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HomeMy WebLinkAboutProposed Economic Development ProgramProject Tera Economic Development Department August 10, 2021 •Rivian is an American all-electric vehicle manufacturer •Founded 2009, production intent prototype unveiled in Nov. 2018, initial customer deliveries scheduled for Sept. 2021 •R1T and R1S high-performance electric truck and SUV •Design, Engineering, and Software Development Centers in California •Supplier Engineering and G&A functions in Plymouth, MI •Production in Normal, IL (former Mitsubishi plant) •Supported by investments from a combination of strategic (e.g., Amazon, Ford, Cox Automotive) and institutional investors (Fidelity, T. Rowe Price, Black Rock, Coatue, etc.) •Contract from Amazon to order 100,000 electric vehicle delivery vans •Over 7,000 current employees and growing 2 Background •Competitive national site selection process for 2,000 acre site for: 1.Vehicle manufacturing 2.Vehicle component manufacturing 3.Development center •Up to 12 million square feet of new vertical construction •Estimated production of over 200,000 vehicles per year •$5 Billion capital investment, min 7,500 jobs •5x capex and 2.5x jobs of Toyota HQ •Would represent one of largest projects in state history 3 Proposed Project Overview 4 Proposed Project Site –Walsh Ranch •Key drivers: •Ability to stand up production fast •Infrastructure and supply chain •Access to labor / Ability to recruit talent •Sustainability •Strategic and cultural compatibility •Company is taking full view of project economics •Ability to scale, time to production, long-term operating costs, and competitive impact •Known competitors offering aggressive state and local incentives •Incentives important to final decision process 5 Competitive Factors Company Commitments 6 •Min. $5 billion private investment for real property improvements and BPP •Min. $2 billion in real property Improvements (min. $1.6 billion hard construction costs) •Min. 15% Hard and Soft Construction costs to Certified MBEs •Completion of approx. 12 million square feet of new vertical construction for: •i) Vehicle Manufacturing, ii) Vehicle Component Manufacturing, iii) Development Center •Initial Investment Completion by 12/31/2024 •Min. 1,875 new jobs by 12/31/2025 •Min. 3,750 new jobs by 12/31/2026 •Min. 7,500 new jobs by 12/31/2027 •Min. average annual salaries of $56,000 Proposed City Incentives 7 •Pursuant to Section 6 of the Tax Abatement Policy and Section 8 of the Economic Development Program Policy, provide the following incentives: •Establish reinvestment zone to facilitate county tax abatement •15-year Economic Development Program Agreement grants equal to 85% of incremental City operating and maintenance (M&O)ad-valorem taxes on real and business personal property •The combined value of the City abatement and grants capped at $440,000,000 gross •Nominate as an Enterprise Project through Texas Enterprise Zone Program •Temporary Class-A Office Space •Open Space Conservation and Development Offset Summary of Proposed Incentive Terms 8 Company Commitment Potential EDPA* Real & Personal Property Investment (Base Commitment)40% 15% MBE Contractors 10% Average Annual Salary for all Full-Time Jobs $56,000 15% Overall Employment >= 1,875 by December 31, 2025 20%Overall Employment >= 5,000 by December 31, 2026 Overall Employment >= 7,500 by December 31, 2027 TOTAL 85% *M&O only Development Summary •Private Investment •Min. $5 Billion toward Real and BPP •15% MBE utilization for Hard and Soft costs •Employment •Min. 1,875 new jobs by 12/31/2025 •Min. 3,750 new jobs by 12/31/2026 •Min. 7,500 new jobs by 12/31/2027 •Avg. wages: $56,000 annually •15-year City incentive proposal •15-year, 85% Ch. 380 on M&O only 9 •Private/Public Ratio Gross NPV •Max Benefit $440 M $277 M •Est. Benefit $344 M $218 M •City Participation 6.9%4.4% •Est. City Private-Public Ratio 14.5:1 22.9:1 •Upfront Local Incentives $0 $0 •CFW Tax Revenue (15 yr.)Gross NPV •Net Tax to City $162.7 M $103.0 M •Net Annual Tax to City -Yr. 1: $9.4 M, Yr. 5: $10.2 M •Does not include impacts to Sales Tax, HOT, Water / Waste Water utility purchases, etc. •Does not include secondary impacts to economy •Payback: 8.1 years •Potential Open Space Preserved: 300 acres 10 Recommendation/Next Steps Tuesday, August 17th M&C Approval for City 380 Agreement, Public Hearing and Approval of M&C for Reinvestment Zone •Enter into a 15-year economic development program agreement with Rivian equal to up to 85% of incremental M&O real and business personal property taxes and to provide temporary Class-A office space •Nominate Project for as Texas Enterprise Zone Project Thank you