City Hall Hustle: Is There a Deeper Wave Than This?
Jobs enter one door, exit the other
In the middle of last week, CNN set up shop at City Hall, soliciting input on how Austin has weathered the economic downturn. As if on cue, Thursday the city announced that China-based solar-panel manufacturer Yingli and social networking kingpin Facebook are eyeing Austin to seat new jobs – dependent, among other things, upon city and state incentives. Our daily paper, further shading its pathological love/hate relationship with the city, editorialized, "If ever there was a time for Austin to live up to its hype, this is it."
The buzz about the offerings dominated City Hall that day (Thursday, Feb. 25), although neither item was on the council agenda. (The pair received their first public vetting in a special-called council meeting Wednesday, March 3.) Essentially, Facebook would receive cash payments, while Yingli's performance-based incentives would be tax abatements.
For Facebook, as in the recent LegalZoom deal, the city is offering $20,000 grants yearly, over a decade, dependent on fulfilled commitments: that Facebook's sales and operations facility, estimated to hire 90% of staff locally, create and retain 200 jobs; that at least 50 be created yearly during the first four years and held throughout the contract; that $2.25 million in improvements to the company's leased property must occur (Facebook is said to be eyeing several properties Downtown); and that $900,000 be invested in business equipment. And no, the city won't accept FarmVille coins.
Yingli is slightly more complicated, in that the incentives are linked to property taxes. In exchange for siting its North American headquarters here, making $1.25 million in lease improvements, investing $18.6 million in equipment – the stuff to mint solar cells – and creating 303 jobs by 2013, Yingli is eligible for rebates on 80% of its property taxes, both on the building and the equipment. Brian Gildea of the city's Economic Growth and Redevelopment Services Office estimates the rebates totaling approximately $354,000 over the course of the 10-year development.
This latest round of judicious incentives is low cost compared to past deals (think Domain, Samsung, etc.), and since they're performance-based, they needn't be honored if the companies stop hitting their hiring goals. But the big issue that has hung over recent incentives offerings – salaries – won't be going anywhere.
Notwithstanding the wiggle room in average annual salaries, Facebook estimates its yearly wages at a healthy $54,000 throughout its contract – although who knows how far that salary will go 10 years from now, as it isn't indexed to inflation. By contrast, Yingli's wages start a little over $39,000, creep down to $32,677, then slowly work up to $36,640 by 2019 – representative of the more skilled labor required to get the manufacturer off the ground, then the blue-collar work involved in minting cells. Yingli salaries will likely be an issue with Austin Interfaith, the group that's bulldogged for livable wages of $18 an hour in city-incentivized contracts. But that argument has previously been rejected by some on council, specifically Sheryl Cole, who argued that jobs are needed in all salary ranges.
Back in council chambers last week, a fight unfurled, a counterpoint to the happy jobs-talk carrying the day. The brawl between Sustainable Waves, a company providing solar-powered amps and PAs, and the River Bluff neighborhood association had been brewing for months, boiling over in the last couple of council meetings. Facing council was the question of whether to repeal Sustainable Waves' recently granted one-year live music permit, after neighborhood opposition. Neighborhood spokesman Daniel Llanes bristled at the potential for regular amplified music and "huge uncontrollable events" from the outfitter – specifically after the bedlam reportedly ensuing from last year's Red Bull party, one of those unofficial South by Southwest bacchanals where the booze, tunes, and corporate-branded debauchery lasts until the wee hours. Waves' Neal Turley, with three minutes to speak after a barrage of 'hood opposition, countered that the Red Bull party wasn't thrown by SW or held at the company's headquarters, and the company only provided equipment. (Prompting the question: How does the sun power a 4am DJ set?)
However, Turley's caginess on the number of events he wanted to throw – ultimately conceding he'd like "the option to be able to do events when we can" – coupled with council's belief that nonappealable, one-day sound permits would best suit his business – led council to side with the somewhat histrionic opposition.
Afterward, Turley issued a press release declaring his solar-powered staging company "dead on arrival," saying that due to "a political decision made by the city to try and appease the neighborhood associations ... effective immediately all full time Sustainable Waves employees will be laid off and company assets will be liquidated."
Good thing those other jobs are coming ....
Council does not meet today (Thursday) but will reconvene March 11. Put in work: www.twitter.com/cityhallhustle.