Update (6/22): The ABJ reported that the proposed project investment is tabbed at almost $1.1 billion — between $410.3 million in real property investment and $682.3 million in business personal property investment.
Austin sometimes feels like the land of milk and honey. It's had a couple decades of high trajectory economic growth, soaring home values and a parade of accolades for being one of the best places to live.
What was once known as Dell's turf has become a field of Big Tech dreams, with towers springing up for Google, Facebook, Apple, Amazon, Oracle and more.
So why would local residents need to give Tesla $60 million-plus in tax breaks over the next decade for the company to build a gigafactory to build its new Cybertrucks here? After all, we already have a tech talent pool, world class universities, exploding population growth and quality of life that few cities can claim. Not to mention, we're a few hours from SpaceX's facility in South Texas.
But, from another perspective, isn't it Tesla's fiduciary duty to look for the biggest breaks -- whether they come from Travis County or Tulsa or wherever? Shouldn't they ask for every penny they can get -- or at least the best publicly acceptable deal?
After all, Apple, for example, was in line to get a 65% discount on its property taxes and millions from the Texas Enterprise Fund for its forthcoming $1 billion new campus in North Austin. And Apple is far from alone in tapping public incentives.
By nature, companies are pretty secretive about their hunt for taxpayer-backed incentives. But, on Thursday, Austin American Statesman reporters explored new documents made public by the Texas Comptroller's office that outline incentives that could give Tesla a $68 million break on property taxes over 10 years.
In exchange, Tesla would add thousands of jobs and build a huge plant -- 4 million square feet or more -- in Southeast Travis County near Highway 130 and not far from the airport. The incentives are being reviewed by the Del Valle Independent School District, which could be one part of a broader deal that could involve Travis County and the State of Texas, both of which have reportedly been talking to Elon Musk's team at Tesla but haven't made any documents public.
In Tesla's application, it notes it has not received any commitments for state or local incentives at the proposed project site so far. But it notes it is considering other locations -- which likely refers to Tulsa.
"Construction timing is still to be determined but anticipated to be sometime over the next 2-3 years pending required approvals," Tesla's application for the tax incentives said.
The new plant would bring 5,000 jobs with an average $74,050 a year, documents show. But the document also shows Tesla would be committing to only 25 qualifying jobs at that rate -- those that pay 110% of what average local manufacturing jobs currently pay. It's unclear what the other jobs would pay.
Nathan Jensen, a UT professor of government who frequently writes about tax abatements, suggested there's more to the proposed deal than meets the eye, including the baseline commitment of 25 qualified jobs.
"That is the trick of this program. You can lowball to make sure you comply. Nobody fails on jobs in this program," he tweeted.
But for Tesla, it's a matter of business and competition.
The company said in its application that it needs a new manufacturing facility in the U.S., and the central locations of Texas and Oklahoma would help it provide vehicles to the eastern half of the country.
"In addition, many states and counties submitted unsolicited packages of incentives designed to entice Tesla to locate in their respective states," the application says.
It says incentives will be "a determining factor" in which city it picks for its new plant and all those jobs. That could be especially attractive to many local leaders -- in Austin and Tulsa -- as the nation grinds into the new recession.
"...for a project to succeed, it must also have an acceptable rate of return to secure the necessary capital and compete in the automobile industry against some very capable competitors that have been longstanding industry players," the document says.
