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Nevada Legislature Considers Tesla Incentives In Special Session

Ky Plaskon / Capital Public Radio

The Nevada Legislature opened a special session Wednesday to consider incentives to bring Tesla motor company's $5 billion battery factory to the state.

Ky Plaskon / Capital Public Radio

Update: 6 a.m. - Nevada Assembly Continues Special Session

The Nevada Assembly continues a special session considering an unprecedented package of up to $1.3 billion in incentives to bring Tesla Motors' $5 billion battery factory to the state.

The Senate is expected to begin debating the biggest part of the incentive package for the electric-car maker -- up to $1.1 billion to finance the abatement of Tesla's various property, sales and use taxes, in some cases for up to 20 years.

The Nevada Legislature will continue a special session today to consider a package of tax credits and incentives intended to entice Tesla motor company to build a $5 billion battery factory east of Reno.

The Nevada Governor’s Office is asking for up to $1.3 billion in tax credits. But there are other incentives too. One of the first bills to be introduced in the legislature was an energy bill that would give Tesla a cut on electricity rates. NV Energy could then request rate increases from other customers to pay part of Tesla’s power bill. 

CapRadio's Ky Plaskon is covering the special session in Carson City. He says that while there's a lot of support for the plan, some legislators are concerned the project may not be as lucrative for the state as advertised.

"Mainly the opposition is saying, hey, let's study this a little bit more," says Plaskon. "The opposition isn't saying, hey, let's close this down.  The opposition was saying, let's take a closer look at will we be getting 100 billion dollars in economic benefits over the next 20 years.  Is that true?"

-Capital Public Radio Staff

Update: 11 p.m. - Three Bills Under Consideration

The Nevada Assembly is considering a package of three economic incentive bills worth millions and designed to entice Tesla Motor Company to build a battery factory east of Reno. The Nevada Senate is also set to consider a $1.3 billion tax incentive package, but as of 7 p.m., the Governor's Office had not released that bill to the Nevada Senate.

The first bill being considered by the Assembly extends the amount of time that new companies in the state can get is a reduction in the price they pay for energy. The program is subsidized by electricity customers who experience price hikes on their bills to pay for the company’s reduction.

According to the Nevada Governor’s Office of Energy, the maximum cost per customers under the program is $1.84 per year or 15 cents per month.

Language in the bill raised questions from legislators. The bill says the Governor’s Office of Economic Development can approve the incentive if it “is in the best interest of the state.”

Assembly members Andy Eisen and Lucy Flores wanted to know what is the best interest of the state, and who decides which companies get incentives.

Eisen asked representatives from the Governor’s Office “How is that evaluated and measured?”

Paul Townsend, Director of the Governor’s Office of Energy said, there is, “Not a specific definition for what is in the best interest of the state, which allows the director to try to triage them (applicants) and make his decisions, measuring applicants by the same yard stick.”

Another bill being considered allows electric vehicle manufacturers to sell cars directly to the public instead of through a dealership. Currently, car companies are required to have a franchise agreement with a dealership.

Assembly Bill 3 would reduce tax credits for insurance companies in the state to $5 million. According to the Division of Insurance, there are 2,400 insurance companies in the state.

The bills will also need to be considered by the Senate. The Senate is on hold, waiting for the Governor's Office to send another incentive bill. Early versions of that bill outlined by the Governor's Office of Economic Development show it would include tax abatements and incentives worth $1.3 billion.

That bill would also need to be considered by the Nevada Assembly.

“Skepticism” was a common word legislators used to describe the bills before them. Nevada's Legislature meets only once every two years and many hold other jobs. They were called off those jobs to Carson City from all over the state.

“You have a billion dollar company that is driving us to special session and that probably turned some folks stomachs as well,” said Kelvin Atkinson, Senate District 4, North Las Vegas.

He is skeptical about the sales points on the bills from the Governor’s Office of Economic Development. One is that the incentives will benefit the whole state because the bills do not mention Tesla, but instead are aimed at drawing any big business.

“If this passes, it does open the door for another billion dollar company to kind of come in and do this,” said Atkinson, “But let's think about this. It is a billion dollar operation, so not very many people can compete.”

At the start of the Assembly session, six skeptics took to the public comment microphones. Among them, conservative group Nevada Policy Research Institute and the liberal Progressive Leadership Alliance of Nevada. They agreed that the state needs to take a closer look at the costs of the legislation.

“The Governor's Office and Tesla have a vested interest in making sure that this looks like the best thing since the Brooklin Bridge,” said Bob Fulkerson of the Progressive Leadership Alliance.

He and Geoffrey Lawrence of the Nevada Policy Research Institute questioned the assessment by the Governor’s Office that for every $1 of incentives the state gives out, taxpayers will get an $80 return in overall economic impact to the state.

“We think that is highly dubious,” Fulkerson said. “We think that the Legislative Council Bureau should investigate that because if that is not true, this house of cards could collapse and we are gambling the house on this, we can’t afford to lose any more.”

The Assembly and Senate would have to call for such an investigation, and that could take time.

But legislators appeared to have no appetite to block or slow the bills. In less than three hours of questioning, two of the three bills were ready for a vote. Legislators went into recess at 7 p.m. before considering the third bill. Voting will occur on all bills after they have all been through the legislative questions and public comment.

The most controversial of the bills is the $1.3 billion tax abatement and tax incentives bill yet to be released by the Governor's Office. 

That could draw amendments and questions about incentive-recipient accountability from both the Senate and Assembly.

Reno Assemblyman, David Bobzien is pushing to ensure that companies that get incentives hire Nevadans, but wasn’t prepared to attempt to block legislation if the bills didn’t specifically mention hiring Nevadans.

“That would be pretty brutal politics, and hopefully our process is not going to go down that path. But there is a place for strong advocacy to say we want to look at the jobs piece and we want to have some certainty that Nevadans are going to be front in line for those jobs,” Bobzien said. He added that there are concerns that Nevada doesn’t have the qualified workforce, so some workers will have to come from out of state.

He and other legislators were also concerned about ensuring that companies that get the incentives like Tesla actually do what they say they will do. 

“So that we are not just writing blank checks to companies that come here with lots of promises and then those promises don’t come true,” Bobzien said.

He said the state has been burned before on renewable energy projects and there needs to be accountability.

“There is a lot of talk about us being engaged a race to the bottom with these economic incentives and that is something that does trouble me. But I think it is healthy that we are trying to strive for a more accountable system and that other states will learn from us and we can learn from those other states.”

Original story: 6:35 p.m.

Nevada Gov. Brian Sandova is asking for up to $1.3 billion in tax credits to entice Tesla motor company to the state.

But there are other incentives too.

One of the first bills to be introduced in the legislature today is an energy bill that would give Tesla a cut on electricity rates. NV Energy could then request rate increases from other customers to pay part of Tesla’s power bill.

Reno Assemblyman David Bobzien has doubts.

“There will be rate-payers in the Sierra Pacific Service territory, predominately Washoe County and Northern Nevada. So we are going to ask some questions as to how worth it is it making that investment in future prosperity for all Nevadans but also understand that there is going to be an impact on the rates," Bobzien said.

Two other bills have been introduced into the Nevada Assembly for the incentive package. One would allow Tesla to sell its cars directly to buyers, instead of using dealerships.

The other bill would remove $25 million worth of tax credits for insurance companies that locate their home offices in the state. The Nevada Division of Insurance says there are 2,400 insurance companies in the state.



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