Welcome to 2021 (we made it!). Like many readers here, I navigated through unprecedented times as an owner-entrepreneur in 2020, in my case as a lobbyist at The Bingham Group, LLC.
Lobbyists are positioned at the intersection of business and policy, giving us a unique perspective on the question posed by the forthcoming Q1 issue of Texas CEO Magazine: “Why Texas?” In other words, why do so many businesses choose to move to or expand in Texas?
As an Austinite, a more apt question for me to answer may be: “Why Austin?” If your firm is relocating or expanding here (or just continuing to do business here), what should you know about what’s up with the capital city in 2021?
Well, let’s talk about it.
The Austin City Council
Let’s start with what’s going on with the Austin City Council. Beginning with its March 26, 2020, meeting, the Council has conducted its work virtually. City hall has been closed to the public due to COVID-19, and all boards and commissions have managed affairs virtually. This is not expected to change through at least Q3 of 2021, but even conservatively (and optimistically) mid-to-late Q4 is more likely.
The fall 2020 City Council election season saw five races, with the dominant issues in the campaigns being homelessness (the easing/elimination of penalties for camping in place and panhandling) and police reform. In fact, one or both of these issues pushed two of the Council races into runoffs, which were decided on December 15.
Those races were notable, as both featured Democratic-leaning incumbents against GOP-affiliated challengers (Austin Council races are officially nonpartisan, but Austin and Travis County are firm Democratic strongholds). Ultimately, the elections went different ways in the runoffs, with incumbent Alison Alter holding on to her seat and challenger Mackenzie Kelly earning a spot on the Council. The outcome will not impact 2021 Council policymaking, which is center-left progressive.
The Push for a “Strong Mayor” System
Austin’s business leaders should also be aware of a proposed change that will be decided in May 2021. Though not widely discussed, it would be one of the most significant shifts in Austin’s governance since voters approved the current 10–1 district system in 2012.
There is currently a citizens’ petition drive (launched in July 2020) to shift Austin’s governing structure to a mayor-council system (i.e., a “strong mayor” system). As background, the city of Austin is currently run under a council-manager system, with power and authority to set policy resting with the City Council. The Council in turn hires a nonpartisan manager, who runs the city (including hiring and firing personnel).
By adopting a mayor-council government, the mayor would take on a CEO role for the city and would be separate from the Council. The shift would also necessitate a new Council seat, as the mayor is currently considered a Council member and has an equal vote.
If there are more than 20,000 valid signatures on the petition, City Council will be forced to either pass the ordinance as written or call a local election to let the voters decide. Should Austinites favor a strong mayor system, it would not go into effect until the next mayor is elected.
This in itself is notable, as current Austin mayor Steve Adler is in the final two years of his second term (he was re-elected in 2018 and previously elected mayor in 2015), making the office all the more sought-after if executive authority is elevated.
Austin’s Road to Recovery
Economic recovery and the ongoing COVID-19 response will remain major issues in Austin in 2021. While Austin is known to be “last in, first out” concerning economic downturns, the impact of the pandemic on local and small businesses was dramatic, and continues to pose difficulties.
Much of the fall of 2020 was spent crafting and finalizing economic recovery policy that we will see play out over this year. This included the city last September naming Veronica Briseño Chief Economic Recovery Officer (she was most recently Economic Development Director). Her role, then and now, will be leading cross-city department responses for recovery programming and funding opportunities for those impacted by COVID-19 in Austin.
Some examples of this include the city’s Economic Recovery Framework, developed over seven months of stakeholder input; the $15 million Save Austin’s Vital Economic Sectors (SAVES) Fund; Chapter 380 program modifications; and the Austin Economic Development Corporation (AEDC). The latter two should be of particular interest.
Regarding the AEDC, its exact powers and functions will likely not be defined until later in Q1; however, according to city documents, the corporation could help the city with development, acquisition, ownership, and operation of community development projects and affordable housing projects; promotion of employment and economic development; and promotion and maintenance of both for-profit and nonprofit creative and cultural venues. Overall, the AEDC could provide for greater flexibility and speed in making deals, as it would operate outside of the city’s regulatory framework (in addition to having its own board of directors and CEO).
Another initiative I mentioned was modification to Chapter 380 agreements (so named after Chapter 380 of the Local Government Code), which authorize municipalities to offer incentives designed to promote economic development such as commercial and retail projects. Specifically, these agreements allow the city to offer loans and grants of city funds or services at little or no cost to promote state and local economic development and stimulate business and commercial activity. The city’s take would create a Recovery Lease Incentive (RLI) program.
The RLI would in turn offer commercial property tax reimbursements to property owners in exchange for renegotiating leases with small businesses to address arrears and long-term affordability in order to recover from the COVID-19 crisis. Thus, a participating property owner would be entitled to a City of Austin property tax reimbursement for the portion of property associated with the participating commercial lease. This reimbursement will be given following successful completion of contract terms, with lease documentation and verification by the tenant. Reimbursements will be available for one year, with potential for annual renewal.
Of course Austin is also advocating for federal relief, similar to the CARES Act. But with no certainty there, or from the state, the city presses on.
The Texas Legislature
While we already expect an active spring at city hall, 2021 also marks a legislative year in Texas. The state’s 150 state representatives and 31 state senators will convene on Tuesday, January 12, for the beginning of the 87th Texas Legislature, despite the Capitol grounds having been closed to the public since last March. In whichever way or form, the state’s business will be done.
The biggest change, beyond administrative and procedural shifts due to COVID-19, will be (presumed) new Texas House leadership. It is expected that State Representative Dade Phelan (R-Beaumont) has the necessary votes among his fellow house members (a mixture of Republican and Democratic member support) to become speaker. Following the speaker’s election, house committee assignments and chair positions will be assigned, and with that the assignment of filed legislation.
While matters related to economic recovery, COVID-19 response, and local control will explicitly and implicitly come up, legislators have since October filed bills on a myriad of subjects related to their respective districts and to overall state policy. We see no reason not to expect a similar volume of bills to be filed over the legislative session, in the 5,000 to 7,000 range. What will and won’t be heard is a different matter.
• • •
There are many who have made the case for “Why Texas?” (much to California’s loss, it’s true). The overall favorable conditions in the state extend to its capital city. But when it comes to predicting the rest of 2021, our advice is to expect the unexpected, but be glad to be here (or wherever y’all are in Texas).