Nevada lured Tesla with subsidies worth $1.3 billion

Gigafactory development exacerbated regional housing crunch

Musk called lack of housing constraint on growth

Tesla spokesperson referred to Musk's statements when asked for more details

Electric car entrepreneur Elon Musk says his latest vision for Tesla’s Nevada Gigafactory includes housing close enough for workers to walk to their jobs.

“We’re looking at creating a sort of housing compound just onsite at the Gigafactory, using high quality mobile homes,” Musk said during a recent on-stage interview with Nevada Gov. Brian Sandoval.

Musk added, “which I think would be great because people could actually just walk here.”

During the conversation, Musk listed sustainable housing as one of Northern Nevada’s greatest needs, a need that’s been exacerbated by an influx of people working at the Gigafactory, which is part of the booming Tahoe Reno Industrial Center about 20 miles east of Sparks.

“Well, I think it’s going to require pretty much everything,” Musk said. “There’s going to need to be single family units with, you know, a yard, apartment buildings.”

The factory, which Tesla agreed to build in Nevada after the Legislature and Sandoval approved a subsidy package worth an estimated $1.3 billion over 20 years, already employs an estimated 7,000 people.

Musk said employment could eventually increase to as many as 20,000 at the Gigafactory, where workers are already racing to increase output to produce products such as the drive train and battery for the Model 3 sedan and Powerwall home charging systems.

“We just need to make sure that we can build out the housing, the infrastructure, schools and all the things that are necessary in order for people to have, essentially, the American dream,” Musk said.

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In the past year, housing inventory in the Reno-Sparks area has dipped to as little as 1.2 months, well below the typical six-month supply. During the same period, the median home price in Reno reached $400,000 for the first time.

The situation is even more dire for would-be renters. The most recent available figures for Reno-Sparks show a vacancy rate of just 1.58 percent and average rent increasing from $1,230 to $1,318.

But turning Musk’s vision for Gigafactory housing into reality will be a tall order considering the factory’s location in a massive industrial park on rugged terrain in a remote location.

The land where the Gigafactory is located is subject to covenants that prohibit residential development and surrounding property is zoned for industrial use.

Austin Osborne, planning director for Storey County, said the closest land that’s considered primed for residential development is several miles to the northeast at Painted Rock.

“The housing we do have in the master plan is located adjacent to the industrial center, that is an area that could be potentially considered for residential,” Osborne said. “That location at Painted Rock is not walking distance.”

The extent of what Musk has in mind isn’t clear. Musk, who is known for making bold, if vague, proclamations, didn’t stick around after his appearance to answer questions from reporters.

A company spokesperson referred back to Musk’s remarks when asked what, if any, steps the company was prepared to take to make the idea a reality.

Gigafactory-adjacent housing that’s limited to temporary units for construction workers would be easier to accomplish than permanent units that could support families.

Although either style of housing would come with challenges.

“This is kind of dreamy right now,” said Joe McCarthy, a member of the board of the Comstock Residents Association, a community group for Storey and Lyon county residents.

“It sounds great but delivering a significant zoning change … there is going to be some residential outcry,” McCarthy said.

Todd Hess, superintendent of the Storey County School District, said any significant residential development in the area would need a school and the cost would likely exceed the district’s entire annual budget.

Without outside funding, “we try to get a bond to pay for it or it comes out of the general fund,” Hess said.

During his time on stage, Musk discussed a private conversation with legislators prior to the event in which the group discussed a need for more housing, infrastructure and amenities in the area. But he stopped short of offering to foot the bill and suggested, “some combination of developers, Tesla doing things directly.”

Musk continued, “People need houses, they need schools, roads, electricity – all those things,” adding, “well, Tesla could probably do the solar battery electricity part. But there’s just a tremendous amount of infrastructure that needs to get built. I think that is the main constraint on Gigafactory growth.”

Lance Gilman, developer of the industrial center, said he’s supportive of plans to develop housing near the center. Gilman, who is also on the Storey County Board of Commissioners, said he was speaking in his capacity as developer.

“The TRI-Storey County Development Agreement precludes residential anywhere within the boundaries of TRI,” Gilman said. “That being said, we are aware Tesla has been exploring sponsoring housing development at other locations nearby in the trade area -- and we encourage them to continue to do so.”