Austin City Council
4:54 pm
Thu February 20, 2014

Austin OKs Economic Incentives for Dropbox, Websense (Update)

Update: Dropbox and Websense will receive economic incentives to expand in Austin.

The Austin City Council voted 5-2 today to offer the two tech companies approximately $700,000 in incentives. The money comes on top of $6 million from the Texas Enterprise Fund. 

Council member Laura Morrison was one of the “no” votes. She said spending the city’s money on early childhood education would be a better long-term investment: "More of a trickle-up, as opposed to a trickle-down approach to making sure people have economic opportunity in this town … that’s how we should be investing our money now." Morrison was joined in opposition by council member Kathie Tovo.

Council member Mike Martinez countered that an understanding of how the incentives actually work reduces opposition. “The challenge that we face is getting out there and messaging, so that those concerned citizens have their fears and concerns alleviated as much as we can," he said. "There will always be some who will never agree with them, and I respect that."

The companies’ proposals – which would expand Dropbox’s Austin office and move Websense's headquarters from San Diego to Austin – are estimated to bring a net fiscal benefit of $2.35 million to the city. See a further breakdown of the agreements in the report below.

Original story (Feb. 10): Fresh off their approval of economic development incentives for one company, the Austin City Council is considering two new incentives packages this month.

These two proposals, with tech firms Dropbox and Websense, are expected to result in 640 new full-time jobs, at a cost of $682,500 to the city.

Here’s a closer look at the companies and the incentives:

What is Dropbox?

Dropbox is a privately owned software-as-a-service company based in San Francisco. It was founded in 2007 and has since amassed over 350 employees and over 175 million users in over 200 countries. Their current consumer offerings include cloud storage, file synchronization and client software. You may have used their service for sharing photo and files online.

What is Websense?

Websense is a privately owned Internet security firm that was founded in 1994 in San Diego, CA. Since then, it has focused on protecting companies and organizations from cyber-attacks and data theft. Websense currently employs 1,600 employees in 28 global locations.

What's at stake in the two proposals?

As a part of its proposal, Dropbox would expand its Austin office, which currently has 30 employees.

  • Jobs: The proposal would create 170 new jobs paying an average annual wage of $59,000.
  • Investment: The proposal includes capital investment of $5.5 million, which would go towards a larger office space, investments in business personal property and improvements on leased property.
  • What would Austin pay?: A performance-based grant of $244,500 that would be paid over a 10-year period. The state of Texas would also offer $1.5 million, contingent on the city's approval of its own subsidy package.

Websense’s proposal includes a relocation of its corporate headquarters from San Diego to Austin.

  • Jobs: Their proposal would create at least 470 jobs that would pay an average annual wage of $82,000.
  • Investment: The proposal also includes capital investment of $10 million, which would go towards an office space, investments in business personal property and improvements on leased property.
  • What would Austin pay?: A performance based grant of $438,000 paid over a 10-year period. Additionally, $4,500,000 is offered from the Texas Enterprise Fund for the relocation of their corporate headquarters – also contingent on the city's approval of its own subsidies.

These two proposals are estimated to bring a net fiscal benefit of $2.35 million to the City of Austin.

What is the proposal process?

At its regularly scheduled meeting this week (Feb. 13), the city council will receive a rundown of the two proposals. The proposals will be are scheduled to be presented at 10:30 a.m. and the council will allow for public comment.

On Feb. 20, the council will hold a special-called meeting to take action on the proposals.

How can I have my voice heard?

With Austin booming economically, continued use of economic subsidies remains a controversial topic. The council split 5 to 2 in ultimately approving an incentives package valued up to $679,500 for health IT company athenahealth.

Beginning Feb. 6 at 1 p.m., the city's Economic Development Department opened a public comment period regarding the proposals. The period will conclude on Sunday, Feb. 16 at 5 p.m. All written comments regarding the proposal will be presented to City Council Monday, Feb. 17.