Samsung Makes Its Pick: The inside story of the huge deal in a tiny town

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Williamson County

Published on

Nov 30th, 2021

The first inkling for Williamson County Judge Bill Gravell that a multibillion-dollar economic development project was interested in his patch of Central Texas came as he was celebrating his 37th wedding anniversary.

Gravell and his wife were eating dinner on Jan. 4 at Paw-Paw’s Catfish House in Bastrop, he recalled, when his phone rang. On the other line was a consultant for an unnamed company who asked if any Williamson County cities would be interested in competing for an unnamed project, which would create a large number of jobs.

“He was very clear, and he said there are other places in the state and around the world that have been working on this for a year,” Gravell recalled being told, “and you’re in last place.”

The anniversary dinner ended then and there: “We knew that we had to respond with lightning speed to even be considered.”

Not long after, it was revealed that Samsung Electronics Co. Ltd. was scouting the world for the location of its next-generation chipmaking plant, a $17 billion project that would employ at least 1,800 people.

After 10 busy months, it was announced Nov. 23 that the South Korean tech giant had picked the small city of Taylor for the massive project. It beat out other finalists, including Austin, Phoenix and upstate New York. Construction is expected to begin next year, with the factory up and running in late 2024.

With the decision finalized, those who have worked quietly behind the scenes to win the project for Taylor offered Austin Business Journal an exclusive glimpse into how they landed one of the largest foreign investments in U.S. history. Regional leaders said it was a challenging process with myriad complications, including pulling off secret in-person and overnight Zoom meetings with South Korea-based Samsung executives and creating competitive incentives packages.

“The last nine months has been the most mentally exercising event I’ve ever been a part of in my life because some of the problems were large,” Gravell said.

Multiple candidates
Moments after Gravell ended that first call, which was with a land broker from Jones Lang LaSalle Inc., he reached out to the Williamson County Economic Development Partnership — a coalition of the county’s economic development leaders — to ask if anybody wanted to put in a bid. They were given 36 hours.

Two cities responded: Taylor and Leander, both north of Austin.

Cameron Goodman, Leander’s director of economic development, said the city wanted to throw its hat into the ring because of the size of the investment and the number of jobs promised. After learning it was Samsung, the company’s reputation intrigued city officials even more.

Samsung has a 2.3-million-square-foot factory in North Austin, where it has already invested $17 billion over the past 25 years. The factory supports 10,000 jobs, including roughly 3,000 Samsung employees. The company has also crafted a reputation locally for being an upstanding corporate citizen that supports education efforts through tutoring, partnerships with Austin Community College and donations.

“When you look at the scope of a project of that size, it’s very interesting because the impact it could have on your local economy,” Goodman said. “Pretty quickly on, more details became clear that it was going to be one of the biggest projects in the nation’s history.”
The company was also interested in Leander, Goodman said, because of its infrastructure and workforce. But the project scope quickly grew to more than 1,000 acres, and Leander, which is among the fastest-growing cities in the country in terms of population, didn’t have the available land to spare. They were eliminated in late January.

After that, all the county’s attention turned east to Taylor.

Mayor Brandt Rydell said the scale of the project was enough topique the city’s interest. Samsung’s reputation was also an important factor.

“It certainly seemed like an incredible — literally an incredible — project to be involved with. … It was almost too incredible to believe,” Rydell said. “We’re talking about a $17 billion investment in a community. It just seemed like, given the opportunity to compete for a project like that, we in Taylor felt we’re going to put our best foot forward and see what happens.”

Taylor’s population in 2020 was 16,267 people, according to U.S. Census Bureau data. Samsung is expected to have a transformational effect on the economy, which in the middle of the last century was the thriving hub of agricultural production in eastern Williamson County. But Taylor has largely missed out on the tech-fueled boom of the Austin metro in recent decades.

“For the last 30 years, it’s been completely decimated. It’s been more of a ghost town. Not seeing people interact has been a real sad change,” Wayne Mueller, the third-generation owner and pit master at Louie Mueller Barbecue on West Second Street, previously told Austin Business Journal.

Now Taylor will be catapulted to the cutting edge of global semiconductor production at a time when the world is facing a shortage of chips used in everything from cars to home appliances to computers.

Making their pitch
About a month later, Williamson County and Taylor officials made their first in-person pitch, almost literally.

The local leaders learned that Samsung owned a professional baseball team in South Korea called the Samsung Lions, part of the country’s premier KBO League. Gravell said they called the Round Rock Express and asked if they could use Dell Diamond for their first meeting with Samsung.

“We said sure, of course,” said Reid Ryan, CEO of Ryan Sanders Sports & Entertainment, which runs the Express.
On Jan. 27, Williamson County and Taylor officials met the Samsung execs at the front gate of Dell Diamond. Gravell recalled escorting their guests to the field, where they were presented with Express jerseys baring the name “Samsung” and the No. 21. They were shown a video on the big screen featuring U.S. Sen. John Cornyn, R-TX; Jim Schwertner, a local rancher who owns 20,000 acres between Taylor and Hutto; Todd Nelson, CEO and owner of Kalahari Resorts, which has a hotel and water park in Round Rock; and Shin-Soo Choo, a South Korean professional baseball player who recently played for the Texas Rangers, the Major League Baseball affiliate of the Express. That was followed by a daytime fireworks show, Gravell said.

A formal presentation followed in the stadium’s Intel Club, though the two sides were still talking baseball. One topic of conversation were the ballplayers who had played or coached in both the U.S. and South Korea, including Trey Hillman, Chan Ho Park and Hank Conger. Before the Samsung execs left, they were presented with a Taylor High School Ducks football helmet. An executive was spotted carrying the helmet underneath his arm as he boarded the plane home.

Gravell said the reason they made an impression on the company was “because we did it as a family,” leveraging their regional partnerships. Kalahari Resorts hosted the company representatives and allowed them to use the convention center. Members of the Express did everything for free, Gravell said, outside of being reimbursed for the jerseys by the Taylor Economic Development Corp.

“As a proud member of the Williamson County community, Kalahari Resorts and Conventions is dedicated to the continued growth and vitality of the area. We welcome any opportunity to help showcase all the reasons a business should call Williamson County home,” Nelson said in a statement.

Ryan said his organization “made sure we did whatever we could do to help,” adding that they feel it’s important for the team be active in the community.

Avoiding ‘no’
From there on out, the brunt of the work was handled by three people: Gravell, Rydell and Williamson County Commissioner Russ Boles, whose precinct includes Taylor.

The trio spent at least one hour a day, and sometimes more than 10, working on the project. There were national and international meetings in the middle of the night via Zoom or phone, and in-person tours at Samsung’s North Austin facility. They kept the group as tight as possible to keep the project quiet, only bringing in others when they encountered problems.

“From the very first day, I said, ‘We don’t say ‘no.’ We always work toward ‘yes,'” Gravell said. “That doesn’t mean you give away everything. It just meant every problem has a solution.”

The first issues they overcame were the basics: land, water and electricity. Samsung needed at least 1,200 acres for a 6-million-square-foot facility, which also requires an enormous amount of electricity and water.

Taylor had the land and is also in the utility area of Oncor Electric Delivery Co., which is Texas’ largest transmission and distribution electric utility. But water issues are always at the forefront for the region, and local officials didn’t want to take resources away from residents. County and city leaders ultimately connected Samsung with a division of Canada-based Epcor Utilities Inc. to funnel millions of gallons of water into Williamson County from neighboring Milam County.

“I think they were pleasantly surprised at how well-positioned the city and our team was to take on something of this magnitude,” Rydell said of Samsung.

At one point, they thought the project was dead, Gravell said, recalling that the construction cranes needed to build the facility would violate Federal Aviation Administration limitations at the nearby Taylor Municipal Airport. The problem was solved after they connected with the office of U.S. Rep. John Carter, R-TX 31, to secure the necessary waivers, Gravell said.

Then there were the roads. Plans to connect Taylor to Hutto via a road called the Southeast Loop had only been partially funded by a bond, and they needed more money for road infrastructure. So they reached out to Gov. Greg Abbott’s chief of staff, who said all resources were available at the highest level, Gravell said. The state committed $67 million while Samsung is writing a $6.3 million check to help with the roads.

“That’s just an example of the city, the county, the state and the federal government actually working together to solve the problem,” Gravell said.

Of course, all this was accomplished during a pandemic. And when winter storm Uri hit in February, the county turned its attention toward that emergency. Officials were busy clearing roads of snow, setting up shelters for those without electricity and canning water at a local Taylor brewery to get it to those in need.

That was the turning point, Boles said, adding Samsung was impressed by how they juggled everything at once.

“I think as a community, Taylor showed exactly who they are,” Boles said.

Winning with incentives
During the discussions, Samsung officials made it clear that incentives would be an important factor in the decision. It was the sweetener for the deal and the factor that, ultimately, established Taylor as the leader in the search, as the only locale to publicly approve agreements.

It is customary for governments to give economic development projects codenames. During one of their calls, Gravell said he was talking to Boles when he told his golden retriever, named after Sir Winston Churchill, to sit. That spurred the name Project Winston.
“It was our way of letting us know that it was personal and to stay after it,” Boles said.

Other entities also began working on incentives. Taylor Independent School District named its proposal Project Colin after the superintendent’s son. It was Project Spring for the City of Taylor, which was the same project name used for an incentives discussion in the Phoenix area.

In September, both the city and county approved property tax abatements for Samsung, plus other perks. Williamson County officials approved 20 years of property tax abatements that start at 90%, later dropping to an 85% rebate. The city of Taylor approved abatements beginning at 92.5% of Samsung’s property taxes, falling to 85% over the course of 30 years.
Taylor ISD approved its agreement with Samsung in November, which could lead to $292 million in tax savings for the company over a 10-year stretch. In addition, the facility is eligible for a grant of up to $27 million from the Texas Enterprise Fund, the state’s deal-closing incentives fund, it was announced Nov. 23.

Incentives are also possible from the federal government.

Rydell noted that the project will have a tremendous economic impact on Taylor — pulling in businesses that want to be near the factory, and boosting activity for existing businesses — which made city officials comfortable offering incentives.

“We took a more holistic view of what something like this could do for Taylor and beyond. The council was very comfortable making the proposal that they did,” he said.

Gravell said the county was more than comfortable offering incentives. He said the average property tax revenue per acre on the property is currently about $1. Even with the incentives, the property taxes on the Samsung factory would bring in $3.2 million annually, the county judge said.

“We weren’t trying to beat other places with incentives, we were trying to beat everyone with our team,” he said.

Boles added that there could be as many as 2,000 supplier and contractor jobs created from Samsung’s project, whether on-site or at nearby facilities.

Gravell said another benefit is the impact on national security.

The worldwide chip shortage is affecting companies in industries from auto manufacturing to smartphone production, and it isn’t expected to ease anytime soon. About 90% of chips are made outside of the U.S., and federal officials are working to incentivize the creation of domestic fabrication facilities.

“I want it to be made in the USA,” Gravell said. “I want the next disaster, the next war, the next time of unrest, to know the most advanced microprocessing chip in the world will be made in Williamson County, Texas.”
As Samsung considered its options for 10 months, all three men joked that they couldn’t go out anywhere without getting asked when a decision would be made.

Reaching the end
Goodman, the economic development director in Leander, said there are no hard feelings despite a nearby city getting the project instead.

“Ultimately I think we take a regional approach in economic development. … I still think it’s going to be beneficial for all of Williamson County — even Austin. It helps cement the status of

Williamson County as a technology and manufacturing leader. I think all that benefits that come with that will only benefit Leander,” he said.

Now that Samsung has picked a factory location, the real work is just beginning.

The city will soon start work on water and road infrastructure. Boles said the first task is to assign a construction contract for a road they want to build for Samsung.

“The first thing I’m going to do is get to work,” he said.

They also plan on reaching out to companies that share the same values as Samsung, Gravell said.

“I would tell you that currently the land between Hutto and Taylor could be some of the most sought after land in the world. I can tell you that Williamson County is no longer playing on the state level or national level. We are recognized around the world,” he said.

On a personal level, Gravell said once the announcement came, he and his wife were planning to head back to Bastrop for dinner.

“I dropped her like a hot potato to work on this,” he said. “We’re going to celebrate our anniversary dinner and I’m turning off my phone.”

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