Las Vegas Sun

March 29, 2024

For NLV, electric carmaker Faraday could be deal of a lifetime

Faraday Future

Faraday Future

An artist’s rendering of a Faraday Future concept car.

Inside the city hall of low-slung, hard-scrabble North Las Vegas, Mayor John Lee was giving the hard sell to Assemblymen Harvey Munford and Tyrone Thompson. If Gov. Brian Sandoval were to convene a special session of the Legislature, would they be willing to “jump in”?

“The thing about Apex is that I need information,” Thompson said. “All I know is what has been said through the media.”

Lee and the city’s economic and business development director Gina Gavan shared what they could. A new factory at the Apex Industrial Park, a dusty 18,000-acre plot of developable land in the northeast part of town that has sat almost vacant for more than 20 years, could stimulate 13,000 direct and indirect jobs and pump $86 billion into the local economy over the next two decades.

“Is that Faraday or something?” Munford interjected, referring to the Chinese-backed electric carmaker that will soon be announcing where it will locate its factory. Many of the details about Faraday Future are hidden behind nondisclosure agreements and a deliberately minimal public relations strategy.

The deal, which is still under negotiation, is not simple. It would likely require a tax incentive deal similar to the one in 2014 that brought electric carmaker Tesla to Northern Nevada to bring Faraday to North Las Vegas — plus upgraded water and transportation at the Apex site. It will take the backing of the governor, a majority of the Republican-controlled Legislature and delicate negotiations with Faraday’s leadership — some of whom are linked with a Chinese tech conglomerate Leshi Internet Information & Technology, also known as LeTV.

But Lee is determined to make it work, convinced that it holds a key to revitalizing a city that narrowly avoided declaring bankruptcy after the recession hit. “I’d say three years from now, you’ll start seeing a ripple in the economy from Faraday,” Lee said. “If we’re able to land Faraday, we’ll have one or two other large announcements to make.”

As Lee has shown since becoming North Las Vegas mayor in 2013, he’s not afraid to take aggressive action to put the city back on solid ground, whether by pursuing a game-changing manufacturer or by replacing longtime public employees with private-sector recruits.

He’s helped steer the city away from a state takeover and there are strong whispers that Sandoval will soon call a special session to pave the way for the Faraday deal. But for Lee, there’s been pain behind the progress. There’s been a backlash from some of the old city establishment that he swept out, and his critics have taken steps as drastic as lodging an unsubstantiated child-porn allegation against him in what appeared to be an effort to discredit him.

• • •

In North Las Vegas, paranoia lurks in the margins. Although the mayor wanders city hall with ease, pausing recently to sing “Happy Birthday” with the city attorney to a longtime employee, there’s animosity behind his back.

For some employees, Lee’s tenure has made the working environment worse. Over the last four months, at least five current or former city employees have alleged wrongdoing by him, including complaints that the climate had become hostile under Lee.

Lee views those allegations as blowback for what he says were necessary changes. “They had desks that they thought was their desk for life,” Lee said. “I’m not paid to focus on their needs. I’m focused on the greater good.”

The last two years have seen rapid turnover in the North Las Vegas senior staff. None of the city’s top directors held their positions when Lee started two years ago, although some of them held lower-level positions in city government. Lee said that when he took office, it seemed like a number of city staff had “hunkered down” as if the city’s demise were inevitable: “Sometimes the people that create the problems aren’t the ones who are able to figure out how to solve the problems.” Read between the lines and it’s clear what Lee means. His critics are fired or sidelined city employees crying sour grapes.

“I don’t know that those people would’ve had any trust for me,” Lee said.

To fill the vacancies, Lee brought in a number of individuals with backgrounds unconventional in government. The city’s finance director is former Switch CFO Darren Adair. The city’s neighborhood and leisure services director is former president and CEO of United Way Cass Palmer. The city’s economic and business development director, Gina Gavan, is a former consultant for the Fremont East Entertainment District and other organizations.

The most explosive development came in May, when, former police chief Joseph Chronister alleged the mayor had received special treatment in a case involving suspected child porn on the mayor’s iPad.

The accusation spawned incendiary headlines but went practically nowhere. An FBI inquiry into the police department’s actions on the matter later found no evidence of wrongdoing. The timing of the initial news reports about the accusation — a day after Chronister retired as police chief — raised questions about whether it was politically motivated. Lee has said that there had been friction between him and Chronister over how to run the department.

Other employees have filed complaints with the state’s Employee Management Relations Board and the Nevada Commission on Ethics. Results of those investigations have not yet been made public and Chronister and others who have lodged complaints about Lee have gone silent, declining or not responding to requests to comment for this story.

Distrust of a mayor in North Las Vegas is not without precedent. The previous two mayors, Shari Buck and Mike Montandon, both had ethics complaints filed against them, Buck for failing to adequately disclose her husband’s involvement in a city council campaign and Montandon for three separate cases. (The ethics commission found Buck had committed nonwillful wrongdoing. Only one charge was sustained against Montandon, who was fined $500 for failing to disclose a position as a corporate officer.) Buck also had an unsuccessful recall campaign launched against her.

After the fallout from the recession, many at the city said morale has been improving. A city survey showed an increasing number of employees were proud of the city, believed that it cared about its employees, and felt their jobs were secure. (The same survey showed that 39 percent of city employees don’t feel their jobs are secure and one in three employees don’t feel optimistic about their future with the city.)

“Even when I was re-elected in 2013, morale and the image of the city were pretty low,” said Councilwoman Anita Wood, who has been in office since 2009. “The turnaround in the past two years from then to now is just tremendous.” That’s a turnaround that Lee thinks will continue.

• • •

But for the turnaround to stick, the mayor will have to land Faraday — no easy task.

In late September, Lee welcomed about 30 staffers at a new employee gathering. Lee told the city manager he wanted to speak last. “I want to give them a global look,” he said. He wanted to paint the future of North Las Vegas.

It’s an expansive economic vision. ”They’re building cars out there. By the V.A. hospital, there’s a great medical center,” Lee said. “The Strip and Fremont Street are the boutiques. This is the epicenter.”

When Lee took office in 2013, the city was in bad shape. Lee said he couldn’t find clear answers about the city’s debt nor at what point they would need to shut down the lights in city hall and close up shop.

Others, including some council members, rejected that account, saying city officials had worked hard to make budget cuts. “The state came in and looked at what we were doing and said, ‘We don’t even have any recommendations because anything we’d recommend, you’re already doing,’” Wood said.

The city had started off by cutting back on non-essential services, like the number of days of street sweeping. Then the city turned to jobs. It started off with 1,937 employees. Today, there are 969. Those who stayed found themselves doing the jobs of two or three employees.

“I personally gave pink slips to over 200 people,” said City Manager Qiong Liu, then director of public works. ”It was a very tough time. We reduced our staff from 287 people in public works to 65, including me.”

In 2014, as talk of a takeover by the state government loomed, the city settled a number of contract agreements with its unions and resolved a major lawsuit. That, coupled with a recovering economy, helped the city balance its budget and averted a state takeover. The city has cut its projected long-term deficit almost in half to about $74 million — for now.

Under current conditions, in 2018, the city faces a difficult, but manageable series of debt service. In 2021, however, the disappearance of a $32 million subsidy from the state will create a 23 percent shortfall in the city budget. The debt service payments can be met, Adair said, with the city tightening its belts, growing its consolidated tax and expanding medical marijuana industries — but the 2021 fiscal reckoning looms. “We have to grow our way out,” Adair said.

Enter Faraday.

Much about the company has been shrouded in secrecy, but legal documents filed with the state of California suggest that the company’s CEO is a high-level employee of the Chinese media and technology conglomerate LeTV. Business Insider dubbed Jia Yueting, LeTV’s CEO, the “Chinese Elon Musk” when he announced plans to build an electric car. Some of Faraday’s employees hail from Tesla, BMW, and other car companies, according to their LinkedIn profiles.

There are many unsettled questions about the company including those about its funding and product line. In August, Tesla officials told the Wall Street Journal they believe that LeTV was providing funding for Faraday, a suggestion a LeTV spokesperson called “speculation.” Some observers, like Motor Trend, even questioned whether the company is promising “vaporware” by aiming to bring a car to market by 2017.

In early November, some of that mystery began to dissipate. Bloomberg Business profiled the company and its senior vice president of research and development Nick Sampson. According to him, the company "envisions a rolling smartphone that knows its drivers and their technology preferences. Faraday hopes to make money not just on the car, but on subscriptions for connective services, apps and other infotainment that is piped into the car."

The way people are interacting with their cars is changing drastically, Sampson said. Faraday will meet those needs by offering an enhanced level of connectivity — like that between your iPhone and Apple Watch — and a car interface that will be customized to the individual user. Full autonomy is in Faraday’s future, though not in the first generation of vehicles. One day, Sampson imagines that a user could order a Faraday car for a specific trip, much like they would with Uber, except the car will be entirely autonomous.

“That’s a longer-term element of the market,” he said. “That’s not how everyone is going to live in a few years.”

Faraday isn’t the only project the city has in the works, but it’s arguably the biggest one. The Faraday deal could mean the difference between economic life or death.

Apex has remained relatively vacant for two decades. The plot of land, northeast of town where Interstate 15 and U.S. 93 split, is an almost-completely empty, dusty plot of desert land, home to train tracks, power lines and scrub brush. It looks like the set of a Road Runner cartoon. A mineral and lime producer, the Las Vegas terminus of the UNEV oil pipeline, and a landfill operated by Republic Services are three of a handful of businesses that call Apex home. One of the biggest problems in developing Apex thus far has been the lack of infrastructure, primarily water.

The Faraday deal could change the status quo in North Las Vegas — and it’s been in the works for a long time. From the day the Legislature passed a tax incentives package to lure Tesla to build its $5 billion battery factory outside of Reno, Lee and city staff have been strategizing to replicate a similar deal for the South. Faraday says it plans to spend $1 billion in the factory.

When the bill came out, Lee, Liu and the finance and legal teams pored over its text. “We read it from every angle, and it worked,” Lee said. The state had already made a successful deal with one electric car company, so Lee thought, why not look for another? So he combed through his Rolodex until he found a friend who put him in touch with Faraday, headquartered in Los Angeles and looking for a U.S. factory site.

By the time North Las Vegas entered the picture, Faraday had already whittled its list of potential factory sites down from more than 200 to 10. But the executives agreed to give Lee and Liu 10 minutes at a board meeting to plead their case.

“They opened that door. I stuck my hand through it. Dr. Liu put her hand through it. I put my shoulder through it. She put her head through it,” Lee said. “We forced our way into that meeting and two hours later we were done.”

Lee said Liu — who was born and raised in Beijing — was his “secret weapon,” bridging any cultural barriers between the city and Faraday’s Chinese executives. “She was able to make them feel secure,” Lee said.

When Faraday announced it had narrowed its search to four states, Nevada made the list, vying against locations in Georgia, Louisiana and California.

Lee traveled to China to tour some of the companies affiliated with Faraday. Then, he turned the deal over to the Governor’s Office of Economic Development, the agency responsible for approving any tax abatements. Gov. Brian Sandoval went on a trade mission to China in October and may soon call a special session. According to the Wall Street Journal, Faraday could be making a decision in "the next few weeks."

A lack of water also plagues the site. The city, which has a poor bond rating, wants the state — and its AA+ bond rating — to help, like it did with using highway funds to build the roads to Tesla’s factory in the North.

The Faraday deal is predicated on a pile of if’s: If the governor were to call a special session. If the tax abatements were to be approved. If those abatements were to be enough to woo Faraday to Southern Nevada. If the water problem can be solved. If Faraday successfully brought a car to market. Dozens of electric car startups are currently working to bring their cars to market, including projects at Apple and Google, and others have failed, notably Fisker Automotive, which filed for bankruptcy in 2013 after running into financial difficulties and was later purchased by Chinese auto-parts conglomerate Wanxiang Group. No state lawmakers have yet publicly backed a Faraday deal, and behind the scenes several seem skeptical.

Another problem looms for Lee. As the mayor has dedicated time to the Faraday deal, as well as other projects at Apex and the Nellis Industrial Park, some residents in the older parts of the city have felt left behind.

Though he now lives in the north, Lee once was a resident of that part of town, too, growing up in a modest home on Dogwood Avenue. If you ask Lee about projects happening in the older part of town, he’ll mention the city has fixed the swimming pools, cleaned up graffiti and changed out the air conditioners in the senior centers. However, when residents see their mayor spending a significant portion of his time and effort on a multibillion-dollar project on the periphery of the city, some feel left out.

“I know he has his attention out at Apex and other parts of the valley,” said Lydia Garrett, a life-long North Las Vegas resident and president of a local neighborhood group. “But I’d like to see more redevelopment in the older part of the city. That’s what he said when he was running for office. But most of the projects have been in other parts of the city.”

Others, like former County Commissioner Tom Collins, who has said he plans to run for mayor of North Las Vegas in 2016, doubts that the Faraday deal will save the city. “Faraday ain’t going to turn it,” Collins said at a Hispanics in Politics breakfast in September.

• • •

Lee now faces a critical juncture. North Las Vegas has made its case on Faraday. It’s up to Sandoval to call a session or not. Rumors have been swirling that the governor would do so for most of the summer. He hasn’t yet, but Lee could still pull out a win.

But all of Lee’s hopes aren’t set on Faraday. He said the city is looking at other players in different markets, though he said he couldn’t specify which or which markets. But the future he paints with Faraday is bright: immediate jobs in construction, jobs from Faraday in a year, jobs from the other companies that could follow Faraday in the next few years.

What can Lee tell you about what these will look like? “The future is phenomenal in transportation. That’s what I can tell you.”

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy