The tax incentive deal to attract Faraday Future to Nevada has drawn intense scrutiny thanks to the company’s reported financial straits. And now the state’s treasurer, Dan Schwarz, is calling for an audit on the government agency that organized the subsidies for FF, as well as Tesla’s Gigafactory.
Schwarz requested the audit on Friday during a committee meeting of the Governor’s Office of Economic Development (GOED). As a member of the Executive Branch Audit Committee, Schwarz said he wants to “better understand the procedures used to give out hundreds of millions” of dollars in incentives.
“Since 2014, the powers granted to GOED have continued to grow,” Schwarz said in a statement. “The audit will look into job creation data, amount of money invested in the state by everyone involved with the projects, the process that GOED used to qualify the project, and the rationale for what related documentation is deemed ‘confidential.’”
As we reported last month, the Nevada legislature passed laws during special sessions to authorize the Tesla and FF deals. The laws granted the GOED particularly significant authority over what documents related to the deals may be considered public. In the case of Faraday Future, that meant that the GEOD sealed the company’s financial documents before lawmakers voting to approve the tax incentives got to see them. This is totally legal in Nevada. Under SB 1, which launched the Faraday incentive package, if a company requests for documents to be considered confidential, it’s GOED executive director Steve Hill’s decision alone to make the determination. As a result, SB 1 mandates that Hill’s decisions are “final and not subject to judicial review.”
As part of the Faraday project, upward of $175 million in bonds may be issued by the state to build infrastructure around the site. Schwarz’s office is supposed to issue a recommendation as to whether the state can expect to recoup revenue from FF to pay off those bonds. But so far, he has been unable to review any documents related to the company’s finances.
That’s why Schwarz says he’s requesting the audit. “It is my hope that this audit provides greater transparency for these large scale projects,” he said in his statement.
Review of the $1.4 billion deal for Tesla could also be interesting. The GOED was criticized last year after Tesla sold $20 million in tax credits to MGM casino, but it shouldn’t inhibit the company’s efforts at the Gigafactory, which started producing lithium ion batteries earlier this year.
Anyway, Nevada’s governor, Brian Sandoval apparently has no problem with an audit, according to the Nevada Review-Journal, and said the GOED submits public reports and data to lawmakers.
That’s somewhat hard to believe, since Nevada lawmakers admitted they weren’t able to see anything related to FF’s finances before agreeing to the tax incentive deal in late 2015. Maybe that speaks more to the state’s lawmakers, though.