believe.



>> Tovo: johnson, i

just wanted you to clarify

the point you were making

about that gentleman's

speech.



He listed walkability as --

I'm sorry, incentives as

8th or 9th in terms of

what encourages a company to

come here, but I didn't

understand the connection to

his subject matter.



Were you asking him -- did

you ask him the question of

how highly incentive factor

ability -- would you

expand on that.



>> My question was do

economic incentive policies

in the context of trying to

promote business expansion

or relocation, do those work

for or against walkability

in a suburban environment or

an urban environment knowing

that manufacturing plants

when they choose to relocate

or to expand usually look

for land outside of the

urban core even though

downtown is the main place

where we hope walkability

happens.



So he was saying that in

terms of the list of what

businesses look for and

prioritize in order to

relocate here or to expand

here, that incentives would

rank down the list in the

8th or 9th slot based on

his experience in the

 area and

other urban areas.



>> Tovo: So I guess -- i

may still be missing

something, but it doesn't

sound like that's a direct

answer to the question you

had posed to him.



>> Well, he was trying to

answer the question of

whether or not that advanced

the issue of walkability and

how much economic incentive

policy did.



His answer didn't nail it on

the target, but it was

informative to me to know

that that was not what

businesses thrive or or

their foremost interests or





[14:12:00]





incentive when they choose

to locate.



>> Tovo: Thanks for

mentioning.



That I look forward to

seeing that presentation.



>> Martinez: Next speaker

is dave porter.



Welcome, dave.



>> Thank you,

councilmembers.



Dave porter with the austin

chamber.



Excuse me.



I've had a fun morning

yesterday and I did watch

your work session and

discussion about the current

project that will be

considered tomorrow and i

just wanted to comment on a

couple things regarding your

current process and the

current project that will be

discussed tomorrow.



You all have a current

policy for economic

development incentives.



It was adopted, it's been

reviewed and changed several

times in 2003, 2004 when it

was first adopted.



I think the time is right to

look at it to make

additional changes.



A company, though, what they

do is they look at the

policy, they look -- let's

use the current project

before you, the hid global.



They go through the process,

they look at the

application, they complete

the application, they work

with city staff, web loci

model and if it gets to that

point where it's still

moving forward, you know,

then you get this letter

from the city manager about

proceeding, and then the

company negotiates in good

faith a contract, a draft

contract which is presented

to you, which was presented

to you back on

SEPTEMBER 12th.



So up until that point, none

of these add-ons that were

discussed at the 12th are

even mentioned at any part

during this process until it

goes to you guys.



And I know that you

mentioned, councilmember,

the 11th hour situation





[14:14:01]





that you all feel like you

are crammed into or forced

into.



So my thought is let's get

this stuff up front so

companies can expect -- they

can look at your policy and

see what's expected.



Let's not hold the company

hostage.



I mean, I heard that wording

several times.



Let's not hold a company

hostage because it's not in

the current policy.



Let's get through this one

but get the input from

everybody, the community

partners, let's get a

[inaudible] in whatever is

necessary, but the company

is blindsided.



I know you feel blindsided,

but the company too is

blindsided by what is being

asked of them at the 11th

hour when they have felt

like they negotiated in good

faith with the city attorney

and city staff.



City staff does a great job.



But anyway --



>> Martinez: I appreciate

your comments that you are

willing to work on this and

we're going to need your

help.



We want the chamber to be a

part of -- I do, I want to

speak for myself, I want you

guys to be part of any

rewrite in terms of economic

development policy and we

need your input.



Where I will diverge with

you a little bit is the good

faith negotiations that goes

on with staff, while

absolutely true and

appropriate, the contract is

with this council, the

governing body.



And until that decision is

made by the council, there

is no contract and that's

with any case.



That's with any agenda item,

that's with any zoning case.



If a company looks at

austin, texas and they come

to you all and tell you they

are interested, I would hope

that you would let them know

what they are heading into

because every one of these

most recent economic

development agreements have

had every one of these same

conversations.



It's not like there's some

big surprise waiting around

the corner.



And so we need your

assistance in that part

because you guys are the

first to be contacted by

these companies.



Not us, necessarily.





[14:16:00]





So I don't believe it's a

blind side.



I believe it's part of a

negotiated process.



And quite honestly, they

don't have to request an

incentive if they don't want

it, if they feel that

blindsided.



What I'm trying to do and i

believe what this committee

is trying to do is create

the best policy, and just

like you said so that

everybody knows up front

what the rules of the game

are, but, again, ultimately

it ends with a council vote

and that means sometimes

that amendments are made or

requests are made in the

end.



>> I understand.



>> Martinez: Thanks, dave.



Next speaker is carol

hadnot.



>> [Inaudible].



>> Thank you for being here,

ms. hadnot.



We always appreciate you

being here.



Jeffrey santori.



Is jeff here?



Welcome, sir.



>> Good afternoon, mayor and

councilmembers.



My name is jeff santori.



I represent liluna career

center.



I just want to take this

opportunity to thank the

council for the work you

have done thus far to create

good jobs and opportunities

for construction workers

through your economic

incentives.



For example, the green water

master development agreement

and the amendments suggested

by mayor pro tem cole and

councilmember morrison.



On the hid global offer, we

encourage you to continue to

create opportunities for

disadvantaged workers.



To get the training they

need for a career in

austin's booming

construction industry.



And to ensure that they are

compensated fairly for their

efforts at living or

prevailing wages and thus to

contribute to austin's

economic growth.



We look forward to working

with council on these issues

and thank you again for your

efforts thus far.





[14:18:00]





>> Martinez: Thanks, jeff.



Next speaker is emily tim.



Welcome, emily.



You have three minutes.



>> Good afternoon, mayor and

councilmembers.



I'm emily tim with the

workers defense project.



We appreciate the interest

of this committee and that

council has taken in

including construction

workers in the conversation

about incentive agreements

and what the city of austin

is requiring.



We know you've all heard

about the dangerous and

deadly conditions in the

construction industry and

low wages and the need to

address those issues.



We do appreciate bringing

that into the conversation.



These incentive agreements

are an opportunity to create

good construction jobs here

in austin and we think that

we can do that by including

in these agreements certain

things like a living wage, a

prevailing wage to raise the

standards, to make sure

workers are able to support

their families.



We want to make sure that

there is safety on these

work sites and that workers

are properly trained and

that there is oversight to

make sure that those work

sites are safe.



We think it is urgently

important that this is an

opportunity to create a

pipeline to -- for

disadvantaged workers to

obtain training and to

advance their careers in the

construction industry.



We look forward to

continuing this conversation

and to presenting to the

council alongside austin

interface, the building

trades and the other

organizations and groups

that are advocating to

include construction working

conditions as part of the

conversation around these

incentive agreements.



Thank you so much for your

work on this and we look

forward to continuing the

conversation.



>> Martinez: Thanks,

emily.



Next speaker is jim oquinn.



Welcome, you have three

minutes.



>> Thanks for having me.



Jim oquinn with our lady of

guadalupe church, leader

with austin interfaith and





[14:20:00]





specifically working on

economic incentives teams

and wage standards.



I just want to take a quick

moment to thank those of you

that appeared at the civic

academy for homeless on

saturday.



We believe there's a

correlation between low

paying jobs and homelessness

and those who live right on

the edge are probably one or

two paychecks away from

becoming homeless.



So, again, thank you for

your presence.



It was very important for

all of those that were

involved.



Over the last couple of

months, we've had many

conversations over the

process by which companies

receive economic incentives

and we learned a few things.



It appears as if the

community's desire for

better paying jobs is not

properly communicated to the

companies that are applying

for the incentives early

enough in the process.



I think hid global was

pretty surprised a the the

feedback, and surprise may

be putting it mildly at the

meeting last week.



And it's been brought up

just previously.



So I think moving the

education process up earlier

rather than at the 11th

hour would be pretty

productive.



We also realize that $8 an

hour job is better than no

job at all, but these groups

that are sort of mandated

with bringing jobs into the

city through the economic

incentive process and

spending taxpayer money

shouldn't even consider such

low paying jobs.



It should be part of their

mandate to only select

companies that are going to

pay -- we're not saying

living wage, but somewhere

between living wage and

minimum wage.



So we would like to see that

addressed by this economy

along with our five other

primary concerns.



Proper safety training,

career paths, hiring

locally, wage standard for

long-term jobs, wage

standard for short-term

jobs.



And we also believe that

there's a potential for a





[14:22:00]





loophole to happen when the

company who receives an

economic incentive goes off

and hires a third party and

then that third party pays 8

bucks an hour, 7 bucks an

hour.



So I think there should be

some dialogue about any

company that's involved with

the company that receives

economic incentive also

adheres to these same

standards so it's not

exploited as a loophole.



So in conclusion, we look

forward in helping solving

the current sort of

insufficient process that

requires leniency and often

stressful debate down at

city hall between the

businesses, between the

community and between the

councilmembers.



If the expectations can be

set early on in the

discussions with these

companies requesting the

incentives we think it can

result in a much less

contention process.



Thank you.



>> Martinez: Next speaker

the paul saldana.



Welcome, paul will.



>> Good afternoon,

councilmembers.



I'm paul saldana speaking on

behalf of the minority trade

alliance and we're part of a

bigger coalition today of

construction industry reps

that include the agc, the

aca, the abc, the greater

austin chamber of commerce,

reca and our minority trade

association eye lines.



And my focus today was to

talk about the ongoing

discuss regarding the wage

for construction workers.



And we are aware of the

proposal that mayor pro tem

cole has put forward about

disadvantaged workers and

demonstrating good faith

efforts to set aside 15% of

the job.



The conversation that has

been missing so far is

conversation with the

construction industry reps

which is why we decided to

form a coalition.



Some of the followup

speakers are going to speak





[14:24:00]





directly to the policy

decisions that you all are

making and who it's actually

having an impact on.



It actually has an impact on

the smaller guys.



I wanted to point out and

give you an example that's

actually working very well

in the city of houston, and

I hate to ever compare the

city to houston examples to

what we have here in austin

but they are ahead of the

curve because they actually

have a group called the c-3,

crux, career collaborative,

where their focus is

partnering today to ensure

tomorrow's workforce.



They have three primary

goals in their alliance.



The first is specifically

looking at the issue of

hourly and overtime

payments, strong emphasis on

safety and craft training.



At the end of the day, that

ensures that you have all

the construction industry

experts, the actual

construction companies

involved in these

discussions to make sure we

have a sustainable strong

workforce in the future.



Moving forward it's our hope

that we can make sure that

we have a seat at the table

as you all are talking about

the wage increases and

potential initiatives for

disadvantaged workers

because that does have a

direct impact on the

construction industry and

like I said, a followup

speaker will speak and give

you specifics.



I appreciate your time this

afternoon.



Thank you.



>> Martinez: Thanks, paul.



Phil tobin.



Welcome.



>> Good afternoon.



I appreciate the opportunity

to take three minutes today

to talk a little about the

construction industry's

feedback on the economic

incentive plan.



First of all, I thank you

for having a special

economic incentive committee

because construction

companies become very

frustrated when they are not

at the table between the

owner and the city during

these negotiations and often

there's not a construction

industry expert in there

giving some feedback to you

as to how some of the things

that may be tacked on at

city council meeting on





[14:26:00]





thursday will actually

impact the construction

industry.



So as paul said, there's a

number of folks here from

the industry.



[Inaudible] represent

general contractors, members

doing work here in austin,

texas.



A lot of the economic

incentive packages that come

through have addressed

construction issues and in

particular safety and wage

issues.



I just want to let you know,

as I always try to, that we

have a very competent and

very good workforce in

austin, texas and we have

companies that take safety

very seriously.



I would like to extend an

invitation to take all of

you as a group or

individually to one of our

construction sites.



There are a number of around

here.



Every time I go I marvel at

the level of professionalism

and the integrity and the

skill of our workforce and

our companies here in

austin.



I think it's good that there

is community discussion from

people representing workers

at the low end, construction

companies and companies

wanting to come here to

austin and it's tough to

squeeze everything we need

to talk about in three

minutes.



What I wanted to share with

you was following up on what

paul was talking about with

the c-3 group, the issues

that we talk about here are

wages and safety 6789 and i

have some alternative

language I included in a

letter to each of your

offices.



I have a handout here,

basically three points that

I think would be great to

include in economic

incentive plan.



Pay by the hour with

applicable overtime for the

workforce in lieu of piece

work payments to craft

workers.



Provide worker security by

paying unemployment taxes.



Making sure all workers are

fairly classified and

everybody is paying into the

unemployment tax coffers.



And with regard to safety,

make sure that craft workers

on the site have a 10-hour

construction card and that





[14:28:00]





supervisors has a 30 hour.



All those provisions are

incorporated in general

provisions of the city

public works document and i

think that's a great place

to start is what you require

of contractors doing work

for the city.



So I can hand that out to

you if you like and i

appreciate your time.



>> Martinez: Thanks, phil.



I think we have one question

for you.



>> Morrison: I wondered if

you had any specific

comments -- I got the

feeling you were going to

perhaps mention some

observations about, i

believe it was mayor pro tem

who made a suggestion for

hid global to consider about

disadvantaged workers and

setting a goal of hiring a

certain percentage of those.



Did you have any specific

comments on that and do you

see that as having a

negative impact on the

construction industry?



>> Well, it's a challenging

issue for a lot of different

reasons.



The construction industry is

very complex.



You might have a company

that is just petting a

temporary fence in so you

have somebody doing that

work as a subcontractor and

they are hiring people for

one or two days and a couple

things have to happen in

order to meet that 15%.



They already have a -- they

go out and get a new

workforce, they are telling

their loyal workers who have

been there for a long time,

hey, you don't get to work

on this, we're taking people

who haven't been trained and

they are getting a higher

wage essentially.



That creates challenges.



Anecdotally, talk to people

who are looking to hire

people into our workforce,

they have ads in the paper

or doing outreach and it's

difficult to get people into

the construction industry.



Part of that, I'll put the

blame partly on the

construction industry

because I know 19 and

20-year-olds can go down to

the oil and gas industry in

the houston area and they

are making $75,000 a year

with a high school diploma.



And our industry has to

realize that and has to

realize there are only so





[14:30:01]





many workers out.



There paul was talking about

c-3 and what they are doing

in houston.



Part of the reason they've

come together is because

they are losing workers to

other industries, oil and

gas.



Trying to get a trucker,

there have been reports of

concrete shortages on job

sites because there aren't

truckers trained to deliver

it.



So to your point, you know,

if it's reaching out, we're

happy to help in that

regard, but the frustration,

kind of as dave alluded to,

not knowing what the

economic incentive game plan

is for each of these private

jobs, so trying to

streamline that.



Whether this included that

or not, that's really the

frustration.



>> Morrison: Okay.



So I'm gather, the points i

heard you say are to some

degree you might be

concerned it displaces

existing workers

potentially.



>> Correct.



>> Morrison: And then just

the challenge of the

outreach and -- that you

offer to participate in

[inaudible] thank you.



>> Martinez: Phil, i

wanted to ask a followup

because I've heard from the

contractors on this issue

before and it sounds similar

to what you mention, but i

wanted a little more context

because I still don't fully

understand it when a

contractor says -- and the

example you used was

temporary fencing.



We may have someone that

works for you that we

subcontract with that we pay

$9 an hour to do temporary

fencing, but because they

are going to do it on a hid

global job or an ex-job that

the council voted on to set

a floor of $12 an hour, now

we're kind of caught in this

limbo stage of either

bumping them to $12 an hour

for this temporary position

and then bumping them back

when they go to another job

or hiring someone off the





[14:32:01]





street and just paying them

$12 an hour for that

one-time job.



How is that different from

agc and any other contractor

applying for a city project

that absolutely has a floor

of $11 an hour?



>> Well, prevailing wages

for travis county and city

57 on

up to 38 bucks an hour.



So there's actually, as i

understand it, levels of

craft workers who are below

that.



>> Martinez: But not on

city of austin projects.



All public works projects

and all projects of the city

of austin have a floor of

$11 an hour, even if the

prevailing wage scale is

below $11 an hour.



I'm struggling with how does

that scenario differ from

the one you are referring

the and why is it causing

problems for contractors

that bid on city jobs?



>> They know what it is.



It's stated on the

documents.



When they go to pre-bid,

they are given notice, okay,

everything is going to be

this on this particular

project.



>> Martinez: Okay.



Paul, did you have something

you wanted to add to that?



>> That's the point --

[inaudible]



>> Martinez: Good.



He's our next speaker.



Frank fuentes, you will have

three minutes.



>> Councilmember.



>> Martinez:,

Councilmember tovo,

councilmember morrison,

thank you for allowing us to

come here before you and

express our concerns.



If, certainly on the

 morrison

asked, with respect to how

our industry works, and it's

not as easy and as simple as

it works.



It's very complicated.



It's a big jumble puzzle, if

you will, and the prime

contractor puts the puzzles

together.



The contract between the

city or in this case a third





[14:34:00]





party owner has all these

requirements.



And so the prime contractor

now has to insure that all

the pieces that are below

him have to do this

outreach.



A simple construction

contract has 16 divisions.



Let's just start with the

mechanical, electrical and

plumbing.



A mechanical contractor has

your ac subcontractor, and

the ac contractor has a

testing and balancing

subcontractor.



It also has a sheet metal

subcontractor.



And down below then you have

your installers and a lot of

this work sometimes is done

outside from the job site.



Let's say somebody says this

job is going to take a year

and typically for that

particular subcontractor

he's not there for a year.



He can be there for a week,

he can be there 30 days.



And so when you implement or

institute this policy, it's

not consistent because it's

specifically for that

particular job.



Now, with respect to your

question, prevailing wage

scale, we've gone dealing

with that for many, many

years, not only at the

federal level but at the

city level.



Contractors are already used

to that and for the most

part on commercial projects

those classifications, if

you will, that phil was

referring to already exist.



And so companies already

have those particular

classifications lined out on

their payroll.



When you institute, like a

$16 an hour raise for

unlicensed or unskilled

workers, for example, it

becomes disruptive to the

small contractor.



Phil described the temporary

fencing, your erosion

control.



Those guys come in at the

very beginning and they are

there for a week, yet they

are going to have to adhere

to the policy that council

institutes.



And it's very disruptive

because that worker, that

laborer walks away with that

pay raise.



You can't take it away from

them.



It's very disruptive to





[14:36:00]





small business.



Now, your intent is very

good.



No one can deny that your

intent is good.



There's got to be a way to

make it work, though, so

that this complicated

puzzle, if you will, at the

end of the day, it all works

and your intent actually is

realized without hurting the

small business who is

actually going to have to

hire these new workers

because if mayor pro tem's

policy comes true --

[buzzer sounding]

-- they are going to have to

hire from this 15% pool that

we have to now outreach --

I'm sorry my time ran out.



>> Martinez: That's okay.



Go ahead and finish.



>> If I understand the

policy the mayor pro tem

cole is trying to institute

is a 15% goal to reach out

to disadvantaged laborers.



And here is also the

distinction.



We're talking about laborers

versus companies.



Companies contract with the

prime contractor and with

the subprimes.



You have a lot of tiers.



But ultimately the laborers

work on the small tiers, the

small businesses.



Those are the ones most

affected by the policy that

we're now discussing, if

that makes any sense.



At any rate, if that policy

is instituted, now the lower

companies, just to get

through the bidding process,

have to now retain more

resources to do this good

faith effort, if you will --

because good faith really is

just a measurement of your

heart.



How well do you really want

to reach out to these folks,

and you have a measurement,

if you will.



So it takes resources to

really measure your heart,

if you will, your good will,

if you will.



So it's just another added

cost to the bidding process

to something that you might

not even get, to something

you might be working for a

week, a month, two months.



So it's not as simple as

mandating the company that

owns a factory, if you will,

and letting them know you





[14:38:01]





will only hire -- and these

are the rules to hire and

the employee is there

forever.



You can manage your

profitability because you

have a long-range, if you

will, of time to do it.



I hope that makes sense.



>> Martinez: Actually i

think a light bulb just went

off in my head.



I want to ask staff a

specific example.



So we have $11 an hour floor

on city of austin projects.



Is that correct?



>> That's my understanding,

if we have a project where

the city is actually funding

that contract.



>> Martinez: Let me give

you a somewhat hypothetical

example, and this is

hypothetical so don't read

into this this.



So I build a new house and i

tell my builder what kind of

cabinets and vanitys and

bookshelves that I want and

it's x amount, 60,

70 thousand dollars worth of

cabinets.



They spend the next four

months at their shop

building these things, but

they only come to my house

for four days to install

them.



How do we implement a $11 an

hour minimum wage on the job

site in that scenario?



>> That's some nice cabinets

you are getting.



You know --



>> have you seen his house?



>> Hey, hey.



>> I have not.



>> Martinez: You don't

want to go there.



I've seen yours.



>> I guess assuming that

it's a city project then so

you are asking the $11, i

guess it comes in the

installment, those that are

actually at the house doing

the installment of those

cabinets as opposed to those

back in the factory making

them because you don't know

specifically where are those

cabinets going to be

manufactured.



>> Martinez: And in my

hypothetical, the installers

are the same folks that

manufactured them in the

wood shop back at the

cabinet company abc.



>> Okay.



>> Martinez: That's a real

scenario in my mind, you

know, at a city of austin

project if we're building





[14:40:01]





the energy control center

for austin energy, we're

bringing in tons of modules

of equipment whether it's

electronics, computers,

desks, cabinets, that are

being manufactured and built

off site and then installed,

if you will, and backed into

a space.



How do we -- how do we

enforce a in $11 an hour

minimum wage on that?



>> I guess, you know she

it's a difficult question.



If you are looking at being

up front and saying every

position associated with

this entire process needs to

make a minimum of $11 an

hour.



When that company bids on

that particular project,

they are going to

incorporate that, and if

that's an increase in terms

he have what they would be

paying, you would pay a

higher rate for the work

they are doing because you

directly are paying for that

higher wage.



>> Martinez: I just see

that as problematic and it

was very difficult to

enforce scenario.



And that's just one

scenario.



>> Your point is incredibly

correct.



You take the steal erection,

for example, the steal is

fabricated outside

specifically for a job and

in this factory, if you

will, you've got all kinds

of -- type of skilled

workers with different pay.



And if you are going to

institute unskilled labor at

a certain rate, how in the

world do you police that,

number one.



Number two, if you only do

erection, you are

mandating that particular

company to raise the level

of pay for only the certain

time amount that it takes

for them to erect that

structure, if you will.



Not to mention supplies.



>> Martinez: Councilmember

tovo.



>> Tovo: Well, I think the

question you raised,

councilmember martinez, is a

good one, and I wonder how

the city monitors that.



Is there a bright line

between installation that

happens on site or does

the -- not get it backward,





[14:42:01]





the wage floor extend to

anybody associated with the

job and if so how do they

regulate it, and I think

that would point some

directions as to how an

incentive wage floor might

work if we're trying to

capture all of those who

work on a job whether they

are working on site or

contributing to the

production of things.



>> I think what wee need to

separate here, there's a

couple things.



One, we're talking about

wages for construction

associated with a project,

if you will, and that's

generally going to be

something public works is

doing.



We're not in terms of

economic development out

monitoring the wages

associated with that.



What we do monitor are all

the wages associated with

the company that we're

working with that has an

agreement with the city

that's creating those jobs.



We monitor that.



We make sure they hit those

wage goals as are outlined

in any contract.



I'm not qualified to say how

we as a city monitor that

$11 an hour threshold or

floor for that project.



That being said, I would

assume there is a way to do

that.



>> Tovo: And [inaudible].



 fuentes, I have a few

questions.



I want to make sure i

understand your point -- or

the many points you made,

but are there any

circumstances in which you

have -- a contractor has an

ongoing relationship with

different contractors,

different subcontractors and

they may have a certain rate

on one job and a different

on another.



I hear what you are saying

about -- about an

incentive -- if the

councilman dates a

particular wage level for a

job, that that gives certain

workers, as you said, a

salary increase, but then i

assume the point you were

making is that a contractor

then needs to pay at those

same rates on the next job

and the next job and so --

am I understanding your

point correctly?



>> If I understand your

question correctly, let me

answer it this way.



My point was if you have an





[14:44:01]





employee and you give him a

raise, you can't just take

the raise away away from him

once you give it to him.



Does that make sense?



>> Tovo: Yeah, I mean that

makes sense.



It's not exactly the same

relationship when you are

talking about a general

contractor and

subcontractor.



>> Right, about out the

policy, if I understand

correctly the policy that is

being discussed is for

employees, is for labor, not

for contractors, not for

businesses.



Although the businesses have

to fulfill the requirements

with their employees.



When you are paying somebody

by the hour, he is your

employee.



There's no doubt about that.



So I guess I'm not

understanding your question.



I'm trying to.



>> Tovo: Yeah, I'm just

trying to understand the

point you are making and i

think we're moving in that

direction.



>> Real simple.



>> Tovo: But I think -- so

if I'm a contractor and i

have -- and I'm doing --



>> councilmember martinez is

your --



>> Tovo: We're working on

his house.



>> Oh, okay.



>> Tovo: I ordinarily pay

them, say, $8 an hour.



And now we're going to work

on a job that received

incentives and there's going

to be a wage floor of $11 an

hour.



Are you suggesting that

there are no -- that there's

no way that I can work with

my employees and say on this

job you are going to receive

$11, but after this project

is over you are going to go

back to your regular wages?



I think the hope I've heard

expressed is this will lead

to livable wages for

construction workers on all

the projects so by no means

am I suggesting it's a good

situation for a contribution

worker's wages to go down

after they've completed a

project that received

incentives.



>> I think I understand your





[14:46:00]





question.



No doubt the intent is a

beautiful intent.



And if I could support it

right now, if I knew there

was a clear plan for it, we

would probably support it.



But there is no clear plan

because the construction

industry is very

complicated.



Councilmember martinez just

pointed out one scenario

where it would be hard to

monitor.



In terms of employees, it's

like -- city employee, for

example, if you send them

out to work at a different

park that's federally

owned -- federal owned and

he's only going to be there

30 days, you can't give that

city employee a raise and

take it away from him.



At least I don't think you

can.



If he walks away with that

raise.



If he walks away with that

raise, you just cannot do

that.



>> Tovo: Yeah, in my -- i

mean, it does -- maybe this

is a misperception of some

of the contractors and

subcontractors, but it seems

sometimes there is nor

flexibility.



A contractor might work with

a particular work of

contractor -- it's not as

consistent.



I'm not sure the analogy is

apt.



A clear consistency between

the employees who work with

a particular supervisor.



>> But the policy we're

hearing is for laborers, not

for contractors.



It's not for businesses.



Contractors are businesses

that hire employees.



More specifically on

public -- a public works

projects they are employees.



They are just not labor that

you pay by contract.



If you are looking at the

private sector, that's more

apt to happen.



But if you have to submit

certified labor report,

that's difficult to do.



>> Tovo: So -- and i

understand -- I mean so we

have a contractor who is

working with a good up of

laborers.



On the next project those

laborers may be working with

a different contractor on a

different project.



>> Then they are not





[14:48:00]





employees, they are

contractors.



They are contract labor.



They are not employees.



And therefore they would not

be held to the policy that

you are discussing.



The policy that you are

discussing is people that

work by the hour.



They are labor, hourly paid

employees.



The discussion then turns to

how are we going to pay the

contractors.



Are we now asking the

contractors to work by hour?



Then that's a different

definition.



>> Tovo: Well, I think we

have more --



>> I don't know if I'm

making sense and I'm trying

desperately to do that.



It's a very complicated

policy because it's a very

complicated industry.



I know it looks simple, but

you take the electrical, for

example, you have within the

electrical you have high

voltage, you have your

regular electrical that you

see in a building, then you

have your security systems,

which is low voltage.



These are different types of

subcontractors, different

businesses, if you will, and

you are mandating that

policy to them.



It's just a complicated

industry.



>> Tovo: I understand.



I'm married to a, an

architect.



I understand.



But I do want to earth about

understand your point, but

we can take it up on --



>> I would be happy to sit

down with more time.



>> Tovo: That would be

useful.



>> I'm hoping by the end of

this week we can even draw a

flow chart that will better

paint a picture of our

industry.



>> Tovo: Great.



Thank you.



>> Martinez: Councilmember

morrison.



>> Morrison: I just wanted

to ask staff, I think by

tomorrow we're going to have

some answers to that issue.



I think the specific

language that we had at the

last meeting, I might be a

little bit off, but I have

some papers here that i

worked from, we can check,

but the applicant will

ensure the contractors and

subcontractors pay workers a

minimum of and then it went

on from there.



So we're going to need to





[14:50:02]





have the answer to the

question, especially that

councilmember martinez

brought up, and that is how

do they do it on our public

works projects now where

they are required to pay a

prevailing wage and that

contractor might not always

pay a prevailing wage.



So how do we handle it in

any case.



I'll look forward to that

and yes, we're on a very

short time line and we

haven't gotten any answers

yet back from the questions

that we did propose a couple

weeks ago.



So we'll have a long

discussion, I'm sure.



>> Martinez: And I just

want to state that my

question today is for a

prospective policy.



I understand your concern

about applying it to

tomorrow's decision, with

what worry doing here in my

mind is not about tomorrow's

decision, it's about the

contemplated change in the

policy somewhere down the

lane.



But I appreciate your

concern.



>> Morrison: Yeah, i

suspect the issue is going

to come up tomorrow and i

also appreciate that it

needs to be a part of this

discussion.



I also will look forward and

I think we can maybe just

leave this till tomorrow,

but I think we need to

explore the issue about good

faith effort for hiring a

certain percentage of -- of

disadvantaged workers for

the long term, but also it's

going to come up tomorrow

and so I don't know if you

all will be able to do some

discussion with those

[inaudible] and I suspect

there will be some people in

the community that will be

able to help us have that

dialogue.



>> Martinez: We have three

preparations and

unfortunately, folks, we

have some conflicts about

00 for some of the

committee members.



So I'm going to ask the

presenters, I think you were

given a heads up to try to

keep them within 20 minutes.



So we will go on to agenda

number 3, which is

presentation from michael





[14:52:02]





oden from the university of

texas regarding economic

incentive agreements.



Welcome.



You can sit if you would

like.



I don't want you to stand

for 20 minutes.



>> Hopefully I won't take 20

minutes.



>> Martinez: We'll crank

the ac down and make you

stand so we can get through

this.



>> Yeah, well, I want to

express my gratitude for

being invited to comment by

the councilmembers to the

committee on economic

incentive.



I've been involved in

economic development policy

and have written on economic

development in austin

specifically less so in the

past few years because I now

have administrative jobs at

the university.



But I study and teach

economic development

 and I wrote

a study back in may of 2008

and I participated in the

city working group to revise

incentive process back in

2009 which led to some

changes in the policy.



Which I think generally have

worked pretty well.



I'd like to start by trying

to sort of put economic

development incentives into

a broader context.



And I'm probably not going

to be telling anybody

anything they don't know,

but I think we oftentimes

get fixated on tax

incentives to firms thinking

that if we don't do that, it

will stifle growth or if we

do do that, it just

corporate welfare pure and

simple, et cetera.



And we don't understand, i

think -- we forget sometimes

that economic development is

really our -- is one tool in

a big toolbox and that it's

probably not as substantial

in terms of shaping our

growth and job development

as we sometimes might think





[14:54:00]





it is.



You know, almost all private

investment that occurs day

in, day out, year in, year

out in the city of austin

has nothing to do with

getting or not getting

economic development

incentives.



Private market is out there,

it's working.



In good years, it's

generating jobs and

opportunities for people.



And we have a $90 billion

economy in austin.



So whether we grant a

million dollars in

incentives a year every year

really has no major effect

on that.



In fact, I think you

completely shut the window

on economic development

incentives you really

wouldn't notice a negligible

impact on anything in terms

of the broader economy of

the city.



City governments can most

effectively support job

growth by the provision of

quality public services, by

retaining and burnishing

local amenities, by helping

to build and sustain and

attract high-skilled workers

to the community.



So -- okay.



Sorry.



So the stuff in the picture

is probably more important

than whether or not we give

a $500,000 economic

development incentive to one

or two firms every year.



So in terms of sustaining

austin's fairly impressive

record of economic growth.



Furthermore, direct

incentives to firms to

encourage relocation or

expansion in austin are

really a small part of a

much broader economic

development strategy that

involves numerous city





[14:56:01]





departments and

subdepartments.



So incentives really are

significant, it's very

important that we have a

good incentive policy, but

incentives really hardly

make the world go round in

terms of economic

development.



I think we sometimes get a

little too fixated on them.



Why do firms decide to

locate in one region versus

another.



There's a long list of

reasons and firms that are

relocating or expanding in a

region look at all sorts of

factors that are important

for their business success.



They look at transport

costs, labor costs, land

costs, the skill of local

labor force related to what

they do specifically, labor

and business regulations,

whether they are local

research and development

assets they might draw on if

they are a certain kind of

firm, education and

training, local supplier

industries, et cetera.



And they also look at things

like site and building

availability, neighborhood,

urban and environmental

amenities.



They look at a very long

 johnson

suggested earlier, local tax

burdens and incentives

are -- the research is

pretty decisive, they are

way down the list.



So, again, these other

things that the city is

involved with, be it

employment and training,

participation in training

programs, be it maintaining

high quality urban amenities

of various kinds are more

important to the economic

development process than

direct tax incentives to

companies.



So why then do we brother

with them?



Why are incentives justified

and why might they make

sense in particular

instances.



I do not oppose

incentives on principle but

I think they have to be used

only in certain





[14:58:00]





extraordinary circumstances

where the benefits of

attracting a certain kind of

firm and industry are

exceptional.



And these are some of the

factors that might justify

offering a firm a direct tax

incentive.



A firm should export its

product to national and

global markets because it

will grow a lot, generate a

lot of jobs.



It should offer wage

premiums.



It should offer average

wages above what market is

offering.



This should be something

special in that regard.



The location or expansion

should consider -- would not

occur without the senate

itself.



Are the incentives really

critical to this firm's

location?



Given all those other

important factors that firms

really consider when they

are deciding about a

location.



And are there significant

positive effects on other

firms in the region from

enticing one firm to locate

or expand in a region.



Are there higher customer

links, research and

development knowledge spill

over, a specialized labor

pool.



So all of these benefits are

important to understand and

verify and they do justify

in certain circumstances, i

would argue, offering a

direct incentive to firms.



You know, I think i

sometimes have been seen to

be a critic of austin's

incentive -- I also think

austin on balance does a

pretty good job of managing

incentives.



We're very disciplined

relative to other cities in

offering incentives.



Very a very strong

performance based system,

maybe -- a strong

performance based system.



If a company doesn't do what

it says it's going to do,

they do not get the tax

incentive and we have a

strong and very good process

for that.



I think we have improved the

process for evaluation of

deals.



And many of the deals that

we do meet the criteria i

just laid out for being an

exceptional or extraordinary

deal.



So we're doing a lot that's

right, but we -- and I think

it's absolutely crucial and

I think one reason why our

incentive policy is pretty

good is that we do revisit

it, we try to tweak it, we

try to improve it every so

often.



I was involved in the

2008-2009 period and I'm not

sure what it was exactly, i

think it was a working

group, involved mostly staff

and councilmembers and the

mayor sat in on occasion, i

don't think it was a formal

committee, but we went

through processes and dealt

with certain sorts of

complaints.



Part of that we eliminated

incentives for retail, which

makes certain -- which makes

complete sense.



We created a much better

opportunity for public

deliberations and

discussion.



We created a regular,

consistent process for that,

and we ensured that each

deal was evaluated through a

relatively sophisticated

kind of cost benefit model,

whereas before they were

kind of cost benefit models

were just kind of brought in

for each individual deal.



Now they are evaluated by

the same criteria.



So I think these are real

improvements.



It is my feeling, and i

don't, you know, have privy

to local pollers or polling

information, but I do think

that there still is a high

degree of questioning and

opposition to the granting

of direct incentives to

firms, and from what I've

heard and from what I kind

of understand, these are

some of the major complaints

that are common.



The perception is that

incentives are used

selectively and

opportunisticly not tied to

an economic development

strategy the public really

understands.



The public doesn't really

understand and tried to

communicate but I don't

think it's effective to

communicating to citizens

why are we doing this, what

are specific goals in

granting these [inaudible].



And I don't think the public

really understands why and

they view it as deals and

corporate welfare and so on

and so forth.



I think the perception is

that despite the policy

changes that we did work on

in 2009, that the deals are

basically fully baked or

predetermined when they are

murder presented for public

discussion.



So people go to the hearings

and so on and so forth and i

think a lot of people

perceive it a donedeal, i

can say I oppose it but it a

done deal and that can be

sort of demoralizing.



I think there's a perception

by some after three decade,

and this has been a long

precedent in the city, we

have been offering

incentives to firms that are

not creating living wage

jobs.



This is a change in

direction that's troubling.



And then there's the

perception by many that some

companies would come and we

didn't really have to offer

the incentives.



I think these are the main

things that you hear and

council people probably have

a better sense of this

because they deal with the

public every day, but i

think these are the kind of

problems and perceptions

that people have and I think

as we change this policy, we

really ought to try to

address at least in part

some of these perceptions.



If I look at the deals that

have been done after the

2009 reforms, there were

seven deals.



And I've done a -- you know,

my own personal quick

assessment of these deals

and I don't pretend it's

definitive, but I look at

the reasons why you would

offer incentive in these

cases.



Why this deal was

extraordinary.



And then whether the

incentive was critical to

the firm really coming here

or not.



And whether the senate i

have is critical or not is

complete guesswork.



And I think that's part of

the problem with official

basis is it's very hard and

the way the institutional

setup is it's kind of

designed you can't really

answer but for the incentive

question.



But when I look at the deals

that we've done since 2009,

I noticed one that the

incentives are very small.



So it's really unclear to me

whether these -- in some

cases really tiny incentives

were really the decisive

factor that determined

whether a company came here

or not.



I would be very surprised if

it was.



Because, again, all these

other factors shape whether

a firm thinks that austin is

the right place for it to

locate.



And I this I a couple of the

deals, my assessment of the

legal zoom deal and the fair

thane deal.



The other cases I think you

could make strong arguments.



And I think that when we

look at this, we have a

pretty good record but a

record and questioning that

comes up in these cases why

are we incent a back office

operation.



Is it really going to yield

these extraordinary benefits

that I think you need to

communicate and justify

offering incentives?



I would offer no.



Why are we offering a tiny

incentive, granted, but

incentive nonetheless, for a

company that really is not

paying a living wage job.



So I think there are

questions associated with a

particular -- I don't think

we've done a bad job, but i

think in a couple of cases

there's kind of head scratch

ago this kind of feed into

some of the public

perceptions I was talking

about.



So these are my sort of

takes.



These are what I would argue

would really help address

some of those public

perceptions that I outlined.



I really do think the city

should work with broader

constituency to better

articulate and communicate

the specific goals that will

be achieved through the

offering of incentives.



And based on that revise

this firm based scoring

matrix and explain the

scoring to the public.



Because for each of these

deals, the scoring matrix is

presented.



25 Points in the case of

legal zoom of being linked,

having critical linkagees to

local economy.



Maybe there was evidence

that I couldn't understand,

but I didn't see any sort of

thins.



This is -- these are the

important links that we

reveal when we examined it.



So again, I just don't think

that we're communicating to

the citizens and voter why

we do this stuff.



And I think we've got to

communicate this is our

goal, this is why we're

doing it and we're doing it

by this and we're grading

these potential deals by

these criteria.



I think, and this is I think

a fairly easy and modest

tweak to the process.



I think that the council

should be briefed in

executive session, this kind

of came up earlier in

 porter's comments,

allowing the councilmembers

and the mayor to kind of

offer questions and

deliberate before that

letter is sent to the

applicant outlining the

agreement.



I think if I were on the

council and I sort of

entered the process once

that conditional kind of

agreement had been sent to

the firm, I would feel like

to oppose it I would be

opposing at that point not

just the firm or not just

the idea we should give

incentives, but opposing the

judgment of the city

manager.



I think before that judgment

is made, that the

councilmembers and the mayor

should kind of get a sense

of what this deal is, what

some of the issues are, is

it worth doing, et cetera,

et cetera, before the

agreement is baked.



I think that the city and

staff should produce a kind

of across the departmental

budget that really outlines

all the economic development

activities occurring this

the various city

departments.



And I think the staff could

do this probably in a day or

afternoon.



But there are lots of

economic development

activities as are more

important than are

incentives that are

occurring in small business

support, in business

incubation, in support for

certain kinds of employment

and training and so forth

and it would be good to have

a map of all of the economic

development functions that

the city carried out by

department.



And I think that would allow

you to say, okay, this

company wants to come here,

these are the kinds of

services, not just

incentives we could offer

them some other things.



I think that would be a

simple, straightforward

thing to do that I think

would actually give us much

better information.



>> Martinez: I want to

make sure you get through

your presentation.



20 Minutes.



I just want to make sure

everyone else get their

presentation as well.



>> I'm done.



The final thing is I think

we should have a

confidential disclosure of

compeing localities.



Estimating argument, well,

wedon't offer incentives they

are going to community x.



And I think everybody has a

right council and staff to

say, so on.



So I think this helps deal

with the problem of -- of

the if but before the

incentives question.



Thanks.



Appreciate it.



>> Martinez: Thank you.



Any questions?



Councilmember tovo.



>> Just a couple quick ones.



I want to thank you for

being here and for the time

you've put into the

presentation.



I think you've offered us

some interesting

perspectives to think about

and to consider as we move

forward.



And thanks, of course, on

your past work on our

incentives program.



I wondered, it's come up

multiple times and I think

you are right in saying that

there is a public perception

that some of the firms might

have located here without

incentives.



Do you have any suggestions

on how we might collect

better information or how do

we get at answering that

question of whether or not a

firm would have located here

without the incentives?



You've offered a few ideas,

collecting information,

asking the staff doing those

negotiations to collect

information about that and

then perhaps doing some

verifying of that

information.



>> I think that's an

important step.



The other way you can get a

better idea, you can never

answer that question

completely because this

whole process has asymmetric

information.



That means one party to the

transaction has a lot of

information and the other

part to the transaction

doesn't have much

information.



That gives the party with

information more power.



So it's always kind of

mystified me why we kind of

allow that process to be the

kind of business as usual in

this domain.



But I think if you -- that

little list of location

factors that I laid out at

the good evening of my talk,

I think if you look at that

and say, okay, here's why

this firm really wants to

come here.



We have this, we have that,

we have that, we have that.



Is the competing -- does the

competing jurisdiction

really have all of that?



And if they do, well, maybe

the incentive will be the

kind of tipping factor.



But if the other community

or competing community is

clearly inferior in a number

of these locational factors,

that suggests you probably

don't need to offer

incentive, or if the other

community is clearly

superior in a lot of those

location factors, it would

probably suggest if you have

to pay them you would have

to pay too much because you

would have to be

compensating them for having

infear your assets here

versus the community they

might move to.



So I think you can never

answer the question

completing, but I think it's

really worth trying to get

at it as rigorously as

possible because if you

offer -- it could be the

best deal in the world and

it could do wonderful

things, but in a city offers

an incentive and it doesn't

have to, that's a direct

transfer of revenues from

the taxpayers to the company

stockholders.



It could be the best deal in

the world, but if you didn't

have to use that incentive

to get them, it's still in

that lot.



>> Martinez: Any other

questions?



>> Morrison: I just want

to highlight one point

you've made and that is back

on one of the earliest slide

about why direct incentives

and the last bullet is

significant positive effects

on other firms in the region

and supplier customer

linkagees and all.



I hear you say that and i

think making sure folks

understand what we're

working with, that tied to

the livable city in terms of

let's really define our

goals.



I also know that opportunity

austin and the chamber have

set things that fit into the

goals and I think we're

hearing the same thing in

many different languages and

it's important that we

address them and have some

public dialogue so that they

are understood and do they

need to be refined and we

get them in terms of some

higher level goals and

things like that.



I hope that's one thing

we'll be able to work on.



>> Thank you.



>> Martinez: Thank i, sir.



The next item is a

presentation from a dear

friend of ours who left us

and retired, used to work

for the county, it's good to

have you back, leslie.



>> [Inaudible] I kind of had

a peripheral role in that.



>> Martinez: Just to tee

this up, the county is

obviously a part of these

deals that we make and you

all are contemplating

potential changes to how you

structure your economic

development agreement and

that's why we've asked you

to come present to us the

things that you all are

looking at and things that

you find kind of heading in

the right direction, if you

will, toward where the

commissioners want to land.



>> And I've got a power

point for you that I think

you can make up some time

with me.



You all remember I talk

pretty fast.



But anyway, we are in the

middle of process.



It had actually been ongoing

before I went to work at the

county and the way it got

initiated, we did have a

policy in effect that

expired in 2011 that had an

end date.



[One moment, please, for

change in captioners]



>> but do that in the july or

august time frame.



The development consumed us.



We didn't get there.



Now we're having a session in

mid october to address

everything that was left because

there were I want to say about

ten issues that the court wanted

to discuss before they finalized

something.



And hopefully after that, we can

get to the point where we

adopted a revisedeconomic

development policy.



In the current draft, I thought

this slide would be helpful for

you, a little history of what we

did previously in the county.



In the last policy, the focus

was on the large dealings, the

large expansions.



The minimum was $100 million in

terms of the capital investment.



The minimum jobs requirement was

minimized and we reduced it and

we could look at hiv global, for

example.



They've only done one agreement

since I was there, the apple

agreement.



And there has been a lot of

living wage inclusions in there.



It's for the employees that work

at apple.



It doesn't relate to the

construction.



In the new policy, we have

minimum requirements.



Again, this is a draft that

hasn't been adopted yet.



So there are rebate percentages

associated with the minimum

requirements depending on the

magnitude.



They grow on a sliding scale.



I've included all of that in the

back here.



And there's add-ones in the

event that you achieve

additional things.



That's the next to the last

bullet.



We've got incentives in there,

add-on incentives for green

building.



The lead certification.



The development, if it's located

in a desired development

location.



And we're actually citing the

city's desired development zone

in there as well.



As the travis county planning

staff are working on a future, i

guess master plan, kind of

similar to a comprehensive plan.



So we'll get feedback from them.



But basically it would focus on

the activity center that we

would like to see it occurring

in.



Or we've been leaning towards

transit friendly areas.



And I think hiv global is

planning their location is near

a capital metro park and ride.



And we've been told that capital

metro is looking at possibly the

rapid transit bus service going

up there and they've indicated

to us that they're excited about

that.



The one thing we included in the

apple agreement that may be

unique to travis county.



And we heard about this a lot in

the public feedback if we had

recapture provisions in there.



Sometimes they're not always

needed.



But I think apple is kind of --

they were planning to bring

their jobs and their capital

investments over a period of

time.



And so we had a provision if

they didn't meet that in any

given year, the rebate would not

be paid.



Over time they weren't meeting

the overall goals.



They would recapture.



That's not always necessarily

relevant.



That will be a feature in the

policy that we have the option

of renegotiating that.



The preferred industry, I think

the county put this list

together in kind of cooperation

with the chamber or the city in

the january work session that i

referenced.



And so they're all laid out

here.



And I think they're very

consistent with the opportunity

austin program.



Okay.



Oops.



They put some surprise going to

have to get after it -- oops,

okay, there we go.



These are the base requirements.



I think I kind of mentioned

those already.



So I went too in depth.



Capital investment of $25

million.



Increase employment by 50

employees.



Then we got add-ones for you

achieve greater new job creation

you get a larger percentage.



The competitive requirement

which I believe the city has

having a good employee benefits

policy.



And we've kind of been

struggling a little bit with the

language there.



But we basically want the

company to provide meaningful

access and coverage.



I think the meaningful term

comes from ann kitchens.



She suggested that.



We want the employee benefits

policies of the firms to imply

two things.



Then item number six is the idea

that came into our discussion.



I would say this past spring

when we were looking at the

policy.



That was trying to feel at least

50 positions with travis county

residents.



Apple ended up, we ended up

doing an add-on for apple which

is what we originally had in the

policy rather than including

that as a base requirement.



So I'm not sure where the

commissioner's court will land

on that.



The only time that seems to

bring up concerns is if you're

locating near the border,

williamson county.



And so you can understand how

those discussions go.



But this is a feature that's

received a lot of discussion and

I think the commissioner's court

is in it.



These are the lists of the

component incentives.



We do have in our draft policy

that we will not exceed an 80%

of taxes on new or eligible

property value.



And really, our rationale there

is trying to limit it to close

to or no more than the

operations and maintenance rate

associated with the tax rate.



So that we just are rebating

general funds related revenue,

not debt service just a

definition of capital investment

for you.



One of the things that we may do

that's a little different in the

city is we actually require the

firm to provide us with

documentation as what they

presented to the travis central

appraisal district when they

actually get to determine what

is actually taxable in terms of

their facility.



We actually have a further

requirement that it has to

qualify for new construction.



With tcad.



This is the base incentive i

mentioned earlier.



$25 Million is the minimum for

consideration in terms of the

capital investment.



And you can get the rebate.



It kind of increases in the

sliding -- on a sliding scale

here.



Job minimum was in the base.



Lead certification.



You can go up there.



The austin's city desired

development zone in there and

any important activity center

that might be identified in the

equivalent of a travis county

comprehensive plan.



That's another 5%.



Economically disadvantaged, we

need help in this area.



We're going to involve our

health and human services group

there.



This is something that companies

have said they're interested in.



They could use some help from

us.



We could pull in the experts and

that would be the health and

human services people to flesh

this out a little bit so that

when companies come and express

interest in doing this, we could

kind of offer some different

programs for them that might fit

their needs.



You can get under the current

draft policy an additional 10%

under this category.



Oops, they did it to me again.



The next up is in october when

they bring it back for a special

format for further

consideration, these are some of

the areas that we kind of

targeted the last time we had

the discussion with them that we

need sort of some closure and

some additional feedback to

finalize the policy.



Do we have the right targeted

industries there?



Do we need to define those a

little more broadly to account

for evolving trends and the

desire to diversify our economy

here.



We have a requirement to look at

the loophole commitments.



We're having a discussion in

that as well.



You can get having a long-term

opportunity for people making

leasehold improvements that

result in taxable value.



There's been discussion about

whether or not to include a --

or to require a super majority

of the court if we want to waive

I go in -- waive anything in

the policy.



That might be a little more

cumbersome.



That could receive further

discussion.



Health benefits, that will be an

issue.



Access versus requiring employer

subsidies.



One of the pieces we had on the

last slide was setting it up

that gives you a little more

flexibility to award bonus

points when companies are

locating or want to locate in an

area where there's a lot of

economically disadvantaged

residents.



And, of course, residents on the

last.



That's all I've got.



Good to see all of you.



I hope I talked fast.



>> I have a question, leslie, on

one of the slides.



Slide five.



Under requirements for

incentives, number two says it

doesn't transfer employment from

one part of the county to

another.



Can you explain to me what

exactly that means?



I think I get it from the retail

perspective and that's why we

stopped doing retail incentives

but not sure how it applies to

manufacturing?



You know, this may just be --

this may sort of be related to

number four.



It's basically that you are

actually discussing an incentive

with someone who's bringing new

business to the area.



So I do see what you mean with

retail.



But, for example, if a company

is expanding.



If they're located here and

they're expanding.



Is that what you're getting at?



They're going to bring more jobs

and value to the tax base.



So that may be a little

confusing.



>> Then on your so you cap new

maximum property value at 80 kt

be.



The abatement can only be up to

80%.



So, does your policy -- are you

contemplating or do you

currently contemplate an actual

annual revisit of those

performance measures so that

that abatement can continue at

that level or be adjusted to be

commiserate with --



>> with whatever they've

achieved, yes.



So we would look at that on an

annual basis to make sure that

compliance is occurred.



Any time we partner with the

city, they help us with that.



We appreciate it.



>> Councilman morris?



>> I know we need to move on.



Thank you for rubbing through

this so quickly.



A couple of questions, have you

guys started talking about the

issue of construction safety and

wages?



You know, I don't recall that

it's come up before.



We had a couple of hearings on

hiv global.



So I've got some of the points

that they're interested in.



They left those with us.



>> And does the county do a cost

analysis?



>> We do --



>> oh, okay.



>> We're looking at right now

when something comes up jointly

that the city is working on and

the county has been approached

as well.



Egrso is helpful.



We're running those numbers for

us.



We're looking at contracting to

go forward and relieve them of

that request that makes me make

it from time to time.



>> Tovo: It makes me think

there are two different

jurisdictions and demographics

and we serve different people

than the court.



But it makes a whole lot of

sense to align things where it

makes sense to align things.



For me, I would love to be able

to see our policy next to the

county's policy and have a

conversation about whether it

makes sense to incorporate

something and where the

differences really are.



And potentially we have a

different approach to them bchlt

uh to see them lined up next to

each other would be helpful.



I wonder if the staff might be

able to help create such a

chart, as you will, or

however -- however best it could

be presented.



>> Martinez: Can I assume

you're referring to our existing

policy?



And then they're going through a

draft so -- the draft?



Is it a future draft that we

have versus their draft?



Is that just a question I have.



>> That's a very good question.



I would suggest -- I don't know

what you think -- what my

colleagues might think is most

helpful, but I would suggest our

existing policy and the county's

proposed draft policy.



We know that it's the draft and

we know that we're probably

going to change some things.



Like some inl put from my

colleagues on that.



>> How different is your current

existing policy with the draft

that you just presented.



>> Our existing policy was

focussed on tax abatements.



It actually expired.



And I think -- I didn't bring it

with me, but I think it was

mainly focused on large capital

investments and large numbers of

jobs.



That was the main focus.



So it was $100 million in terms

of a minimum investment and 500

new jobs in terms of minimum job

creation.



>> So, I would agree

councilmember morrison if we

could get a side-by-side

comparison of the existing

policy of what she presented

today on the existing county

policy?



>> Sure.



>> Thank you.



>> Martinez: Thanks, leslie,

appreciate it.



One more presentation.



This is from john hocnyos.



>> Sit or stand?



>> Martinez: Up to you, buddy.



Appreciate you being here.



>> My pleasure.



Thanks, guys.



Thank you for having me this

afternoon.



It's not a misprint in the first

page of the slide.



What I'm going to show you today

is I thought it would be helpful

to see some of the deliberations

and the findings that happened

getting on to ten years ago with

the policy that exists today

came out of what was then the

mayor's task force on the

economy and chartered by mayor

garcia.



It's been long enough ago that i

forget who was involved doing

what?



I was involved in that

obviously.



This is kind of to give you a

flavor of the original thinking

that was behind a lot of the

conversation about the policy.



If you go through this, you will

see that a lot of the questions

you were wrestling with were

questions that we were thinking

about back then as well.



By way of context by you all,

you know what I do for the city

of austin.



In terms of incentives, I want

to say that my firm has written

probably close to a dozen

incentive policies at this point

fundamentally relying on the

outline that we use there.



We're engaged by the city of

grapevine, every time they do

negotiation, they have us cut

the deal.



We wait for the guy to come in,

ask for the stars and the moon.



And we say you ear not going to

have the stars and the moon.



Let's go back to the policy and

have a realistic conversation.



This is the charge given to the

traditional industries

recruitment and retention sub

committee.



You can see here, the question

is how to think about an

incentive policy and how do we

go about developing anned

evaluation process and scoring

matrix that will fit community

values.



Again, what you will see as we

go through this, obviously we're

concerned with the impacts on

the economy.



But we're also concerned at the

same time in reflecting what the

city of austin and by extension,

the austin community cares

about.



Sod that was behind this whole

thing.



By way of background, I found it

interesting that alexander

hamilton came in and asked for a

tax abatement, 1791.



It's just a little flavor on

this.



Any economist we talked to would

tell you in the abstract, we

wouldn't want to do taxes.



We're not functioning in the

abstract.



So what you end up with is a

situation where communities are

pitted against each other.



Part of the goal is to think

about the scale.



You have a policy that's

relatively clear in terms of

what it's going to be asked for

by the companies.



You don't want to find yourself

boxed in.



It was a philosophy and a

thought process that was shot

through most of what we're

trying to do here.



More background, blah, blah,

blah.



We can skip past this.



It included 40 stake holders

from a broad range of

consistencies across the city of

austin and the broader austin

community is we should do what

was called a shared investment.



We couldn't say tax incentive

because it was an ugly term.



Using the sort of broad criteria

here, and it's somewhat in

descending order, economic and

fiscal impact, local interests

to the austin economy.



You heard something about this.



Cultural and quality of life

considerations and I'll get in a

little more detail on what that

was.



And additional environmental

considerations that we were

thinking about nine or ten years

ago.



So these were the questions that

we suggested should be informing

the evaluation criteria.



This is specifically on the

economic and fiscal impact.



First of all, how big is it.



Does it fit with the targets

are.



Operations are desirable.



Does it represent the

headquarters of a new product, a

service, a new division of the

company.



Is it a growing firm.



Is it a firm in the growing

industry.



How stable is the firm?



This is the place where I want

to say about target industries.



I've done a ton of target

industry studies.



I came in too tightly for the

attendance policy.



You have a terrible firm in the

growing industry and you have a

great firm in an industry that

you're not targeting.



Sometimes you have a firm in an

industry that's cool but doesn't

fit with what you think it would

be.



I had a long consideration with

the firm that's looking at doing

vertical farming.



You know what vertical farming

is?



It's basically hydrouponics on

steroids.



You go old warehouses and go 16,

17 stories in the air in any

urban environment and grow

incredible food.



Is it manufacturing?



Agriculture?



Technology?



It's cool.



They think you want to be in

austin.



Long ways away from being able

to talk about this.



In a target industry study, that

wouldn't be on the list unless

you were sufficiently broad that

you said it was leveraging new

technologies or something.



Keep that in mind.



The one about significantly

enhancing the tax base, the mall

example.



I'll give you context.



I wrote a long piece about why

you never want to incentivize

retail.



I could go on that for hours.



At the time in the day we were

concerned about sunset valley,

where sunset valley was on the

order of -- I can't remember the

exact number.



The insane amount of sales tax

revenue for 325 residents in

sunset valley.



We were also back in the day

thinking of incentivizing mixed

use development because we knew

it was a pattern of development

that we wanted to push in the

city of austin.



So that was back in the day.



That's convention market wisdom.



Any developer you talk to says

you have to do it.



You don't have to incentivize

it.



The point of that is this needs

to be flexible and responsive to

the trends out there in the

world.



The demand on the environment

and the community's

infrastructure.



Job evaluation criteria.



Will the bulk of new hires be

right up on top.



What is the average wage paid?



How does it compare to the local

or the national industry

average.



Let me encourage you to think

about that in those terms.



I agree with the notion of the

living wage.



When I think about it, there are

some industries that we may want

to incentivize someone noft

paying a living wage.



For example, an industry that

said we're going to have a

program for people who have been

recently incarcerated.



It will be relatively low skill.



We're going to try to provide

job training and we're going to

pay $2 more than the industry

standard which is $8.50.



If you have an absolute minimum,

you may be hamstrung with that.



Conversely, you could have a

company paying below the

industry standard but well above

the living wage standards.



So you could leave money on the

table.



So what this is designed to do

is really look at this.



You can see in some of the

criteria in getting a more

complete picture of the hiring

practices and patterns of the

company you're dealing with.



So not only what is the average,

but what is the media.



Do you have a handful of highly

paid people and then a whole

bunch of really low paid.



You should look at the median in

addition to just the average.



What training is provided?



What opportunities are there for

advancements.



Are there funds available for

education.



Tuition match, etc.



The last one -- I hope it's not

quite the concern it used to be.



We have to be mindful of it.



Does the firm actively promote

diversity in hiring and

promotion?



These are all things that helped

you paint a more complete

picture.



Local linkages.



This was a big issue at the time

because at the time, the

unemployment rate is relatively

high.



Does it make use of an

especially underute litzed

asset.



Certain segments of the labor

force, or at the time, office

space.



What creates opportunities for

local firms.



Disadvantaged businesses, does

it fill a hole?



Doesth is it the potential to

see a new cluster?



Bring firms to austin?



That's an important one.



Will it compete for resources

directly with existing local

firms?



That's an important

consideration.



One of the things you want to

avoid doing in this process is

incentiveizing people to the

disadvantage of your existing

companies.



Simple terms, that's not fair

and inappropriate in my view.



So these are the cultural and

environmental criteria we talked

about it at the time.



It took a lot of energy and

thought to come up with a

blanket statement about are we a

good citizen on the global

front.



The active participants in the

arts and cultural life in

communities where it operates.



We hope that's a broad enough

statement to fill in a lot of

things.



Instead of being specific.



Will it be proactive, a cultural

outreach program, does it

encourage the employees to

volunteer.



Does it have a track record to

conduct the business in a

responsible way?



Does it have a track record of

being supportive of

environmental initiatives and

concerns?



So those were the questions we

laid out.



Most of them were on the table

as we sit here.



What is the process?



This is guidance.



This is not the exact policy,

cost benefit analysis is the

proper approach.



We think the best way to

benefit -- measure the benefits

with time is the present value

of direct tax revenues

attributable for a project.



We suggested at the time that

became a city policy, you look

at the ten-year window on

present value.



There's a specific reason for

that.



That is, ultimately, the process

that you should get more than

you give, so accepting

extraordinary circumstances, you

shouldn't give away more than

50% of the present value.



But if you looked at a ten-year

window, it gave you flexibility.



You could front load for a

couple of years.



If that's what the company

required, taper it on the back

end and keep it under the 50%

present value ceiling that we

suggested was important.



Two components for the costs.



One is direct costs for the city

of austin.



If the firm for the project is

the primary beneficiary.



Do you have to expand any

infrastructure, etc.



And the second is indirect costs

to the extend that new folks are

in town.



You're going to have ongoing

city expenses associated with

the overall growth of the

community.



Operations, police, fire, parks,

etc.



We suggest you should measure

all of that out.



And the package that became 50%

is the ceiling should be some

percentage of the net gain.



Benefits minus the cost.



Give back some percentage of the

net game.



That is one of the more rigorous

incentive analysis processes out

here in the country.



There's a reason why it works in

austin.



We have an extraordinary range

of advantages here.



I would argue over time these

all begin to fit together.



I want to underscore something

the doctor said.



He's right.



Nobody picks this community

initially because of the tax

incentives.



They pick it because of all of

the other things they have going

on here.



However, sometimes the community

and two or three others are all

leaders for the company's we're

talking about.



That's when the tax incentives

can potentially become a more

important part of the equation.



Also I want to say this too.



You guys heard me speak of this

a lot.



Much of what the city does has a

huge effect on economic

development.



And this is just a small piece

of it.



I said that for years,

everything that the city does

helps create an environment that

influences the future of our

economy.



What should be some of the

principles?



Make people perform based on the

contract.



Give it back.



I think that's been the case.



Guidelines any earlier should be

used to determine the level of

net gain.



We talked about that.



At the time, we talked about all

applicable city revenue sources

could be included.



That's a policy decision.



Chapter 380, I think, continues

to be the right way to do it.



Because it's simple and flexible

and allows you to craft an

agreement with the company that

makes the most sense.



Again, emphasize ten years ago.



It should be factored into the

equation.



A couple of things again, these

are things that are also part of

the process.



Some of these are less germane,

some are still germane.



Expedited permitting, etc., etc.



That last one is particularly

interesting because a couple of

times this happened in recent

years, the city, I think, is in

part willing to offer an

incentive because it was a

requirement from the texas

enterprise fund.



That's an important piece of the

equation.



If you have a tie breaker, a

company that otherwise isn't

quite as attractive but if the

governor's office is able to put

a bunch of money on the table,

maybe you want to step in and

participate today as well.



Where are we today?



You heard about this.



We are going through a detailed

benefit cost analysis.



The city staff is asked me to

come in and help them go through

a little bit of that to have the

best possible data.



That's the best methodology.



Again, per the recommendations

for ten years ago, the direct,

economic, and fiscal effects are

the main components of the

analysis.



Ripple effects are measured and

considered but not included in

the calculation.



I want to say if you think about

this, the ripple effects are not

important.



Because the ripple effects will

extend the benefits of the right

kind of project on beyond the

people who actually work for

that particular company.



If you bring new money to town,

the goal of the economic

development, the net exporter of

a good or service, that money

moves through town with

suppliers in the form of wages

paid, obviously, the people who

work there.



That creates benefits for people

even if you are not actually

directly employed by the company

that's receiving the incentive,

something that we're keeping in

mind.



We talked about some of the

balance there.



This is kind of interesting.



I asked city staff to send me

over a list of some of the

projects.



Look at the benefits.



And, again, these are ten-year

projections.



Benefits measured by revenue of

the city.



The incentive is included as a

cost.



I broke it out.



You can see actually directly

what it was.



The other costs for the

calculation, it's about 2 1/2 to

1.



Which suggests that so far,

we're getting more than we're

giving.



That's obviously a very, very

positive thing.



Hiv is included, it wasn't done

yet, that was proposed at the

time.



So, in conclusion, you know, i

think the overall process is

pretty good.



I agree.



I think overall that I believe

this isn't broken.



The detailed evaluation criteria

and the scoring system never

meant to be carved in stone.



I would never suggest as an

economy evolves, as priorities

evolve and change, you should

revisit that.



I think the overall structure is

sound.



I have a dog in the hunt.



Full disclose euro, obviously.



Incentives, again, one piece,

overall economic effort, by the

city, by extension and the

community as a whole.



And it's something that also it

is easy to lose sight of, we

have tremendous economic success

here.



I would argue because

fundamentally we're doing this

right in the big picture sense.



I would make the argument that

yes, for the pride of living

here, we're the economic leader

in the country.



There are certainly communities

of any size.



So, with that -- I'll stop.



>> Thank you so much.



I really appreciate the

presentation.



And these are great points.



I guess I'm not going to suggest

that they didn't make it to a

codified policy.



But these -- these points that

you brought forward in 2003 seem

a bit stronger than what we have

in the policy today.



So I appreciate you revisiting

this as a reminder to us that

you actually have been here

before, and you made some darn

good suggestions.



So I really appreciate you

coming back with it.



>> Sure.



>> Councilmember tovo?



>> Tovo: A couple of quick

questions.



Thanks very much.



As with the other presentations,

I think there's a lot to

consider.



I appreciate you bringing it

forward.



I want to be clear about what's

in front of us is not the same

document provided in 1993.



This is your 2012 take on what

those findings were?



>> No, the last --



>> Tovo: I'm sorry, I have the

2003.



>> The last three slides -- see

if I can reverse course here.



Go back with it.



Yeah.



Starting where it says city

incentives today, that's 2012.



The other stuff are actually the

slides.



I showed it on april 9, 2003.



>> You probably told us that

initially.



But I didn't capture that bit of

information.



A quick question.



And I'm not sure kind of tell

you what page it's on.



Under the shared investment

policy.



The nine financial inducements

and bullet points.



Can you explain land where

possible in the energy.



>> We were talking at the time

that the city at the time had

land that was actually in its

control that could be offered

up, either free or at a nominal

rent value.



In 2003-there was more available

city land, I believe, than there

is today.



Austin energy had some as well.



>> Tovo: So the austin energy

references, austin energy-owned

land.



My last comment the ten-year

projections.



Are these based on the

calculations done at the time

those deals are being

considered?



Or did the staff go back and

revisit those numbers?



>> This is done at the time the

deals were being considered,

right?



>> These calculations were done

at the time that these deals

were considered projecting out

the future ten years.



Our agreement carried that term.



>> Tovo: That was the question.



Did you go back and recalculate

any or look at any actual

financial information after the

point of execution of that

agreement.



>> Actual taxes collected, the

property taxes.



The jobs.



We can't measure the sales tax

collected as a result of the

jobs being created.



>> Tovo: Okay, thanks.



>> Martinez: Councilmember

morrison?



>> Morrison: Yes, I want to

echo councilmember martinez's

comment that there are a lot of

great things in here that were

not actually put in.



But good points all around.



I wanted to ask someone specific

question, sort of a fascinating

question.



Local linkages, evaluation

criteria.



The very bottom bullet question

is will the firm compete for

resources directly with the

existing local firms?



How do we deal with something

like that?



How do I appreciate something

like that?



And when it comes to, for

instance, thinking of our lack

of enough technically competent

and capable employees or workers

in our community right now?



Some folks say all they're doing

is stealing from each other.



Apple will come in and steal

from all of the little guys.



>> It brings up the point.



That's the purpose of that.



It depends on where you are in

any given time.



It's in 2003, that wasn't a

problem.



At the time, it was the wake of

the dot-.com, you know, bust.



It was the wake of 9/11.



There was a tremendous amount of

under and unemployment in the

austin technology community at

that stage.



So to cite that specific

example, that's an issue.



Another issue that arises as you

think about that is squaring

that with thinking about wanting

to hire local folks first and

foremost.



So as you say to yourself, hey,

wait a minute, we're down to a

tight labor market in specific

areas, if we want to bring in

companies that we think are

going to be growing, companies

that are going to be good

citizens here go forward, do we

want to impose on them a

requirement to hire an existing

local folks at a time when the

labor market is tight?



Maybe not.



Maybe you do when the labor

market is very loose.



When there's tremendous excess

capacity in the labor market.



So the point of all of this, i

guess, is really a lot of it is

contextual.



The specific industry we're

talking about or where we are as

a city?



>> Martinez: So, john, on some

of the criteria that you guys

contemplated in 2003, were there

certain things such as

participating in the cultural

life, being environmentally

sensitive.



I think those are broad

statements and they're certainly

good values.



But what if any conversations

took place regarding specific

performance measures as to

investment in the local

community and cultural arts?



>> There was a lot of

conversation and the answers

were unsatisfactory.



Several times in different

instances, it was going to be --

it was going to vary

company-to-company,

industry-to-industry.



What was contemplated.



I think that does happen is as

the scoring is done, there's

justification of why a score was

awarded.



You can be done in that form, we

talked to the following people.



We reviewed the following

materials.



We did this, this, and this.



The article in business week,

town and company had the

incredible recycling program.



Those kinds of things that you

could do going to look at

evaluating this.



The staff and by extension to

you the policy makers.



But these issues are complex

enough that you want to give

some room within that so someone

could build a case about why

this particular company has a

terrific environmental program

without having to say here's a

quantitative metric that we're

going to make you rely upon.



So the default position was,

leave some flexibility.



Tell people this is what they're

going to be judged on, and say,

okay, make your case about why

they meet the criteria.



>> I appreciate those comments

because I think that's partly

where my position lies on this.



There are some hard and fast

values that this council wants.



There are a few absolutes and

you get in the door with them or

you don't.



But there are others that are of

value that I would certainly

contemplate being flexible on if

they showed a stronger value.



So as the example that you just

brought, an environmentally

superior company that is zero

waste.



That is carbon neutral.



And that is energy consumption

neutral.



I may not be as hard and fast on

a living wage, necessarily,

because of the costs it takes to

be carbon neutral, to be so

environmentally sensitive.



Again, I don't know where I'd

end up on that.



I would have to see the full

proposal.



But I want to maintain a flex

nblt the new policy that

determines the baseline hard and

fast rules.



Everything else is somewhat of a

menu.



You can achieve up to a certain

percentage of incentive via

disagreement by applying the

values to the companies as it

expands here in austin.



>> That's exactly what I'm

talking about.



That's beneficial, I think, to

the community and the company.



The company for whatever reason

may say -- let's stipulate that

there's hard and fast.



And I assume that it's not going

to get a deal.



Okay, fine.



That's a stipulation.



We're there.



But a lot of these other things,

individual companies may have a

greater capacity to perform at a

relatively higher level in

different -- different criteria.



And by giving that flexibility,

you give the company the best

opportunity to perform at the

highest level.



While at the same time, being

able to say to the community, we

have a lot of these values here.



Okay.



HE DIDN'T GET STRAIGHT A's BUT

He did a plus over here and b

over here, that's find.



Again, that's part of the goal

here is guidance and

flexibility.



Those are the two principles we

tried to reconcile in putting

this together.



I'd argue with you so far pretty

good.



There's always room for

improvement.



I applaud use guys for thinking

about this and trying to

continue to make this better,

make it better aligned with the

reality of the modern economy.



Make it better align with what

are certainly evolving community

values.



But, compared to lots of other

places I work in, we're doing

this right, we really are.



>> I really appreciate you being

here.



I hope that you will help us

craft whatever becomes the final

policy.



0

version?



This will be the third, right?



I do appreciate it, john.



>> Thank you.



>> I want to make one more

comment.



It sounds like our grade is

"it's not as bad as it could

"



but I do want to mention, you

know, you're talk about the

guidance and -- I want to add

process to all of that.



Because I think one of the

things that's come up in some of

the conversation is that we need

not just transparency, but so

that folks know what we're

talking about and why we're

talking about it.



And the interesting thing is i

think about it is some of the

forms and some of the backup we

get right now for instance has a

number score over here.



If you go to a different -- if

you go to a different section or

a different file, it's sort of

explains why.



So I think we just need to keep

an eye on also presentation to

really help the public dialogue

quite a bit.



That's another -- for the public

to understand what we're talking

about.



It's critical.



>> Martinez: Those are all of

the items that are posted today.



I'm going to make an assumption

that we want to have another

meeting fairly shortly.



Would it be appropriate, brian,

to maybe just verbally without

taking any formal action direct

you all to help us start

bringing forward some language

to start working from to share

with the public?



And get feedback on?



>> Sure.



>> Martinez: Maybe ask john to

help us based on the comments he

heard today and some of the

things that historical context

that he has with the process?



>> I guess the question I have

is are you asking me to craft

language based on what we've

discussed and bring it forward

or is it let's craft the

language and use the next

meeting as a forum to throw out

and measure some of the ideas.



>> Martinez: The second.



>> Morrison: It would be great

for the committee to roll up our

sleeves and say here's the

overall construct, here are all

of the things we need to deal

with.



So I guess my sense is it would

be a little premature to ask

staff to draft anything at this

point, unless they wanted to

draft a set of points that we

ought to address.



>> Martinez: That's a better

starting point.



Let's -- we'll see if we can

come up with a synopsis of kind

of the conversation and the

points that we brought up that

you all have heard.



And we haven't clearly

articulated that openly, then

we'll add to that -- add more

content to it.



>> Be helpful to put together

bullet points, specific to the

points we discuss, share that,

if additional ones we have

missed.



Circulate those.



And as this progresses, start

working with the committee in

terms of vetting those?



>> Morrison: Right?



Seeing how we want to address

those, that's great.



>> Martinez: Any other

questions or comments?



No other agenda items, we stand

adjourned.