Travis County commissioners to consider $14.7 million economic incentives deal for $1 billion Tesla factory

Travis County commissioners will hear from county staff, Tesla representatives and residents on Tuesday about whether they should approve an economic incentive deal that would save the electric carmaker $14.7 million in property taxes over 10 years and generate 5,000 jobs.

Tesla has proposed a $1 billion "Gigafactory" to be built on a 2,100-acre site in Southeast Travis County. Founder Elon Musk tweeted Thursday that the company has an option to purchase the site from its current owner, construction supplier Martin Marietta, but has not yet done so.

Staff will give a presentation—which was made public earlier today—to commissioners on the proposed agreement. Tesla representatives will also present to the court.

If approved, the factory would employ 5,000 middle-skill workers with an average annual salary of $47,147 and "full benefits," including health insurance and paid parental leave, according to the staff presentation.

These middle-skill jobs are particularly needed in Travis County, where most job creation, pre-pandemic, served highly educated workers who moved to Austin from other places—and not low- and middle-skill residents looking for work.

In addition to job creation, staff estimates the new factory will generate more than $600 million in sales activity annually and spur new jobs, firms and economic activity "from the ripple effects of Tesla," per the presentation.

In exchange, commissioners would approve a deal that would see Tesla rebated 80% of its property taxes to the county for a period of 10 years.

The total property tax that Tesla would pay Travis County is estimated to be $21.7 million over 10 years, of which $14.7 million would be returned if the company passes an annual compliance review conducted by a third party.

This equation "results in a substantial benefit to the community and a net fiscal benefit to the County," staff wrote.

Travis County hired Jon Hockenyos, president of the local economic analysis firm TXP, to conduct a financial impact analysis on the proposed deal.

In his review, Hockenyos concluded: "There is a highly competitive global environment for projects of this scale and scope that typically requires incentives from state and local governments to secure relocation," he wrote.

Travis County Public Information Officer Hector Nieto said commissioners do not intend to take any action on the proposed agreement on Tuesday.

Earlier this week, union representatives called into a Commissioners Court meeting to raise concerns about Tesla's "troubled history with taxpayer subsidies."

In addition to applying for incentives through Travis County, the company is seeking nearly $70 million in subsidies from Del Valle ISD over the same 10-year period.

The proposed factory site is also within Austin's taxing jurisdiction, but the company reportedly will not be seeking economic incentives from the city.

In an email to Austonia, a spokesperson said that the city does not comment on economic development prospects.

"However, we are not surprised that an innovative technology company like Tesla is interested in opening a facility in Austin," he wrote. "Austinites win when our area features many major employers offering stable, mid-level, and strong paying jobs – as well as procurement opportunities for local businesses."