DOWNEY – Tesla Motors and Industrial Realty Group have reached a lease deal to open an electric vehicle production line in Downey, and the lease is now awaiting government approval, city officials said this week.

“It is my understanding that the last step to make this a reality is the federal government's approval of the lease between Tesla Motors and Industrial Realty Group for the Downey site,” Councilman Mario Guerra said in a statement Tuesday. “The City is looking forward to that approval. We are very excited and happy about our relationship with Tesla Motors.”

An approval by the federal government is necessary because Tesla received $465 million in government loans to jumpstart production of its Model S, an all-electric vehicle sedan.

Government approval on the deal is expected to take several weeks, city officials said.

A spokesperson with the U.S. Department of Energy, which issued the Tesla loans, did not return a phone call seeking comment.

Guerra’s announcement came minutes before the city of Long Beach approved a $28.6 million incentive package for Tesla, which reportedly is also considering a former Boeing plant near the Long Beach Airport.

Last month, to facilitate a deal with Tesla, the city of Downey waived nearly $6.9 million in future rent payments from IRG on 20 acres of land on the former NASA site.

The city also waived a stipulation that IRG build a 40,000 square foot learning center, and agreed to pay $1.8 million in roof repairs using federal grants.

Tesla representatives would not confirm that it had reached a deal with IRG.

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Published: December 11, 2009 - Volume 8 - Issue 33