Nov 23
2021
Surprise winner of Samsung plant
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At the beginning of the year, it looked like Austin, Texas, was the frontrunner to land a $17 billion Samsung microchip plant that Western New York officials were hoping to lure to rural Genesee County.
In recent months, a new leader emerged – the City of Taylor, just outside Austin – that agreed to a slew of city, county and school district incentives that would reportedly reduce Samsung’s tax burden by 90 percent during the first 10 years of the plant’s operation.
“I thought this was Austin’s to lose,” said Nate Jensen, a professor at the University of Texas-Austin who studies subsidy programs.
“I’m more shocked that they are picking a location just outside of Austin as opposed to their existing location in North Austin,” he said. “I didn’t think New York, given the limitations of the site, was a serious contender. But again, I was surprised by Taylor.”
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The Wall Street Journal first reported Tuesday morning that Samsung officials settled on Taylor after considering another site in Austin, one near Phoenix and the 1,250-acre Science, Technology and Advanced Manufacturing Park, or STAMP, in the Town of Alabama in Genesee County.
Texas Gov. Greg Abbott made it official during a press conference Tuesday evening in which he said that in addition to local subsidy agreements, the state would provide a $27 million grant for the project.
Abbott, who was joined during the announcement by top Samsung executives, including the company’s Vice Chairman Kinam Kim, described the project as the “largest foreign direct investment in the state of Texas, ever.”
Analysts expected Austin to be selected for the project, in part because Samsung already has a plant there. On Tuesday, company officials said Taylor’s proximity to the existing Samsung plant in Austin was one of the reasons the city was chosen. Kim also cited government support and the “readiness and stability” of the local infrastructure as factors.
According to Jensen, the professor, the incentive deals approved by the Taylor City Council, surrounding Williamson County and the Taylor Independent School District also helped.
The Austin American-Statesmen reported last week that the Taylor Independent School District approved an incentive deal that would provide Samsung with $300 million in tax savings. That agreement followed prior approvals for incentive packages by both the City of Taylor and Williamson County that would provide Samsung with another $350 million in tax savings over 10 years.
Jensen said the timing of the Taylor deal allows Samsung to take advantage of a controversial incentive program called Chapter 313, which provides reductions in school taxes for businesses that increase based on the level of investment involved.
While the program was not reauthorized by the state Legislature earlier this year, Jensen said it can still be applied to the Taylor project, allowing the company to save as much as $300 million on that incentive alone.
“This is a huge incentive through 313, mostly because this is a huge investment,” Jensen said.
Jensen said it’s too early to tell just how large the incentives will total, but described them as “very generous” and “outside the norm” considering they offer tax breaks for 20 years.
“Most cities offer 10-year incentives and some of them are closer to 50 percent abated,” he said. “This is a huge dollar deal but Samsung also really pushed Taylor to the limit.”
Samsung will reportedly invest a total of $17 billion, including $6 million in buildings and another $11 billion for equipment, at the Taylor site. The project is expected to create about 10,000 construction jobs and 18,000 full-time positions once the plant is opened. Samsung expects construction to begin next year, with the plant opening in 2024.
U.S. Sen. Chuck Schumer, D-New York, and officials from the Genesee County Economic Development Center had hoped to lure Samsung’s chip plant to a 1,260-acre industrial site known as the Science and Technology Advanced Manufacturing Park in the Town of Alabama.
“Senator Schumer believes STAMP remains a leading site for companies looking to locate or expand in New York, as recently evidenced by Plug Power’s decision to build its new green hydrogen fuel production facility there. Sen. Schumer’s primary focus remains working closely with Genesee County and New York State officials to push companies that are actively considering STAMP to locate here,” said Schumer spokeswoman Allison Biasotti.
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The county’s economic development agency has so far invested more than $26 million in mostly state funds from the Buffalo Billion program to develop the site. For years, the site sat vacant before finally landing its first industrial tenant – a hydrogen fuel producer called Plug Power.
Last month, Plug Power broke ground on a $290 million hydrogen fuel production facility at the STAMP. As part of a development agreement with the Genesee County IDA, Plug Power has agreed to build a substation that officials say will help lure additional tenants to the property.
A spokesperson for the Genesee County Economic Development Center declined comment when asked about the Wall Street Journal report on Samsung’s decision, saying the agency “does not comment on the status or specifics of any company’s due diligence.”
