City readies final changes to revised business expansion programs

The Economic Development Department has announced final modifications to its Business Expansion Program, a key component of the city’s Chapter 380 economic development incentives. The updates, approved by City Council in September 2024 under Ordinance 20240926-013, are designed to increase small business participation and better align with Austin’s living wage policies.

According to a memo released last week by interim EDD Director Anthony Segura, the Global Business Expansion Division will host a series of incentive workshops in April, along with monthly office hours through the Small Business Division. Those sessions will provide details on eligibility and application procedures under the revised incentive structure.

Under the newly approved changes, the Business Expansion Program now includes a dedicated small business category, which lowers the threshold for participation.

Previously, businesses needed to create at least five new jobs to qualify for incentives. The new program reduces this requirement to one job for businesses with fewer than 100 employees.

Streamlined organizational requirements are being introduced to simplify the application process and tailor the scoring system for small businesses. The revisions aim to reduce administrative hurdles and provide applicants with greater clarity on qualification metrics before submission.

The living wage criteria have also been adjusted to allow businesses to include tips, overtime, commissions, shift differentials and bonuses in wage calculations.

Companies that fall just short of the wage threshold may still qualify for incentives but must demonstrate a commitment to wage increases through participation in coaching and training programs provided by the Small Business Division.

Austin’s Chapter 380 economic development agreements have undergone significant revisions over the past six years as city leaders sought to adapt policies to changing economic conditions and priorities.

Initially, the city’s economic development strategy focused on attracting major corporate campuses, offering tax incentives and grants to large employers such as Apple and Samsung in exchange for job creation. These agreements aimed to bring high-paying tech jobs and commercial investments to Austin, aligning with city leaders’ early economic growth priorities.

By the late 2010s, concerns emerged that this approach was focused primarily on job creation for high-wage earners and contributed to rising costs of living, with fewer opportunities for local small businesses and middle- to lower-income workers. In 2018, City Council overhauled its Chapter 380 policies, shifting toward smaller, performance-based grants that emphasized local business participation, equitable hiring practices and worker-focused incentives.

That revision introduced middle-skill job incentives, allowing businesses to qualify for funding by hiring workers from targeted populations, including veterans, people with disabilities and individuals without advanced degrees. The policy also expanded eligibility for small businesses by lowering the job creation threshold and introduced provisions to help businesses meet the city’s living wage standard.

In response to ongoing concerns about rising commercial rents and displacement of small businesses, the city further explored place-based incentive models to support affordable commercial spaces. By 2024, additional adjustments were made to refine the program, lowering barriers to small business participation while maintaining pay-for-performance requirements.

On top of the effects of the business expansion programs, Austin is already seeing substantial transformation in its infrastructure landscape that will continue over the next two decades, with investments totaling approximately $25 billion. Major projects include the Interstate 35 expansion, Austin-Bergstrom International Airport’s expansion, Austin Convention Center renovations and the development of the Project Connect light-rail system. Collectively, these initiatives are projected to generate around 10,000 new jobs annually through 2040.

To address the anticipated surge in demand for skilled labor, the city has partnered with Austin Community College and Workforce Solutions Capital Area to establish the Austin Infrastructure Academy. This initiative aims to equip local residents with the necessary skills to participate in upcoming infrastructure projects.

The academy functions as a “training marketplace” and has identified over 24 programs for potential collaboration, offering customized guidance to help participants navigate their career paths in infrastructure and mobility sectors.

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