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What could Tesla's $3.6B expansion mean for Northern Nevada?

FILE - In this Oct. 13, 2018, file photo, a sign marks the entrance to the Tesla Gigafactory in Sparks, Nev. Terms of any potential state tax breaks Tesla might get as part of a newly announced $3.6 billion expansion of its northern Nevada factory will remain secret until late February under a non-disclosure agreement state officials signed with the electric car-maker. (AP Photo/John Locher, File)
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AP
FILE - In this Oct. 13, 2018, file photo, a sign marks the entrance to the Tesla Gigafactory in Sparks, Nev. Terms of any potential state tax breaks Tesla might get as part of a newly announced $3.6 billion expansion of its northern Nevada factory will remain secret until late February under a non-disclosure agreement state officials signed with the electric car-maker. (AP Photo/John Locher, File)

When Tesla broke ground on its 5.4 million square-foot battery factory in 2014, then-Governor Brian Sandoval said the company would help “change Nevada forever … and stream billions of dollars into our economy.”

Since then, Tesla has helped reshape the economy of the state, especially in Northern Nevada, where an influx of tech and manufacturing companies have brought new jobs and higher wages to the area.

It also came at a cost. To get Tesla here, the state gave it more than a billion dollars in tax incentives. At the same time, the Reno area is dealing with an affordable home crisis and heavier traffic. More people typically means you need more police, fire and schools.

And now, Tesla is planning a $3.6 billion expansion and will get another $330 million tax deal. Some have already criticized the governor, saying Tesla would have done it without the tax sweetener.

So, is this a good investment for the state? We have our panel of those who have watched the company's impact here.

Bob Potts is the deputy director of the Governor’s Office of Economic Development, that's the state agency tasked with bringing new businesses and jobs to the state. He'll talk about this with State of Nevada host Joe Schoenmann along with Laura Martin of the Progressive Leadership Alliance of Nevada, Ann Silver of the Reno-Sparks Chamber of Commerce, and Michael Schaus, a columnist.

Potts said economic development needs to happen strategically.

“It wasn't until we went through the Great Recession, and we were the poster child of the unemployment rate, that we had to become very strategic in what we were doing with economic development and thinking about our comparative advantages, largely because of our proximity to the fifth largest economy of the world, and also some of the natural resources that we have available to us,” he said.

With Nevada’s lithium supply and ability for manufacturing, Potts said “it’s the complete supply chain … which is much bigger than just one company.”

But the deal in 2016, which he was involved with, is different than the deal this year.

“There's no transferable tax credits this round, like there was the last round,” he explained. “This time, we're only abating down [a] little over 5% on that, because it includes the local schools for tax, so they're still going to be paying full freight to help support education in the state.”

Silver, based in nearby Washoe County, said Tesla in Storey County has added traffic and other concerns in her area.

“I, for one, have never seen so much as a park bench donated by Tesla,” she said. “So if Tesla cares very much about this area, and apparently more so than it does about Austin, then then I would like to see greater participation in the community by Tesla executives.”

She also questioned their average wage of $34 per hour, suggesting executive salaries are within that statistic.

“People I know are making $24 or $25 an hour, and that does not pay for the gas back and forth, 60 miles a day, or whatever rents they're able to afford here in the Washoe County area.”

She said the chamber of commerce has thousands of business members and nonprofits in Washoe County, “and I’ve never met anyone that has ever said, ‘We’re so thrilled that Tesla is in Storey County, we’re so thrilled that they diversified our economy.”

Silver said 93% of their economy is based upon small business.

Schaus is a Nevada Independent columnist, and he's the former spokesman for the Nevada Policy Research Institute. He noted Nevada and Tesla are both very different today than in 2014.

“We're talking about an automaker now that is currently the highest valued automaker in the world. They're more highly valued, valued on the stock market than Toyota or GM or Ford. And the idea that we have to give them $300 million to continue to expand in a state that is set to be the lithium capital of North America, that has already got their Gigafactory built here and ready for more expansion. … It takes a little bit of a suspension of disbelief, so to speak, in order to kind of buy that argument … A business like Tesla's already incentivized to continue to build here, I don't think as opposed to 2014, when [Elon Musk] was kind of an unproven company and unknown quantity.”

Martin echoed Schaus and Silver and said the $300 million is noticed in Carson City.

“The state of Nevada is paying over $4 million to provide their employees with health care through our Medicaid program. It's our legislative session, and people know that bills sometimes die in the committees when we need to find money. But they also noticed that we gave Tesla $300 million without much of a blink of an eye.”

She continued, “Las Vegas is known for gambling, right? It almost feels sometimes that we're being took by these folks, you know? … I think we just have to be more aggressive. Nevada needs to stand on its power and make some demands of these people. … I think the least we can do is have Tesla make some guarantees to invest in different facets of public life, or at the very least pay all their workers, not [just] executives, enough that they can make ends meet and also provide them with good benefits, including health care.”


Guests: Laura Martin, executive director, Progressive Leadership Alliance of Nevada; Ann Silver, CEO, Reno-Sparks Chamber of Commerce; Michael Schaus, columnist, The Nevada Independent and former spokesman, Nevada Policy Research Institute; Bob Potts, deputy director, Governor’s Office of Economic Development

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Paul serves as KNPR's producer and reporter in Northern Nevada. Based in Reno, Paul specializes in covering state government and the legislature.
Kristen DeSilva (she/her) is the audience engagement specialist for Nevada Public Radio. She curates and creates content for knpr.org, our weekly newsletter and social media for Nevada Public Radio and Desert Companion.
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