Businesses bailing on incentive deals worries mayor

AUSTIN (KXAN) — Three companies have recently opted out of incentive agreements with the City of Austin that would have brought about 1,400 jobs to the area. Now, Mayor Lee Leffingwell is worried strict requirements put into place by the Austin City Council are pushing companies away.

“In recent months, Austin City Council action instituted stringent requirements in regard to economic incentives,” Leffingwell said. “It concerns me that we have greatly diminished the effectiveness of our incentive program by placing burdensome conditions into the agreements.”

The obligations range from “exceedingly difficult reporting requirements, to new provisions regarding prevailing wage and minimum living wage,” the mayor said.

Dropbox, National Instruments and US Farathane were the latest to back out of deals with the city.

“The disappointing news from NI, Dropbox and US Farathane brings a total of nine companies out of 21 deals that have canceled for various reasons,” Leffingwell added.

In a statement on Monday, National Instruments said they “elected not to proceed with the development agreements with the City of Austin, Travis County and the State of Texas which would have set building and hiring requirements in Austin.”

National Instruments’ proposed project would have resulted in the hiring of 1,000 engineering and technology jobs with an average annual wage of approximately $72,000. Austin’s agreement provided a performance-based economic grant equal to 50 percent of the property taxes generated by the project over a 10 year period, equivalent to an estimated $1.7 million

Dropbox, a popular cloud storage company, was set to receive $244,500 after the Austin City Council and chamber of commerce voted on an incentive package. It stipulated Dropbox must pay its prospective 170 new employees at least $59,000 a year and invest $5.5 million in the city.

The company said it is continuing with its plans to expand in Austin but will do so without incentives from the city.

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