Tesla submits application with Del Valle ISD for ‘Gigafactory,’ $68M in tax incentives proposed

Travis County

DEL VALLE, Texas (KXAN) — Tesla is looking to build a 4 million to 5 million square-foot manufacturing plant in the Austin area, and it would like to build on land within the Del Valle Independent School District with more than $68 million in tax incentives, an application with the Texas Comptroller’s office says.

Tesla, owned by billionaire tech magnate Elon Musk, wants to put an electric vehicle manufacturing facility — a Gigafactory — at the intersection of State Highway 130 and Harold Green Road on about 2,100 acres, according to the application. The property is currently home to a concrete batch plant owned and operated by Martin Marietta.

The proposed incentive agreement between the car maker and Del Valle ISD lets Tesla save money on its property tax bill paid to the school district by capping the property value for 10 years.

The Austin Chamber’s Senior Vice President of Economic Development, Charisse Bodisch, told KXAN in a statement that it has “engaged in multiple discussions with Tesla,” but that the company has not made a final decision about where it wants to put its new Gigafactory.

Musk has repeatedly expressed interest in putting a plant in Texas. He has Tesla plants in California, Nevada and New York. The proposed plant would build the next version of Tesla’s Model Y electric car.

“The potential location being explored is an underutilized site that is in clear need of revitalization, and it would be a perfect fit for an environmentally focused organization like Tesla,” Bodisch wrote. “We are home to a talented and diverse workforce, and we are grateful that Austin is being considered. We will continue to make the case for why this would be a win for Tesla and for our community when it comes to job creation, economic impact and workforce development.”

The plant would create an estimated 5,000 jobs, according to Tesla’s Section 313 tax limitation application with the school district. According to the application, wages for 25 positions would be around $74,000 per year.

“Texas has a really high property tax burden compared to other states, so if we want to recruit and win these companies we have to provide tax abatement to be competitive,” said Ed Latson, Executive Director of Austin Regional Manufacturers Association (ARMA).

He said many manufacturers tend to look in areas outside dense cities because land is more affordable in those areas, bu they still need easy access to highways.

Latson said about Tesla’s interest in Del Valle, “You’re going to see a lot of suppliers come in and move to the region as well, and I anticipate they’d want to be really close to the main plant. So it would be the main magnet that’s gonna attract a lot of other companies.”

Del Valle ISD’s Superintendent Dr. Annette Tielle sent KXAN a statement, which read:

“On behalf of our students and teachers, we are excited by the prospect of a company of this magnitude coming to our district. This type of partnership could provide our students authentic, rigorous, and practical internship, apprenticeship, and work study  programs in the areas of robotics,  engineering, manufacturing, and STEM. Our focus has always been ensuring that our children have robust and successful futures. The addition of a company who has the ability to support our community both economically and academically would be advantageous for our students and accelerate our efforts to mentor and develop the workforce of the next generation.”

If approved by the school board, construction on the facility could start in the third quarter of this year. Tesla said it has to come to an agreement or else it will build somewhere else. Tesla paid Del Valle ISD $150,000 on May 21 to file the application.

“Since school taxes are the largest component of local property taxes, the Section 313 tax limitation is especially critical to create a level playing field between Texas and other states vying for this project,” a letter from Tesla in its application reads. “Therefore, obtaining the 313 limitation is a determining factor in the decision whether to locate the project in Texas.”

On the application, Tesla promised to create 5,000 jobs, but did not specify a salary range for those jobs.

Latson said the industry, in general, pays well.

“We have a lot of advanced manufacturers, and the average wage is actually $90,000 a year,” he said.

Michael Granof, professor at the University of Texas at Austin McCombs School of Business, told KXAN, however, being vague can be an issue.

“Very often, companies make promises and they don’t fulfill them,” he explained. “So what’s needed is over time, there have to be audits and make sure that the companies actually create the jobs that they said that they would.”

He said jurisdictions should calculate their economic benefits from incentive deals carefully.

On one hand, according to Granof, “Restaurants open up, motels open up, and that may result in an overall increase, in overall expansion of the tax base, and therefore an overall increase in their revenue.”

But on the other hand, he said, they should question, “Will they come anyway? You know, here in Austin, we’re a very desirable area. Do we have to give these incentives? Companies are always asking for them, but that doesn’t mean that you really have to give them, they may come anyway.”

The property tax incentives would be spread out over 10 years.

Additionally, Travis County is in deliberations “with Tesla for an Economic Development Performance Agreement that would bring a “gigafactory” to the eastern crescent of Travis County.”

The county spokesman told KXAN the Commissioners Court will receive presentations from the county staff and Tesla representatives at its regularly-scheduled meeting next Tuesday.

He said, “The Court encourages the public to provide input on Tuesday when it takes up the item. It is the Court’s intention to not take any action on the item. Should any member of the public not be able to provide comments during Commissioner’s Court, they are encouraged to submit written comments via email to edsi@traviscountytx.gov.”

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