AUSTIN (KXAN) — A city of Austin program aimed at helping local businesses grow needs improvement: An evaluation of the program found it was too hard for small businesses to get incentives, leading to low participation rates.
In the five years since the city launched the business expansion program, only one company has benefited from it, according to the Economic Development Office.
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The program offers grants and tax rebates to businesses that relocate to Austin and employers who employ targeted populations.
“In certain census tracts, people who haven’t completed a traditional high school curriculum may still have a GED,” said Economic Development Director Silnovia Holt Love.
What did the evaluation say?
The evaluation noted that Austin’s “high standards and numerous criteria must be met to receive incentives.”
Holt-Love specifically noted that small businesses will have to meet the same requirements as larger companies.
“They thought the bill was too onerous. It was too broad, too complicated,” Holt-Love said. “It put small businesses and large businesses in the same category. So it was very difficult for small businesses.”
The evaluation states that the eligibility criteria limit the number of applicants who are able or willing to apply.
“The large number of desired outcomes reflected in the basic general eligibility criteria and scoring criteria make it difficult for potential projects to meet them and achieve the desired outcomes,” the report said.
What are the proposed changes?
The evaluation recommended the following updates to attract more applicants:
Addressing the barriers that small businesses face in obtaining grant funding Strengthening the criteria for large businesses to be recruited Establishing clearer eligibility criteria, application processes and procedures
Holt-Love said she plans to separate requirements for small and large businesses.
“Small business and large business were packaged together,” Holt-Love said, “so we separated that out and now there are two components underneath.”
The department currently requires small businesses to only employ one employee to qualify for the $3,000 grant.
Large businesses need to create 75 new jobs.
“If they were to expand into a brick-and-mortar location, it would depend on the amount of capital investment they’re willing to make,” Holt-Love said. “If they put in, say, a baseline of $2 million in capital investment, they could potentially get a portion of their property tax refund.”
Another new requirement for large businesses is a child care component: The city will set aside 10 percent of the property taxes that qualify for a project into a reserve fund for the city’s child care programs.
The EDD has presented these changes to the Austin City Council. A decision on the updates has yet to be made. The vote has been postponed to the Sept. 23 meeting.
