Samsung says it will build $17B chip factory in Texas

[Enghum]

Due to the high property taxes in Texas one of these types of plants doesn't really make sense being located in Texas so these types of deals are necessary but hard to pinpoint where fair is. The tax breaks seem huge in comparison to similar projects but other similar projects don't have the most sophisticated equipment in the world being installed. Property taxes include all manufacturing equipment within the facility and not just the facility itself. Compared to the Tesla factory this factory will have 3 times less employees but costs 15 times as much. (Tesla's investment and employee counts are underreported and outdated but I used the published numbers for estimates)

You can look at it the other way around in that you're generating $1.7 billion in taxable property value and only having to serve 2,000 jobs worth of costs. $1.7 billion in taxable value is worth ~$7.8 million a year in taxes for Williamson County.

That being said, there really are not as many knock off effects of a chip fabrication plant vs a car manufacturing plant. Cars are big bulky part filled machines that take a lot of outside coordination to get from raw material to a delivered product. Chips will largely start and end within the Samsung facility so there will be little associated facilities to tax to make up for short taxing the Samsung facility.

These are also not places you want to live near. The processes used to manipulate atoms into wafers of billions of transistors include some of the nastiest chemicals you can imagine as well as massive power requirements. If you look at the existing Samsung plant in Austin you'll notice that even though it's relatively well located there isn't really that much development around it. That's changing now with high price of land but the Samsung Plant combined with the large landfill a couple miles away created a dead zone of development in that part of town.

As far as the effects of what gets built around the new plant sprawl is going to sprawl. There's really not much else you can do in that area. No one is going that far north and asking where they can find nice townhouse in a walkable neighborhood. Hutto will be the most affected and Round Rock will get a lot of the demand as well. My guess would be that Taylor continues to see the least amount of development. All things equal developers were already building at full capacity. Austin metro is extremely labor constrained right now so this doesn't really affect much. Everyone will continue to build as much as possible.

Interesting links if you want to look at the infrastructure plans for the area. The county can barely keep up with road planning and construction before development leapfrogs it and gets in the way of the little planning that is able to be done.

Williamson County Long Range Road Plan
https://www.wilco.org/language/es-mx...portation-Plan

Hutto Thoroughfare Plan
https://www.huttotx.gov/DocumentCent...lan-PDF?bidId=

[Shawn]

Originally Posted by austlar1

Well, if any of those outfits want to invest $17 billion locally, they'd probably get some serious consideration. Keep in mind the Samsung project is going up on UNDEVELOPED acreage in a far ex-urban location. This is land that is not throwing off much tax revenue at present...

I keep forgetting that large parts of the country have unincorporated land at all, let alone within a metropolitan area. So where do taxes collected from properties in unincorporated Texas go? Is there a county-level public school district situation going on?

[Enghum]

Originally Posted by Shawn

I keep forgetting that large parts of the country have unincorporated land at all, let alone within a metropolitan area. So where do taxes collected from properties in unincorporated Texas go? Is there a county-level public school district situation going on?

Almost as many people live in the unincorporated parts of Harris county than in the city of Houston proper.

School districts are their own separate entities and have their own separate taxing authority. Borders overlap or cut through different cities and counties.

Example taxing authorities for an unincorporated home in Harris County. Each has its own tax rate and property value exemption. Appraisals and collections are done by the county and distributed to the separate entities.

KLEIN ISD
HARRIS COUNTY
HARRIS CO FLOOD CNTRL
PORT OF HOUSTON AUTHY
HARRIS CO HOSP DIST
HARRIS CO EDUC DEPT
LONE STAR COLLEGE SYS
HC EMERG SRV DIST 16
6HC EMERG SERV DIST 11
SPRING CRK FOREST PUD

[llamaorama]

And here we have exhibit A on how a "low tax" state actually works....

God forbid people pay taxes based on a fair share of their income, which will never leave you owing more than you can pay in normal situations. No, small government means we should extract a large proportion of public funds using a regressive method that can go up even when your money goes down and cause you to lose your house. Great plan, great plan. /s

[austlar1]

Originally Posted by KevinFromTexas

The whole east side of the metro is a clusterphuck. I babysat my sister's kids out in Del Valle over the weekend so my sister and brother in law could go see Ghostbusters Afterlife, and we had forgotten that weekend was the weekend of the Rolling Stones concert at COTA. The traffic was absolutely insane. It looked like everyone in the city was trying to get out. We passed a CapitolMetro bus that was standing room only.

I've also had my fill of cookie cutter suburbs for a while. They're sold their house in Del Valle and are building a new one in Cedar Creek, but right now they're renting while it's being built. While their old house was actually pretty nice, the yards were tiny, there were no trees, the HOAs are Nazis, and the neighborhood is pretty blah. I spent several nights over the last month there spending the night, and during the day while also staying there, I felt like was on a deserted island or a small patch of green in the desert. It's very isolated - being a few miles east of the airport. The rental house they're in now is downright awful. On the first night of helping them move in, my brother in law said he already hated it. That place has a decent yard, though, those places have horrible drainage because of the clay like soil, so it basically floods your yard when it rains hard. It's clear to me that developers are just throwing up thousands of houses with little thought about the fact that people and families will be calling them home. Imagine a neighborhood where you have to drive to and from it to the city every day, the street is narrow, the driveways short and the yards narrow, so that even if you do have more than 1 car, you'll barely have room for it in front of your house, and anyone who is visiting will likely have to park down the street. What's interesting is, that house sits on a dead end street that overlooks a field and vacant land that continues on for 8 to 10 miles until you get to Cedar Creek.

That land won't be vacant for long. I agree that those Del Valle houses near COTA are pathetic. Lots of the homes over in Manor are similarly dreary and isolated. Other subdivisions are not quite so terrible and once the trees grow in a decade or three, they might even look halfway attractive. Still, if you are a double income family with a combined income of $150K or less (think new hires at Tesla, etc.), where else are you going to find a home that you might be able to afford?

[dave8721]

Originally Posted by Shawn

I keep forgetting that large parts of the country have unincorporated land at all, let alone within a metropolitan area. So where do taxes collected from properties in unincorporated Texas go? Is there a county-level public school district situation going on?

In Miami-Dade County, it was just a couple of years ago that the unincorporated population dropped below 50% of the counties population. In Florida school systems are run by Counties (as is transit, and many other functions). Cities do things like zoning, police..etc. In Unincorporated areas, the County provides those services directly. I actually live in Unincorporated Miami-Dade County. Miami-Dade has Unincorporated neighborhoods with 25+ story buildings and 25-30k people per square mile so its not a rural thing.

[mhays]

In the cost/benefit discussion, it's worth wondering how much of the $17 billion is construction vs. owner-supplied equipment. Construction would tend to be more locally-impactful than equipment simply shipped in and installed. (It's huge regardless of course.)

Actually you could break it into three categories, with the first one having most of the local benefit:
1. Work scopes built and installed locally or onsite.
2. Components in the construction scope produced elsewhere and installed onsite.
3. Components not in the construction scope produced elsewhere and installed onsite.

I say "benefit" loosely. Maybe "economic impact" would be better. A big exurban plant that contributes to sprawl and doesn't pay its fair share of taxes would be controversial at best.

"Economic impact" is also problematic because the term tends to be tied to questionable claims made to sell questionable deals to unquestioning people.

[austlar1]

Originally Posted by mhays

In the cost/benefit discussion, it's worth wondering how much of the $17 billion is construction vs. owner-supplied equipment. Construction would tend to be more locally-impactful than equipment simply shipped in and installed. (It's huge regardless of course.)

Actually you could break it into three categories, with the first one having most of the local benefit:
1. Work scopes built and installed locally or onsite.
2. Components in the construction scope produced elsewhere and installed onsite.
3. Components not in the construction scope produced elsewhere and installed onsite.

I say "benefit" loosely. Maybe "economic impact" would be better. A big exurban plant that contributes to sprawl and doesn't pay its fair share of taxes would be controversial at best.

"Economic impact" is also problematic because the term tends to be tied to questionable claims made to sell questionable deals to unquestioning people.

Applied Materials has a large operation in Austin, and they would almost certainly be one of the local firms supplying manufacturing materials and equipment to Samsung. They are located not too far south of the present Samsung fab in NE Austin. Of course, Applied Materials would probably be a supplier to this project no matter where it was constructed in the US, but the Austin connection is not to be overlooked.

With regards to other economic benefits to local workers, I can only offer anecdotal experiences related to me by two young friends, one an apprentice union electrician and the other an apprentice union pipe fitter, back when the first Samsung factory was constructed here in Austin. It was, at the time, the largest commercial construction project ever undertaken in Austin. My young friends worked, often seven days a week, on that project for almost two years. They racked up very lucrative time and a half and even double time earnings that allowed both of them to accumulate down payment money on their first homes here in Austin. The windfall earnings from that four billion dollar project helped a lot of workers either achieve that middle/working class dream or hang on to it at a time when Austin was just digging out from the dotcom crash of the early 2000s. Admittedly there is a huge construction boom underway in the Austin area at present, and the Samsung project won't have the same booster shot impact that the 2005 project had on the local economy. Still, it seems likely that as many as 10,000 workers will be involved in the construction process for the new Samsung project. They won't all be on site at the same time, but that is the number projected to become involved at some point in the construction process. There is no way around it. That adds up to a lot of benefit to local workers and the local economy.

[SFBruin]

Originally Posted by mhays

"Economic impact" is also problematic because the term tends to be tied to questionable claims made to sell questionable deals to unquestioning people.

I agree that economic impact is the right way to look at it.

[mhays]

10,000 construction workers? Even the project apparently claimed 6,000 or whatever. A small fraction would be onsite at a given time, if they're onsite at all.

As I've discussed above, that apparently includes the supply chain and a lot of very short-term scopes, whether it's one of the dozens of trades cycling through or in factories. Maybe it's only the local supply chain.

[austlar1]

[QUOTE=mhays;9461371]10,000 construction workers? Even the project apparently claimed 6,000 or whatever. A small fraction would be onsite at a given time, if they're onsite at all.


Have it your way. The 6,000 workers sounds more likely, and I can practically guarantee you that for most of the construction period there will be at least a few thousand on site on any given day. They aren't throwing up an Amazon warehouse out in Taylor. This thing is going to be both huge and incredibly complex. It won't build itself.

[AviationGuy]

Originally Posted by KevinFromTexas

The whole east side of the metro is a clusterphuck. I babysat my sister's kids out in Del Valle over the weekend so my sister and brother in law could go see Ghostbusters Afterlife, and we had forgotten that weekend was the weekend of the Rolling Stones concert at COTA. The traffic was absolutely insane. It looked like everyone in the city was trying to get out. We passed a CapitolMetro bus that was standing room only.

I've also had my fill of cookie cutter suburbs for a while. They're sold their house in Del Valle and are building a new one in Cedar Creek, but right now they're renting while it's being built. While their old house was actually pretty nice, the yards were tiny, there were no trees, the HOAs are Nazis, and the neighborhood is pretty blah. I spent several nights over the last month there spending the night, and during the day while also staying there, I felt like was on a deserted island or a small patch of green in the desert. It's very isolated - being a few miles east of the airport. The rental house they're in now is downright awful. On the first night of helping them move in, my brother in law said he already hated it. That place has a decent yard, though, those places have horrible drainage because of the clay like soil, so it basically floods your yard when it rains hard. It's clear to me that developers are just throwing up thousands of houses with little thought about the fact that people and families will be calling them home. Imagine a neighborhood where you have to drive to and from it to the city every day, the street is narrow, the driveways short and the yards narrow, so that even if you do have more than 1 car, you'll barely have room for it in front of your house, and anyone who is visiting will likely have to park down the street. What's interesting is, that house sits on a dead end street that overlooks a field and vacant land that continues on for 8 to 10 miles until you get to Cedar Creek.

I would certainly never live in East Travis County. Sorry to hear about your sister's location. I think it's fair to point out that there are some very, very nice subdivisions in the Austin area, but few in East Travis County (if any). The nice ones used to be fairly affordable, but of course they are not anymore. Even the shitty developments are expensive. And condos/townhomes have ridiculous prices plus monthly fees that are so high that you have to have a high income. I keep telling people to never, ever buy sight unseen, but it's happening. Also, many people aren't doing their homework and are not anticipating the high property taxes. And if they are unfortunate enough to buy into a subdivision in a M.U.D. district (very common in the burbs here), they're looking at even higher taxes. A friend of mine bought a $400K house on the west side and was paying $10,000 a year in property taxes, and that was a couple of years ago. He lives in a M.U.D.. His property value is increasing rapidly, and so are his taxes. His property is valued at about $600K now, and still increasing, and it's just a surburban house. Nice development, though.

[mhays]

[QUOTE=austlar1;9461381]

Originally Posted by mhays

10,000 construction workers? Even the project apparently claimed 6,000 or whatever. A small fraction would be onsite at a given time, if they're onsite at all.

Have it your way. The 6,000 workers sounds more likely, and I can practically guarantee you that for most of the construction period there will be at least a few thousand on site on any given day. They aren't throwing up an Amazon warehouse out in Taylor. This thing is going to be both huge and incredibly complex. It won't build itself.

Based on what? You don't seem to have a construction background, and your claim is pretty outlandish. A project that claims 6,000 would peak in the hundreds onsite based on some ratios from projects I've been involved with.

[austlar1]

[QUOTE=mhays;9461614]

Originally Posted by austlar1

Based on what? You don't seem to have a construction background, and your claim is pretty outlandish. A project that claims 6,000 would peak in the hundreds onsite based on some ratios from projects I've been involved with.

Let me get back at you with that after I question my friend who worked on the first Samsung project for over a year back around 2005 or 2006. This project is supposedly four times the size of the original build, so we can maybe extrapolate from that.

UPDATE- Just got text from my buddy. He worked on the construction of Samsung Fab1 and Fab2 back in the period 2005 to 2008. Fab1 was a 4 billion dollar project. Fab2 was built immediately on the heels of Fab1 with a substantially larger budget. My friend said that once the shell of the new building is up, the site will be teeming with electrical workers, pipe fitters, and HVAC crews. His firm, Dynamic Systems Inc., had over 1,000 workers (almost all of the plumbing for every aspect of plant operation) on site during the Fab2 build. They had almost as many on site during Fab1 build. My friend estimates that there were overall 2,000 to 3,000 workers on site at peak during the build out for Fab2. Work went on 7 days a week. Samsung did not seem to balk at paying these union workers time and a half and double time in order to speed completion of the projects. I am not making these numbers up. They come from someone who was on site during the original Austin build outs. It seems reasonable to conclude that at least as many workers, and probably a whole lot more, will be on site during the build of this giant project in Taylor.

[mhays]

We must be talking apples and oranges. If the onsite count is 6,500 total (no supply chain), I can believe up to 3,000 on peak days, mostly on a peak shift. The campus will be large enough that trades will be able to overlap quite a bit. But I don't believe it if the figure includes every guy who makes a widget or delivers a few truck loads.

PS, the $20 billion Intel Phoenix chip plant project project claims 3,000 construction jobs, without context.

[austlar1]

Originally Posted by mhays

We must be talking apples and oranges. If the onsite count is 6,500 total (no supply chain), I can believe up to 3,000 on peak days, mostly on a peak shift. The campus will be large enough that trades will be able to overlap quite a bit. But I don't believe it if the figure includes every guy who makes a widget or delivers a few truck loads.

PS, the $20 billion Intel Phoenix chip plant project project claims 3,000 construction jobs, without context.

I think the 6,500 figure almost certainly includes (local?) supply chain numbers, many of whom may or may not ever be on site. I am pretty confident that my friend's estimate regarding the earlier projects is accurate, and based on those earlier numbers, it is safe to figure at least 2,000 to 3,000 workers on site on a daily basis for much of the construction period.