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Then There's This: Preferential Treatment

Schwab wins incentives from county – when do we say 'time out'?

By Amy Smith, Fri., Aug. 8, 2014

Sarah Eckhardt
Sarah Eckhardt
Photo by John Anderson

These are frustrating times for the de facto county judge in waiting. Sarah Eck­hardt, who's expected to win easily against her Republican opponent in November, is marking the days until January, when she officially takes the reins of the Travis County Commissioners Court.

Until then, though, the votes are hopelessly stacked in favor of doing the opposite of what she would do on some of the pricklier issues that come before the county. Things like granting economic development incentives to companies wanting to expand or relocate here, for example. Eckhardt doesn't believe corporate welfare is necessary during an unprecedented economic boom, especially when Austin's success has simultaneously pushed more pressing issues like affordability, tax equity, and infrastructure (or lack thereof) into the spotlight.

On Tuesday, Commissioners touched on those issues before voting 4-1 to grant $3.3 million in tax rebates to Charles Schwab. The financial services firm, which currently employs about 1,000 people here, plans to add 823 jobs over the next 10 years at a new campus in North Austin. Things have gotten too expensive in San Francisco, so Schwab is downsizing there and upsizing in Colo­rado and Texas.

Schwab had said that it would take its expansion plans to Denver if the Austin deal fell through – a threat Eckhardt called a "total bluff." She didn't voice her opposition in testimony Tuesday, but she said she did communicate her concerns to Travis County Judge Sam Biscoe and commissioners. "They know where I stand," she said by telephone Wednesday morning.

Indeed, what the current bunch knows is that the vote would have gone 3-2 against Schwab if Eckhardt and the next likely Pct. 2 Commissioner, Brigid Shea, had been making the decision. Commissioner Ron Davis cast the only dissenting vote Tuesday, with Biscoe, Bruce Todd, Gerald Daugherty, and Margaret Gómez forming the majority.

Davis, who sometimes has trouble turning his thoughts into sound arguments, made an impassioned plea on behalf of those who never reap the local benefits touted by the business-recruitment arm of the Greater Austin Chamber of Commerce. "I don't know if some people understand how it is to be poor. We need to hold the line on rebates until we're able to get some type of control of this situation," he said, adding that he wasn't sure how the final vote would stack up. "I do know this, that the taxpayers are overwhelmed ... I think they're saying 'time out.'"

Daugherty and Gómez spent several minutes wringing their hands before casting their votes; Biscoe, who's getting more and more chipper as his retirement draws near, steered the meeting along with little comment. Todd, who'll return to his lobby job at the end of the year, looked ready to personally roll out the welcome mat for Schwab.

To be just a little fair, county officials didn't have a lot of time to study the proposal, although they must have known it was in the Chamber's pipeline. Gov. Rick Perry and his Texas Enter­prise Fund crew took about three months to review the deal before throwing it to the county in July. (The city won't be weighing in on the abatements, but it will likely be called on for any needed road and infrastructure improvements at the new campus.)

Daugherty, the only Republican on the commissioners court, signaled early on that he would vote for the agreement because Schwab met all the county's incentive policy requirements. But he wanted the company and Chamber officials to know that it pained him to award the tax abatements to a "well-heeled" company when county residents were struggling just to pay their taxes. "I've made the comment before, maybe we ought to test this [incentives] thing. Maybe we ought to say 'no' and find out whether somebody will really go to another town."

Noting the ongoing heartburn over homeowners' rising property tax bills, he said he was heartened by Schwab's statement that it didn't intend to challenge its property tax bill (unless they believed an error had occurred). At the same time, Daugherty urged the Cham­ber to try to work on bridging the gap between the haves and the have-nots. "There is an image out there that the Chamber is only concerned about one thing, and that is putting as many companies here as you can get," he said, adding one other request: "Try not to bring us things where in two weeks we've got to make something work, or else people are going to start jumping off of bridges and mountaintops." Those kinds of threats, he said, "aren't fair to the community."

Eckhardt, meanwhile, has had some time over the summer to draw up a to-do list. She says she intends to discuss the current state of affairs with Chamber officials. "They have other very valid concerns about the tax rate and the burden on residential homeowners, and the cost of doing business here," she said. "And I think that it's growing increasingly difficult to advocate those things simultaneously [with incentive proposals] for a very small number. To extend preferential tax treatment to one member of a class and then have everyone else in that class paying full freight doesn't make a whole lot of sense."

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