TESLA Heeadquarters in Palo Alto, California
July 15, 2020
UPDATE: On July 14, the Travis County Commissioners voted 4-0-1 to approve a deal with TESLA to bring a manufacturing plant to eastern Travis County. Commissioner Margaret Gomez asked for a one week delay and ultimately abstained when the other commissioners would not agree to a weeklong delay. Gomez noted the agreement did not meet basic community demands and Travis County policy like the Better Building Program, which is in place to prevent deaths of construction workers. Before voting, Commissioners added strengthening provisions to the agreement, including covering all contract employees with minimum salary levels, ensuring basic training, rest breaks, and onsite review of construction review, as well as adding a commitment to meeting Austin Green Building Program standards. The City of Austin will still play a role as certain land use permits, and compliance with a Planned Unit Development that encompasses the site.
In response, a coalition of labor and community groups including the Sierra Club put out the following statement:
"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. The lack of transparency throughout this rushed process resulted in worker voices being excluded, and the vote should have been delayed. We look to the City of Austin to take every possible step to ensure this proposal is a good deal for the community.”
July 9, 2020
The Sierra Club is often confronted with difficult decisions regarding tax incentives, jobs, environmental performance and the dual crises of racism and climate change impacting all of us.
As a society, we can not sustainably rely on energy sources like coal, oil and natural gas, and we must invest in new technologies like solar power, energy storage and electric vehicles. TESLA, the iconic brand led by controversial billionaire Elon Musk, is known for successfully working on all three of those technologies and they are in the middle of negotiating and selling a proposal to come to Austin, or at least to the ETJ (extra-territorial jurisdiction) of our fair city. The location is east of Austin in Del Valle, near Webberville, on the banks of the Colorado River. It is a stone’s throw from the Onion Creek Wastewater Treatment plant, as well as the City’s Hornsby Bend Tertiary Wastewater Treatment Plant, Dillo Dirt “Factory” and Bird Observatory.
The site currently houses a sand and gravel mining operation and concrete batch plant that is in desperate need of upgrading. In the recent past, some stormwater runoff from this very plot of land has impacted the Colorado River.
You might be asking, isn’t this a good thing? With TESLA in Texas we could potentially create 5,000 clean energy jobs that would produce EV. This seems exactly like the kind of investment we need, especially in the “eastern crescent” and Del Valle, an area that has not enjoyed the same job opportunities as North or West Austin, and lacks basic infrastructure like parks, community centers and super markets.
TESLA’s proposal to locate in Austin comes with certain conditions. They are seeking major tax incentives from the School District, the state, and from Travis County, as well as future regulatory favors from the City of Austin. Essentially, a multi-billion dollar company that is worth more than Toyota is saying that they won’t pay their full tax burden but will provide a number of jobs, only a few of which are actually in writing.
Unfortunately, their record -- though disputed by the company itself -- is not stellar. They have not been consistent at their SpaceX location at Boca Chica in South Texas, have made the questionable decision to open their factory in Southern California in the middle of the pandemic, and have broken promises in New York and Nevada. TESLA has been characterized as being great in technology, but inadequate in labor, safety and environmental performance. Our partners released a fact sheet on some of those failings. While TESLA disagrees with some of these reports, no one can deny that TESLA has a history of coming up short on its commitments.
The Big Ask: Chapter 313 and the Del Valle Independent School District
The proposed property: The Marietta Mining and Batch Plant location on Harold Green Road just east of SH 130 on the banks of the Colorado River.
Under Texas legislation, companies are able to get giant property tax breaks from school districts if they follow certain procedures. They must file an application with both the state’s Comptroller of Public Accounts and the local school district, hold one or more public meetings, and be approved by both the state and the elected board of the School District. They also must provide a minimum amount of investment, and produce a minimum amount of jobs through an agreement. In essence, the company asks for a reduction in their tax burden in exchange for their investment and jobs being produced.
On Thursday night, July 9th, on a 7-1 vote, the Del Valle Independent School District approved the first deal, after having held an official public meeting in June. This decision has been reached despite the fact that most of the Community Assurances demanded by a coalition of groups- including the Sierra Club- have not been met. To be fair, the School District is somewhat limited by the law on what they can require, however, we believe that they have settled for a very limited deal. Information about last night’s meeting can be found here.
Under the deal, TESLA agrees to a number of investments in the district. They agree to invest in a new manufacturing facility, and commit to paying up to a maximum of $80 million in property taxes annually over the next 10 years. TESLA has also agreed to a supplemental payment of $999,609 to the district, which can be used for a variety of supplemental programs. TESLA is also promising to invest some time and effort into specific training and educational programs related to robotics.
How Good Would the Jobs Actually Be?
In addition to the investment, supplemental payments and educational programs, TESLA is promising new jobs, but the details are hazy. Under Chapter 313, they have to produce at least 25 jobs to be eligible for the favorable tax treatment, so they have promised 25 jobs of at least a salary of roughly $75,000. They have publicly stated that they might produce up to 5,000 jobs, and that for all the jobs they produce the average weekly salary will be at least $1,346, which is roughly $35 per hour based on a 40-hour work week. None of the number of jobs -- other than the 25 required jobs -- is actually in the agreement itself. It is also important to note that the average weekly salary is an average salary, meaning that some workers could make considerably less. Separately, TESLA has committed to pay at least $15 per hour for all employees, but clearly $15 dollars an hour in Austin is not really a livable wage.
Groups including the Sierra Club have been calling for community assurances which are partly modeled on Travis County’s Better Building Program. Thousands of construction jobs and permanent jobs could be created by the investment, but without some on-the-ground reporting and enforcement of issues related to wages, wage-theft and worker safety, many of these jobs could be less than ideal. The School District essentially has been arguing that these issues go beyond their capability, which brings us to…
Austin Water Hornsby Bend Tertiary Wastewater Treatment Plant and Bird Observatory is about 1.5 miles West of the proposed TESLA site.
The Deal Before Travis County
In addition to school property taxes, TESLA, under a different chapter of state and local law, is seeking to reduce their Travis County property taxes. While the tax burden is considerably less, TESLA is seeking an 80% tax cut, signifying millions of dollars to the County in return for the promised investment and jobs. The Travis County Commissioners have already held three public and executive committee meetings on the proposal, but we, the public, have yet to see a copy of any proposed deal.
The demands made by our labor colleagues are very reasonable:
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TESLA needs to meet the same standards that Travis County has been requiring through their Better Building Program
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Provide an actual jobs report,
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Require paid sick leave
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Require basic enforcement and onsite compliance to make sure the company meets those requirements.
As of now, TESLA has not agreed to these demands, and we are unclear on what the Commissioners themselves are demanding.
Sierra Club’s Position
We are endorsing our colleagues demands, but we are also asking TESLA to make some commitments to high environmental performance. We want to be assured they will meet high building standards, will commit to 100% renewable electricity, assure there will be no runoff into the Colorado River, assure that any wastewater discharge will have adequate pretreatment in place, assure that there will be access to the river for boaters and birders, and assure that any air permits will meet maximum achievable control technologies to avoid air pollution. A copy of our letter to the DVISD can be found here.
We, along with our labor colleagues, have asked for a meeting with TESLA where all of our concerns and questions can be addressed, possibly through a side agreement with the community. While there have been a few quick phone conversations, as now, there has been no formal meeting or real exchange of information.
Let’s be clear: we can’t solve the climate crisis without new technology like electric storage, batteries and vehicles. But we can’t solve the climate crisis without assuring safe and steady jobs, environmental justice, high environmental performance, and commitments to local hires- no matter how innovative their technology may be.
The Travis County Commission meets Tuesday evening. Let’s let them know that if TESLA wants a big county tax break, they need to meet basic community and environmental assurances. Information about the meeting on Tuesday July 14th, including how to participate, can be found here. The Commissioners could approve the deal, or they could just discuss it. We would urge them to take more time.
What’s next?
Even if the School District, County Commissioners and state -- which has a role on some other funding sources -- approve agreements with TESLA, the site will need additional approvals by the City of Austin, TCEQ and other agencies. As an example, the site is located both in the Austin Energy and Bluebonnet Electric Cooperative service territories, so TESLA will need to reach agreements on electric rates and interconnection standards to run its factories. Furthermore, TESLA will need to get approval from the City of Austin on the use and reclamation of the heavily used land, and multiple permits from TCEQ on the land, and any wastewater, waste and air permits. They will also need to reach agreements on water use and wastewater service, whether with the City of Austin or other entities.