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Should Austin Offer Economic Incentives? Athenahealth Deal Stirs Debate

I-Hwa Cheng for KUT News
The Seaholm building, photographed in 2011. Athenahealth’s proposed research and development center would use the iconic building as office space.";

Austin’s facing a familiar question: whether to approve economic incentives luring new jobs to town.

Today, the Austin City Council was briefed on a proposal for incentives for health IT company Athenahealth.

Massachusetts-based Athenahealth – which currently employs 36 Austinites in offices at The Domain – is promising a new research and development center. Located inside the former Sealholm Power Plant in downtown Austin, the company says it would create 607 new jobs over 10 years.

The bulk of incentives would come from the Texas Enterprise Fund, which has offered $5 million. The city’s incentives proposal includes a performance-based grant of $679,500 over 10 years – but the state incentives can’t be disbursed unless the city incentives proposal is approved.

The city will not be required to pay out any part of the grant for a year that the company fails to meet performance requirements, which include:

  • 35 new full-time positions by the end of the year
  • 100 new full-time positions by the end of 2016
  • 607 new positions by the end of 2023
  • Average salary wages of $132,085 across all positions
  • Local capital investment of $7.75 million by the end of 2023

The city estimates a net fiscal benefit of $1.67 million from Athenahealth’s expansion.
Council member Laura Morrison voiced support for bringing more technology business to Austin, but also cited two concerns. One was with the use of the Seaholm plant – a historic Art Deco-inspired building – as Athenahealth’s office space. The council had originally hoped the building would house more public uses, like retail spaces or cafes.

Morrison’s second concern was offering incentives for the company to occupy the plant – especially at a time when Austin’s economy is the envy of the country.

Citing a recent Forbes article saying Austin has “the most economic momentum” of any metro area going into 2014, Morrison said “I don’t see how it makes sense for us to be having to subsidize companies to come into town at this point. … I’ve supported almost all of the economic incentive deals as we’ve looked at what role they play, this may well be the time for me to draw a line in the sand.”

The city council is posted for action on the incentive proposal at its next regularly scheduled meeting, Thursday, Jan. 30. 

You can read more about the proposal on the City of Austin website.

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