Nevada Lawmakers Approve Tax Breaks For Tesla Motors
Updated: Sept. 12 10:15 a.m.
The Nevada Legislature on Thursday approved the unprecedented package of incentives – valued at $1.25 billion - to bring Tesla Motors Inc.’s $5 billion battery Gigafactory to Northern Nevada.
The battery factory is expected to bring more than 20,000 jobs and $100 billion to Nevada’s economy over the next 20 years. Both the state Senate and Assembly unanimously approved the deal, which includes four bills.
Gov. Brian Sandoval, who helped broker the Tesla deal, signed the package of bills late Thursday. Flanked by legislative leaders and lawmakers, Sandoval presented a Nevada license plate with “Tesla” to Diarmuid O’Connell, the company’s vice president for business development.
Tesla will build its battery factory at Reno-Tahoe Industrial Park along Interstate 80 some 15 miles east of Sparks. Nevada beat out California, Texas, New Mexico and Arizona for Tesla's factory.
“I want to thank the Nevada Legislature for its thorough and comprehensive review of this legislation,” Sandoval said in a statement. “The Legislature has confirmed that this package is indeed in the best interest of our citizens and is good for Nevada.”
Sandoval also officially welcomed “Elon Musk and Tesla Motors to the Nevada family.”
Among the package of four bills, is Senate Bill 1, which gives Tesla about $1.25 billion in tax abatements in exchange for the electric car maker investing $3.5 billion in the state within the first decade of the agreement. Under SB 1, Tesla will be given some $1.1 billion in tax abatements.
Tesla will pay almost no property or payroll taxes for up to 10 years and no local sales taxes for up to 20 years. Another $195 million in tax credits was also approved. Tesla will have to give some or all or some of the money back if it fails to spend $3.5 billion in the Silver State within 10 years.
The agreement also mandates half of the jobs go to Nevada residents, at both the factory which is expected to employ 6,500 and among the estimated 3,000 construction jobs. Sandoval also signed three other bills that made up the package, one discounting electricity for Tesla and another ending a $25 million annual subsidy for insurance companies to help pay for the car maker’s tax credits. That tax subsidy is worth $125 million over five years.
Another bill clarifies that it is legal for Tesla to sell cars it manufacturers at dealerships it owns in Nevada. Before the Senate voted on the bills Thursday, several Senate Democrats objected to the governor’s plan to cut all but $10 million from an $80 million program providing tax credits to the film industry.
The $70 million from film tax credits combined with the $125 million from the home insurance office credit will offset $195 million in Tesla tax credits. But, lawmakers on Thursday signaled they will push to restore the film tax credit when the 2015 session begins in February.
“I will bring it up next year,” Sen. Aaron Ford, a North Las Vegas Democrat who sponsored the film tax credit bill in the 2013 session with support from Nicolas Cage, told the Las Vegas Sun.