November 30, 2012

Investment Incentives News

Visa to Austin?

Visa is considering moving some California operations to an IT center in Austin, Texas.  I’ve blogged about investment incentives in the past. The Texas Enterprise Fund (TEF) is offering a $7.9 million incentive contingent on $1.5 million in local incentives from the City of Austin.  TEF, sometimes called a “deal closing” fund, has the ability to easily offer these incentives with few conditions (and limited oversight).

The bigger fight will be in the City of Austin, set to have a public hearing on Dec 6th.  For some commentary see here and here

The quick highlights are that the City has imposed some rules on the minimium average salary necessary for these incentives and the specific details on employment.  The public hearing will probably address even more details, but the City leadership seems concerned about the costs versus the benefits of these incentives.

As I’ve blogged previously, I’m not a fan of these incentives.  They are largely wasteful uses of scarce resources.  But as much as I would like to believe that the City of Austin has a better formula to making sure incentives are effective, these “performance requirements” were commonly used by developed and developing countries in the past.  They stopped doing this because it was very ineffective.

Sorry I don’t have more positive news about their strategy or concrete suggestions for the City of Austin.  I also really don’t have many readers.