Austin officials have approved at least $ 60 million in real estate tax breaks to bring Tesla’s next electric car factory to the city of Texas. Austin is one of the two leading candidates for the factory where Tesla, along with Tulsa, Oklahoma, will build the cyber truck.
The Travis County Commissioner’s Court, the local government’s political and administrative arm, signed an agreement on Tuesday that will save Tesla approximately $ 14 million in property taxes over the next 10 years. Late last week, the Del Valle school district, located near the factory’s location, approved an agreement that granted Tesla nearly $ 50 million in tax breaks over the same period.
The vote was preceded by a drama as to whether Tesla could wait longer for a response to the incentive package. Many citizens who called for the Travis County meeting on Tuesday stressed that they felt that time was of the essence ̵
“We have to vote today,” said one resident. “Time kills businesses, and the longer it takes, the greater the chance that another country will put together a package,” which Tesla influences. “In my opinion, it is very important that we do this quickly and delay tactics tend to scare me,” said another. Shortly before the vote, District Commissioner Margaret Gomez said she had read only half of the contract and asked for a week extension.
Commissioner Gerald Daugherty mentioned that if a commissioner asks for another week, the court has a “permanent policy” to honor. But he said, “If another week will force Tesla to go, then maybe you know for the first time, I will say … I’m not ready to honor that.”
The court then turned to Rohan Patel, Tesla’s senior global director of public policy, to ask if Tesla could wait a week for a decision. He replied with a detour.
“We only had a phone call yesterday to the governor of another state and the mayor of another city to go through a number of things, much like we’re going through, so I can’t say much more.” Said Patel. “We have to make an early decision because these things take a long time and we have to do a lot. There is a lot of money that we have to allocate correctly. ”
Daugherty then asked another commissioner, Jeffrey Travillion, if he was ready to “play” that Tesla would stay at the table. “We are talking about a transformation process that deals with poverty and opportunities in this area for generations,” said Travillion. “It would be difficult for me to accept that.”
The commissioners decided to vote on the agreement. It was adopted almost unanimously, with Gomez abstaining. The two agreements were approved after weeks of public gatherings, although most of the details were worked out in closed sessions, which frustrated some residents and local leaders.
“The lack of transparency was really outrageous on this project,” said Emily Timm, co-director of Workers Defense, a Texas nonprofit organization The edge in a phone call. “It seems like there has been an extra effort to really hide the ball from what’s going on.”
A district commissioner, Brigid Shea, agreed to the deal, but agreed that transparency was an issue, and said she would suggest changes to improve the process. “I think it would have been a much better process if there had been more transparency,” she said.
Elon Musk, CEO of Tesla, said that tax incentives will play a role in landing the factory, but he is also considering “logistics costs, access to a large workforce with a wide range of talent and quality of life”. The company will build the plant’s Cybertruck and Model Y SUVs destined for the U.S. East Coast.
Tesla has settled on 2,100 hectares near Austin-Bergstrom International Airport, and the company has the option to buy the land for $ 5 million. The company would spend $ 1.1 billion to build a 4 to 5 million square meter factory that would employ approximately 5,000 people, according to documents filed with Travis County last month. It would pay these workers an average salary of around $ 47,000 with benefits and stock options, with the minimum salary starting at $ 15 an hour. It would not employ a unionized workforce.
Salary and minimum wage figures have been a sticking point for many citizens, union representatives and workers’ rights advocates during the last public meetings. In response, Travis County officials announced two concessions on Thursday. For one, Tesla has agreed to increase the minimum wage of $ 15 an hour annually with the consumer price index (especially the “lagging average annual growth rate of 10 years”). Another reason is that food and janitorial service workers in the factory receive at least $ 15 an hour.
Despite the tax relief, Austin will benefit from the property tax that Tesla would bring to the factory, since much of the proposed location is largely vacant. Travis County currently receives only about $ 6,400 a year from a sand and gravel company operating on the property. But Tesla would pay closer to $ 880,000 a year, or $ 8.8 million in the first 10 years, as long as it keeps up with the investment and hiring milestones required by the contract.
Tesla has also agreed to repay 10 percent of the district’s tax rebate to the local community. “Tesla consistently emphasized its desire to invest in the community, particularly in terms of vocational training and human resources development (including Huston-Tillotson University and Del Valle schools), public transportation, and affordable housing,” the county commissioners wrote on the agenda for the Meet on Tuesday. “Travis County’s goal was to build a long-term philanthropic partnership with Tesla, not just a transaction agreement that needs to be reviewed once a year.”
Last Thursday, the Del Valle school district approved an agreement that would allow Tesla to pay property tax at just 20 percent of the factory’s estimated value, saving the company about $ 50 million. This agreement was passed with 7 to 1 votes. Board member Susanna Woody said she was not comfortable with this process, which was largely done behind closed doors. “I felt it was either way [Tesla] will move somewhere else, ”said Woody.