City Council Special Called Meeting - 9/12/12 >> Mayor Leffingwell: Good rnoon. I'm austin mayor lee leffingwell. A quorum is present so I'm going to call this special called meeting to order on wednesday, september 12, 2012, at 1:36 p.m. We're meeting in the council chambers, austin city hall, 301 west second street, austin, texas. The first item is only to set a public hearing to consider an ordinance for economic development, an economic development program with hd global corporation. September 27, 2012. 4:00 P.m. All in favor say aye. Opposed say no. That passes on a vote of 6-0. Councilmember martinez off the dais and councilmember martinez will be off the dais for this meeting. He is on paternal leave. And that brings us to item 2, but I believe we have a [13:38:00] request to go into executive session before hearing that item. So the city council will go into closed session to take up one item pursuant to 087 of the government code and that's item 2, to discuss financial and other incentives or hid global corporation. Is there any objection to going into executive session? Hearing none -- >> Spelman: Mayor, I have no explanation, I would like a -- will we be referring with attorneys? >> Mayor Leffingwell: This was requested by councilmember tovo and I'll let the city attorney address that. >> The only item we were notified of was to discuss the economic incentive so that's the notice we're giving to the public that we're going to be discussing. If you have other issues, we are required to notify the public, but that's the item that we were notified that you would like to discuss. >> Spelman: Okay. >> Mayor Leffingwell: Councilmember tovo. >> Tovo: I know we have many members from the public so if you would like to hear testimony from them, I'm certainly happy to have the executive session during any point. >> Mayor Leffingwell: I would prefer if we're going to do it that we go into executive session now. >> Tovo: Sure. We can make it short. >> Mayor Leffingwell: So without objection, we're now in executive session. >> Mayor Leffingwell: Item number 2, we will now take up item number 2 and begin with a staff presentation. >> Thank you very much, mayor and council, for allowing us to have this special called meeting. This is the second economic development proposal for 2012. The first, as you recall, was apple, which was 3,635 jobs, which was primarily focused on white collar jobs and addressing the 27,000 unemployed people who are on the unemployment role. Today we're going to be presenting a company that is very exciting, hid global is the international leader in sensor technology and is focused on 276 jobs, which i believe are in the category of harder to employ, blue and white collar manufacturing jobs. 85% Of which do not necessarily require a college degree. The site that they are looking at would be their global center of excellence for north america. With -- the representative company, testify convenient teehan, optization, I love that title, rodney glass, senior vp of global quality and kimberly and michelle dewitt with their h.r. Department. So the purpose of today's briefing as we normally do is to go through overview of the company's particular, a review of the economic development matrix score analysis, compilations of the overall benefits and review of the economic development agreement. The company, hid global, is based in urban california. It's a global company. The proposal here is for their consolidation of four facilities, four companies from around the united states into a technology manufacturing facility here that specializes in sensor development. Sensor technology, as you know, is one of the leading areas in technology in the world right now. So this is a special called meeting to present the briefing and then the followup meeting would be the public hearing on the 27th. A little background on the company. 2,100 Worldwide employees with 11 locations in the u.s. and 56 global. The economic development matrix that we used is the same criteria that -- that has been designed by the mayor and city council that is approved that you are familiar with. The web loci tells us how much money not to give. Hid scored 65 out of 100. They will be building a 200,000 square foot manufacturing and distribution center creating 276 new jobs and providing a comprehensive benefit package to its employees. Some fiscal impact analysis is showing here. The total direct benefits over a 10-year period are 7.7 million. The total cost over a 10-year period are 5.5. With the incentive that we've proposed, which is a little over $90,000 a year for 10 years, the total net benefit would be $2.24 million. So in the context of the net benefit cash is 24 million and that would rank as the third or fourth highest of those numbers. The overall benefits are illustrated here. The job creation, the $36 million of capital investment in business property investment, a net positive benefit according to web loci. The company's benefit, the company has an extensive benefit package including the talent management program which is a very, very good program that helps the employees through -- to get advancement. Also I'd like to say that the company does -- because of its extensive federal government contracts has an affirmative action plan which requires them to hire based upon the population of the city. So the larger minority population would benefit tremendously from that hiring. The contractual agreements are outlined here. Of course the company would have to establish the manufacturing and distribution center, and i believe that their preferred location is in tech ridge. They would have to create $30 million of real property improvements in the new 200,000 square foot building and $6 million in personal property. The average annual wages are indicated here above the 51,000. They would have to agree would work with the local minorities chamber of commerce and recruitment efforts since they are required by the federal government to do more than that, I think that's still a very good point. They have agreed to a diversity policy and comply with all standards and principles of the city's m.b.e. program ordinance. The contractual obligation from the city's perspective is that it's a 10-year performance based on development grant that the rebate of taxes is only after the jobs have been created and the development has proceeded as agreed to. The grant is calculated at 60% of the actual real and personal property taxes. The estimated value, again, is a little over $90,000 a year, $920,000. 9 million from the state of texas. Lastly, it's important to reiterate the city is not obligated to make grant payments for any year in which the city has determined the performance measures were not met. So today city council has already set the public hearing earlier and all of this information is on line so that citizens can review it. And then on the 24th we would review, have the public hearing and have the vote. So I'd be happy to answer any questions that you might have and as I have indicated there are four representatives from the company here, so whatever you prefer to go forward. >> Mayor Leffingwell: Are there any questions before we go to public comment? If not, we'll do that and we're basically back to the stone age on using cards. Dave porter is first. Dave, you have three minutes. >> Good afternoon, mayor, councilmembers, I'm dave porter with the greater austin chamber. I want to thank you for your consideration of this project that will come up before you on SEPTEMBER 27th. This project has been three years in the making. Sometimes these projects take a long time and this one has and it is still a very competitive situation. One of our challenges not just with the city process or the state process is that we lay our cards on the table much earlier than most cities and states, and as a company representative would tell you, the people in tennessee and memphis are really putting the pressure on knowing what we put on the table. And that is a challenge that we've had with our other projects, that we lay it out early and gives obviously the public a great benefit to see, but it also creates sometimes a competitive disadvantage because other states can offer more now that they know the state is 9 million and what the local is going to do. Obviously we encourage your support. This is a great project for a good portion of our population that doesn't have a four-year college degree. We're hoping to attract more opportunities like hid global. This would be a great opportunity and a great win for austin, travis county and the state of texas. Thank you. >> Mayor Leffingwell: Thank you. Next speaker is philip lohan. Lahan. Correct me if i mispronounced it. >> I'm phil soden. I have bad penmanship. I thought you were calling me. >> Mayor Leffingwell: The next speaker is jim o 'quinn. >> Hello. I'm jim o'quinn with our lady of guadalupe church, and a business owner in austin. I'm here with my colleague bob batlin from temple and miss barbara from st. David's episcopal church and leeland butler from saint thomas more. We understand hid is proposing to bring a significant number high paying jobs, permanent jobs to austin, and we applaud them for doing that. But specifically what I want to talk today is about the workers who are not part of that group of high paying jobs and long-term employment. Workers whose pay will probably be in the category where it pushes them on to the social safety net. So what we want to do is prevent the double dip on the taxpayer where these -- money is transferred to the corporation and the money is -- tax dollars are transferred to the corporation, tax dollars are transferred to the employee because their pay is not high enough to keep them off the social safety net. As we know in the news, pressure on the social safety nets right now are higher than ever. Food stamps, texas is the number one for uninsured children, and this is at all levels. We're seeing it at the city, at the state and at the federal level. And so I think there's an opportunity to the city to institute a wage standard to help shift the burden off of the social safety net. So we look forward to setting a wage standard for these economic incentive deals and we're participating in the economic incentive council. However, in absence of that, we would insist that the city -- for workers temporary and hourly and associated with these incentive bills pay at least $12 an hour to help lessen the burden on the social safety net. Thank you. >> Mayor Leffingwell: Thank you. Raymond butler. >> Good afternoon. I'm a retired electrician from ibew and I would lying to see the incentives offered to companies coming into to provide prevailing wages. >> Mayor Leffingwell: Thank you. I'm not going to be able to read this one. Bill boden. Yeah, you really do have bad penmanship. >> You took my back to my first pen manship lesson. I'm fill t-h-o-d-e-n. Our members are commercial contractors doing work in the city of austin and central texas building many of the buildings including this wonderful city hall that we're in today. I just wanted to come in in up port of this proposal for hid. I think it's a great opportunity. I think I saw $30 million of real estate development along with an extra $6 million in there so it's a big construction project and that's certainly a welcome information for our construction community. I know that there are a lot of folks whenever there's a construction project in town like to talk about safety concerns and what the industry is doing so i wanted to be down here today because I wanted to remind everyone here in the -- at the council that our contractors were very fortunate to have -- especially contractors and suppliers, the majority take safety very seriously. The real story in austin is when you look at the crane construction activity going on right around where we are today, the thousands of man-hours that are taking place and everything is being done in a very safe way. I live in fear of seeing on 00 news that there's an injured worker or worse and knock on wood we don't see that very often. So I wanted to let everyone know that we do have a great construction workforce here. We're looking forward to this project and certainly encourage the city council to endorse it. Thank you. >> Mayor Leffingwell: Thank you. betty McDaniel. >> Good afternoon, mayor leffingwell, cole, councilmembers. MY NAME IS teddy McDaniel and I'm speaking in support of the proposal between city of austin and hid global. I just briefly want to talk about the jobs that will come from this agreement. We know it's 276. Of utmost importance are the 99 entry level jobs and also the $51,000 average wage. These wages are what we deem sustainable and it's no secret that despite austin's relatively healthy economy there's just too many residents who are still unemployed or underemployed. And again, with these kinds of wages, jobs such as customer service jobs and direct service and labor positions, we can get more citizens into these sustainable wages. I am in support of the austin urban league, stand ready to help hid global in training and providing qualified applicants to fill these roles. We hope this is an approved proposal, one which we fully support. >> Mayor Leffingwell: Christian furtado. Three minutes. >> Good afternoon, gentlemen, ladies. Christian furtado. Member from [indiscernible] really train me and show me how to use the right tools. And the reason why I'm here, I want to give a welcome to this company in construction in austin, but I want to give the same opportunity to construction workers on these kind of safe jobs and give them living wage. So that when -- good work, safety. So thank you. >> Mayor Leffingwell: Thank you. [Applause] ann kitchen. >> Hello. My name is ann kitchen, chair of livable city. And we have participated in your economic incentive committee and I'm here today to say what we did in that committee, we think that this -- that this opportunity for an economic incentive should also consider livable wage as well as health insurance coverage for construction workers. And so we ask you to, as you think about this package, that you explore that -- those requirements also. Thank you very much. [Applause] >> Mayor Leffingwell: Billy yates. Billy yates. >> Good afternoon. Bill yates, with the united students against sweat shops, a student group at u.t. One of the things we do is use our leverage as students to make change in an institution bigger than us. We're the ones paying tuition and going to classes. I like to think of that as citizens of austin to make changes. For example this company coming in, we like to think that in our group we're working to help change garment worker conditions in sweat shops, but a lot of us know and it pretty clear from walking around campus that sweat shop conditions are not just happening in garment factories, they are happening all around us and we have to pay attention to those ones locally as well. As far as the majority of the contractors, you know, doing the best they can, i think we can shoot for higher than that and by actually instituting policy that can make that change, that can guarantee that a third-party monitor will be able to monitor the situation that workers will have a living wage we can do the best for all the workers. A lot of us have the opportunity to go to university and we're coming from families that were doing those jobs, that were the construction workers and it's those breaks we got, those living wages, the kind of things we hope the workers get now that made us who we are today and so i would just like to say that on behalf of united students against sweat shops that we would really support city council coming together and coming up with a fruition with the project to support the workers that will be providing these jobs to everyone else. Thank you. >> Mayor Leffingwell: Thank you. [Applause] k zariffe. Zariffe. You have three minutes. >> Good afternoon. Forgive me, I'm losing my voice today if it's not already apparent. My name is ken zariffe, president of education austin, the employees union for aisd. You may be wondering why I'm up here. I taught at burnet million dollars school for 12 years and families that struggle to get by day to day. Many of the families were in the jobs that build facilities that provide great jobs for others in austin. And what we encourage the council to do is to provide quality pay and safety for those workers because we see and I saw firsthand what job insecurity and low pay not only does for families but how it impacts our kids day to day getting to school. Everything we do in this society seems to be connected anymore. Schools, cities, I mean it's all interconnected. And as we make decisions, we have to look at the large picture. We have to step back and see how everybody is impacted. As I said before, I've seen how the kids were impacted and I don't want us to forget that as we start to make decisions about a business that will receive millions of dollars in incentives, which is important for our city. I don't disparage that at all, but we have to remember if we can afford to make such large incentives for companies, how can we not afford to provide quality wages for parents that are trying to provide for their kids on a daily basis and we need to make that a priority not only on this job and on this construction site but on every site and every company that we bring in and want to have part of the austin -- austin community. I want to thank you for your time. Have a good day. [One moment, please, for change in captioners] >> a lot of construction workers as myself are employed, but at the same time, we want to get that safety put on to us, you know, before we do any training, before we get set out there. Just like lately, I just got off this program. Got my 30 hour osha and safety courses and if you are going to come out and construct something and they don't know what they are doing out there, offer their training before they do anything out there and have any fatalities and that would be something to take into consideration. Thank you. thank you. Christopher knox. Christopher knox. Robin drake will be next, if you want to get ready. >> City council, mayor, mayor pro tem. My name is christopher knox. I reside in precinct 4 and I am a union iowa worker with 20 years experience. I am here to ask city council to fight and change some of the practices that apply to city funded jobs, such as a background checks. Okay. What I am saying is, I am an ex-convict, and it's hard for me to find a job. I am just saying if the city can fund jobs with a lot of money and I know I did my time and everything. I just would like to be able to be part of the city's growth, and I would like to propose that the city fight for some of the ex-cons in the city. I -- I'm kind of tired of living in the shadow and I am a skilled worker. I love this city. And I just want to be part of what's -- the growth. Thank you. >> Thank you. [Applause] >> I have a brief question. >> Mayor leffingwell: okay. Mayor pro tem cole. There is a question for you, sir. >> Cole: I have a question for you. >> Mayor leffingwell: >> Cole: Christopher, it really struck me when you said you love this city. >> I do. >> Cole: You obviously have had trouble gaining employment. >> I have. >> Cole: What is the number one reason that you think that's been the case? >> My background. It goes so far back. A lot of companies say, well, we are only going to go three years back. They will go all the way 25 years back. >> Cole: And how long has it been since you have not had any trouble with the -- your conviction? >> Well, as soon as they started the background check, I remember before in the city of austin, there was no background checks. >> Cole: I guess what I am trying to get at is a lot of times people don't appreciate the fact that you could have done a crime, been convicted and served your time and then in 5, 10, 20 years later and that's still being held against you. >> Yes, it is. >> Cole: So I am trying to figure out how long that's been held against you? >> At least ten years. >> Cole: Okay, thank you. >> It has been more than ten. >> Cole: Thank you. >> All right. Thanks. let me just say to the best of my knowledge, most city jobs do not require background checks. Some do. It depends on the nature of the job. Robin drake. >> Good afternoon, mayor, mayor pro tem, council people, members. My name is robin drake, I am the business manager, financial secretary, treasurer for the hour workers here in austin. I have been a union member for over 30 years now. The union has helped me in more ways than you can imagine, helped me earn a fair wage for fair day's work and provide me with training and safety courses to be safe in today's construction industry. I applaud your tough decisions you've made in the past, such as working with the workers defense project on rest breaks. I honestly feel like you probably saved someone's life by doing so. The decisions you made in giving companies tax breaks to build here to help create jobs for people in our community and surrounding areas. A lot of my members have benefit from those decisions and are still are today. Because of your willingness and caring to help protect the people that built this city and the people who live here in this city, I thank you. I am here today to ask for your help. I urge you to continue working with the workers defense project, to continue to protect the workers here in austin. We is you when you give more tax breaks to company, to bring more jobs to austin, that you require whoever accepts the breaks, that they help us hire hourly district managers. For example, samsung has hired many of our members but left few members out in the cold due to them having felonies. They have paid their debt to society and yet they are still punished. They want to work and provide for themselves and their families. When these companies keep closing the doors on them, what are they to do? Come back to where they came from. This is a chance to do what is right. Please help me get that chance. I here about a hiring local workers, workers that live and pay taxes here, and that's great but let's nat forget about our disadvantaged workers. I am sure elected officials will help the workers in austin and continue to make this the best city in the world to live and work in. Thank you for your time and your job you are doing. thank you. [Applause]. Next speaker is greg cesar, has self people donating. Jennifer scott, all right. Aaron chappell, rogan kesto. Did I get that wrong, brayon? Anybody with those initials. Got you. Okay. Jose ramiriz, amy price. >> You have 10 minutes. good afternoon council, good to see you. I am part of the workers defense project, my name is gregario and I know you have heard me speak many times and I will do something new. I have numbers for you, they are not numbers new and fun. They are very startling numbers. So I know we have talked a lot about construction jobs and unsafe conditions that workers face and the low wages but this data from census data, we have taken a deep look into show that we are headed in a dangerous direction and things are getting worse. So if you look at the first column you will see in 2005 a family of four, we had 4% of the construction working families in these -- in the december traitly low category, less than $11,500 supporting a family of four with a construction worker as one of the wage earners. 2005. We had 8% of construction workers and their construction working families between 11,500 a year and $23,000 a year supporting a family of four. If you look at next column, you will see in 2010, that number increased for those in the desperately low category from 4% to 10% of the construction working families, so the number more than doubled, it went up 150%. In the next category which we consider poverty wages which is 11,000 and $23,000 of a family of four, that went from 8% to 15 percent, almost doubling. And when we look at jobs disappeared we look at category of decent jobs and working class jobs and that's where the numbers wept down from, it went down from 55% to 41%, so we see that during the recession we lost jobs and we lost decent middle class jobs that could support a family and the jobs we got were bad jobs. I have heard the council speak a lot about two austins, about an austin of the haves and an austin of the have nots. These numbers clearly show, [14:40:00] undeniably show that divide continues to grow and continues to widen. This is a great opportunity for us to start to descend the tide by partnering with hid global corporation global and working with them to get decent jobs, we can target disadvantaged workers and disadvantaged people from a pipeline from training and safe and decent jobs. There will be those that say we shouldn't do anything. We should surrender and divide growing into the disgrace of large american cities. But I ask you today, I ask you to work with hid global corporation global to work in the workers defense project in the next few weeks to make sure they can create jobs for families like they used. To. We can partner with hid global corporation and come coming here but we need to stand tough in our values. That we will invest in you, that you please invest in us, also. Thank you so much. >> Mayor leffingwell: okay. >> Spelman: Greg, at what point, do we know we have succeeded. They is a question, sure, we will help you out. How do we know we have hit a bar we can be satisfied with, that they aren't blowing smoke. >> This company in particular? >> Spelman: Yes. >> We have a set worked out with many groups and construction workers for a time which we think is reasonable standard which is to ask independent wage and an independent monitor and create a pipeline for disadvantaged workers into better jobs. Obviously we can't succeed with one project and we realize we are facing a huge problem but we hope we can chip away at it project by project so people meet at least the minimum standard that we agree is much better than what exists on most construction projects in austin. [14:42:00] >> What is your current threshold for living wage? >> That is a good question. Some people put the living wage very high and some people put it lower. This is politics. It's not a number that exists in objective reality but we think a reasonable wage floor is $12 an hour, because that puts people outside of the desperately low category into just the low category. And we know that's not perfect. But we realize this is a process and it has to be incremental and we can only ask for so much on some of these incentive deals so we are willing to negotiate and be plexble so we can get something and at least get headed in the right direction instead of let nothing happen. >> $1,200 That would be close to $23,046 a year, something where we are able to stitch together 40 hour as week, week after week? >> Yes, sir. >> Spelman: Got you. >> Cole: Mayor. mayor pro tem. >> Cole: I want to say I really appreciate your comments and a even more than that I appreciate you working with my office the past couple of weeks about the issue of two austins and the disadvantaged worker. Can you talk a little bit about what you have researched on that issue throughout the country? >> Sure, we see in municipalities see construction jobs as great opportunity for working families. Construction jobs are jobs you can do with your hands and job that is can be train ared for a lot of working class families and they can train working class men and women into good, better construction jobs. So different municipalities from milwaukee to los angeles to cleveland have targeted particular areas and cities and workers and given them incentives or their public projects created pipe lin for the disadvantaged areas into construction jobs. The entire state of oregon on their entire clean energy program, which is called clean works oregon which consists of hundreds of millions of dollars worth of projects have set a minimum wage of 180% of the [14:44:02] state minimum wage of oregon and have created a pipeline where all workers and all clean tech projects are coming through training, coming out of distressed neighborhoods and earning better jobs so we can work actively to try to attack the problem instead of letting this continue to happen. >> Cole: Thank you, greg. council member morrison. >> Morrison: I think for your research, it is helpful to get context around all of this. Can you talk a little bit about how other folks or what you would envision in terms of trying to get the disadvantaged construction workers a leg up in terms of pay that you might recommend? Like pay levels that you might recommend for those folks? >> Sure, and so to encourage training, we think it's really important to establish a higher wage for workers who have gone through training schools. So many workers who are going to becoming untrained which is the vast majority of construction workers, we think deserve decent wage, regardless of whether they have gone through training or not. We have seen that through austin, the most recent study through the university of texas said that three construction workers have gone to vocational school so it is different than where it used to be where there were different union programs and workers were going not only on the job buts will formal training for their work. So we believe 15 to 16-dollar an hour for disadvantaged workers will help bring these workers out and of and the families out of the conditions they are in so if we design disadvantaged workers who below 60% of travis county median family income, giving them 16-dollar a job gives them out of the cat can guy and now they are above the 60% median income in travis county. >> You are talking about folks who have been trained and it [14:46:01] incentivizings the training. Can you talk about a that -- are you expecting to see -- obviously the contractors are going to get better work, i would assume of the folks who have training and better product, but also, in terms of safety and all, are those the kinds of things that you realize -- >> certainly, a typical construction cross training course consists of both learning to work on a particular kind of project, learning how to complete a particular trade, and, also, safety is always a key component of those training courses. >> Morrison: Great. Thank you. >> And I did forget to mention that we aren't just talking about the disstressed neighborhoods but also folks with previous offenses or people with problems with the criminal justice system who are considered to be in the disadvantaged worker category. >> Mayor Wynn: Phillip lohan. phillip lohan. >> Good afternoon, mayor and council >> . I am phillip, I represent the lew local 520 here in austin, the electrician's union. First off, I want to thank you for allowing me to speak here today and also I want to recommend hid global corporation global and their products that they manufacture. We use their products in the bidding and we have used it the last 15 years. Glad to see they are coming to austin seeking to build in our community and create jobs. We would like to see if you will consider -- give them incentives to implement prevailing wage and the project and the wage floor as well as greg had spoke about. We also implement prevailing wages, it would also allow the other trades as well to get, you know, access to apprenticeship [14:48:03] programs. It would ensure they get a decent wage on the job, and, also, it would help level out the playing field for the honest contractors here in our local community. Thank you. [Applause]. those are all of the speaker that is we have. There are a number of other speaker who is signed up to express an opinion but not wishing to speak. So with that, I guess we are open for council comments, if you have any. But we will have the public hearing and anticipate taking action on this item on september 27th. Are there any questions? Mayor pro tem? >> Cole: Yes, mayor. As stated earlier and through several economic development agreements that we have had recently, I have become increasingly concerned that we did not use this opportunity to employ our disadvantaged workers, especially on construction jobs. And so with the help of the workers defense project, I have been able to come up with some language that I would like to see used and discussed with the workers defense fund and the chamber and hid, and that language basically says that an applicant shall make good faith efforts to ensure that 15% of nonlicensed construction work hours are completed by disadvantaged workers who have graduated from a construction craft training program. A disadvantaged worker either lacks a high school diploma or ged, has a criminal record, has a family income of less than 60% of travis county msi, or resides census track where median family income is less than 60% of travis county mfi. We had a few people testify about the safety met and we having more and more workers and [14:50:02] family fall into the safety net and as we make outreach to companies from around the world to come to austin and create opportunities, we did not want anyone left out of the opportunities. So I will maae this language available to all of the stakeholders that are involved and I hope that it becomes a part of the agreement that we see that comes before us on september 27th. Thank you, mayor. council member tovo. >> Tovo: Yes, thank you, mayor pro tem. I thinks this a great start to a conversation. I look forward to hearing the feedback, also, from workers defense fund and from hid. I do have a few questions at this point, probably directed either to our economic growth and redevelopment service staff or to hid. I believe I read somewhere or heard maybe in the presentation that 85% of the jobs would not require a college degree. In my quick reads through the documents, I don't actually see that captured in any of the language of the agreement, the business information form or the economic development agreement, buts the certainly possible that I am missing it. I wonder if you might address that, mr. johns. >> Yes, kevin johns, director of economic growth. In our due diligence, we have looked at the requirements, the job hiring requirements for the positions that are available, and it's that number that is what the company requires. They require a high school degree but not a college degree in that span of the position that is are offered here. So it doesn't show up in the -- in the requirement -- in the contract. It shows up just in how they operator all of their positions. >> Tovo: And is that specifically the 99 entry level positions or is that also reflected in the staff, supervisor, and managerial level [14:52:01] positions? >> I may let the company respond to the detail, because I know every company, especially technology manufacturing, they want the most qualified persons, but they do have minimum standards and I think that's what we are speaking about here. So I am going to let the company respond a little bit about their hr policies. >> Tovo: Thank you. >> Hi, I am kimberly markort, human resources for hid and for the entry level positions, we of course don't require a college degree for that. >> It is the 99 entry level positions that don't require a college level? Would the other, the staff positions, would those require a college degree? >> Some of them. It just depends. If you look at the total of the 276 proposed positions, of those, 85% don't do not require degrees. >> Tovo: Would they be primarily in those categories, staff and entry level categories of jobs? >> That do not? >> Tovo: Yes, that do not. >> Correct. >> Tovo: Okay. Could you talk about -- i noticed a comment in some of these -- in some of the documents before us that talked about extensive health insurance benefits and I wonder if you can talk to us through that and what the cost is to employees at various levels, generally, what the company's contribution is, and we also heard some questions or some points made from our speakers that they would like to see health insurance benefits for construction workers as well and I wonder if you can address that as well, please. >> I am not able to comment on construction jobs but I can certainly tell you about hid's benefits. We are very proud of the benefit programs we offer employees. Every employee that works for hid is -- has the opportunity to participate, so we don't have a a tiered level of benefit, so [14:54:01] from our ceo down to our manufacturing workers, we all have the same benefit. The company pays 80% of the medical program, medical, dental, vision, prescription. We have a comprehensive wellness program. We have tuition reimbursement program, employee assistance program, so it's a whole spectrum of employee benefits. >> Tovo: So 80 percent contribution from the company, 20% from the employee and then for any eligible dependent, it would be 100% employee contribution, or is there any contribution from the company? >> It's 80% employer contribution even for the dependent portion. And not only that, but if an employee participates in our wellness program, which we have close to 90% participation, we give them an additional 3,520-dollar a year credit on -- we give them an additional 520-dollar a year credit on their premium. >> Tovo: Thanks for that. I see domestic partners are among the eligible dependents for any employee. >> That's correct. >> Tovo: All right. There was a description in here about opportunities for professional development, and i think there was a statement made that each employee is required to have 40 hours of training per year. Is that correct? Is that paid or unpaid training? >> That is paid training. It's a worldwide objective we have for every employee at every level. >> Tovo: And then I have a more specific question about some information in the economic development agreement. There is a section talking about hid being an active participant in the electric code of conduct and the statement is made that hid has audited 50% of its suppliers in low cost countries [14:56:00] which account for 96% of our supplies spend to ensure their adherence to the eeic guidelines, so first, can you explain what supplier spends means in this context and two, what the result of the audits have shown as a result of the suppliers in low cost countries that -- that are working with hid. >> Hid audits all of their suppliers. We talk about spend, it is how much money we spend on the components that we bring in to the company to manufacture the products. The manufacturing spend for hid is about 95% of our spend, is about 15 companies. Not all of which are in the low cost regions. Some are in -- certainly in china, the philippines, parts of other malaysia and also in the top 15 count in europe and the united states. We also have supply chain conferences on an annual basis. We also visit those sitings on a regular basis, pretty much on a quarterly basis formerly and more reg -- formally and more regular basis, weekly, monthly, we have hid employees who live at a couple of our sites, and china as well. Paid by the company but work in the factory in china. >> Tovo: It does say you audit 50% of them. Can you give us information on that? Is there information on the website that shows us what some of the audits have revealed in terms of conditions in those supplier company? >> Yes, I would say tothe specific website, we don't post the results publically, but we have a score card so we talked [14:58:00] about elements of working traditions, so we walk through the factories -- working conditions. We walk through the factories and are aware of the working conditions of what the workers make for hid global. We talk about the number of employees, we go through their work hours. We walk through the factories, as I said. We are just kicking off more recently sustainability type of metrics. [Indiscernible] so specifically posting is not a public posting. But recordkeeping internally. >> Tovo: And perhaps you and i can continue this conversation or I can submit some questions. That would be -- that would get some information but I guess, what I would like to see is some assurance that when there have been -- if there have been challenges cited at any of these factories, that there have been attempts to address them. >> And maybe they are close for comment, too, is hid on these top 15 suppliers I reference, about 90% of the spend, these suppliers have been suppliers company 15-20 years. So we don't chase low cost suppliers. We formed long-term relationships with the suppliers and history will show that. >> Tovo: Great. I assume it extends into the working conditions with the factories that, you have continued a relationship there because you found it to be up to the standards you require. >> Exactly. Exactly. >> Tovo: Could you talk for a minute, and anyone who is prepared an interested in talking about this, could you talk about your record of employing hard to employ workers, how you define that term, what your track record is and what kind of support services you would have in place for those workers? >> So -- so could you just clarify when you say hard to employ workers, describe that worker to me. >> We have had an ongoing discussion here at the council. You have heard some comments from the public here today that they would like to see -- well, I won't summarize, but do you employ workers who have had a criminal background? Are they excluded from work in any of the staff positions? >> Yes. Because we are a security company, our business is secure identity, a client, customer requirement as well as a requirement for many of our security certifications make us so that we are not able to employ anybody that's been convicted of a crime -- convicted of a felony. >> Tovo: Of a felony. Okay. We did address education. You indicated 85% of the employees do not need a college degree. In terms of your commitment to local hires, there is an estimate of how many local hires you would be looking to make here in austin. How would you -- I see some of the partnerships that you are planning on entering into. How will we assure that those -- how will you assure those new employees are, indeed, local? >> I can say we are affirmative action employer and committed on ensuring the demographic of the workforce reflect the community we reside in. That's something that we define within our affirmative action plan and we have been very, very successful throughout the country in sticking to that. >> Tovo: And in terms of the partners that are listed as potential collaborations in terms of recruiting and providing ongoing support, have you met with most of those, the austin/travis county reentry? Actually, the austin/travis county reentry roundtable may not be a partner in this case, so maybe that wasn't the great example but the greater austin hispanic chamber of commerce and minority for liberty, are you involved in discussion with those groups already? >> I think over three days i have had 16 meetings scheduled. And I am in the middle of completing those. I met with your veterans commission. The workforce -- workforce alliance and have another, you know, number of meetings. Of course it's to our advantage to partner with these organizations. We are going to be, you know, trying to fill 276 jobs, and we definitely want to tap into whatever community resources are available to us. >> Tovo: Okay. Thanks. Great. Thanks. And I will probably have more questions but I will stop there for now. Thanks. >> Cole: May I have a brief follow-up. mayor pro tem cole. >> Cole: Thank you, thank you for your testimony. I want to clear phythat you have the restrictions of actual employees of your company, but aren't you building a new site for when you relocate, if you relocate, assuming that we decide to approve this? >> Yes, this is -- it would be a new build and I would actually -- one of the advantages we would have -- and I should probably let kevin comment on this is the security features we will be able to implement into this site and we will be seeking the highest level of security certification that we are able to obtain in order to satisfy our customer needs. >> Cole: But what I am trying to clear phyis that the construction workers that you actually hire to work on this site, would the complete ban of any type of criminal record apply to them? >> One is we are probably not that far along yet. We met with the developer -- the owner of the land so whatever local practices the city has approved, we will certainly work with our partners there. I think there is not being construction company -- there is two separate entities of the construction, the traditional shell part, putting the, you know, prepping the ground and putting the walls up. That's one element. Internal part of the building, we will have vaults we put into this building and security systems. Those tend improvements are things that will be more strictly controlled as we put the tenant improvements in the building. >> Cole: Okay. Thank you. just a quick question. Kind of a follow-up on that, but we spent a lot of time talking about the construction. Are you actually building this or are you contracting for that? >> We will contract that out, mayor. When we make our final decision, we have a, what we have called a theoretical best layout of the design for a building. We are in discussions and negotiations with the folks that own the land and we have not selected a general contractor. and none of whatever economic incentives might be on the table would be applicable during the construction phase. Is that correct? To the construction company? I want to make sure that we understood that the economic incentives don't -- within the construction -- when the construction project is complete, so it would not apply to that part of it. Council member spelman. >> Spelman: Council member tovo and mayor pro tem cole asked most of the questions. I am interested in just a couple of other things to fill in some gaps. Moorecort mentioned affirmative action plan and you alluded to it but you didn't see much about it. I wonder if you can tell us owe how that works. >> Essentially any employer who had federal contracts that exceed $50,000 a year is required to have affirmative action plan in place and as i said, you basically go to the labor statistics. You identify the demographics of the community in which the spike is based and then you commit to making sure that your workforce reflects the diversity reflected in the statistics. If for any reason in your hiring practices, terminations, promotions or your general mix of race or gender, you know, strays from the statistics in the community, then you put together an affirmative plan to achieve that percentage and so usually that involves partnering with community programs that represent the particular, you know, race or gender that's underrepresented, and actually i am happy to say that in all of , we have no underrepresentations at this time. And so we are pretty committed to keeping up with that, in whatever site we choose for this new facility. >> Spelman: So the commitment you have made is not just due to to -- good faith effort but in consequences and the last 15 sites you have been able to reflect the demographics of the area you are located in? >> That's correct, you are require todd have an affirmative action plan in site with 50 or more employees and we don't have affirmative action in every single location, but, in fact, we completed ofcc audit earlier this year successfully. >> Spelman: Perfect. I understand -- along similar lines, I understand the average wage you are talking about here, $25 an hour and 51,000 and change per year. What -- one of the questions we ask is not the lowest pay you pay because that will be different for individuals but the lowest tenth percentile. Can you give us that idea of that would be or somewhere in the neighborhood. chaunce may have your answer for that. >> Lowest 10% is 27 people, 18 of those 27 people make -- have the number here -- make under $11. They make $10 and something per hour. Excluding profit sharing. So all employees do get profit sharing. There are 18 employees who get a little less than $11 an hour but they do get profit sharing. >> Spelman: They do get profit sharing, which of course is not guaranteed in any given year. >> That's correct. >> Spelman: They also do have, however, access to health insurance and all the other benefits you talked about at exactly the same level and terms as all the other employees in the organization? >> That's correct. And one of the greatest benefits we have that I didn't mention earlier is we are -- we do have a safe harbor in our 401(k) plan which means every employee receives 3% of pay whether or not they participate themselves. So a 401(k) account is established for them and everybody is funded an fully vested upon funding, each paycheck. >> Spelman: Vested at each paycheck. >> Right. >> Spelman: Good for you. That's great. I have a question about -- actually, either -- is it teon or ms. moorecort. You are coming to us, I think it is safeta to say you are asking for an incentive. You have already talked to the state. Are you seeking an incentive from the county or any other local government? >> Yes, hid has been made aware of it on the county level. So we were given an audience with judge biscoe. We had an opportunity to meet with him. We presented an -- we were presented an application and went through that process as well. >> Spelman: The county has not made a commitment one way or the other yet? >> No, sir. >> Spelman: There is a number on the table from the county. >> Yes, sir. johns later johns later on what that is. Thank you. I do have a question for mr. johns, over your shoulder. Kevin. You provided us good information in the powerpoint presentation and I am assuming the analysis in detail will be available for anybody online for anybody who wants to look at it on annual basis, so we know how many jobs created, what the benefits and costs of the city are going to be and what the presumed payments are going to be if they are able to meet their job targets? >> Their performance measures, yes, sir. >> And the performance measures will be described in detail as well? >> Yes, sir. >> Spelman: Okay. Thank you. council member morrison. >> Morrison: Thank you. And just a few more questions now. So you were talking about the lowest 10% and you said that just to be clear, you said that 18 folks make under 11, but more than 10 plus the profit sharing. Is that correct? And then those other nine make more than 11? You said -- we were talking about 27, the 10%, we were talking about 27 folks. >> Yes, yes, that's correct. So that the remainder, the 9 make more than $11. >> Morrison: Okay. That's helpful. And then you were also talking about the health benefits that a company pays 80% and dependent portion included. Can you tell me what, just in round figures, what dollar amount that is? Because I take it that that doesn't vary depending on how much money you make and so it would hit the lower paid folks a lot harder than the higher paid folks. >> So if the employee is participating in the wellness program, as most of ours do, it is for single coverage, $26 a check. >> Every two weeks. >> Biweekly. And for family coverage, it is $110 and it's for as many members of their family that are eligible. >> Morrison: Do most of your lower paid folks actually participate in that. >> Yeah. I would say that -- I would guess 97% of our employees participate in the health insurance. >> Morrison: Great. And in terms of the training you were mentioning, though, required 40 hours of training. So for the manufacturing jobs, can you give me some catches of some of the training that those folks might engage in? >> Sure. A lot of our manufacturing processes are arranged, I guess you can call it in a cell configuration, and so an employee will typically circulate through the different tasks required within that cell so there is a lot of cross-training that goes on. Then there is different cell that is have varying degrees of complexity and so often employees will move from one cell to another and, you know, we are happy to encourage employees to, you know, be skilled in as many areas as they are motivated to grow in. >> Morrison: Do you have any numbers or something you can share with me in terms of what your turnover is for the manufacturing jobs? Do they stay with you for a long time? And do you have any measure of them moving up, the latter in the manufacturing world? >> I don't have the turnover number available to share with you but I don't want to misstate it, but I can tell yous the very, very low. We consistently do benchmarking. I cans will tell you that our tenure is very, very high in some of our plants. It's not uncommon at all to have someone who has been with us 20, 25 years. >> Morrison: Okay. That's helpful. Two other more difficult things to really get to any details on and I think that council member tovo might have mentioned this, but one of the concerns always is, not only what kind of jobs are available but are these going to be j austinites, or do you have any sense that you are going to be located, i understand it far north so are we going to be providing jobs for a bunch -- we not that it's a bad thing. We want everybody to have a job in travis county and so on but whether there thereby incentives and drives to hire people outside of the city limits? >> I have to be honest, I am not familiar with the demographs of where employees with particular skills are concentrated but i can tell you it is our intention to hire from the community. We have a nice variety of jobs, the majority are entry level jobs, which wouldn't require a specific skill set and maybe the specific jobs, like supply chain or technology-related jobs, we have a wide spectrum of people. I don't think we will have a problem -- locally is our intent. >> Morrison: johns may may have a comment on that. I can tell by the express on your face. >> Thank you. I wanted to add that we did have discussions with the company about surveying the people who had been employed to find out whether they have left unemployment compensation, whether this has moved them out of poverty so that we can get a better sense of where they started and where they come from and the company is very willing to work with us and I think that might give us a better picture, also, of where the people are living. >> Morrison: Okay. >> To use it as kind of a template for some of the things that are being discussed in the economic development economy. >> Morrison: I have one other question, and one of the issues that always comes up is the but for question, and that is, would you -- and I don't know how you are going to be able to answer this but I would just love to hear your comments on it and what the community will ask is, would you be coming here, anyways, without an incentive package from the city and state? Sorry to put you on the spot but I can assure you, people will ask sos the helpful to hear directly from you. >> Yes. So when we went on our site selection process, we had ten innovation, business friendliness and the environment. The criteria for how -- the type of people in the community that we would be hiring, so things in austin, the fact that you have technology here, you have a university here. You have -- I forget the exact number, but 12 or 13 different education type of places, those all contributed. As we narrowed down our selection, the incentive is very attractive. It is very expensive to move an operation and set it up, so hiring 276 people, training them the way we train them and operating once we have the doors open is expensive proposition that the incentives are helping us tremendously about. We are a leader in our industry, but relatively speaking, we are not huge. We are still under a billion dollars. But we are expecting to grow quickly and so the place where we land, we -- those features of business friendly environment, helping us establish at the location, you know, is a partnership we are looking for. >> Morrison: I appreciate that. And in terms of central texas versus austin, can you speak to that at all in terms of where you are interested this landing? >> We have a preferred site now in austin. It's in the tekridge property -- the tech ridge property on i-35, a east of i-35, north of parmer. We like the location for a lot of reasons. It is in the corridor, the i-35 corridor and the 130 corridor, so access around the metropolitan area. It's within walking distance to retail which is a culture that we have today. We have bus stops on two corners. We have a car pool area within 1 yards of the site. So a lot of features about that land and it's -- it's a land site so it enabled us to take our box that we designed and put it in a location that has a lot of the features we already built in. We have looked in central texas. We had looked before we startedded narrowing in on this opportunity, we had looked in other locat pflugerville, that's a town we looked at. What you offer in that location just culturally fits with who we are and the sites we are coming from. >> Morrison: I appreciate that. And then I just want to follow up on the comments that mayor pro tem made because I think that -- I understand that you're -- in the new jobs you are creating and your employments are one bucket of things that we are looking at, but the construction of the new site is also an opportunity that we need to be thinking of in terms of helping to close that divide that we talked about, and so, in addition to the suggestion that mayor pro tem is going to be making that she shared with us, which I support. I would also like to ask us to consider a couple of other things as we are working through that, an one is that -- that we, in fact, have an agreement that the disadvantaged workers that we are talking about under mayor pro tem's comments actually be paid a wage with the floor of 15 or $16 an hour to provide that incentive and really create the pool and ladder up and out into more opportunity. And then that, in general, so that's just for construction that we are talking about, and that in general, for the construction workers, that there would be a floor of $12 an hour or the prevailing wage, which ever is higher. Sometimes we know that we have -- [applause] we know there is prevailing wanings that aren't living wages at all. 85, $8 an hour, and so in terms of creating an opportunity and spend taxpayer dollars, I feel very strongly that we need to make sure that the folks that are engaged because of that have a fair chance with a fair pay. that's all we have on our agenda. Without objection, we stand adjourned at 3:22.