The Tech Bust

Source: CB Richard Ellis (industrial) & Colliers Oxford (office).

Occupancy rates fell by nearly 20% from 2000 to 2003.

Occupancy Rates Decline

94.2

%

91.8

%

82.7

%

77.1

%

95.8

%

81.2

%

77.0

%

76.8

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003

Industrial

Office

Source: Texas Comptrollers Office

By 2003, the city’s revenue from sales tax had dropped $13 million, severely impacting services.

COA Sales Tax Revenue Declines

$117.8 $117.4

$110.2

$105.0

$95

$100

$105

$110

$115

$120

2000 2001 2002 2003

Mill

ions

Source: PricewaterhouseCoopers/Venture Economics/NVCA.

By 2002, venture capital investment fell to 20% of what it had been two years earlier.

Venture Capital Investment Declines

$2,076

$1,059

$448 $496

$0

$500

$1,000

$1,500

$2,000

$2,500

2000 2001 2002 2003

Mil

lio

ns

Meanwhile…

Austin had taken itself out of the economic development “game”

Austin Chamber’s economic development funds were being diverted for operations – annual funding for economic development was $500,000Chamber’s website for site selection and business relocation/expansion was “under construction”. . . for over 5 yearsChamber had one full-time staff member focused on economic developmentA City employee skipped a meeting with a major auto manufacturer

Opportunity Austin 5-Year Plan

Program Goals:

72,000 net new jobs

$2.9 billion net increase in payroll

$14 billion in GRP

Opportunity Austin 5-County Region

The Beginning of Opportunity AustinWe raised $14 million in 2004($3 million over our goal!)

5-Year Result

5-Year Goal

New Jobs 124,200 72,000

Payroll Increase $5.7 Billion $2.9 Billion

Corporate relocation announcements 144 100

Out-of-region visits 835 500

Prospect visits 540 250

Regional retention visits 857 475

Summary of Results

Relocations By Target Industry Sector (2004-2008)

Clean Energy 6

Data Center 5

Digital Media 15

Headquarter/Regional Office 29

Life Sciences 13

Semiconductor 13

Software 17

Wireless 8

Other IT 11

Other 27

TOTAL 144

Opportunity Austin

Opportunity Austin

Job Creation Largest 100 Metros

Nonfarm jobs, Dec.

2008

2003-2008 1998-2003

Diff. % Ch. Rank % Ch. Rank

Austin MSA 783,300 124,200 18.8% 1 6.4% 26Raleigh MSA 516,600 72,500 16.3 2 5.1 38Houston MSA 2,628,100 336,600 14.7 3 2.9 50Las Vegas MSA 899,700 114,700 14.6 4 22.1 2Salt Lake City MSA 646,100 78,300 13.8 5 3.1 49San Antonio MSA 856,700 99,300 13.1 6 5.0 39Tulsa MSA 439,800 47,100 12.0 7 -2.3 84Fort Worth MDiv 884,200 93,800 11.9 8 3.6 46Durham MSA 292,800 31,000 11.8 9 2.1 57Dallas MDiv 2,119,600 222,100 11.7 10 0.6 69Baton Rouge MSA 380,400 39,500 11.6 11 2.7 53Orlando MSA 1,064,900 109,600 11.5 12 9.4 13Charleston MSA 296,200 28,800 10.8 13 7.4 19Boise City MSA 263,600 25,500 10.7 14 11.4 7Wichita MSA 313,300 29,500 10.4 15 -5.1 97

Source: U.S. Bureau of Labor Statistics.

18.8%

12.9%

3.7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Austin MSA Texas United States

Employees on Non-Farm Payrolls 2003-2008

Source: U.S. Bureau of Labor Statistics.

-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.53.03.54.04.5

2001 2002 2003 2004 2005 2006 2007 2008

Mill

ions

of

Sq.

Ft.

Office

Industrial

Real Estate Absorption

Source: CoStar.

-23,900-5,800

-1,300

+22,700 +25,100

+41,700

+24,800

+9,900

Office Building Sales

Source: Sperry Van Ness, Advisor Insights.

2001 2002 2003 2004 2005 2006 2007 2008

Transactions 7 11 11 23 33 14 33 18Avg Price/SF $115 $118 $100 $121 $174 $172 $249 $199

0

50

100

150

200

250Transactions

Avg Price/SF

-23,900 -5,800-1,300

+22,700

+25,100+41,700

+24,800

+9,900

Existing Home Sales

$3.56 $3.56 $3.70 $3.90$4.49

$5.66

$6.96 $6.91

$5.46

$0

$1

$2

$3

$4

$5

$6

$7

$8

2000 2001 2002 2003 2004 2005 2006 2007 2008

Bil

lio

ns

+33,100 -5,800-23,900-1,300

+22,700

+25,100

+41,700 +24,800

+9,900

Source: Real Estate Center at Texas A&M University.

>>Opportunity Austin 2.0

A challenging time…

300 jobs lost with ModusLinkclosing in Round RockAquatic Industries closes Leander

plant

Applied Materials lays off 650

Dell eliminates 900 manufacturing jobs

Harcourt Education eliminates 200 jobs

Jewelery Channel closes in Round RockAdvanced Micro Devices lays off 364

Midway Games cuts 50 Austin jobs

Education Finance partners closes student loan service center

Freescale downsizes by 138 jobs

NCsoft downsizes Austin Studio by 100

Austin Companies in the News in 2008

Applied Materials downsizing continues with another 60 layoffs

Google closes recently established Austin office

Spansion cuts 163 Austin jobs

Sun Microsystems prospects uncertain following acquisition

Freescale downsizes by 319 jobs

Austin Companies in the News in 2009

Fastest Growing Among Top 50 Metropolitan Areas

Source: U.S. Bureau of Labor Statistics.

Non-farm payroll jobs

June ‘09

Growth June ‘08-June ‘09

RankDifference % Ch.

Austin MSA 778,700 -1,200 -0.2% 1

San Antonio MSA 855,900 -6,300 -0.7 2

Virginia Beach MSA 774,000 -7,600 -1.0 3

Fort Worth MDiv 869,000 -13,700 -1.6 4

Newark MDiv 1,031,500 -16,800 -1.6 5

Washington MDiv 2,411,200 -41,000 -1.7 6

Columbus MSA 931,600 -15,900 -1.7 7

Memphis MSA 616,800 -12,900 -2.0 8

Kansas City MSA 1,008,300 -21,300 -2.1 9

Dallas MDiv 2,078,200 -44,600 -2.1 10

Fastest Growing Among Top 50 Metropolitan Areas

Source: U.S. Bureau of Labor Statistics.

Non-farm payroll jobs

June ‘09

Growth June ‘08-June ‘09

RankDifference % Ch.

Baltimore MSA 1,296,200 -32,000 -2.4 11

New York MDiv 5,187,700 -130,300 -2.5 12

Boston MDiv 1,687,800 -46,000 -2.7 13

Houston MSA 2,550,900 -69,600 -2.7 14

Pittsburgh MSA 1,135,400 -31,200 -2.7 15

Philadelphia MDiv 1,880,600 -54,500 -2.8 16

Nassau MDiv 1,249,200 -40,300 -3.1 17

Richmond MSA 616,100 -21,800 -3.4 18

Indianapolis MSA 890,000 -33,000 -3.6 19Miami MDiv 1,000,700 -37,200 -3.6 20

Job Growth, Peer Metros June 2008-June 2009

Source: U.S. Bureau of Labor Statistics.

-0.2%

-3.0%

-3.9%-4.3% -4.3%

-7.6%-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

$8,509,907 40.5%

$2,111,754 10.1%

$6,272,472 29.9%

$732,743 3.5%

$1,362,349 6.5%

$483,897 2.3% $426,878

2.0%

$100,000 0.5% $1,000,000

4.8%

Opportunity Austin 2.0 Five Year Approved Budget $21 Million

Economic diversification

Business retention & expansion

Education

Talent attraction

Improve transportation system

Keeping Greater Austin Great

Investor relations

Fundraising campaign

Opportunity Fund

Opportunity Austin 2.0

$60.0

$25.0 $22.5 $22.5 $22.0 $21.0 $17.0 $17.0

$0$10$20$30$40$50$60$70

Mill

ions

Comparison Cities

Opportunity Austin 2.0

Opportunity Austin 2.0

• Campaign launched in May 2008

• 312 companies/organizations have pledged to invest in O.A. 2.0

• 153 - new investors

• Contributions are up 67% from original investors

• Total as of August 31, 2009: $18,329,400

August 09 August 08 2009 YTD Annual Goal 5 Year Goal

OUT OF REGION VISITS 26 9 180 120 600

SOURCES OF LEADS 22 102 181 80 500State 2 28Site Consultants 4 22National Broker 6Local Broker 2 19Web 2 10Out of Region Visits 1 42Direct Company 5 23Referral 6 31

LEAD GENERATION 81 350 500 2500

Cold Calls 48 203

Out of Region Visits 17 110

Electronic Communication 16 37

PROSPECT FOLLOW UP REQUEST 206 1316

PROSPECT VISITS 15 9 99 40 300New (1st) 7 54Repeat 8 45

ANNOUNCEMENTS 1 2 9 15 115

REGIONAL RETENTION VISITS 87 29 420 360 1800

Opportunity Austin 2.0Efforts as of August 2009