Startup’s previous venture addressed Startup’s previous venture addressed BY TIMOTHY BOONE| Advocate business writer Jan. 11, 2013 Comments The startup car company that announced plans Thursday to open a manufacturing facility in the old General Motors plant in Shreveport, made a similar proposal in 2010 to move into an empty GM plant in Michigan. But the project never got off the ground. Elio Motors plans to take over part of the Shreveport General Motors plant to assemble its three-wheeled vehicle. Elio plans to begin commercial production in mid-2014, and says the vehicle will sell for $6,800 and average 65 miles per gallon of gas. Paul Elio, chief executive officer of Phoenix-based Elio Motors, first identified a GM plant in Pontiac, Mich., as the site where he wanted to build the vehicles. At the time, he was calling the three-wheeled vehicles, which are considered motorcycles by federal standards, the “Trikke.” In March 2010, Elio told the media about his plans to open a manufacturing facility in Michigan, saying it would create 2,100 jobs. But the plant was never built. “Nothing ever happened,” said Kathy Fagan, a spokeswoman for the Michigan Economic Development Corp. Elio had brief talks with MEDC officials about the plant, but there were no state incentives and “nothing materialized,” Fagan said. Elio told KSLA-TV in Shreveport there was a lack of financing and community support for the Pontiac project. A spokesman working for Elio did not respond to The Advocate. For the Shreveport plant, Elio has teamed with Stuart Lichter, an industrial developer who has found new uses for shuttered military bases and manufacturing plants. Elio and Lichter will buy the plant from the RACER Trust, which took over dozens of discarded GM facilities after the company filed for bankruptcy. Bill Callen, a spokesman for the RACER Trust, said the sale of the Shreveport plant is set to close in the spring. Callen would not disclose the sale price, citing a confidentiality agreement. RACER carefully vetted Elio and Lichter before agreeing to the sale and made sure they had financing in place and a realistic business plan, he said. “The mission of the trust fund is to find buyers that create jobs in line with the community vision,” Callen said. “It’s not just to sell property.” Elio is set to get a number of standard performance-based state incentives from the Louisiana economic development department. Those including the Competitive Projects Payroll Incentive. The CPPI gives companies payroll rebates of 13 percent for each qualifying job during the first 10 years of operations, LED Secretary Stephen Moret said in an email. Elio has drawn comparisons with another startup automaker, V-Vehicle, later renamed Next Autoworks. In 2009, V-Vehicle announced it would convert a shuttered headlight plant near Monroe into a plant to build fuel-efficient cars. The project had high-profile investors, including billionaire T. Boone Pickens and Kleiner Perkins Caufield & Byers, one of the largest and most established venture capital firms in the world. But those plans failed to materialize after the U.S. Department of Energy did not approve $321.1 million in federal loans designed to promote new fuel-efficient automobile technology. Elio filed for $260 million in DOE grant funds for the proposed Pontiac plant, according to a 2010 article in The Oakland (Mich.) Press. But the Shreveport project is not seeking federal money. Moret said in an email that Elio and V-Vehicle aren’t comparable. For one, the state is not providing any up-front incentives. V-Vehicle had to reimburse $6.18 million to Louisiana in 2010 after the DOE rejected its loan application. “If the project succeeds as planned, the company will receive statutory incentives (CPPI); accordingly, it involves zero risk for the state,” Moret said in an email. LED was aware of Elio’s plans to open a Michigan facility and the failure to launch the project, he said. Woody Wilson, Caddo Parish administrator, said Elio is asking for local incentives. The Caddo Industrial Development Board plans to sell $10 million in revenue bonds to cover the renovations to the plant. Elio wants Caddo Parish to purchase about $1 million in bonds, and will sell the other $9 million to investors. Taxes derived from the plant would go toward paying off the bond. If the sale is approved and Caddo buys the bonds, the parish could end up on the hook for $1 million and end up owning an automobile plant if Elio is not a success, Wilson said. “Everything has risks,” Wilson said. “No risk, no rewards.” Caddo officials said Elio and Lichter are worth the gamble. Wilson notes that Lichter redeveloped McClellan Air Force Base near Sacramento, Calif., which was shut down during the 1990s. “There are 15,000 people working out at that base now,” he said. Elio plans to occupy about 1.5 million square feet of the plant, which is about 4 million square feet and still contains equipment used to make vehicles. Moret and Wilson said that Lichter has a lot of room to offer other potential tenants. “We’re gaining the benefit of having Mr. Lichter’s capabilities, resources and commitment as a major industrial developer to cultivate additional reuse options for the former GM facility,” Moret said in an email.