Applied Materials starts $2B program incentives process in Hutto, may bring hundreds of jobs

A global supplier to the semiconductor sector is formally eyeing expansion into an Austin suburb — and the capital investment could top $2 billion capital while bringing more than 800 jobs to Hutto.

The Hutto Independent School District board of trustees on March 31 unanimously voted to accept an application for a Chapter 313 state-funded property tax incentives agreement with Applied Materials Inc. that would aid the construction of a research and development facility in the fast-growing but still small suburb northeast of Austin. Chapter 313 incentives can be used for new manufacturing and energy projects, although the program is currently slated to expire at the end of the year.

Hutto is just west of Taylor, another small suburb that has lured a huge Samsung Electronics Co. Ltd. semiconductor factory.

Sara Leon, an attorney for HISD, said during the meeting that the company’s investment would be exceed $2 billion and would be for a state-of-the-art research and development laboratory.

She added that the application requires a minimum number of jobs, which was listed at 25 jobs with an average salary of $69,000, but the project would create much more than that — including 7,000 construction jobs.

The application in Hutto marks the first public disclosure of the involvement of Silicon Valley-based Applied Materials (Nasdaq: AMAT), already a major employer in Austin, with a still-growing facility off U.S. Highway 290. Austin Business Journal reported in February that the company was eyeing the city for the project. The school board vote starts the process for the incentives application and still requires a formal review from the state comptroller, before returning to the board for another vote.

Chapter 313 allows a school district to cap the taxable value of a property between $10 million and $100 million for up to 10 years, for the portion of the property taxes it would receive for maintenance and operations. The tool has been used by several companies making massive investments in Central Texas, including the $17 billion Samsung chipmaking plant in Taylor and Tesla Inc.’s $1.1 billion facility rising in Travis County.

However, the Chapter 313 program is slated to end Dec. 31, 2022, because it was not reauthorized by the last state legislature, and companies are rushing to get applications approved before the deadline.

Leon said Applied Materials would invest an initial $80 million within a certain time period, after which the project’s valuation for HISD maintenance and operation taxes would be capped at $80 million for a further period of time. But full terms would be negotiated at a later date.

She added that benefits to the school district include tax savings coming from state, no loss of revenue and the fact that it would increase the district’s tax base.