On its face, it sounds like a dream come true. A pioneering company that could dramatically expand the amount of climate-friendly electric vehicles on the road. A community that has long asked for more resources and investment in the area. A city that prides itself on environmental leadership.
But things are rarely that simple.
When news broke that Tesla was considering Austin as the site of its next gigafactory (and that the county and local school district were developing incentive packages to bring them here) the comments on social media went wild.
Cheers that good, green jobs were coming to Austin. Concerns that those jobs might not actually be as good as they seem. Outrage at the idea of giving corporations any kind of tax break, especially in the midst of a pandemic that has local government banks accounts running low.
So what’s going on here? What does it mean that Tesla is coming to Austin?
We’ve got the answers to all your questions below.
First, the basics.
Earlier this month, Tesla officially announced that it would be building a new $1 billion electric vehicle factory in the Del Valle area (a part of far east Austin) along the Colorado River.
In a press release, Texas Governor Greg Abbott said that the factory would create at least 5,000 new jobs in the region.
The factory will be built just off State Highway 130, near the Austin Water Center For Environmental Research. It’s located in the City of Austin ETJ (extra territorial jurisdiction), which means that even though it’s very close to Austin, it’s not technically within Austin city limits. This also means that Austin City Council didn’t really have much control over the initial incentive packages that you’ve probably read about on the news. Those were offered by Travis County and the Del Valle Independent School District.
This far eastern part of Austin, often called Del Valle (about 172-square miles of mostly unincorporated area) has long struggled with the lack of resources that comes with living outside of city limits.
(For more about Del Valle, check out this story we wrote in April – How Gentrification Could Make A Public Health Crisis Even Worse.)
“We’re the dumping grounds for the county,” said Richard Franklin in a recent interview with The Austin Common. Richard is a longtime community activist in Del Valle, who has worked tirelessly to try and bring economic investment, healthcare, and improved food access to the people who live there.
He pointed to the fact that the Tesla factory site is currently home to a sand and gravel mining operation that has had a lot of environmental issues in the past and is in need of a cleanup. A cleanup that Tesla has promised to provide.
As KUT reports, Tesla CEO Elon Musk told investors on a recent call that, “It’s right on the Colorado River, so we’re actually going to have a boardwalk, a hiking-biking trail. It’s going to basically be an ecological paradise. Birds in the trees, butterflies, fish in the stream and it will be open to the public, as well.”
“Potentially, depending on what Tesla does, it could be a big improvement,” explained Cyrus Reed (interim director & conservation director of the Lone Star Chapter of the Sierra Club) in a recent interview with The Austin Common.
But of course, the devil is in the details, and according to Cyrus, there just haven’t been enough specific commitments on this front.
On top of that, Cyrus said, “It is an industrial facility, so you always want to know a little bit more about what sort of air emissions might occur on site… And then what their plans are in terms of wastewater discharge permits. So there are some details that are still unclear.”
For Richard, who’s supportive of Tesla coming to Del Valle, it all comes down to finally getting some much needed investment in the area.
“So how do we benefit from someone who’s actually looking at us for the first time ever?,” Richard said. “Because we’ve never had anybody actually look at us. We’ve had arguments with the Chamber of Commerce about the fact that no one has ever brought anything to us, with this massive amount of land out here. So it was an exciting process to even be considered for something, finally. And then we started looking at, how do we bank off of that and get some of the things we needed because of that?”
One of the things Del Valle needs is jobs and Richard is excited about the idea of Tesla bringing them to the area, particularly jobs that don’t require a 4-year college degree.
“We’re looking at the opportunity for this major manufacturing… manufacturing allows these kids who don’t have high tech degrees to go to work right out of high school or sometimes even before high school, go to work in jobs paying them $35,000 plus… which was going to be a big boon for us,” Richard said.
This is especially a big deal, explained Richard, because so many students and young people have to drive far out of their community in search of work, spending hours a day in traffic traveling back and forth to job opportunities downtown or in other parts of Austin.
But not everyone is so sure these jobs will be as good as they seem.
Groups like the Sierra Club and the Workers Defense Project have been working together to push Tesla for higher wage guarantees and worker protections. So far, they’ve been moderately successful, playing a role in getting Tesla to promise a minimum wage at the factory of $15/ an hour (even for contract workers).
“It’s the moment in time where we’re seeing that our society is so inequitable, so if we can raise our voice and hopefully get jobs that are better and have better assurances, that feels like something we should do,” Cyrus said. “That it’s not just about carbon emission reductions. We need to make sure that the economy works for everyone.”
For the Sierra Club and the Workers Defense Project, there’s still work to be done in this arena. Together, along with other local labor groups, the organizations had been pushing for Tesla to follow all the standards laid out in the county’s Better Builder Program, which requires development projects to submit themselves to independent oversight for construction work and agree to certain worker safety protections. In the end, this didn’t end up being part of the final agreement.
“That was some of the disappointment,” Cyrus said, “that the County Commissioners didn’t hold Tesla to the same standards that they’re holding other people to, including themselves.”
The Sierra Club has also said that they would have liked to see the minimum wage guarantee even higher, explaining in a recent blog post that, “clearly $15 dollars an hour in Austin is not really a livable wage.”
This is where a bit more of the controversy comes into play. Both of the local taxing districts/ governmental bodies where the Tesla site is located offered tax rebates/ incentives to the company – Travis County and the Del Valle Independent School District.
The Travis County Commissioners Court (kind of like a City Council, but for the entire county) agreed to a tax rebate program for Tesla.
Here’s what that means…
Once Tesla invests its first $1.1 billion, they’ll receive a 70 percent rebate on their Travis County (operations & maintenance) property taxes, 75 percent if they invest another $1 billion, and 80 percent if they invest anything beyond that.
In exchange, Tesla has to…
Ensure that at least 50 percent of its jobs go to Travis County residents.
Donate 10 percent of its tax liability ( aka – 10 percent of what it would owe in taxes, before the incentive is taken out) to local nonprofits, schools, affordable housing, and public transportation.
Build its factory to high green building standards
Guarantee a $15/ an hour minimum wage
Del Valle ISD
Meanwhile, the Del Valle ISD School Board agreed to a tax cap or value limitation program for Tesla.
Here’s what that means…
Once the factory is completed, it’s estimated that its property value will rise dramatically, an additional $773.4 million. Del Valle ISD has agreed to cap the value at which Tesla can be taxed to $80 million. In other words, when they go to tax the property, they’ll pretend they’re taxing a property worth $80 million, even though it will be worth far more than that.
In the end, this will save Tesla nearly $50 million in property taxes over 10 years.
Deeper partnerships with the school, including technology programming and workforce training have also been discussed.
The bottom line.
A lot of concerns have been raised over the decision by Travis County and Del Valle ISD to offer these tax rebates and caps to Tesla, a multi-billion dollar company, but Richard doesn’t see it that way.
“We don’t have anything out here now,” he said. “We’re not giving them anything, because it’s going to create something that we don’t have. You can’t say, you’re giving them something. We’re not giving them anything. Right now, if they don’t come here, there’s nothing. We’re back to where we are before.”
According to Travis County, even with the tax rebates, the Tesla deal is estimated to be a $8.8 million net gain for the county over the next 10 years. Similarly, as KUT reports, estimates are that the deal will bring in $28 million to DVISD over the next 10 years.
From the Sierra Club’s perspective, the idea of offering incentives in general to Tesla isn’t the major concern. “It was more, if you are going to give incentives to a company, that frankly, is worth a lot of money, you should make sure that the agreement is a good one,” Cyrus said. “And our thought was that the agreement didn’t go far enough.”
In a joint statement published with several local labor groups after the Travis County Commissioners approved the Tesla tax rebate package, the Sierra Club wrote, “after hundreds of letters, phone calls, and testimonies from the community, Travis County fell short of a deal that would guarantee good, safe jobs for thousands of workers. While we appreciate recent additions of worker standards including baseline wages, the existing agreement would still leave many with poverty jobs and unsafe workplaces with no real enforcement…”
That’s why the Sierra Club is planning on keeping an open line of communication with Tesla and working with Austin City Council to monitor issues they can control, which could include Tesla’s water and energy use (since the City of Austin owns the electric and water utility).
“Sierra Club is excited about the need for a new technology like Tesla’s electric vehicles… that’s really important for our future,” Cyrus said. “That being said, because Tesla has asked and received large tax incentives, it’s very important that the community is assured good sustaining jobs that are safe, and also that Tesla be expected to meet some high environmental performances.”
For Richard, the push for environmental protections and workers rights is fine, but he’s upset with the idea of these organizations coming in and dominating the conversation.
“I’m sick and tired of people telling me, you’re going to control my life, but you’re not going to do anything to help me,” Richard said. “…The City of Austin, the people in Austin think they know better about what happens for me and what’s being done to me.”
If these organizations want to get involved in Del Valle, explained Richard, they should be there all the time, supporting the community year round.
“We’ve literally been ignored and taken advantage of, to the benefit of others,” Richard said. “It’s our turn.”