As Toyota considers which of its North American plants will get a multimillion-dollar investment in production technology, the City of San Antonio is lining up a $10.3 million incentive package to lure it here.
Ordinances drafted by the City’s Economic Development Department (EDD) outline a combination of tax abatements and infrastructure improvements intended to attract an added $392 million investment Toyota would make in its current manufacturing site on San Antonio’s South Side. City Council will vote on the incentive package next week.
“Toyota is one of the world’s most innovative companies and is a champion of San Antonio’s workforce and community development,” said Mayor Ron Nirenberg. “On May 30, the San Antonio City Council will vote on an incentive package for Toyota’s prospective San Antonio investment.”
The agreement calls for a tax abatement of 100 percent of Toyota’s property taxes for the next eight years and a Chapter 380 Economic Development Fund (EDIF) grant of up to $621,000 for water infrastructure improvements.
In exchange, Toyota will agree to spend as much as $392 million to expand existing buildings and enhance production lines and equipment over the next three years, use CPS Energy and San Antonio Water Systems exclusively for 14 years, and contribute $1 million to local education and workforce development initiatives over the next five years.
Toyota also would agree to retain its current employees, and pay all of its new and existing employees the City-mandated “living” wage of $12.38 per hour, and 70 percent of all new and existing employees the prevailing “all-industry” wage of at least $16.94 hourly.
Toyota and the 23 suppliers that have established facilities on Toyota’s Southside property together employ approximately 7,200 people at the project site.
In 2003, Toyota put $2.1 billion into establishing its manufacturing plant to build Toyota Tundra trucks in San Antonio. Seven years later, the Japanese automaker invested another $100 million to add a Tacoma production line. For that investment, the City and Bexar County each provided a 10-year, 100 percent property tax abatement.
In a memo to the Council, EDD Director Rene Dominguez wrote that the City estimates the proposed project would result in a net $8.1 million in tax impact from personal property taxes, real property tax, sales tax from related construction efforts, and CPS Energy revenues, in addition to the education and workforce development commitment.
The City’s return on investment to date for the incentives provided to Toyota in past years has netted approximately $25 million in fiscal benefit, according to Dominguez, and the City estimates the cumulative fiscal impact with the latest proposed investment through 2032 would total $83.4 million.
The ripple effect of Toyota’s presence in San Antonio has had an overall economic impact of $50 billion in the community, according to an analysis by economist Steve Nivin.
Toyota has a global workforce of 364,445 and operates manufacturing plants and research and development sites throughout North America. In March, Toyota company officials announced it would exceed a 2017 pledge and invest an additional $13 billion in its U.S. manufacturing presence in five states, although not Texas, but “with more to come.”
In May, President Donald Trump stated that the current level of imported automobiles and parts to the United States threatens to impair national security as defined in section 232 of the Trade Expansion Act of 1962. But the Japan Automobile Manufacturers Association, which represents Toyota and others, recently released a statement from its chairman saying its members were disappointed by that view.
“We now have 24 manufacturing plants, 45 research-and-development/design centers, and 39 distribution centers in 28 states, and have cumulatively invested approximately $51 billion in manufacturing facilities alone,” wrote Akio Toyoda. “These numbers speak for themselves about JAMA member companies’ long history of local contributions and commitment as U.S. corporate citizens, and we are certain that neither imported vehicles and parts nor our American operations ‘threaten to impair’ the U.S. national security.”