DOWNEY -- Financial incentives aimed at jolting an electric carmaker into locating a production line on public and private land steeped in Space Age history won swift City Council approval Wednesday.
Officials agreed to offer free rent, building improvements and other inducements that a real estate investment group can use to lure Tesla Motors to 57 acres of the old NASA site now used for film and TV production by Downey Studios.
A deal with Tesla, which is looking for a location to build its battery-powered S sedan, could return automobile manufacturing to Southern California for the first time since General Motors pulled the plug on its Van Nuys plant in 1992.
"I am physically exhausted, I am emotionally drained, and it absolutely feels fantastic," said Mayor Mario Guerra, who has participated in six months of negotiations with Tesla and Downey Studios' parent, International Realty Group, or IRG, and its financial backer, Pacific Coast Collateral Partners.
The council's 4-0 vote -- Councilwoman Anne Bayer was absent -- does not mean Tesla will locate in Downey, but it does move the deal closer, Guerra said.
Tesla, whose spokesman said there would be no comment before the meeting, is also in negotiations with the Boeing Co. that could bring the car production line to the former 717 factory in Long Beach.
In addition, Tesla deals have already fallen through in San Jose and Albuquerque, N.M.
"There still remains work to be done, but every major obstacle seems to be done," Guerra said.
The city would also waive a requirement that IRG build a learning center stipulated in an earlier agreement with the city.
[TAG1]Staff Writer Paul Eakins contributed to this report.
[TAG1]john.canalis@presstelegram.com, 562-499-1273
Officials agreed to offer free rent, building improvements and other inducements that a real estate investment group can use to lure Tesla Motors to 57 acres of the old NASA site now used for film and TV production by Downey Studios.
A deal with Tesla, which is looking for a location to build its battery-powered S sedan, could return automobile manufacturing to Southern California for the first time since General Motors pulled the plug on its Van Nuys plant in 1992.
"I am physically exhausted, I am emotionally drained, and it absolutely feels fantastic," said Mayor Mario Guerra, who has participated in six months of negotiations with Tesla and Downey Studios' parent, International Realty Group, or IRG, and its financial backer, Pacific Coast Collateral Partners.
The council's 4-0 vote -- Councilwoman Anne Bayer was absent -- does not mean Tesla will locate in Downey, but it does move the deal closer, Guerra said.
Tesla, whose spokesman said there would be no comment before the meeting, is also in negotiations with the Boeing Co. that could bring the car production line to the former 717 factory in Long Beach.
In addition, Tesla deals have already fallen through in San Jose and Albuquerque, N.M.
"There still remains work to be done, but every major obstacle seems to be done," Guerra said.
The memorandum of understanding OK'd by the council allows Downey to offer $8.7 million (unadjusted for inflation) in economic development incentives over a 15-year period at the site used by NASA and defense contractors off of Lakewood Boulevard and Columbia Way.
That package includes $6.9<TH><TH>million in waived rent on 20 acres owned by
the city, $1.8<TH>million in federal grant money for roof repairs to buildings at the site and $250,000 to shelter a full-scale space shuttle mockup that city officials consider an important artifact from its space race history. Sections of space shuttles and Apollo program capsules were made in Downey.
The city would also waive a requirement that IRG build a learning center stipulated in an earlier agreement with the city.
"There is only upside to this deal," Councilman Roger C. Brossmer said.
Tesla would employ an estimated 1,200 workers, but City Manager Gerald Caton estimates as many as 4,400 additional jobs would be generated from related economic activity.
"We think it will have a significant impact," he said, adding that his staff is using conservative forecasts.
In return for its investment, Downey expects direct revenues of $11.76 million from taxes on business licenses, utilities, sales and property.
As far as sales taxes, those figures depend on whether Tesla builds a dealership in Downey or makes Downey the point of sale for online transactions, Guerra said.
The S sedan would retail for about $50,000 after expected tax incentives and $57,000 without them.
If approved, the plant would use fewer than 1 million square feet in and around Downey Studios, where films from the "Spiderman" and "Iron Man" franchises, as well as many others, have been made, officials said. The fate of Downey Studios, and whether it would run a scaled-down operation, remains unclear.
Councilman Luis Marquez said the project is significant because it will mean not only high-tech jobs but "green jobs."
Guerra added that the building would be among the cleanest manufacturing plants in the nation.
IRG and Pacific plan to bring Downey's offer into negotiations with Tesla.
The memorandum of understanding approved by Downey council should speed up negotiations, said Tom Messmer, senior vice president for IRG.
"This clears the way for those short strokes close to the hole," Messmer said.
He declined to provide an estimate for when the deal would be completed.
Tesla is expected to keep its headquarters in San Carlos, in the San Francisco Bay area.
Tesla is expected to keep its headquarters in San Carlos, in the San Francisco Bay area.
Though some have said Long Beach is out of the race, City Manager Pat West said Tesla representatives toured the 717 site last week, which means there may still be hope to get the automobile plant.
"The decision hasn't totally been made yet," West said.
While Long Beach can offer an enterprise zone -- which gives state tax breaks to businesses -- at the site, it doesn't own any land and cannot offer free rent as Downey can..
"For us, I just wish we were in a situation where we had the land to negotiate with Tesla, instead of sitting on the sidelines," West said.
Downey is able to offer nearly $500,000 a year in free rent, Guerra said.
The 717 site, which is also being eyed for a possible movie studio, sits entirely on Boeing property.
A Boeing spokesman declined to comment on negotiations Wednesday night.
Though it has only sold about 1,000 cars, Tesla plans to expand by raising cash in two ways. It is expected to receive a $365 million loan from the U.S. Department of
Energy and is considering going public.
[TAG1]Staff Writer Paul Eakins contributed to this report.
[TAG1]john.canalis@presstelegram.com, 562-499-1273
