Texas deals with Tesla’s 2-step to Silver State
AUSTIN, Texas — Officials with Tesla Motors visited Williamson County at least eight times over six months as they sought a site for the company’s $5 billion battery factory, going as far as hiring an Austin lawyer to negotiate in a series of meetings with local and state officials.
The electric car company’s intense interest in 1,200-plus acres between Hutto and Taylor galvanized the two communities and Williamson County to create a rare mega-site for manufacturing served by a rail line.
The Austin American-Statesman reports the Hutto-Taylor site fell just short this month when Tesla chose Storey County for its ground breaking, $5 billion battery factory and the 6,500 jobs expected to come along with it.
But Central Texas economic development officials are trying to leverage their near-miss with Tesla into an opportunity to expand the region’s manufacturing base, vowing to maintain control of the Hutto-Taylor site while shopping it to some of the nation’s largest business endeavors.
They say the region’s next big thing could land on the site, which is along U.S. 79 between the two communities.
“This is a game-changer site,” said Joey Grisham, president of the Hutto Economic Development Corp. “We’re going to look at every creative way to secure this site.”
Sean Stockard, president of the Taylor Economic Development Corp., said the site “will forever change the landscape of Hutto-Taylor and in a good way.”
Before the competition for Tesla, the mega-site didn’t exist.
The sprawling farmland was split between two rival jurisdictions and 11 owners. The need to assemble at least 1,000 acres — the minimum eventually required by Tesla — prompted local officials to create a partnership to share the risks and revenue.
They called the partnership “Frame Switch” after the historical community once rooted on the land.
Initially, Tesla was looking for a 5 million-square-foot building it could convert, but that proved too difficult, so the company turned to building its own.
It pitted five states — Texas, Arizona, California, Nevada and New Mexico — in a bidding war that was by turns both very public and very secret.
In Texas, the code name was “5 Star Project.”
Dave Porter, senior vice president for economic development at the Greater Austin Chamber of Commerce, coordinated the regional response to Tesla.
On Nov. 5 of last year, Porter said, the governor’s office relayed Tesla’s desire for a large factory on 300 acres within an hour of the Austin, San Antonio or Dallas-Fort Worth airports.
Texas had three days to respond.
Hutto didn’t have an available 5 million-square-foot building, but Grisham said the community submitted a proposal to build on several hundred acres.
On Nov. 27, Porter said, he was alerted that Tesla was interested in the Hutto-Taylor site.
On Dec. 5, a couple of Tesla executives made the first of several visits to the Austin area with news that Tesla co-founder Elon Musk had enlarged the project to 1,000 acres.
Grisham said he could get Taylor to help enlarge Hutto’s original proposal of several hundred acres.
Austin officials had been courting Tesla for four years.
“Our eyes went wide open,” Porter said of the initial meeting.
There was a dinner in a private room at the III Forks restaurant and an all-day meeting at the Temple College campus in Hutto the next day.
Every time Tesla officials returned to Central Texas, they brought more executives, but Musk wasn’t among them.
By March, Tesla had hired Austin lawyer David Armbrust, who has been involved in some of the region’s largest development deals. Armbrust said his client assured him the company was serious about Hutto-Taylor.
“They told me they were looking at other sites in Texas, but they had not committed the resources like they had for Hutto-Taylor,” Armbrust said.
For weeks, Armbrust said, he was on 10 a.m. conference calls with Tesla officials.
Despite Tesla’s urgency to investigate the Central Texas site, the company never officially filed applications for school district property tax breaks, commonly called Chapter 313 agreements, or for the Texas Enterprise Fund, the state’s source for grants to relocating companies.
“I know they were frustrated with the state process,” Porter said.
He said the application for Chapter 313 is voluminous, takes too long and makes the company’s plans public the moment the paperwork is filed. Other states didn’t have that hurdle, he said.
At the local level, the story was different.
“All the jurisdictional issues just faded away,” Armbrust said. “The attitude was, ‘There is one site here. We’re going to make it work.’ It was incredible.”
Time was running out, however.
On July 31, Musk was due to talk to analysts during a quarterly earnings call. Porter said he and Grisham were meeting with company officials in Dallas just hours before Musk’s pivotal conversation.
No one was sure what Musk was about to say, Porter said.
During the call, Musk disclosed that the company had started clearing a site in Nevada, while insisting that Tesla would do the same at one or two other locations before finalizing a decision.
The real curveball: Musk said he expected the winning bidder to put up $500 million of the $5 billion price tag for the “gigafactory.”
Grisham said Hutto-Taylor had put together a package of tax abatements and rebates worth $800 million to $900 million over 20 years. It had spent $20,000 for an option on the 1,200-plus acres.
The only upfront money would be whatever the state offered from the Texas Enterprise Fund.
“We knew no one was going to give $500 million upfront,” Grisham said.
Nevada provided a $1.3 billion package, including tax breaks that will allow Tesla to operate the factory virtually tax-free for years.
“I don’t view it as a loss because look at the exposure we’re going to get,” Grisham said. “This is the biggest project talked about in the world.”
He said the Hutto-Taylor partnership is trying to extend the options on the land and is approaching investors to buy the land — at a cost of $20 million — to keep the mega-site together for a game-changing project.
“If another project comes along,” Stockard said, “we can literally pick right up where we left off.”