Officials in Austin approved a total of at least $ 60 million in property tax rebates in an effort to bring Tesla’s next electric car factory to Texas City. Austin is one of the top two candidates for the factory, which is where Tesla will build the Cybertruck, along with Tulsa, Oklahoma.
The Travis County Commissioner Court, the administrative and policy-making arm of the local government, approved a settlement Tuesday that will save Tesla about $ 14 million in property taxes over the next 10 years. Late last week, the Del Valle school district, which is close to where the factory would be located, approved a deal that would give Tesla about $ 50 million in tax refunds over the same time period.
The vote was preceded by some drama about whether Tesla could wait any longer for a response on the incentive package. Many citizens who attended Tuesday’s meeting in Travis County emphasized that they believe time is of the essence, especially after Musk visited Tulsa, Oklahoma, on July 3, and reports detailing the state’s behind-the-scenes efforts to offer his own incentive package.
“We have to vote today,” said one resident. “Time kills deals, and the longer this goes on, the greater the chance that another state will put together a package” that influences Tesla. “In my opinion, it is very important that we do this quickly, and delay tactics tend to scare me,” said another. Just before the vote, County Commissioner Margaret Gomez said she had only read half of the contract and requested a one-week extension.
Commissioner Gerald Daugherty mentioned that the court has a “permanent policy” to comply with if a commissioner requests another week. But, he said, “If another week is going to force Tesla to leave, then, I will know, maybe for the first time, say … I’m not willing to honor that.”
The court then turned to Rohan Patel, Tesla’s global director of public policy, to ask if Tesla could wait another week to make a decision. He responded with an indirect response.
“We had a call yesterday with the governor of another state and the mayor of another city to go through a lot of things, similar to what we’re going through now, so I can’t say much more than that.” Patel said. “We have to make a decision early because these things take a long time and there are many things that we have to put into practice. There is a lot of money that we have to allocate in the right way. ”
Daugherty then asked another commissioner Jeffrey Travillion if he was willing to “bet” that Tesla would stay at the table. “We are talking about a transformation process that will address poverty and opportunities in that area for generations,” said Travillion. “It would be difficult for me to accept that.”
The commissioners decided to vote on the agreement. It was approved almost unanimously, with the abstention of Gómez. The two deals were approved after weeks of public meetings, though most details were settled in closed-door sessions, frustrating some residents and local leaders.
“The lack of transparency has really been outrageous on this project,” said Emily Timm, co-executive director of Workers Defense, a Texas nonprofit organization. The edge in a phone call “It seems that there has been an extra effort to really hide the ball about what is going on here.”
County commissioner Brigid Shea approved the deal, but accepted that transparency was an issue, and said she would propose amendments to improve the process in the future. “It would have been, I think, a much better process, if there had been more transparency,” she said.
Tesla CEO Elon Musk said tax incentives will play a role in where the factory will land, but he is also considering “logistics costs, access to a large workforce with a wide range of talents and quality of life. ” The company will build the Cybertruck at the factory, as well as the Model Y SUVs that are destined for the East Coast of the United States.
Tesla focused on a 2,100-acre site near Austin-Bergstrom International Airport, and the company has the option to purchase the land for $ 5 million. The company would spend $ 1.1 billion building a 4-5 million square foot factory that would employ about 5,000 workers, according to documents filed with Travis County last month. It would pay those workers an average salary of about $ 47,000, with benefits and stock options, with a minimum pay starting at $ 15 an hour. It would not employ a unionized workforce.
Minimum wage and salary figures have been a point of conflict for many citizens, local union representatives and workers’ rights advocates during recent public meetings. In response, Travis County commissioners revealed two concessions on Thursday. One is that Tesla agreed to increase the minimum wage to $ 15 an hour annually with the Consumer Price Index (specifically the “10-year compound annual growth rate”). Another is that the food and janitorial workers at the factory will also receive at least $ 15 an hour.
Even with the tax exemptions, Austin will benefit from the property tax that Tesla would bring with the factory, since much of the proposed site is largely vacant. Travis County currently only receives about $ 6,400 per year from a sand and gravel mining company that operates on the property. But Tesla would pay closer to $ 880,000 per year, or $ 8.8 million for the first 10 years, as long as it keeps up with the investment and contracting milestones required by the contract.
Tesla also agreed to return 10 percent of the county’s tax refund to the local community. “Tesla consistently emphasized his desire to invest in the community, especially when it comes to job training and workforce development (to include Huston-Tillotson University and Del Valle schools), public transportation, and affordable housing “County commissioners wrote on the agenda for Tuesday’s meeting. “Travis County aimed to create a long-term philanthropic partnership with Tesla, not just a settlement agreement that is reviewed once a year.”
Last Thursday, the Del Valle school district approved a deal that would allow Tesla to pay the property tax on just 20 percent of the factory’s assessed value, saving the company about $ 50 million. That deal was approved in a 7-to-1 vote, with board member Susanna Woody saying she was “not comfortable with this process,” which also happened largely behind closed doors. “I felt it was’ do it this way or [Tesla] he’s going to move somewhere else, ‘”Woody said.
