TITLE
Recommendation to authorize City Manager to offer and negotiate incentives with Boeing and Tesla Motors to locate a production facility in the City of Long Beach including: (1) rebate of 50 percent of sales tax generated to Long Beach for a term of 10 years, (2) provide a Section 108 Loan in the amount of $2 million with a term of 10 years for facility improvements, and (3) other economic development tools as described below. (District 5)
DISCUSSION
Over the last several months the Mayor and City staff have been meeting with Tesla Motors and the Boeing Company to discuss the opening of an electric vehicle production facility at the former 717 manufacturing site, 3860 Lakewood Boulevard. Through this process Boeing has outlined a letter of intent to lease the facility to Tesla for production of the new model "8", a four-door electric vehicle. Even though the discussions to date are related to a private property transaction between Boeing and Tesla, the City is interested in offering economic development incentives to assist Tesla in opening the new operation. The incentives include:
1. Sales Tax Rebate - With the approval of Council, the City will enter into a sales tax incentive program with Tesla to return 50 percent of sales tax generated by sales and lease of Tesla products in Long Beach in excess of a base of $50,000 for a period of 10 years. The potential sales tax rebate would be substantial if Long Beach serves as the point-of-sale for all Internet sales and lease agreements. (Exhibit A)
2. Section 108 Loan - The City will provide a Section 108 Loan for facility upgrades in an amount of $2 million with a term of 10 years.
3. Long Beach Enterprise Zone Tax Credits - The Long Beach Enterprise Zone offers a variety of tax credits to offset California income taxes (Exhibit B). The credits include:
a. Hiring Credit - A qualified business may reduce its state income tax by a percentage of wages paid to one or more qualified employees over a five-yea...
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