Castle out of running for Tesla plant

09/04/2014 8:36 PM

09/05/2014 8:16 AM

Castle Commerce Center was eliminated Thursday as a potential location for a $5 billion Tesla Motors battery factory after the electric carmaker chose a Nevada site for the coveted plant.

Castle was a finalist in an intense five-state competition to nab the Tesla plant along with the 6,500 jobs and billions of dollars in economic development attached to it. The other states vying for the electric-car battery “Gigafactory” were Texas, New Mexico and Arizona.

Nevada lured Tesla by offering a tax deal worth $1.25 billion over the next two decades, it was revealed Thursday.

“We are obviously disappointed in the results,” said Mark Hendrickson, Merced County director of community and economic development. “But we are hopeful in the future that as this company grows and develops, they will remember Merced County fondly as we are open to their business down the road.”

Hendrickson said Tesla did not indicate why Castle Commerce Center – or the state of California – were not chosen for the battery plant.

Although Tesla’s main assembly plant is in Fremont and its corporate headquarters in Palo Alto, the Golden State failed to latch on to the growing company. The California Legislature failed to act on Senate Bill 1309, a bill that would have provided “financial incentives and changes to regulatory and environmental processes” to expedite groundbreaking and construction of the Tesla factory.

Merced Mayor Stan Thurston, who is also co-president of Gemini Flight Support, the airport’s fixed-base operator, said the environmental regulations in California make it more expensive and extremely difficult to build a manufacturing plant.

“Environmentally and economically, the cost of doing business in California is extremely high,” Thurston said. “You’re talking about making batteries, and I think their board just couldn’t see getting past the regulations dealing with chemicals on a long-term basis.”

Tesla originally requested 500 acres for the factory, but later expanded its footprint to more than 1,000 acres – potentially encompassing the airport side of Castle Commerce Center, which is under FAA regulation.

Rep. Jim Costa, D-Fresno, said he spoke with FAA officials about the possibility of either reducing the size of the airport runway or eliminating airport capacity completely to make room for Tesla.

“They (FAA officials) were certainly indicating some of the challenges, but they were receptive, if the county wants to consider that in the future,” Costa said. “The question for us became whether or not those with authority over Castle (Merced County) wanted to make modifications, especially when it came to the runway.”

Costa said it’s unclear what incentives were offered to Tesla by other states, but he said California put its best foot forward. “The financial package that the governor negotiated with Tesla was competitive,” the congressman said. “But Tesla folks were sellers in a buyers market, so to speak.”

Tesla officials have hinted at plans to build more manufacturing plants as the company grows. Hendrickson and others are hoping Merced County can compete for those additional opportunities.

Hendrickson applauded Costa and Assemblyman Adam Gray, D-Merced, for their efforts in making Merced County a contender for the highly sought battery plant.

Gray said he believes Merced County will find itself at the table again for future opportunities with Tesla.

“In my discussions with them (Tesla), they made it clear that they have a lot of plans for growth in the future,” Gray said. “As they look to grow and expand, I think there’s still opportunity for us.”


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