Texas state and industry leaders have unveiled the $1.5bn Villa Muse mixed-use development that will break ground in East Austin, at the heart of which will be a $125m, 200-acre studio.

The Villa Muse Studios will serve the film, television and video game industries, and will be surrounded by architecturally diverse housing units that will accommodate approximately 8,500 residents and serve as a backlot for productions.

Phase One of the development is scheduled to open by the end of 2008 and will encompass the usual studio features including a 50,000 sq ft soundstage that supporters say will be the largest purpose-built soundstage in North America.

Amenities include an outdoor amphitheatre with a capacity for more than 70,000 people. Villa Muse executives estimate that the overall project will generate approximately 8,000 jobs upon completion. The announcement dovetails with what could well become a bright future for state production incentives in the wake of a recent vote by the Texas House of Representatives on House Bill 1634.

The Bill, which is awaiting approval by the State legislature, proposes to earmark a minimum of $20m from 2008-10 that will enable qualifying productions able to demonstrate fiscal activity and substantial revenue generation to apply for grants of up to $2m.

The Villa Muse project, backed by the Villa Muse consortium of business leaders and real estate developers Carpenter & Associates, will not receive funds appropriated by the Bill.

'Neighbouring states and foreign cities like Toronto are aggressively working to lure Texas filming opportunities away from the state,' State Representative and House Bill 1634 author Dawnna Dukes said. 'House Bill 1634 will level the playing field for our state in comparison to other film venues. We have made a grand investment in the future of Texas.'

'Providing incentives for the film industry will create new jobs and enhance the role of Texas as a national leader in television and film production,' Senator Bob Deuell, who sponsored the Bill, said. Deuell added that the Villa Muse project was 'a textbook example' of how the government could use state-funded incentives to promote private industry for public benefit.

'Villa Muse will address the needs of our thriving creative industries in Texas, while attracting business that has been out of reach and forced to go elsewhere,' Jay Aaron Podolnick, founder and chief executive officer of Villa Muse, said. 'Meanwhile, Villa Muse will give Texas a centralised location where creative talent can come together to cross-pollinate and communicate in a uniquely innovative