Tesla burns Downey

DOWNEY - After more than a year of negotiations, Tesla Motors was set to announce Thursday they would open a vehicle production plant in Northern California and not Downey.Tesla will team with Toyota to build their Model S all-electric sedan at the New United Motor Manufacturing Inc. plant in Fremont. Gov. Arnold Schwarzenegger called a Thursday afternoon press conference to announce the news. The NUMMI plant employed 4,700 workers but closed in April. At the time, Tesla officials said the NUMMI plant was too large for its Model S assembly plant. Downey officials, meanwhile, said they were "stunned," "appalled" and felt mislead. "I couldn't be more disappointed. I‚Äàfeel like I was stabbed in the back," Councilman Mario Guerra said yesterday. "We were promised all along that we weren't being used and this is what happens." "[Tesla CEO] Elon Musk personally gave me his word that we weren't being used," Guerra continued. "Somebody is a very good poker player and I guess that's how you become a billionaire." Guerra said he was told by a Tesla official that Toyota was contributing $50 million to have the Model S plant in Fremont. Negotiations between Tesla, Downey and land owner Industrial Realty Group advanced to the point where a lease was expected to be signed today. Guerra said he and City Manager Gerald Caton met with Musk and IRG executives on May 11 and "went page by page over the lease." In fact, the Downey City Council had called for a special council meeting Thursday evening to ratify portions of the agreement. Tesla officials did not return phone calls seeking comment. Toyota also declined to comment. Downey entered into a much-publicized recruitment campaign last year to convince Tesla to open their vehicle production plant at the current site of Downey Studios. The City Council paid nearly $10,000 for a half-page, full-color recruitment ad in the L.A. Times, and delivered a gift basket to Musk's SpaceX headquarters in Hawthorne. Last November, the Downey City Council approved a $8.9 million package of economic incentives to facilitate Tesla's move-in. As part of the package, the city agreed to waive nearly $6.9 million in future IRG rent payments on 20 acres of land. At the time, city officials estimated that Tesla would produce more than $20 million in revenue to Downey. Although Tesla never publicly announced where they would open the Model S plant, all signs pointed to Downey. In March, the Downey Planning Commission approved an application from IRG and Tesla to subdivide Downey Studios to suit Tesla's needs. And as part of a $465 million loan from the U.S. Department of Energy, Tesla submitted plans on how it planned to use existing buildings at the former NASA site. The detailed plans showed precisely where the vehicles would be assembled and even included a timeline for construction. Downey officials also spent recent weeks lobbying in Sacramento to have the Downey Studios site designated a redevelopment zone. If approved, AB 2065 would provide Downey with approximately $20 million in tax increments over several years, city officials said. It wasn't immediately clear if Downey would continue to lobby for the redevelopment district. Downey council members and staff members spent much of Thursday afternoon reeling from Tesla's decision to locate its Model S plant up north. Even Guerra, who is usually not at a loss of words, struggled to explain the city's position on the latest developments. "We feel very used. We are upset," Guerra said. "We put forth a good faith effort for more than a year. We're stunned and we're appalled."

********** Published: May 21, 2010 - Volume 9 - Issue 5