Austin City Council approves incentives to bring Merck tech center

The Austin City Council voted 7-3 Thursday to approve an incentives package potentially worth up to $856,000 to pharmaceutical giant Merck Sharp & Dohme Corp., which is promising to bring at least 600 new jobs to the city.

The agreement, Austin’s first major corporate incentives grant since 2014, would pay $200 a year for each full-time job that Merck creates and retains under the 10-year contract. The jobs would pay an average salary of $84,586 annually.

The approval came after less than an hour of debate Thursday, with Council Members Delia Garza, Greg Casar and Ellen Troxclair casting the “no” votes. Council Member Leslie Pool was absent.

“I realize there’s never a perfect package that we vote on here,” Garza said. “My biggest concern is the type of jobs this company is bringing.” She said her priority is “jobs that help our low- and middle-income families, and I don’t see this in this package.”

“In this midst of this affordability crisis, it’s just too difficult for me to look at taxpayers and tell them that instead of reducing their property taxes, that the city chose to give an incentive to a for-profit company,” Troxclair said.

According to the proposal, the company would aim to create 119 full-time jobs and spend almost $6.4 million to equip a temporary facility by the end of this year.

The company also said it would invest almost $29 million over the next decade to build and equip its new innovation center, which would focus on large data collection and the design of technology platforms for “personalized, proactive and preventative health care,” the firm said in its application documents.

An economic impact analysis estimated the project would directly contribute $1.9 million to the city after subtracting the cost of the incentives.

Merck didn’t request incentives from Travis County. Projects of this size and scope often receive an additional grant from the Texas Enterprise Fund when they receive local incentives. Gov. Greg Abbott hasn’t announced any such grant.

In their budget proposal hammered out last week, the Texas House voted to defund the enterprise fund, moving its $43 million to support Child Protective Services, foster care and other child-support programs.

Merck had been reviewing about 50 other sites around the world for the new hub, an Austin city official said this month. However, the potential partnerships with the Dell Medical School and its incentives application indicated Austin was a top target.

The company has yet to determine a final location within Austin, but it could locate temporarily at the Dell Medical School. And a permanent location almost certainly would reside within the innovation district emerging around the school.

Its mission, Merck said, “aligns with the (University of Texas), Central Health, People’s Community Clinic and many other groups that could support the transformation of health-care delivery and affordability.”

While Merck and the medical school haven’t reached any formal agreements, they have discussed a variety of projects that could improve health care and lower costs, according to a statement this month from Clay Johnston, the UT medical school’s dean.

Johnston said potential initiatives include efforts to eradicate human papillomavirus and cervical cancer in Austin; pilot projects around better uses of health data; and community-based programs that bolster the training pipeline from schools to health care jobs.

“These kinds of initiatives would be difficult to achieve without a relationship with this specific kind of collaborator,” he said at the time.

Locating near the school would also give the innovation zone a major private-sector anchor, something economic development experts say is a key factor for the success of such districts.

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