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Panelists look at impacts, opportunities brought by Tesla and others

Thursday, October 21, 2021 by Chad Swiatecki

With Austin an increasingly popular relocation choice for major companies and public institutions, the area’s infrastructure, employment dynamics and education systems are in for significant impacts in the coming years. That was the messages panelists had for local real estate and development leaders on Wednesday, when Urban Land Institute Austin focused its monthly breakfast on the significance of large projects moving into Central Texas.

The most high-profile of these is Tesla’s billion-dollar manufacturing plant in Southeast Austin, as well as the auto maker’s recent decision to move its headquarters to the area. The prospect of 10,000 well-paying manufacturing jobs, plus thousands more white-collar executives relocating to the area, is significant for a portion of Austin that has been historically underinvested in, Travis County Commissioner Jeff Travillion said.

“It is significant for us in this community to build blue-collar jobs as well, and the median (income) for a manufacturing employee at Tesla will be north of $60,000. When you think about the types of jobs being created, the question becomes how do we make sure we connect all the dots,” he said. “We’re grateful to have them there, smack in the middle of the two zip codes with the highest health care disparities in the region … now you get multi-billions of investment in those communities.”

Travillion noted that, pre-Tesla, the land used for the plant brought in $6,400 in property taxes annually for the county, compared to $1 million in annual collections now.

County and city officials now have to take a close look at how permitting and approval processes can be improved, Travillion said. For instance, the county has used an outside contractor on some of the field functions tied to recent bond projects as a pilot program to study how to make changes.

Panelists and audience members agreed that making those changes will help bring more affordable housing to the Austin area to accommodate new workers.

“For the first time in a long time, the emphasis on development and large tracts that are available to develop are in the eastern corridor. We’ve got to build out the road grid in the area and make sure you can connect into that area without being in the middle of gridlock,” Travillion said. “We have to make the permitting process shorter. It is difficult to go from idea to shovel in the ground and it takes a couple of years because we have five times the permit applications today than we did three years ago. The question is how do we re-engineer our internal system so we provide the resources necessary for things to grow?”

The price growth of the local housing market has presented challenges for workers brought to Austin to work for the new U.S. Army Futures Command and its software factory, which is expected to have an economic impact of $359 million.

Jason Zuniga, co-director of Futures Command, said workers have had to travel from north of Georgetown or south from New Braunfels and beyond because of the cost of housing.

“There are challenges with the exploding housing market and what you get with the federal government pay scale,” he said. “It’s hard for them to stay caught up with some of the communities, especially those that aren’t known as having a federal-heavy workforce. On the civilian side it’s a little difficult for them compared to some of the job opportunities in other cities that have a higher (pay) adjustment for locality.”

With suburbs like Pflugerville now feeling those cost pressures, Travillion said the county will have to step up to subsidize more affordable housing projects, pointing to five new projects started in the past year in his precinct.

“We moved to Pflugerville in the ’90s because you got twice as much house for the money. Now people are moving there out of necessity. We know that within two weeks of signing the Tesla deal a $275,000 house was now $340,000, so we’ve put $110 million back out there to address not only homelessness but home ownership, for us to be able to work on the back side of the housing distribution curve … use our capital to buy down the cost and subsidize those homes.”

Photo by Larry D. Moore, CC BY-SA 4.0, via Wikimedia Commons.

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