Faraday Future pledges to secure sufficient bonds, other funding
Faraday Future has assured Nevada of its commitment to acquire sufficient bonds and other funding to help finance infrastructure at the Apex Industrial Park in North Las Vegas.
March 3, 2016 - 4:14 pm
CARSON CITY — Faraday Future has assured Nevada of its commitment to acquire sufficient bonds and other funding to help finance infrastructure at the Apex Industrial Park in North Las Vegas.
In a letter sent Wednesday to Steve Hill, director of the Governor’s Office of Economic Development, executives with the electric car maker said it will acquire a surety bond of up to $75 million and deposit another $13 million into escrow accounts to go toward engineering and preliminary construction of water, wastewater and rail facilities.
The bonding requirement was a concern for state Treasurer Dan Schwartz, who last month questioned whether Faraday’s billionaire Chinese backer, Jia Yueting, had the financial resources to bring the $1 billion car factory to fruition.
The bonds were required under a tax incentive package approved by lawmakers during a special session in December.
“FF will acquire a surety bond, or other financial instrument acceptable to GOED and Nevada, of approximately $75 million,” the company said in an acknowledgment signed by Dag Reckhorn and Dave Wisnieski. Reckhorn is Faraday vice president of global manufacturing; Wisnieski is director of finance.
The security will be released back to Faraday after it has built at least 1.6 million square-feet on the site and has generated revenue from selling cars.
Additionally, Faraday said it will deposit about $3 million in an escrow account by mid-March and another $10 million by mid-May to finance its share of bringing utilities to its site, as well as engineering and preliminary construction of proposed water, wastewater and rail facilities to the Apex complex.
The company began preliminary site work on a 900-acre site in January.
Gov. Brian Sandoval thanked Faraday for its commitment to Nevada.
“The speed at which you are moving forward with your operation is a clear sign of the seriousness of your investment in our state and this facility,” Sandoval said in a response to Faraday dated Thursday.
“As you know, the installation of infrastructure at Apex Industrial Park is not only crucial to your success, but also to industrial land development in Southern Nevada as a whole,” the governor wrote, adding Faraday’s surety bond is a “vital component” to the issuance of state-back bonds to finance the project.
“Your commitment provides full security for Nevada and allows this important set of projects to move forward,” Sandoval said.
Lawmakers in December approved $215 million in tax abatements and credits for Faraday to build its car plant in North Las Vegas. To qualify for the perks, the company must invest $1 billion over 10 years and meet other criteria such as hiring and wage minimums.
The deal also included $120 million in road, rail and water improvements to Apex site, which has sat largely vacant for decades on the city’s outskirts because it lacks water, sewer and other utilities and transportation systems needed to attract big industrial tenants.
Part of the allure for lawmakers to approve the deal was the concept that building those amenities would help attract other companies to the site to generate tax revenue and diversity the Southern Nevada economy.
To that end, the legislation authorizes up to $175 million in general obligation bonds, which are backed by the state. Under the deal, about half of the bond obligation will be paid by Apex property owners through a special improvement district.
The other financing portion comes from a tax increment area. As property values rise with the added infrastructure, the increase in tax assessments will go toward paying off the bonds.
Contact Sandra Chereb at firstname.lastname@example.org or 775-461-3821. On Twitter: @SandraCherebElectric car company Faraday Future has received its first U.S. patent. In a statement Thursday, the company said that its new FF Echelon Inverter will allow the electric motors to achieve 20 percent to 30 percentgreater power density than competitors, which it did not identify. The inverter converts DC power from the batteries into AC power to spin themotor. Faraday Future unveiled its FFZERO1 concept vehicle in January. The company said it has submitted more than 100 new patents to the U.S. patent office over the last year. – ALEXANDER S. COREY