Travis County Approves Millions In Property Tax Rebate To Lure Tesla Factory

Jul 14, 2020

Travis County Commissioners approved a property tax rebate Tuesday for Tesla, Inc., aimed at luring the electric car maker to develop land near SH 130 and Highway 71 for its new truck factory. 

Tesla could get a rebate of up to 80% of the largest part of its county tax bill, resulting in a savings of $14 million for the company over the first 10 years. The county will still net approximately $7 million in new property tax revenue. There is an option for the rebate to extend for an additional ten years, but at a higher tax rate.

The incentive program requires Tesla to pay the county portion of its property tax bill in full and then get refunded if it meets all conditions in the deal. Terms include living wages for construction workers who build the plant, a minimum number of permanent full-time jobs and an average salary of at least $47,000 for plant workers. Prior to the vote, commissioners added language to better protect construction workers as the factory is built and a minimum $15-an-hour wage for contract food and custodial workers once it’s up and running.

Commissioner Brigid Shea supported the agreement because of the opportunities at Tesla for high school graduates without a college degree.

“They are stuck in underemployment and underpayment and uninsured conditions that make it extremely difficult for them to get ahead,” Shea said. “And I think that’s a profoundly important part of this deal.”

The deal passed by a vote of 4-0 with one abstention from Commissioner Margaret Gomez that provided a little drama to the discussion.

County commissioners have held public hearings and discussed the deal in executive session weekly since last month, but once a motion to approve it hit the floor, Gomez asked for an additional week to decide. Commissioner Jeff Travillion did not want any delay to allow this opportunity to pass by constituents in his northeast Travis County district.

“If we’re talking about a transformational process that will address poverty and opportunity in that area for generations, it would be difficult for me to accept that we have a consensus moving forward and we didn’t make a decision and allowed this project to move to another market,” Travillion said.

He pointed out that Tesla’s new “Gigafactory” would be moving into one of the lowest-income zip codes in the county.

Rohan Patel, Tesla’s Director of Public Policy and Business Development, did not know whether a week’s delay could spoil the county’s chances because there are a lot of people making that decision at the company. 

“I just want to be as transparent as I can be,” Patel said. “We had a call with the governor of another state and the mayor of another town just yesterday to go through a whole bunch of things similar to what we’re going through right now. I can’t say much more than that, other than we have to make a decision, because these things take a long time, there’s a lot we have to put in place.”

When the process began, there were rumors Tesla was considering sites in other Texas counties, as well as Tulsa, Okla. Publicly though, if it’s seeking tax breaks, the company is not nearly as far along as the company has progressed here.

Still, county staff suggested waiting was playing a dangerous game.

“We have negotiated really hard with Tesla,” said Diana Ramirez, Travis County's Director of Economic Development and Strategic Investment. “We have come back at them on more than one occasion telling them this is our bottom line, and we’ve added more, and they’ve given more.”

Now the decision is up to Tesla. With the approval for county and school district tax breaks, the company will decide if it moves forward with its new truck factory just east of Austin.