Travis County approves tax incentive deal with Tesla

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TRAVIS COUNTY — After hours of deliberation and public comments, the Travis County Commissioners Court voted to approve its tax incentive agreement with Tesla.

It was a unanimous approval with Commissioner Margaret Gomez abstaining.

The performance agreement is set up in a way that Tesla receives tax rebates if its meets the requirements outlined in the deal. Tesla has been asking for tax incentives to build its next gigafactory here.

According to the county, the car company’s investment of $1.1 billion in the first five years would lead to a 70% rebate on Operations and Maintenance taxes. County officials said that would come out to about $14 million in rebates over 10 years.

Additional investment is incentivized:

  • 75% rebate on O&M taxes on incremental investment from $1.1 – $2 billion
  • 80% rebate on O&M taxes on incremental investment over $2 billion

Incentives from Del Valle ISD

What Travis County is offering is in addition to what the Del Valle Independent School District voted to approve last week.

The school district’s deal involves agreeing to cap Tesla’s taxable property value at $80 million for 10 years. According to a calculation done by consultants, without the cap, the taxable value would be on average $600 million over 10 years.

By placing the cap, Tesla is projected to save about $50 million in taxes over 10 years.

The proposed factory location is in southeastern Travis County at State Highway 130 and Harold Green Road.

Proposed location for Tesla Gigafactory in Del Valle, Texas (Travis County Photo)
Proposed location for Tesla Gigafactory in Del Valle, Texas (Travis County Photo)

The location is outside Austin’s city limits, but city officials are scheduled to get a briefing about it on Thursday.

The city spokesperson sent KXAN a statement:

“We are not surprised that an innovative technology company like Tesla is interested in opening a facility in Austin. Our extremely talented workforce, world-class universities, diverse and vibrant communities, and an unparalleled quality of life are some of the many reasons why businesses – from startups to tech giants – are attracted to our strong ecosystem. Bringing companies like Tesla to our region also benefits our local ecosystem. Austinites win when our area features many major employers offering stable, mid-level, and strong paying jobs – as well as procurement opportunities for local businesses. If Tesla comes to Austin, we will welcome them to our community.”

How Texas’ incentives compare to Tulsa’s proposal

Earlier in July, Tesla CEO Elon Musk visited Tulsa, Oklahoma, another city Musk is reportedly eyeing as the new gigafactory site.

The city has made it clear it wants Tesla’s factory. The Route 66 Alliance made a promotional video.

There’s also a website called Tulsa Says Yes, and the Golden Driller statue is now donning the Tesla logo.

National site selection expert John Boyd told KXAN these all-out campaigns can make Tulsa stand out.

“The power of diplomacy matters in site selections today, more than ever, ever before,” he said.

At this time, there’s no way for the public to know if what Travis County and Del Valle ISD are offering is better or worse than what Tulsa is offering. Under Oklahoma state law, that information is considered confidential.

Boyd said it’s likely a competitive package. “The climate in Texas is much more pro business. The climate in Oklahoma is also much more pro business.”

One key difference we do know is that Oklahoma has a state income tax, and Texas doesn’t. Boyd did point out, however, Texas’ property taxes are higher.

He said he still thinks Austin’s tech scene makes it even more attractive.

“I think Austin very much fits in with the brand of Tesla. Tesla is a company that really brand itself as a company of the future. It’s aN IT company as much as it is an auto manufacturer,” Boyd said.

Musk hasn’t said yet when he’s announcing his pick.

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