Wednesday, July 15, 2020 by Jessi Devenyns

Travis County approves Tesla incentive deal

On Tuesday, the Travis County Commissioners Court approved a $13.9 million tax rebate deal to coax Tesla to build its “Gigafactory” in southeastern Travis County.

The tax rebate is based on a $1.1 billion investment from Tesla and will be paid out over the course of 10 years. The agreement has a 20-year term that will yield additional revenue over the coming decades. Should the California electric car maker invest more in the project, the rebate will increase incrementally. Cost estimates for the dollar figures of such rebates do not exist since they will be contingent on how Tesla improves the property. At the minimum investment level of just over a billion dollars, Travis County will net $8.8 million in tax revenue benefit. Currently, the county earns $6,400 in property tax revenue from the site.

The agreement with Tesla establishes a $15-per-hour minimum wage for employees and contracted workers on the site as well as a requirement that there will be 5,001 ongoing jobs by year four of the project that will continue for 20 years, with half of those employees being Travis County residents. Tesla is also required to invest 10 percent of its tax rebate funds into community programs and will construct its facilities to achieve a zero-emission energy rating. If the company’s performance on any of the required provisions is less than 75 percent, the tax rebate will drop to zero.

This freshly approved tax incentive came with ample support from the community. After weeks of public hearings and over 400 emails and letters submitted by the community, the commissioners listened to another 50 speakers on Tuesday, the majority of whom were in favor of the incentive agreement.

Douglas Gilliland, president of Taurus of Texas development company, called the deal a “once-in-a-lifetime opportunity,” saying, “If we cannot show them that we are business-friendly where jobs can grow, they will find other states.”

Travis County is not the only potential home Tesla is considering for its Gigafactory. Tesla spokesperson Rohan Patel told the Commissioners Court that on July 13 Tesla officials spoke with a mayor and a governor in other areas of the country regarding a potential development proposal.

Commissioners and residents acknowledged the pressure associated with the timeline for the deal, saying it necessitated a decision this week. Tesla formally submitted its application for an economic development agreement with Travis County on June 11.

“I think it’s a dangerous thing to delay,” said Diana Ramirez, director of economic development within the county’s Planning and Budget Office. “We have negotiated really hard with Tesla, and we’ve come back at them on more than one occasion.”

Despite urging from staff to vote on the deal on Tuesday, Commissioner Margaret Gómez requested that the Commissioners Court delay its vote by a week. “I am pleading for a little bit of time so I can get more information on this,” she said. The final agreement for the deal appeared publicly last Friday night.

Union representatives expressed frustration at the lack of transparency in the process and the speed at which it unfolded. Bo Delp with UNITE HERE Local 23 hospitality and food service union told the Austin Monitor, “A lot of us are feeling really shut out of the process … it’s puzzling for a proposal of this size that so many people would have so little voice.”

Commissioner Brigid Shea said that although she had personally heard from both labor unions and community members, “It would have been a much better process if there had been more transparency.”

In spite of several additional requests from residents for a week’s delay to allow for more community input, the commission voted on the proposal. Commissioner Gómez abstained.

Photo by u/Kruzat/CC BY-SA 4.0.

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Key Players & Topics In This Article

Economic Development Incentives: This is shorthand for a series of programs designed to lure business to a given region. In Austin, the program tends to take some form of tax-based incentives. These can include rebates or grants that are often tied to a set of stipulations. These tend to include local hiring goals, same-sex partner benefits, or, more recently, wage floors for construction workers who build facilities for the incoming organizations.

Travis County Commissioners Court: The legislative body for Travis County. It includes representatives from the four Travis County Precincts, as well as the County Judge. The County Judge serves as the chair of the Court.

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