Explained: Travis County’s potential tax incentive deal with Tesla

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DEL VALLE, Texas (KXAN) — If Tesla gets everything it wants, the car manufacturer could be looking at, in total, about $80 million in tax incentives in exchange for building a factory in Travis County.

Last week, details of Tesla’s potential deal with the Del Valle Independent School District became public. According to the Chapter 313 agreement application filed with the Texas Comptroller’s Office, if approved, Tesla would save about $68 million in property taxes by having its property value capped at a certain limit.

Tuesday, the Travis County Commissioners Court reviewed a separate proposal.

Under the proposed agreement with the county, Tesla would pay its property tax like normal, but a compliance check done by a third party would make sure the car manufacturer is fulfilling the promise of creating local jobs and meeting other conditions outlined in the legally enforceable document.

If everything looks good, Tesla would get about $14 million back over 10 years. The company would have to invest 10 percent of that rebate money in local programs that foster workforce and housing growth.

Tesla is proposing to build a 4-5 million square-foot manufacturing plant at State Highway 130 and Harold Green Road in eastern Travis County. They’re promising to create 5,000 jobs.

In the proposal filed with Travis County, the car company said 65 percent of those jobs would be jobs you could get right out of high school.

They’ll pay people at least $15 an hour. The average salary would be about $47,000.

In the Chapter 313 agreement application filed with the Del Valle school district, Tesla said they would also have about two dozen jobs that pay about $74,000.

Tuesday, Tesla representatives told the Commissioners Court Texas has high property taxes, compared to other states.

Rohan Patel, Senior Global Director of Public Policy and Business Development at Tesla, said, “In many cases, [other states are proposing to] completely eliminat[e] property taxes and other business taxes for 20 years plus.”

When asked about hiring locally, Vice President of People Valerie Workman said, “Of course, we want local talent. I mean, that’s the gem of being able to build this factory and not have to outsource production associates. We’re extremely excited that we would be able to provide entry level jobs to local talent in the thousands.”

Patel said suppliers would be local as well.

“There’s every intention both from us, and frankly our suppliers, to be nearby,” he said. “In fact, from an environmental perspective, it’s even more so.”

While the area’s Democratic State Representative Eddie Rodriguez believes the plan could lead to a major step in the economic development of the area, he has some reservations.

“I have had some calls from some constituents they want to make sure that they’re going to have opportunities to get these jobs and some concerns as well about how much it’s going to cost the school district, how much it’s going to cost the state — legitimate concerns,” he explained.

He said one of this biggest concerns surrounds the company’s equity initiative and programs.

“The complexion of Travis County is changing and we need to make sure that people of color are getting good paying jobs and have equal opportunity to share in the economic prosperity,” he added.

Some of Tesla’s proposed community benefits include partnerships with Workforce Solutions Capital Area and Austin Community College to create a workforce pipeline for people who live in Travis County. The company also said it’s committed to equity and inclusion in all its programs.

Rick Levy, President of Texas AFL-CIO, also remained skeptical, however. “Right now everything’s just words on a piece of paper,” he said.

“We don’t need to use public money to bring average jobs, we need good jobs,” Levy told KXAN.

According to the United Auto Workers union, in Nevada, Tesla fell short of its capital investment commitment by $1 billion.

“What Tesla’s track record and other places has been is that they make these agreements to get the subsidies, to get the foot in the door, and then they don’t meet their targets and then it becomes a big fight,” Levy said.

In addition, Commissioner Margaret Gomez voiced her concerns, “At the pay of $47,000, we have seen from your proposal, I don’t think that comes close to them being able to afford to buy a house.”

Tesla’s gigafactory could lead to development in the area which could have an impact on the area’s housing market.

“I think overall it would be it would benefit the economy in the area, but what’s concerning is the affordability of housing,” Romeo Manzanilla, the Austin Board of Realtors Board President said.

At present, Manzanilla said the Del Valle area is the most affordable in Travis County with the median price of homes around $260,000. If the Tesla factory project is approved, what future development will look like will greatly depend on city and county leaders.

The commissioners heard from the public Tuesday as well, but did not take a vote.

Levy said, “This is your moment, where you actually have authority and leverage over a company that’s a billion dollar company, where you can set the terms of that engagement.”

On Thursday, the Del Valle ISD is holding a public hearing about its proposed deal with Tesla.

Details can be found here.

Just down the road, developers are working on a project expected to bring more people to the area is a mixed-use project down the road on SH 130 and SH 71. The Velocity development consists of more than 300 acres. It will feature housing, office space, creative space and retail. The project also includes the area’s first major grocery store.

KXAN reached out to the Del Valle Independent School District and the Austin Chamber of Commerce and in a statement Charisse Bodisch, Senior Vice President of Economic Development at Austin Chamber, said they have not made a final decision.

“While we have engaged in multiple discussions with Tesla, the company has not made a final decision regarding its next Gigafactory. 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. 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.” 

Charisse Bodisch, Senior Vice President of Economic Development at Austin Chamber

In another statement, the DVISD’s Superintendent Annette Tielle said they are excited about what this project could mean for the district’s students and their future.

“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.”

Annette Tielle, DVISD Superintendent

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