By Roger Baker
Roger Baker is a longtime Austin transportation, energy, and urban issues researcher and community activist. The following commentary has been adapted and slightly edited from his comments posted by E-mail to multiple recipients in June.
How did Project Connect come up with their $1.4 billion rail plan? Let’s take some known facts, and connect the dots. The dots in this case were partly the political momentum behind a new hospital district, combined with a new Opportunity Austin/Chamber-of-Commerce-recommended Austin growth policy.
We know that in 2008, a city consultant, ROMA, recommended that the proposed light rail corridor be moved east to the San Jacinto Corridor (ultimately connecting several years later to the Red River corridor), as opposed to the previously-assumed Lamar Corridor alignment. See, for example:
Next, we know that State Sen. Kirk Watson in 2012 announced a plan to develop about $4 billion of future medical facilities and training in the area of Brackenridge and the newly announced Dell medical training center, which would be along this same San Jacinto-Red River corridor. It is pretty obvious that to meet this ambitious goal, to handle this scale of future anticipated development, the existing roads along this corridor could not meet the projected travel demand. I pointed that out in an earlier article here:
How did the urban rail plan get to Riverside? Here is a downloadable audio clip with Project Connect personnel pointing out that the city sees itself as having an unfunded mandate to provide rail on the Riverside alignment in order to meet the city’s future growth goals in that area:
Another problem for the medical district was that Texas state funding could not pay for the medical center without a big boost from local Travis taxpayers. This demanded the promotion of a hospital district tax. See, for example:
…Ever since Austin state Sen. Kirk Watson first unveiled the idea at a Real Estate Council of Austin event last September, regional agencies and governments have scrambled to find funding possibilities for the massive project, which could run the involved parties (all told) as much as $4.1 billion over 12 years. At last check, the University of Texas is on board for at least a $25 million annual contribution that would climb to $30 million over the first eight years of the school’s existence. Central Health, according to the Statesman, would cough up about $35 million annually over 12 years – or a total of $420 million. The Seton Healthcare Family expects to provide nearly $2 billion, including $250 million that would ultimately result in a replacement of its aging but centrally located Brackenridge hospital facility…
But to make it all work, Central Health is asking for a tax increase, to be placed before voters on Nov. 6. Watson asked for a raise of five cents per $100 of property valuation; Central Health’s board obliged, endorsing that increase, which would bring the district’s rate to just over 12 cents for every $100 of property valuation. In dollar figures, that would mean (if voters approve) that someone who lives in a home valued at $200,000 would see an increase of $100 on their annual tax bill…
We know from the following document that the city of Austin is bending over backwards to maximize Austin area growth through relocation, and jobs recruitment to the Austin area.
As we can see, the City has a very well-developed industrial recruitment policy outlined in this document, which coordinates with the Chamber of Commerce, targets key industries to recruit, and gives tax breaks when certain criteria are met. The city takes its lead from the “Council Special Committee on Economic Incentives”, which in turn takes its lead from Opportunity Austin, and the Austin Chamber of Commerce, as we see in this lengthy presentation. It begins by lamenting Austin’s slow growth!
We now see unsigned blogs promoting the same maximum Austin growth recruitment as official policy:
What are the specifics of Austin growth recruitment policy? The policy is to prefer that at least 25% of the jobs recruited into this area go to Austin residents, but if not, it is no deal breaker. Jobs that pay at least $11 an hour would be nice, but this too is considered optional. This is taken from page 9.
REPORT AND RECOMMENDATIONS ON THE COA ECONOMIC DEVELOPMENT POLICY
Change the Threshold for Extraordinary Economic Impact within the Firm-Based Matrix to include other items
The Threshold for Extraordinary Economic Impact has been used within the Firm-Based Incentive Matrix as a means for providing additional economic incentives for significant economic development projects.
Currently, if a company meets one of the four criteria within this section of the matrix, then the company is eligible for an economic incentive of up to 100% of the property tax generated by the project (see Exhibit A, Section 3 and Section 4).
Current threshold criteria include these four items:
• The firm is in a targeted industry;
• The firm is involved in leading edge technology;
• State economic development funds are available for the firm; or
• The firm will generate 500 jobs or more.
The threshold criteria allow flexibility for various economic incentive options to be considered for projects that have an extraordinary economic impact. The flexibility allows Austin to remain competitive for highly sought after projects. Examples of prior significant economic development projects include Samsung and Apple. In both cases, the Austin City Council approved 100% property tax rebates for a prescribed number of initial years…
This is all predicated on the perpetuation of the Austin tech bubble, which is really a regional manifestation of a national tech bubble. Continuing Federal Reserve stimulus is leading to asset bubbles, which are reflected in the NASDAQ’s mostly-tech growth in particular. How long before the tech bubble driving Austin’s current feverish growth and gentrification deflates is anyone’s guess, as Fortune recently pointed out:
I have recently pointed out and discussed in detail the unsustainable nature of Austin’s currently-booming growth here:
This accumulation of material may help to provide a plausible political basis behind Project Connect’s rail plan. I personally have little doubt that Austin is in the midst of an unsustainable high tech growth bubble, and that the future travel demand numbers that Capital Area Metropolitan Planning Organization (CAMPO) feeds Project Connect to justify its rail corridors are largely wishful thinking. Demographic forecasting, like economic forecasting, exists to make astrology look good by comparison. ■