Lawmakers Take Up $1.3B Tesla Deal

The special legislative session to approve the deal negotiated with Tesla Motors Inc. to build a $5 billion battery factory in Northern Nevada began Wednesday afternoon as the Democratic-led state Senate and Assembly look to approve a series of bills.

Lawmakers are considering up to $1.3 billion in tax breaks for Tesla Motors. The cost of the special session will be $60,000 for the first day and $25,000 for any subsequent days, according to the Las Vegas Review Journal.

“An extraordinary occasion exists, which requires immediate action of the Legislature,” Gov. Brian Sandoval, R-Nev., wrote in the formal proclamation signed late Tuesday night. Sandoval said Nevada is still suffering from “the worst economic crisis in the history of the state.”

Sandoval added that for the state to continue to emerge from the recession, “Nevada must expand its economic opportunities and provide greater diversification in the workforce.” The two-page proclamation sets the agenda, detailing the only subject matter the Legislature is allowed to consider in a special session.

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The proclamation asks lawmakers to consider seven bills that will enact some $1.3 billion in tax incentives for Tesla. They are:

- A measure to create tax credits and abatement for businesses that propose to establish in Nevada, and that agree to make a “certain amount of new capital investments in the state.”

- A measure ensuring Tesla will pay back any of its incentives if it fails to deliver on its promises of jobs and investments.

- A measure that will allow the county and city to reimburse their portion of the sales tax back to Tesla. The state only has authority to abate about 75 percent of the sales tax rate. This mechanism will allow Tesla to receive the full 100 percent sales tax abatement.

- A measure reducing the amount of the film tax incentive program to $10 million from $80 million and another eliminating the tax break for insurance companies that locate their home office in Nevada.

- A measure making it explicit that Tesla and other electric car manufacturers can sell their cars directly to Nevada consumers.

- A measure to extend the electricity rate discount program to 10 years from five years.

Sandoval has said the lithium battery factory and its 6,500 workers would generate more than 20,000 construction and other related jobs and up to $100 billion for Nevada’s economy over the next 20 years. He estimated a return on investment of $80 for every $1 the state spends.

Tesla CEO Elon Musk joined Sandoval on Sept. 4 in Carson City to announce that Nevada had beat out California, Texas, Arizona and New Mexico for the factory expected to open in 2017.

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