Austin Business Expansion Program needs improvements, assessment says

AUSTIN (KXAN) --- A city of Austin program, meant to help local businesses grow, needs some improvements. An assessment of the program found it was too difficult for small businesses to get incentives, which contributed to low-participation.

In the five years since the city launched the Business Expansion Program, the Economic Development Department said only one company benefited from it.

The program provides grants and tax rebates to businesses relocating to Austin or employers hiring targeted populations.

"Those who may not come through the traditional high school path, maybe have a GED, in a certain census tract," said Economic Development Department Director Sylnovia Holt-Rabb.

What did the assessment say?

The assessment noted Austin's "high standards and numerous criteria that need to be met to receive an incentive."

Holt-Rabb specifically mentioned that small businesses had to meet the same requirements as larger businesses.

"They thought it was too onerous. It was too broad and complex," Holt-Rabb said. "The small and the large businesses were in one category. So that was very hard for the small business."

The assessment said the eligibility criteria limited the number of applicants that would be able to or want to apply.

"The numerous desired outcomes that are reflected in the base general eligibility criteria and the scoring criteria make it difficult for a potential project to meet and for desired outcomes to be achieved," the report said.

What are some proposed changes?

The assessment recommended the following updates to attract more applicants:

• Address barriers that small businesses face in accessing awards
• Strengthen recruitment criteria for large businesses
• Establish clearer eligibility standards, application processes and procedures

Holt-Rabb said they're planning to separate requirements for small and large businesses.

"It was packaged together, the small and large businesses," Holt-Rabb said. "So we uncoupled that, and now we have two components under that."

The department is now only requiring small and micro-businesses to hire one person to be eligible for a $3,000 grant.

Larger businesses are required to create 75 new jobs.

"If they're expanding to a brick and mortar, depending on the capital investment," Holt-Rabb said. "Say they do $2 million, which is the baseline of the capital investment, then they could get part of their property taxes rebated to them."

Another new proposed requirement for large businesses is a childcare assistance component. The city would put 10% of a project's eligible property taxes towards a reserve for city child care programs.

The EDD brought these changes forward to Austin City Council. A decision hasn't been made on the updates yet. The vote was pushed to the Sept. 23 meeting.