It could be the biggest Austin economic development project in a generation. One observer calls it a "get-out-of-jail-free" ticket to overcome the devastating economic impact of the coronavirus pandemic. But Tesla, the high-flying builder of electric vehicles, has asked local officials to react quickly and fully to its requests. If not, Tesla could flee to a rival location in Tulsa, Okla.
Tesla, a Palo Alto, Calif.-based company, has three objectives.
- Property tax abatements of $68 million and $14 million from the Del Valle Independent School District and Travis County, respectively, over a 10-year period. This means that Tesla would be paying approximately 20 cents on the dollar of the tax bill it would otherwise face. Still, say those familiar with the proposal, the Tesla payment would represent a huge boon to DVISD, a relatively poor school district that has 11,200 students in 10 schools. Eighty-four percent of the students are Hispanic.
- Rapid approval of environmental permitting from the city of Austin. While Tesla's proposed site is not in Austin's city limits, it is within the city's extraterritorial jurisdiction (ETJ), an area extending out from the city in which Austin controls development that affects the environment.
- Fast-track approval of all considerations by no later than July 31 so that Tesla could begin construction soon thereafter.
Some might think that the $82 million in tax abatements is pocket change for Tesla, a company with a market capitalization of $185.5 billion as of June 19. That is several times higher than General Motors' market cap of $38.1 billion and Ford Motor Co.'s market cap of $24.8 billion.
But a source familiar with Tesla's thinking says the property tax concessions are essential, and if not granted, are a deal-breaker. While the company is financially strong and its chief shareholder, Elon Musk, is wealthy enough to launch a manned space vehicle, the valuations on an automotive plant and its highly specialized equipment can be so high that thin profit margins "go upside-down very quickly, so what [the taxing bodies] do is very important."
Tesla property tax impact. (Travis County Commissioners Court)
Choosing the site
Also critical is how the city of Austin's environmental regulators will consider the 2,100-acre site, where owner Martin Marietta now conducts sand and gravel mining. Tesla is said to be concerned with environmental standards in Texas that primarily relate to ranch water tanks—artificially created ponds dug to slake the thirst of cattle.
Those regulations, according to a source familiar with Tesla's application, require 300-foot setbacks from the tanks because of "wetlands" that surround them. If that standard were applied to Martin Marietta mining pits—which looks like a war zone after an aerial attack—there would be no land worthy of development, said a source. That source and others declined to be identified because they were not authorized by parties involved to speak publicly.
Tesla's proposed site is near corner of the intersections of state highways 71 and 130, east of the Austin-Bergstrom International Airport.
The rush to approval
Tesla's request for a "go-fast" processing of its application could present a significant challenge to the city of Austin, which is now overwhelmed with the need to respond to the COVID-19 pandemic and recent protests against police violence. According to observers, there is a real question whether the city has the capacity to focus quickly and in depth on the Tesla application.
Asked why Tesla is in a rush during a time when auto sales have declined sharply, a source familiar with Tesla's thinking said that for every day of lost production, there is lost revenue. "It's just the way business looks at it."
Still to be determined is whether Tesla's expectations about speed of movement align with the city's. Austin City Council is not scheduled to meet again until July 30. There is uncertainty about whether Tesla will wait that long. "The city of Austin can stand only so much pressure," said a source.
Supporters and opponents
Tesla is not without advantages in its pursuit. The firm believes it has allies within the Travis County government and DVISD, as well as in the Greater Austin Chamber of Commerce and "up and down" the ranks of state government. "The support so far has been remarkable," he said.
DVISD Superintended Annette Tielle said in a statement last week, "The addition of a company who has the ability to support our community both economically and academically would be advantageous for our students and accelerate our efforts to mentor and develop the workforce of the next generation." The DVISD board will next take up the proposal during a closed session at a meeting on Wednesday.
The Travis County Commissioners Court will receive presentations on the proposed agreement from staff and Tesla representatives at a meeting on Tuesday. In the presentation, which was made public last week, the county staff wrote that the proposal "results in a substantial benefit to the community and a net fiscal benefit to the County."
Commissioner Gerald Daugherty told Austonia that the proposed factory would benefit DVISD more than the county—equating it to the 2005 economic incentive deal Manor ISD entered into with Samsung. He added that the prospect of 5,000 jobs, most of which would go to skilled workers without college degrees, was alluring. "Let's face it, today in America manufacturing is really one of the more difficult areas to bring to your community," he said. "That's a pretty enticing deal for us."
A person familiar with Tesla's thinking said there were alternative plans if the manufacturer could not win speedy approval of the Austin site, but declined to give details. Tulsa has been mentioned publicly as a competing destination. The source declined to say whether there were alternative sites in Williamson County, which has been an ardent suitor of Tesla, or elsewhere in Texas.
Tesla job creation over time. (Travis County Commissioners Court)
Travis County projects 5,000 Tesla jobs over the next several years.
While Tesla is unlikely to face opposition from neighborhood groups, because there are few neighborhoods in the area of the proposed site, it may well face challenges by the United Auto Workers, which has sought to organize Tesla. The firm's plants now are non-unionized. And the UAW, through allies in the local Workers' Rights groups, has political support in Austin that could become a factor in decision-making.
Rick Levy, president of Texas AFL-CIO, urged local officials to consider what he called Tesla's troubled history with taxpayer subsidies—and its flouting of government authority. He said Elon Musk reopened the company's Fremont, Calif., factory in defiance of a local county shelter-in-place order, meant to limit the spread of COVID-19.
So, you wanna give Billions to a billionaire? What’s it like to work for Tesla? Have they ever kept their promises… https://t.co/TAc1Gr6yD8— rick levy (@rick levy)1592859690.0
In a phone interview on Monday, Levy worried that if Travis County gets Tesla to agree to worker protections and other terms, it may be hard to enforce compliance. "I'm not totally sure that it's possible because when somebody is as big as this operation is, does the tail wag the dog or does the dog wag the tail?" he said.
The optics of giving a public subsidy to a billionaire-owned company are unpalatable to some.
Mayor Pro Tem Delia Garza, whose district runs closest to the proposed factory site, said in a statement to Austonia: "For me, any consideration of an opportunity like this one for residents in Southeast Austin and Travis County must include good union jobs and fair wages. I'm also concerned about some of our small businesses struggling right now, and what kind of message is sent to them for government to help wealthy corporations."
Asked what makes Texas attractive to Tesla, a source said that Texas' "entrepreneurial, pioneering personality" matches that of Elon Musk. As for Austin, the city carries the added advantage of a highly-educated labor pool deep in engineering and technical skills. "There are not a lot of sparks flying, welding and molten steel going on in a Tesla plant," he said. "It's pretty clean and robotic."
Those employed would fall into two groups, those with advanced management and engineering backgrounds, and skilled labor. Also, he noted that construction of a plant would require a substantial force of workers from the building trades.
@GerberKawasaki @thirdrowtesla Frankly, this is the final straw. Tesla will now move its HQ and future programs to… https://t.co/IDLjEvXyDW— Elon Musk (@Elon Musk)1589042677.0
Transportation was clearly an issue in the location of GM and Toyota plans in Arlington and San Antonio, respectively. I-35, I-30 and I-20 are all near Arlington, and I-35 and I-10 converge in San Antonio. The proposed Tesla site adjacent to SH 130 is clearly at an advantage. "That is a yet-to-be maxed-out highway, and gives access both north and south." To the north, SH 130 connects with I-35. To the south, it intersects with I-10, running east and west. Rail service has not yet been discussed, he said.
Not yet known is the ultimate capital investment Tesla will make in the site in the plant and its equipment, but a source called it "staggering." In a presentation prepared for Tuesday's meeting of the Commissioners' Court, the court's staff said the real property investment was $410,316 and the personal property investment, apparently the building and equipment, would be $682,294—for a total of $1,092,610 over 10 years.
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To help make sense of the all information emerging about COVID-19 in Austin, we're answering a few big questions:
1. Why do I keep hearing about Austin's ICU capacity?<div class="flourish-embed flourish-chart" data-src="visualisation/3127217" data-url="https://flo.uri.sh/visualisation/3127217/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div><p>Because we may not have enough of it.</p><p>ICU beds are Austin's "critical limited resource" and Austin is at risk of reaching capacity—and overwhelming the city's health care system—sooner than previously thought, Dr. Lauren Ancel Meyers told Austin City Council on Thursday. <br><br>Dr. Meyers, a modeler at the University of Texas at Austin, said she and her team of researchers recently experienced "a fundamental shift" in their understanding of hospital capacity. ICU beds are filling up faster than regular hospital beds, making ICU capacity the most important metric to watch.</p><p>"It is very possible that we may hit our lower limit for ICU capacity soon," Dr. Meyers said, giving an estimate of early August.</p><p>Area hospitals report they have the beds and staff needed to treat up to 331 COVID patients in their ICUs. If they are able to access additional personnel—such as through contractors and the U.S. military—that capacity could increase to 474.</p><p>If the ICUs fill up, it could threaten the ability of the hospitals to care for COVID patients as well as patients with other medical issues.</p><p>The current state of ICUs:</p><ul><li>There are 149 COVID patients in Austin area ICUs as of Wednesday evening, and they account for about a third of the occupied beds.</li><li>Austin's ICUs are at about 85% occupancy, up from 80% last week, according to a Tuesday report from the Ascension Seton, Baylor Scott & White Health and St. David's HealthCare hospital systems.</li></ul><p>The continued influx of COVID patients is straining area hospitals, which are also facing requests to accept patients from other Texas cities, according to Austin-Travis County Interim Health Authority Dr. Mark Escott.</p><p>"It is not normal operations," he said.</p><p>To meet the rising demand, hospitals will have to reassign non-ICU doctors to care for their patients, which means "a different standard of care than we're used to," Dr. Escott said.</p><p>In the worst-case scenario, patients will spill over into the Austin Convention Center, which could open as a field hospital for low-acuity patients as soon as July 20.</p>
2. Is the COVID-19 fatality rate improving?<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzQ0NTg3My9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYxOTQ3NzIxN30.wTIFalip3a_dj2_xbbzNCKH_-ngM4tkqb_mGQ3s0ER8/img.png?width=980" id="db25c" class="rm-shortcode" data-rm-shortcode-id="85e039ae61eeebdf2b91a3f582088700" data-rm-shortcode-name="rebelmouse-image" /><p>Yes, but with caveats.</p><p>Austin's COVID-19 <a href="https://public.flourish.studio/visualisation/3121104/" target="_blank">fatality rate</a>—defined as reported deaths per confirmed cases—continues to drop, even as the local caseload and <a href="https://austonia.com/Coronavirus/austin-hospitals" target="_self"><u>related hospitalizations increase</u></a>. But Dr. Escott cautions that it likely does not show the full picture.</p><p>Travis County has confirmed 13,161 cases as of Wednesday evening and reported 159 deaths, for a fatality rate of around 1.2%. This is down from <a href="https://austonia.com/Coronavirus/coronavirus-deaths-austin" target="_self"><u>1.8% on June 22</u></a> and 3.6% at the end of April.</p><p>However, many of the confirmed cases have been reported in the last two to three weeks, which means those patients have likely not yet required hospitalization—or died.</p><p>"The deaths that are going to happen for the people in the hospital just haven't happened yet," Dr. Meyers told the council Thursday.</p><p>There are some signs that the fatality rate is declining—at least to some degree—for two main reasons:</p><ul><li>Improved treatments—such as the antiviral drug remdesivir, steroids and convalescent plasma therapy.</li><li>An increasing number of cases among young people, who have a higher probability of recovering.</li></ul><p>But COVID-19 remains disproportionately fatal for certain groups.</p><ul><li>People over 60 account for 11% of confirmed cases but 85% of deaths.</li><li>Black residents, who make up 9% of Travis County's population, account for 6% of confirmed cases but 10% of reported deaths.</li><li>Latino residents—34% of the population—account for 52% of confirmed cases and 41% of deaths.</li></ul>
3. Are we moving to Stage 5?<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzQ0NjAzNy9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYyNTEwNTk5MX0.VDN5YmTKWAXjP37di8y2V9nHBJOuElRm7HWxqi593pU/img.png?width=980" id="ab95f" class="rm-shortcode" data-rm-shortcode-id="654ed55191bb22d73a3257b8782a35e7" data-rm-shortcode-name="rebelmouse-image" />
4. What does this mean for Austin schools?<p>In her presentation to the council, Dr. Meyers delivered projections about what may happen when Austin ISD begins its school year on Aug. 18.<br></p><p>Even if the city issues a 35-day shutdown order between now and then, modeling shows some students will arrive at school with COVID-19.</p><p>In the case of less severe restrictions, the number of infected students expected to arrive at schools next month is higher.</p><p>During the same meeting, Dr. Escott said schools could see COVID clusters—like those reported at nursing homes and construction sites.</p><p>"There shouldn't be an expectation that there will be a school without a cluster," he said.</p><p>Education Austin, a union that represents AISD teachers and staff, is pushing for online-only instruction and encouraging its 3,000 members to avoid campuses if the district doesn't change its plans.</p><p>"All signs point to disaster," ED President Ken Zarifis said during <a href="https://austonia.com/education/austin-schools-online" target="_self"><u>a press conference</u></a> Wednesday.</p>
5. What is Austin City Council doing about this?<p>Austin City Council unanimously approved on Thursday two ordinances that allow for stronger enforcement of existing COVID-19 restrictions:</p><ul><li>One allows civil penalties—including daily fines of up to $2,000—for people who violate masking orders and other rules set by APH to curb the spread of COVID-19.</li><li>The other allows the city to declare properties a public health nuisance if they do not do enough to slow the spread of COVID-19, including enforcing the state's mask mandate and limiting the number of individuals who gather or stand together to a total of 10 or fewer.</li></ul><p>Properties maintained by government entities, used as residences, or that provide medical services or childcare are excluded.</p><p>Mayor Steve Adler said he and Travis County Judge Sam Biscoe will be appealing to Texas Gov. Greg Abbott for state assistance to address the staffing shortages faced by area hospitals.</p>
6. Is there any good news?<p>Possibly.</p><p>There is some evidence that transmission of COVID-19 is slowing down in Austin, Dr. Meyers told the council. She attributed the change to policies implemented in late June, including the statewide mask mandate, and an increased culture of caution.</p><p>"It looks like we may have slowed things a little bit," she added.</p><p>But Dr. Meyers said that this is no reason to abandon precautions.</p><p>There is about a 10-day lag in the data she and her team use in their modeling, which means that the transmission rate could have changed.</p><p>"We don't know where we are today exactly," Dr. Meyers said.</p><p>The modeling also indicates that any slowdown that may be occurring is not at a high enough rate to avoid overwhelming hospitals, which could see ICUs reach capacity by early August.</p><p>"It is very, very uncertain," she said of any slowdown. "If anything, we should be reinforcing this culture of caution."</p>
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Gov. Greg Abbott said on Friday that "the worst is yet to come" in the Texas COVID-19 surge. "If we do not slow the spread of COVID-19," Abbott said during a TV interview, "the next step would have to be a lockdown."
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Update 7/10 6:58:
The Austin Watershed Protection Department said in a statement that there is now some preliminary concern about algae found at Red Bud Isle yesterday, though so far results are not definitive.
Fifteen people set to work during the July 14 election, including two election judges, have quit due to fears about the coronavirus pandemic, the Travis County Clerk's office confirmed.
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Fighting over child custody and visitation is painful under even the best of circumstances, but attorneys and parents say the coronavirus pandemic has brought more stress, more fear, and more "live ammunition" to the battlefield.
A high level of fear<p>Austin family attorney Robert Luther said situations like M's have become a regular occurrence.<br></p><p>"There's a lot of acrimony out there, caused by the philosophical and political positions relative to the pandemic," said Luther. "Everybody's fear level is super high, or their defensiveness is super high. It's one or the other."</p><p>And if it was bad in the beginning, when canceled schools in March threw custody agreements into chaos, then it's even worse now with the latest surge in numbers, Luther said.</p><p>Arrangements between parents who disagree on how to handle the pandemic—or who just don't trust each other—were uncomfortable, but the parents had resigned themselves to it for a few months, he said.</p><p>Now trust is eroding, he said.</p><p>"This new level of long-term fear has affected a whole different round of people, I think, who thought they were being optimistic," he said. "And now being optimistic is really hard to do."</p>
Help from the courts<p>In April, the Texas Supreme Court ruled that— without hearings—custody agreements must be honored, regardless of pandemic orders or school calendars.<br></p><p>It helped M, whose relationship with his son had been relegated to texting and Zoom. In June, a judge threatened to hold his ex-wife in contempt if she tried it again, and said M could make up the lost time, according to court records.</p><p>The judge also directed him to have a COVID-19 test before another overnight visit with his son.</p>
An uneasy arrangement<p>Austin mom Jodi has been uncomfortable for months about sending her two young kids to spend time with her estranged husband, who she believes is too cavalier about the virus.<br></p><p>As the numbers have spiked, so have her fears. But there is no written visitation agreement, and the uneasy cooperation that allows them fairly equal time with the kids is precarious. A custody agreement is likely in the future, when a divorce gets filed, and it's vital to her that they stay on good terms.</p><p>"I don't agree with how he's handling it, but I don't want to fight," said Jodi, who also asked that her full name not be used to protect her children.</p>
New lines of communication<p>Some divorced parents have found a way through years of anger and hurt, finding that the pandemic has opened up new lines of communication that benefit the kids.<br></p><p>Anthony and My-Cherie Haley have worked hard to make things easy during this uncertain time, they said. A birthday party and a Pre-K graduation spent together with the kids during lockdown would have been unheard of in the five years since the divorce.</p><p>"It's not been bad for us, interestingly," Anthony Haley said. "All that's just been put aside, and we're just working together on all of it. It's the only way to make it through this."</p><p>Said My-Cherie Haley with a laugh: "Was it always hunky-dory? No. But we've been really flexible with each other because of this pandemic."</p>
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The newest addition to the Austin Zoo is in need of a name, and for a $2 donation, you can pitch your own idea.