Travis County Commissioners Give the Green Light for Economic Incentives to Lure the $1.1 Billion Tesla Gigafactory to the Austin Area

A $1.1 billion Tesla Gigafactory for the Austin area took another big step in becoming a reality.

Travis County Commissioners on Tuesday voted to approve a 20-year economic incentive package for the Colorado River Project, whose sole owner is Tesla.

County Judge Sam Biscoe, Commissioners Jeff Travillion, Brigid Shea, Gerald Daugherty all voted in favor of granting the incentives to Tesla. Precinct Four Commissioner Margaret Gomez abstained.

Gomez wanted another week to consider the deal, but after consulting via Zoom with Rohan Patel, Tesla’s North American Director of Policy

and Business Development, the commissioners decided to take action.

Patel told the commissioners Tesla had met yesterday with another state governor and mayor and needed to move forward with the project. Earlier this month, Elon Musk, Co-Founder and CEO of Tesla, visited Tusla, Oklahoma, and met with the Oklahoma Governor. Tulsa is reported to be in the running as a site for the plant along with Austin.

The property tax abatement for Tesla approved by the county commissioners is worth an estimated $14.65 million as an incentive to have the electric vehicle manufacturing plant locate in Austin.

Travis County’s revised incentive package provides a 70 percent rebate on operations and maintenance taxes for an investment of $1.1 billion in the first five years with additional investment incentivized at 75 percent for investment from $1.1 billion to $2 billion and an 80 percent rebate on investment over $2 billion. Originally, Tesla requested an 80% incentive for the first ten years and a 65% incentive for the second ten years on its Travis County operations and maintenance tax liability related to incremental real and business personal.

Travis County will receive property tax revenue of approximately $8.8 million net over the first 10 years based on a $1.1 billion investment.

Construction jobs will start this year with a minimum wage of $15 an hour.

The Tesla jobs will provide a minimum wage of $15 an hour for employees with health insurance, paid leave and other benefits. Tesla has agreed to recruit workers from Del Valle schools, historically black colleges and universities, and to work with Workforce Solutions Capital Area. It has also agreed to provide local training and apprenticeship programs, and to work with the county’s workforce program for residents exiting the criminal justice system.

Tesla has pledged to hire at least 50 percent of its employees from Travis Country. Tesla’s jobs will pay more than $35,000 a year with benefits including equity in the company or its cash equivalent.

Tesla has also agreed to invest the equivalent of 10 percent of its tax liability to community programs such as affordable housing and public transportation. It is also partnering with the country to donate right of way and build a road through the site to serve as Austin’s Colony flood evacuation route.

“The number of jobs that the project creates will also provide a significant fiscal impact to the community as a whole,” according to a report prepared for the county commissioners. “Travis County has over 80,000 unemployed workers. Fully half of those workers are reported to have been earning less than $30,000 a year before being laid off primarily from hospitality jobs.”

The plant is proposed to be located on 2,100 acres at SH 130 and Harold Green Road. It’s currently a sand and gravel site owned by Martin Marietta. It houses a concrete batch plant that serves local construction projects. That plant would operate for a while and then be relocated, according to Tesla’s application. Tesla plans to pay $5.3 million for the various parcels of land, which are under contract, according to its filing with the Texas Comptroller’s Office.

Tesla Cybertruck, photo courtesy of Tesla

The electric vehicle manufacturing plant will make Tesla’s Cyber truck and it will have one or more product lines totaling four to five million square feet resulting in a $1 billion investment in new construction and business personal property, according to the document.

For the past four weeks, Travis County Commissioners have heard testimony from residents in favor of and against the plant. On Tuesday, they heard from more callers in favor and against the plant. Travis County Commissioners Court received more than 400 emails and letters from regional and state residents, union and labor representatives, Chambers of Commerce, and many others. In past meetings, Travis County Commissioners also heard from 70 people who called into the court to comment.

“The majority of the input expressed support for Tesla locating in Travis County and supported an economic development incentive agreement that required compliance verification by Travis County,” according to a court document. “Other public comment requested specific deal terms on wage floors, unionization rights and worker safety be included in the contract. A smaller amount of the input requested that Commissioners Court refrain from entering into an agreement that provides property tax rebates to a large corporation.”

“The terms of the incentive, as negotiated, strike a balance between incentivizing the firm to both locate and expand in Travis County, securing significant community benefits, and ensuring the protection of workers and the environment,” according to the county.

Last week, the Del Valle Independent School District board of trustees approved a tax incentive deal for Tesla worth nearly $50 million over 10 years.