Lawmakers to consider $335 million in incentives for Faraday Future

By Megan Messerly, Daniel Rothberg

Published Thursday, Dec. 10, 2015 | 11:02 a.m.

Updated Thursday, Dec. 10, 2015 | 1:51 p.m.

Faraday Future will receive an estimated $215 million in tax abatements and incentives if legislators approve a package for the electric car company during a special session next week, Gov. Brian Sandoval announced this morning.

Under the proposal, the state would also invest about $120 million in three infrastructure projects to improve the Apex Industrial Park, the North Las Vegas site Faraday selected for its factory.

“To the members of the Legislature here today and the taxpayers of Nevada, I offer my commitment,” Sandoval said at a news conference this morning in Las Vegas. “This deal is good for us.”

Because of the deal’s size, awarding the abatements requires legislative approval.

An existing statute that paved the way for Tesla to build its $5 billion gigafactory only applies to companies that invest at least $3.5 billion.

To accommodate the Faraday deal, the state will need to create a category for companies that spend at least $1 billion.

The session is expected to convene on Dec. 16.

Over the last week, the governor’s office has received numerous phone calls asking Sandoval to let the Legislature consider other matters during the session, but he reiterated today that it will be a single-subject session.

The deal is expected to produce a significant economic boon for Southern Nevada, said Steve Hill, director of the Governor’s Office of Economic Development.

Hill estimated the project would generate 9,000 indirect jobs in the region, have an economic impact of $85 billion over 20 years and boost Clark County’s gross regional product by up to 4 percent.

He also said the project is expected to produce about $760 million in tax revenue over a 20 year-period for state, local and K-12 education.

According to the deal, Faraday is expected to reap about $175 million in tax abatements over 15 years.

Nevada faced tough competition in luring Faraday to the state. Other states, including Georgia and Louisiana, offered the company larger tax breaks.

But Faraday chose North Las Vegas for reasons including its central location, proximity to Interstate 15 and an abundance of room to grow, said Faraday Vice President of Manufacturing Dag Reckhorn,

“We love Las Vegas,” Reckhorn said.

Faraday is expected to break ground in the first quarter of 2016. The company had originally said it would bring a car to market by 2017, but Reckhorn said today Faraday would produce its first car “when we are ready.”

Faraday has been quiet about its car and financial backing. On Wednesday, tech billionaire Jia Yueting, who has been called the Chinese Elon Musk, confirmed for the first time he is a founder of the company.

Faraday is expected to reveal a concept car in January.

“They’re entering into a tough market,” Hill said. “But the way we’ve structured this deal, (there) is really very little risk for the state or for local governments or anyone else in Nevada.”

The package splits into three parts: abatements, workforce development and infrastructure. In addition to the abatements, state officials estimate that the company will be eligible for about $38 million in transferrable tax credits.

In luring Faraday to Nevada, state officials committed to providing workforce development programs to train 4,000 workers.

Sandoval is expected to request about $3 million for a new workforce grant program. Like Tesla, Faraday will need to show that at least half of its workers are from Nevada.

As part of the plan, the state will use funding from the Highway Trust Fund to expand the intersection next to Apex. The project would widen the road and build a flyover entrance ramp to the park at a cost of $50 million.

The state will spend about another $70 million for rail and water systems for the industrial park and Faraday. While North Las Vegas has pushed for the creation of a water pipeline to Apex, water for Faraday will be pumped from the ground.

Even though the Legislature still must sign off on the deal, North Las Vegas is ramping up to speed Faraday through the city’s planning process. “We prayed for this day, but we didn’t know if we’d see this day,” North Las Vegas Mayor John Lee said.

The 3-million-square-foot facility should take about 12 to 18 months to build, meaning Faraday could have its factory up and running by 2017, City Manager Qiong Liu said.

“We have no time to waste,” Liu said. “We have to work seamlessly and effectively.”