LOS ANGELES — An electric car manufacturer that won subsidies from Nevada has offered to put up a $75 million surety bond to guarantee general obligation bonds get paid if its proposed North Las Vegas factory does not get built.
The state plans to issue up to $175 million in general obligation bonds in the fall to help fund $330 million in infrastructure, including roads, to support the 3-million-square-foot Faraday Future factory.
"They have agreed to supply performance bonds, so if there is a shortfall in debt service the performance bond will serve to make up the difference," said Nevada Treasurer Dan Schwartz. "The performance bond guarantees the debt service will be paid."
The company unveiled its FFZero1 concept car at a trade show and began clearing the land on the property in January, Faraday Future officials said.
Faraday would not discuss the timing of specific project milestones for the factory, but said they "are moving extremely quickly for a project of this size and expect to start the heavy construction as soon as possible."
Faraday executives sent a letter to the Nevada Governor's Office of Economic Development last week offering to put up the performance bond to support GO bonds issued for infrastructure at the Apex Industrial Park in North Las Vegas.
Nevada Gov. Brian Sandoval responded with a letter lauding the company for "the speed at which you are moving forward with your operation."
Schwartz had voiced concerns over the past few weeks about the company's ability to fund its plans. He noted that there's a freeze until May 7 on trading shares of Leshi, the Chinese company of Faraday's main backer Jia Yueting.
Faraday failed to respond to questions about company finances. A company spokeswoman told other news outlets that Yueting is personally funding the company separately from Leshi.
"There are risks, but we have had a couple of conversations with Faraday management – and they have been very positive and committed to making it happen," Schwartz said. Schwartz said he would withhold judgment as matters develop, but he still has concerns.
The electric car company would be released from providing the performance bond once it has built 1.6 million square feet, or half of the planned factory development and has generated sales revenue from the electric cars.
The state agreed to back the $175 million of GO bonds, which pay for $120 million in road, rail, water and sewer improvements to the Apex site, which has been vacant for decades.
About half of the bond obligation will be paid by Apex property owners through a special improvement district. The remainder of debt service would be paid with the increase in tax assessments as property values rise from the new development.
The company will also deposit $13 million into escrow accounts to go toward engineering and preliminary construction of water, wastewater and rail facilities.
State legislators approved $215 million in tax abatements and credits for Faraday in December. The company must invest $1 billion over 10 years and meet other criteria such as hiring and wage minimums to receive the incentives.
Faraday expects to employ 4,500 people once the factory hits full production.
