Tesla, a maker of battery-powered cars, has identified a 2,100-acre site in southeast Austin, Texas, as the potential home for a major auto manufacturing plant that would span 4 million to 5 million square feet.
The company filed an application for Chapter 313 Tax Valuation Limitation with the Del Valle Independent School District posted on the Texas Comptroller’s website Thursday. Tesla said the southeast Austin location is at the intersection of State Highway 130 and Harold Green Road at the site of an operating concrete plant owned and operated by Martin Marietta.
Tesla has not finalized the site location and is also considering undisclosed locations in Oklahoma for the factory, the company said in its application. Tesla said it initially looked at eight centrally located U.S. states for the plant, which is expected to make vehicles for the eastern half of the United States.
The site at 13101 Harold Green Road is spread across multiple parcels owned by Texas Operations LP, which has a mailing address in Dallas, according to Travis County Central Appraisal District records. The existing properties have a collective value of $1.14 million, according to the appraisal district. Tesla representatives listed on the application did not immediately return phone calls for comment.
Tesla's application did not specify what type of vehicle the proposed plant would make but it is widely believed to be the Model Y SUV and the Cybertruck, the company's first battery-powered all electric truck it plans to start producing by late 2021. Many details about the layout of the plant were kept confidential and blacked out in the application, which cost Tesla $150,000 to file with the state of Texas.
Tesla currently makes most of its vehicles at its plant in Fremont, California, and it produces batteries and some drive units at its so-called Gigafactory in Sparks, Nevada. In 2014, Tesla considered the greater Austin area for the factory but ultimately chose Nevada.
The company also has a Gigafactory in Buffalo, New York, that primarily makes the company's solar products. Globally, Tesla also makes vehicles at a factory in Shanghai and has started developing a site in Berlin.
If the southeast Austin site is selected, construction could start as early as the third quarter this year and support a peak of 1,000 construction jobs next year. Tesla is committing to investing at least $537 million in the project by 2023, but that total investment is expected to grow to more than $1 billion by 2031, according to the application.
John Boyd Jr., site selector and principal of The Boyd Co. who isn't involved with Tesla's search, said Austin has always been the front-runner in Tesla's real estate search that now appears to be between the state capital of Texas and Tulsa, Oklahoma.
"They had to do their due diligence and weigh the options, and this certainly gave Tulsa's economic development team and from the governor's office down a platform to promote itself," said Boyd, who helped both Dell and HP locate big offices in the surrounding Austin region. "Tesla needed a credible alternative and Tulsa was it. The silver lining is Austin was once a bridesmaid for the Gigafactory that Nevada won and any runner up could be the recipient of future investment by either Tesla or one of its suppliers."
The move is important to Texas because it feeds into a larger trend Boyd has been tracking for years with companies migrating from California to the Lone Star State because of government regulations that make it difficult for large companies to do business in the Golden State, he said.
Tulsa and Oklahoma have yet to publicly disclose any potential incentives deals in the works with Tesla. Bill Murphy, who oversees economic development for the Tulsa Regional Chamber, said the community has been "doing its due diligence," readying for any asks that might be made by the U.S. automaker.
"We are ready and waiting for Tesla," Murphy said. "This is how the region approaches economic development," he said in an interview. "We put ourselves in a position where there's not a significant amount of due diligence that needs to happen once a company has identified a site for opportunities."
The Deal
As a way to entice major new capital projects, Texas allows school districts to strike deals that limit property taxes, potentially creating millions of dollars in tax savings for a company that can meet the requirements. School district taxes comprise the largest component of property taxes in Texas, so the limitation Tesla is asking for is "especially critical to create a level playing field between Texas and other states vying for this project," the application states.
Tesla does not own the land it is proposing for the project but has entered agreements for the project, according to the application.
The electric car maker said the plant could create an initial 3,500 jobs once operational by 2022, but that headcount could grow to as many as 5,000 jobs at full build out in 2031, according to the application. Under the proposed incentive deal with the school district, Tesla would only have to create 25 permanent qualifying jobs among other requirements.
The average annual wage would be at least $74,500 for permanent employees about $68,000 for construction workers, according to the application.
Tesla submitted the application with Del Valle ISD May 26 under the name Colorado River Project LLC.
The proposed deal with Del Valle ISD would cap the amount the district could collect by limiting the property value eligible for taxes to $80 million, according to the application.
“We have not done an evaluation of the gross tax benefit for this project yet; that analysis will occur during the economic impact evaluation and that will be a part of the certificate (positive or negative) once it has been issued by our office,” said Kevin Lyons, spokesman for the Texas Comptroller, in an email to CoStar News.
Tesla is also reportedly seeking additional incentives from Travis County, where Austin is located. Typically, if the county or school district offers incentives that could signal the Texas Enterprise Fund could be involved as well, said Nate Jensen, a professor at the University of Texas at Austin who studies economic incentives. That fund is described as the biggest "deal-closing fund" in the country.
The southeast Austin location is about 5.9 miles northeast of the airport off State Highway 130, which is considered one of the fastest ways to get from Austin to San Antonio while avoiding the often-congested Interstate 35.
The toll road will allow “the company quicker access around the Austin metro, helping suppliers get in and out of the plant more efficiently,” said Sam Tenenbaum, CoStar’s Central Texas market economist, in an email. “Development for this kind of project likely had to be east of the city if it was going to go forward in Travis County — less expensive and flatter land."
The concrete plant on the site would continue operating there for the foreseeable future before eventually relocating at an undetermined date, according to Tesla’s application. The site has nine buildings, totaling 45,250 square feet, plus access roads, septic tanks, sheds, conveyors and silos. The existing property also includes high-voltage transmission towers and underground natural gas pipelines within easements.
Tesla’s application with Del Valle ISD describes two proposed tax reinvestment zones, including one zone called “Tesla Solar Reinvestment Zone,” which could offer a clue into potential solar operations at the site.
Angelos Angelou, Texas economist and CEO of Angelou Economics, said both Texas and Oklahoma could offer viable pitches. A huge factory could create millions in payroll benefits and economic impacts for the region where it is located, he said.
"I think both states have the capability. ... The state that puts more emphasis on recruiting Tesla [could ultimately win] because this project would be immensely beneficial to the local economy and statewide economy," he said in an interview.
For the Record
Kimley-Horn and Associates; Moak, Casey and Associates; and HH Property Tax LLC are assisting Tesla with its Chapter 313 application and proposed plans in Texas, according to the application.