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A proposal would give Tesla up to a $68 million tax break to locate its next factory in Austin.

Del Valle ISD is considering an economic incentives deal with Tesla that could save the electric carmaker nearly $70 million on property taxes for a proposed assembly plant.


Tesla's application to the school district—which was made public by the Texas Comptroller's office today—proposes building a 4 million- to 5 million-square-foot facility in Southeast Travis County that would ultimately create 5,000 jobs with an average annual salary of around $47,000.

The factory would be located at the intersection of SH 130 and Harold Green Road.

In a statement sent to Austonia, Charisse Bodisch, senior vice president of economic development for the Austin Chamber, said: "The potential location being explored is an underutilized site that is in clear need of revitalization, and it would be a perfect for for an environmentally focused organization like Tesla."

If approved, construction on the "Gigafactory" would begin this fall and operations would start up in late 2021.

Tesla applied for an incentives deal under the state tax code chapter 313, which allows school districts to offer a 10-year cap on taxable property value to companies to promote new development and job creation.

Tesla requested an appraised value cap of $80 million for the proposed project.

In its application, the company estimates that, without the cap, the taxable value of the property would be at least five times greater—ranging from $432 million in 2022 to $773 million in 2025.

At a property tax rate of 1.31%, per the application, Tesla would pay $78,591,442 in property taxes to the school district over 10 years for the actual value of the site. However, with the cap of $80 million in place, the company would pay $10,480,000 over the same time period—for a total estimated savings of $68,111,442.

"Tesla is looking forward to establishing a strong working relationship with Del Valle ISD and the greater Austin community," Mark Olson—the company's senior director of U.S. Tax—wrote in a May 26 letter to Del Valle ISD Superintendent Dr. Annette Tielle.

The Travis County Commissioners Court is also considering a separate incentives deal, but the terms have not yet been made public. Its members will receive presentations from county staff and Tesla representatives on the proposed agreement next week.

"The Court encourages the public to provide input on Tuesday when it takes up the item," Travis County Public Information Officer Hector Nieto said in an emailed statement. "It is the Court's intention to not take any action on the item."

Earlier this week, union representatives urged commissioners to reconsider such a deal given Tesla's "track record of collecting public subsidies from several states but not delivering on their promises."

The proposal names SH 130 and Harold Green Road as the potential location of the plant.

This story has been updated to correct the average salary of the proposed new jobs.

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