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July 24, 2016

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Carmaker securing $75 million bond to insure state investment

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Courtesy Faraday Future

Rendering of planned Faraday Future auto plant in North Las Vegas.

Updated Thursday, March 3, 2016 | 2:49 p.m.

Faraday Future Concept Vehicle

Faraday Future's concept vehicle FFZERO1 is unveiled at an event before the start of the Consumer Electronics Show on Monday, Jan. 4, 2016, in a parking lot across the street from the Luxor. Launch slideshow »

Electric car manufacturer Faraday Future has promised to secure a $75 million bond to cover the state’s investment in infrastructure improvements for a manufacturing plant it is building in North Las Vegas.

The bond assurance comes as the state treasurer has raised concerns about the financial stability of the company, though the Governor’s Office said discussions on the bond predate those concerns.

State statues require Faraday to secure state investments in infrastructure projects for the plant in the form of performance bonds, actual expenditures or commitments to make expenditures on their project, or other securities.

Still, after taking a trip to China, Treasurer Dan Schwartz raised concerns about the state investments in the event the company goes belly up.

State officials, however, have long insisted adequate provisions were built into the legislation that made the Faraday deal possible to safeguard the state.

In a letter dated Wednesday to state Director of Economic Development Steve Hill, Faraday said it would secure the $75 million bond, which will be released back to the company when it has built 1.5 million square feet on the site and generated revenue from electric vehicles built at the facility.

The company also promised to open an escrow account of about $13 million to provide funding for engineering plans and, potentially, construction of other utility and public safety facilities near the site.

“We look forward to bringing our $1 billion investment to your great state of Nevada and to positively contributing to the further growth of the state’s economy,” Faraday Vice President of Global Manufacturing Dag Reckhorn and Director of Finance Dave Wisnieski said in a statement.

The company’s assurances to the state come at a time of particular scrutiny for Faraday.

Faraday’s battery engineer recently quit, according to a Guardian report last week, and construction has not yet begun at the site. The company has started clearing land but has not yet broken ground.

But in a letter to the company today, Gov. Brian Sandoval praised Faraday for moving quickly.

“It is exciting to see how quickly you have progressed since receiving approval from the board of the Governor’s Office of Economic Development just a few weeks ago,” Sandoval said. “The speed at which you are moving forward with your operation is a clear sign of the seriousness of your investment in our state and this facility.”

The board approved $215.9 million in tax incentives for the car company in January, after the state Legislature created the structure for the incentives at a special session in December.

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