Austin officials will consider entering into an economic incentive agreement with semiconductor company NXP USA Inc., potentially clearing the way for the company to expand its local presence after a proposed tax abatement deal with Austin ISD stalled out last year.

What's happening

On Aug. 31, City Council members will vote to set a public hearing over a potential Chapter 380 economic development agreement between Austin and NXP.

The hearing could be held as soon as Sept. 14 and would be accompanied by a public comment period through the city's community engagement website beginning Sept. 8.

NXP is exploring both city and state incentives in Texas, including the potential support in Austin for a Chapter 380 agreement that would "enable future investments to modernize and create new capacity" at the company's local manufacturing sites, NXP spokesperson Paige Iven said.

"NXP’s pursuit of this investment incentive is critical in order to leverage the bipartisan CHIPS for America Act, which will provide funding for semiconductor manufacturers of all kinds to expand chip capacity in the United States," Iven said. "We are proposing a considerable near-term investment at our Austin manufacturing sites, conditioned on the receipt of incentives, with more details to come with time."

Carlos Soto, a spokesperson for Austin's Economic Development Department, said he couldn't provide more information on the possible agreement as of late August, citing the city's policy of not commenting on its economic development prospects. Soto said the city officials expect to release more details next month.

The framework

Under Chapter 380 of the Texas government code, cities can pursue certain economic incentive deals with companies doing business in the area.

The decades-old economic tool is one of several mechanisms available to companies and governments seeking to collaborate in Texas. Another, the Chapter 313 program related to school districts' property taxes, was replaced after it became a target for state lawmakers this spring following criticism of the system.

Chapter 380 agreements allow cities to offer loans, grants or other services to their chosen business partner to promote economic activity over many years. In return, the company would commit to creating additional jobs or providing other economic investments.

Austin maintains a handful of active Chapter 380 agreements, including deals with chipmaker Samsung Austin Semiconductor and the real estate firm behind The Domain shopping center, Simon Property Group. The city also had major previous agreements with companies such as Apple, eBay and National Instruments, which officials said led to the creation of thousands of jobs.

Austin's Chapter 380 policy, last updated in 2018, may be viewed here.

Austin most recently entered into Chapter 380 agreements with media company Eye Productions Inc. The process also came into focus at City Hall in 2021 as Samsung was shopping around its new $17 billion manufacturing plant, although that ongoing expansion eventually landed in Taylor.

The context

NXP is one of several players in the flourishing Central Texas semiconductor sector. The chipmaker operates manufacturing facilities in Oak Hill in Southwest Austin and off US 183 on the city's east side.

Throughout last year, NXP officials sought to solidify a Chapter 313 agreement with AISD for a proposed expansion in the area. Under that outline, the company would've gotten millions of dollars in tax breaks for new local facilities while providing the district with some additional funding and committing to job creation.

Following some public debate, the AISD board rejected NXP's proposal in a 5-4 vote last December. Some district officials and community members opposed to the agreement expressed concerns over the Chapter 313 program and the potential benefits for the district under the NXP plan.