Tesla – The Miracle In Storey County

It has been nearly five years since Governor Sandoval and the Nevada Legislature saddled The Miracle In Storey County, aka Tesla up onto the backs of the Storey County Taxpayer. With the news of the Tesla deal reaching all four corners of the globe, scores of new companies have purchased land at TRIC and set up shop. These companies are creating rapid growth in Northern Nevada and are responsible for dramatic growth in our little slice of paradise.

This is seemingly a good thing for Northern Nevada and Storey County. It has been an especially good thing for Roger Norman, Storey County Commissioner Lance Gilman, and TRIC project manager and Mustang Ranch brothel resident Kris Thompson. The Tesla announcement has proven to be a massive windfall for TRIC. TRIC recently announced they have sold out and are winding down their real estate business. At 80, Roger Norman will now ride the fruits of his work into the sunset.

While Blockchains has taken the reins from Norman by buying up all the remaining acreage, County Commissioner Lance Gilman has been hired to work his magic for Blockchains. While past performance is no indication of future developments, I am confident that Mr. Gilman will wear hats on both sides of the table as he has in the past to benefit the few (himself and Blockchains) at the expense of the many (The people who elected him to represent them and their best interests).

Past Performance

We’ve seen Tesla’s impact here in Northern Nevada. But what is the impact on Storey County residents and revenues? We have written about the record Taxable Sales success in recent years which you can read here. We have written about the grim outlook presented by the FY18-19 Storey County Budget that was approved on Monday, May 21st. The budget, with $ 1.7 million dollars of red ink, is upside down primarily because of Tesla.

Tesla signed an agreement with Storey County in 2015 to pay for providing County provided activity including Fire, Sheriff, and Building Inspection services. That agreement, which pays the county 1.2 million dollars a year is set to expire on June 30th, 2018. Pat Whitten has been trying, unsuccessfully, to get Tesla to commit a couple hours to hammer out a new agreement. Tesla is in the middle of a remarkable cash crunch, so it’s no surprise that they aren’t interested in talking about committing cash to pay for what we have been providing them. Presumably Tesla will negotiate a new agreement before the current one expires. However, unless it is for $1.7 million dollars, Comptroller Gallagher warns us of belt tightening on the horizon.

In response to our critical view of the condition of our condition, Kris Thompson posted a remarkably rosy picture of the County’s health on the Virginia City Highlands email chat group, which you can find in its entirety at the end of this article. In this article, we address some of the points he brought up (using numbers from the Storey County Audited Budges and the Governors Office of Economic Development, Tesla and others) to provide some balance to his numbers.

Key Facts about Storey County’s condition now (2018) compared to 2014 before Tesla

County General Fund Balance
                End of FY13-14:                              $ 7,433,142
                Final Budget FY18-19:                    $ 8,544,163
                Source:  County Comptroller’s Office

Despite the tens of thousands of jobs, billion dollars of capital investment and vast the growth at TRIC, revenue growth is slim to none here in Storey County. Given the County’s flat revenue growth and the robust spending, the County’s General Fund’s balance dropped last years and we recently approved Budget to be $1.7 million in the red this year. Since Telsa’s arrival as TRIC’s the anchor tenant, the General Fund up only $1.1. While good, this can hardly be considered miraculous in light of our financial health.

Another useful number to consider might be the ratio of revenue and expenses growth since Tesla showed up on the scene.

This chart shows the growth of revenue and expenses over the 5 years since Tesla broke ground. As the chart reveals, the county’s revenue is flat while spending is not.

This chart shows the troubling fact about the growth of revenues and expenses. Storey County spending growth outpaces revenue growth two to one.

Yes, Virginia, from FY13-14 to FY18-19 our expenses have grown 44% while our revenues have only 22%. Expenses are growing 100% faster than our revenues, and C Street continues to not be swimming in cash. Yet Commissioner Gilman and Commissioner McGuffey continue to promise free money and a chicken in every yard due to the abundance of money here in “The Richest Place On Earth”.

First Responders

From Mr. Thompson’s article:

First Responder Capability for Residents
                Total number of Fire and Sheriff and communications employees
                As of 6/30/14:                    71
                As of 4/30/18:                    94
                                Source:  County HR Office

All sectors of the County Personnel County have grown from 2104 levels. Wages and benefits are the driving force of our expense growth. The rise in the payroll costs and the additional fire and police body count is a direct result of the services required at TRIC. We documented the rise in headcount and payroll costs in our budget article here and here. Many of the added personnel are the direct result of TRIC. Yet TRIC revenues are not keeping pace with their impact on the County. There is only one place Commissioners Gilman, McGuffey and McBride can pick up the slack, and that is from the wallets of Storey County Taxpayers.

The Miracle In Storey County – Tesla

Tesla began 15 years ago when Elon Musk sold PayPal. His vision of renewable energy cars was the importance for Tesla. The Tesla business model was to introduce boutique high-end cars so he could develop a market and interest in electric vehicles. With his charismatic personality, he has been able to cultivate a loyal base of enthusiastic supporters and customers who have followed him wherever he has led them.

However, while other car manufacturers rely on producing cars they sell at a profit, Tesla has relied on myth and mystique. And taxpayer money. Without the Zero Emission Vehicle (ZEV) tax credit incentivized initially by California and now by the Federal Government, a dozen or so other states and governments around the world, Tesla would have already been a distant memory.

There are thousands of articles that talk about the cult-like following of Musk, and he is to be lauded for creating this company that has lost money since it’s inception and continues to maintain an astounding market cap. However, it is becoming more clear with each broken commitment and production gaffe, that the wheels are loosening and may soon be flying off.

I’ll begin a more detailed set of reporting on Tesla in the coming weeks, but let’s take a look at their quarter profit/loss performance over this past year:

 

 

I am guessing that Telsa would have been out of business years ago if not for the government welfare checks. Storey County Taxpayers have unwillingly been tossed into this group of check writers thanks in part to Governor Sandoval, the Nevada Legislators, and TRIC frontman Lance Gilman.

More on this later…

Business Licenses

From Mr. Thompson’s article:

Number of Companies licensed to work in Storey County
                Active Business licenses
FY 2013-14: 983
FY 2014-15: 1,081
FY 2015-16: 1,308
FY 2016-17: 1, 781
FY 2017-18 to date: 1,991
2014 – 2018:   102.5% increase

This is nothing short of spectacular. Great job for everyone who bought one of these, including me.

Licensing Fees

From Mr. Thompson’s article:

Revenue from License Fees
Fiscal Year 7-1-13 to 6-30-14: $130,587.09
Fiscal Year 7-1-14 to 6-30-15: $173,045.09
Fiscal Year 7-1-15 to 6-30-16: $216,713.60
Fiscal Year 7-1-16 to 6-30-17: $279,479.42
2013/14 to 2016/17: 114.01% Increase
Source:  County Community Development Office

This increase of 114% is great. It would be even more had the County Commissioners not given away some of this cash with abatements. However, Community Development salaries have outpaced this growth due to the increased workload. This means that the added revenue from the license fees with all the work at Tesla ends up costing the county money. Total License revenue went up $148,892 but salary and benefits went up $333,253 costing the county $184,360. (Source, Audited Budgets from Storey County Website)

The Miracle In Storey County

How will this all wind up? The story is still being told.

Stay Tuned to The Teller for more on The Miracle In Storey County.

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Mr. Thompson’s Post to the VCH email chat group:

TESLA GIGAFACTORY – Financial Condition and prospects of the Anchor Company in Storey County

                Jobs at the Gigafactory:   Between 8-10,000 permanent and temporary jobs (the actual exact job count is confidential)

                                NOTE:  Tesla has already far exceeded their obligation to create 6,500 jobs at the Gigafactory in less than 4 years since the start of construction.

                Payroll at the Gigafactory            Approximately $400 – 500 Million annually

                                                Rough estimate based on data from the GOED Tesla Impact Study which indicated average salaries, etc.  (Source: http://www.diversifynevada.com/documents/Full_Tesla_Summary_Report_Analysis_Letters.pdf)

                                                NOTE:  This does not include the money tesla is paying out in service, construction, and other contracts to local businesses and vendors.

                Tesla Current Stock Price:   $276.82 (NASDAQ) per share

                By comparison GM is @ $37.79, Ford is @ $11.33.    eg. Tesla has a very comfortable margin in the event of a major setback/needing to generate more cash or capital funds

                Actual Payments made by Tesla to Storey County to date:

                                Government Services:    $2,504,099.00

                                Permits and Licenses:     $2,419,055.00

                                NOTE:  Tesla alone, even with the abatements, has already paid Storey County more than the entire County budget in 2001, pre-TRI.

                NOTE:  These numbers do not include revenue generated for Storey County from Franchise Fees, fuel taxes, room taxes, etc.

                                Source:  County Comptroller’s Office

                                                                                           —

Number of Companies licensed to work in Storey County

                Active Business licenses

FY 2013-14: 983

FY 2014-15: 1,081

FY 2015-16: 1,308

FY 2016-17: 1, 781

FY 2017-18 to date: 1,991

2014 – 2018:   102.5% increase

                Revenue from License Fees

Fiscal Year 7-1-13 to 6-30-14: $130,587.09

Fiscal Year 7-1-14 to 6-30-15: $173,045.09

Fiscal Year 7-1-15 to 6-30-16: $216,713.60

Fiscal Year 7-1-16 to 6-30-17: $279,479.42

2013/14 to 2016/17: 114.01% Increase

Jobs in TRI

            2014:    Approximately 5,000

            2018:   Approximately 15,000

            NOTE:   This is an increase of 2,500 jobs per year during the period 2014-2018

            NOTE:    The 15,000 current job count will increase this year as two “major  tech companies,” perhaps more, will be breaking ground and creating a significant number of new permanent and temporary jobs.

Payroll from TRI

            2014:  $200 million per year – Rough estimate based on 5,000 jobs ($40k/yr average) and factors /assumptions in the Tesla Impact Study which contained a job and payroll analysis

            2018:  $700 million per year – same rough estimate based on 15,000 jobs ($46k/yr average).

            If all new tech companies break ground this year, we could hit $1 billion per year in payroll flowing out of TRI in the next 5 years….