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November 12, 2018

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Lance Gilman’s $43 million Tesla payoff has believers — and critics

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Kyle Roerink

Lance Gilman is the developer who helped Nevada land Tesla Motors. Gilman and his partners gave Tesla nearly 1,000 acres for free. In return, the state promised to build a road connecting I-80 and U.S. 50. The roadway, USA Parkway, runs through Gilman’s Tahoe Reno Industrial Center, home of Tesla and 166 other businesses. Critics say Gilman and his partners are the main beneficiaries of the road. Supporters say it will reduce traffic and allow easier access to the industrial center for residents of Silver Springs, Stagecoach and Carson City whose companies are based on Gilman’s property.

More often than not, Lance Gilman is in a cowboy hat.

“I feel naked without it,” he said. “I’ve always worn a hat, and I always will. Maybe they will bury me in one.”

But Gilman, 70, always takes off his hat for Gov. Brian Sandoval. And for reasons that go well beyond common etiquette, both men have good reason to tip their caps to each other.

The Nevada Department of Transportation board, of which Sandoval is a member, approved $43 million in October for a project that will help reimburse Gilman and his partners for building USA Parkway, the transportation corridor of Gilman’s Tahoe-Reno Industrial Center.

The money will pay for improvements to the existing six-mile stretch of USA Parkway and buy land from Gilman and his partners so NDOT can extend the road by 12.5 miles. When completed, the work will connect Interstate 80 to U.S. Highway 50 and help traffic flow more smoothly in the greater Reno-Sparks area.

In addition, the board approved $70 million for other construction costs related to the project.

Proponents of the project say it’s aimed at reaping Nevada’s economic development potential and was fueled by Tesla’s decision to build its $5 billion battery gigafactory at the TRIC. Gilman played an instrumental role in landing Tesla, which became a political triumph for Sandoval — proof that the state could attract a major employer under his watch.

But critics say the road project is a boon for Gilman and bust for the state.

•••

Gilman is a tenacious Storey County commissioner, a multimillionaire and real estate tycoon known for owning a brothel and developing TRIC, the world’s largest industrial park.

The state’s $1.3 billion deal with Tesla wouldn’t have happened if it weren’t for Gilman and his two partners: Don Roger Norman and William Roger Norman.

Free of charge, they dished Tesla nearly 1,000 acres to build its factory at TRIC. That set off a chain of events that led to the funding from the state, giving Gilman and his partners something they’ve wanted for more than 15 years: a completed, state-funded USA Parkway.

In the early 2000s, Gilman lobbied lawmakers in Washington D.C. and Carson City for it. He lobbied so hard in 2001 that former state Sen. Mark Amodei wrote a resolution urging the state to contribute money to the road.

But Gilman didn’t get it.

Instead, Gilman and his partners invested more than $60 million of their own money to build part of it themselves. More than 5,000 trucks and other vehicles access the six-mile, four-lane road every day. After NDOT finishes its work in 2017, USA Parkway will be a state-maintained road that carries Tesla batteries to the rest of the world.

Gilman got the state payoff because Tesla was a convincing anchor tenant. The company’s namesake and futuristic polish promised the arrival of more blue chip job creators and government revenue generators. Since mid-September, Gilman said he’s lined up at least 10 big-name companies vowing to make a home at the industrial park.

“People are sitting around saying, ‘Good Lord this is something,’” Gilman said. “I’ve been telling them that for 10 years.”

Gilman was willing to give a bargain for the road.

Along with giving Tesla free land, Gilman said he offered a “substandard price” for the land that will be used to extend USA Parkway.

The state granted Gilman and his partners around $4 a foot to extend and improve the existing roadway. Other property at his industrial center is going for up to $12.50, he said.

NDOT Director Rudy Malfabon said the project will collectively benefit Gilman and Nevada.

“We can’t argue the developers from the industrial center are going to have some money in their pockets,” he said. “But they did take the risk at building the center in the first place.”

At the NDOT board meeting in October, Sandoval said there was a “critical need” for the state to finish USA Parkway.

“It will reduce commute times,” Sandoval said. “And I don’t want to underestimate that in any way for the individuals that are going to be working out at TRIC. It means something to be home for dinner… It means something not to be sitting in your vehicle for hours upon hours.”

•••

Gilman is cowboy nouveau.

He is a crafty businessman who’s calculated million-dollar deals on napkins. He built a Harley Davidson store. He bought a brothel on Ebay.

During an October interview, he wore a round-brimmed cowboy hat, gold rings, pleated jeans and a gray blazer with a fiery plaid shirt.

His office is 20 minutes away from downtown Reno and in commercial space on USA Parkway, which snakes through the industrial park. Businesses like Wal-Mart, FedEx and PetSmart have operations in the crevasses of the voluptuous Sierras that pop up from the floor of TRIC.

Gilman’s office is laden with maps. They lay on a conference table, stand on an easel and hang on walls. They demarcate cartographic views of the Western U.S., Nevada and — most importantly — local roadways.

As he sat at the table, Gilman used them to explain why USA Parkway was more than a windfall. Behind him, a steady flow of semi trucks rolled on the road.

Supporters of the USA Parkway expansion say the incomplete roadway creates a bottleneck of traffic that permeates throughout the state.

NDOT says the completed project will benefit the 30,000 daily drivers who use I-80 and U.S. 50 by reducing emissions and decongesting arterial roadways. The roadway will save time for employees who work in the industrial center and live in Stagecoach, Yerington, Dayton and Carson City, allowing them to cut I-80 out of their commute, according to NDOT.

Currently, I-80 is the only way to access the industrial center. Without the parkway there’s no direct way to travel north-south on U.S. 95 toward Las Vegas, Los Angeles or Phoenix. Truckers and employees have to drive dozens of miles east or west before entering the roadway. USA Parkway will spit drivers headed south from the center onto U.S 50, which is a few miles from from U.S. 95.

“That’s why we’ve been trying since 2000 to get the damn road built,” Gilman said.

Critics of the project don’t doubt Nevada will benefit from the road. But considering the size of his taxpayer-sponsored payoff, they question if Gilman’s play was rooted in altruism.

The state got “snookered” on this deal, said Paul McKenzie, executive secretary-treasurer of the Building and Construction Trades Council of Northern Nevada/AFL-CIO.

He called the $43 million a misuse.

“Normally when you build a road like this, it is primarily for a community benefit,” McKenzie said. “This will make (Gilman’s) industrial park more valuable. It will make the property that he hasn’t sold more valuable. He is the primary benefactor of the road.”

•••

Gilman is a native southern Californian and the son of a border patrol agent. His roots spread all across the Southwest. He lived in 25 homes growing up, moving every six to eight months.

“I was always in a new pecking order,” he said. “I had to learn to survive those pecking orders.”

GIlman graduated from Sul Ross State University in Texas and has spent the last 40 years in real estate. He started by developing commercial and residential properties in California. He moved to Reno in 1985 after reading a newspaper story predicting that Reno would be a boomtown in the 1990s.

His time in Nevada is the longest he’s ever been in one place.

When he arrived, many of the commercial developments that now line I-395 weren’t there. East of Sparks was bare. The land that’s now the industrial park was a ranch.

Gilman’s first large-scale project in Nevada was the Double Diamond Ranch, a 2,500 acre business park he started developing in 1988. He landed government arms contractor Lockheed Martin as the anchor tenant. A handful of missile and tech companies followed.

A decade later he started the industrial center.

All of Gilman’s projects are notable for their size and community impact. But none grabbed headlines like his brothels.

Gilman purchased the Mustang Ranch brothel on Ebay from the Bureau of Land Management in 2003. He paid $145,000 for the 12 pink, stucco units. After running into problems with the BLM and an underpass too low for him to truck the buildings away, he spent $6 million to helicopter the structures to a new location and refurbish them.

Today the ranch is a Shangri-la for any man or woman looking for close company. It sits in a canyon five miles from the industrial center and is surrounded by tall iron gates and more than 1,000 trees.

The Mustang Ranch isn’t a shabby, clapboard building.

There’s a swimming pool, jacuzzi, nightclubs, lounges, restaurants and a deli.

Gilman displays an art collection worth $8 million throughout the ranch, he said. There are 24-foot ceilings, stone fireplaces and exotic big game mounts hanging on the walls.

Gilman said he isn’t “a brothel guy,” but wanted to run a high-quality, professional business operation.

“You don’t build trailers in the desert,” he said. “You build a multimillion-dollar resort everyone can be proud of.”

•••

Today, the industrial center covers 166 square miles, comprising 65 percent of Storey County. Small portions of the property also sit in Lyon and Washoe Counties.

Before Tesla, there were 166 companies and 14 million square feet of buildings. Sewer, electricity and other utilities come pre-installed. Storey County has streamlined its process for obtaining building permits and other bureaucratic requirements. With the price of the existing portions of USA Parkway included, Gilman and his partners invested $87 million of their own money to start the park. They spent the money without a single credit line, Gilman said.

Gilman speaks about the site in rapid bursts, like an auctioneer at a cattle call.

“You can buy a site from me right now. You can buy an acre. You can buy 1,000 acres. You will have all your sewer, power, water, gas and your roadways. It’s all in. And it’s all free of charge,” he said.

Gilman bought 104,000 acres from Gulf Canada in the late 1990s. Gulf acquired the land as part of mining deal it had in Washington and had plans to build a boutique hunting lodge stocked with big game, Gilman said. Gulf sold the land as part of a debt reduction plan.

The remaining portions of the property came from the McCarran Ranch, which was owned by late U.S. Sen. Pat McCarran.

Satellite images of the industrial center show the transformation of USA Parkway from pavement to unfinished road, to dirt. But It won’t be that way for much longer.

Gilman said money didn’t stop him from finishing the road.

“When you build anything of that magnitude, you build incrementally,” he said.

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