Will Tesla, Switch improve Fallon economy?

Will the economy in Fallon and Churchill County improve when the massive Tesla and Switch facilities currently under construction in Storey County become operational?

I asked this question to the head of the Churchill Economic Development Authority (CEDA), a leading Fallon Realtor and the Nevada State Demographer.

Their answers ranged from undoubtedly yes to not really.

The only enthusiastic response came from CEDA Executive Director Rachel Dahl, who said her office has experienced a “huge increase” in inquiries from out-of-area companies interested in establishing operations here in order to be near the Tesla Motors battery factory and the Switch data center being built at the Tahoe Reno Industrial Center off I-80 east of Reno.

“We’ve also received inquiries from home builders. There is little affordable housing available in the Reno area, and home builders have told me that Tesla and Switch employees wouldn’t mind driving the extra distance if they could find cheaper housing,” she said.

“Things are beginning to look up here. Single stick-built home sales in Churchill County increased 31 percent last month over the same period last year. And third quarter 2015 general sales in the county increased 25 percent over 2014,” Dahl added.

But Bob Getto of Getto and Ferguson Inc. Realtors said that although Churchill County residential real estate sales did increase last month, “we probably should not get our hopes up at this time.”

Local real estate sales have increased because homes here cost, on average, 30 percent less than in Reno and 20 percent less than in Fernley. But “it is difficult for me to believe that many Tesla and Switch employees will want to commute from Fallon to work just a few miles from Reno,”said Getto, a member of the Board of Directors of the National Assn. of Realtors and past president of the Northern Nevada Multiple Listing Service.

“Fallon is outside the arc that includes Reno, Sparks, Fernley and Carson City. Fallon is a great distance from Tesla and Switch in terms of miles and time. I feel that we will eventually rebound here, beginning, probably, in 2017. There are currently 62 vacant store fronts in the city and county that are for sale, lease and rent. I hope things improve, but Fallon and the county will not go to the moon,” Getto stated.

The least optimistic of the three experts I spoke with was Jeff Hardcastle, the Nevada State Demographer.

Churchill County’s population in 2014, when the latest statistics were available, stood at 25,103, he said. This was 219 lfewer than the 2013 figure, which was 25,322.

“I don’t foresee much of a growth effect in Fallon and Churchill County caused by the advent of Tesla and Switch. The growth areas will be in Fernley, Reno and Sparks. I think there will be a population increase in Churchill County of about 270 people by 2017. This will keep the county’s population by 2017 pretty much flat or static, he predicted

Hardcastle, however, believes the Tesla and Switch operations will have a massive population impact on the Reno, Sparks, Carson City and Lyon County areas because they are in the “arc” described by Bob Getto.

Speaking recently to the Carson City Chamber of Commerce, he said, for example, that Tesla will bring 764 new jobs to Carson and that this figure does not include new residents who will be working at the Tesla plant which is expected to begin operations in 2016.

Hardcastle estimated that Tesla workers will eventually total about 6,500, and “they will be spending money on everything from housing to health care to dog food.” He said he expects Carson City’s current population of 54,772 to increase to 69,965 by 2033.

Washoe County will add about 34,000 new jobs to its current workforce of 258,000 by 2019, according to a report prepared for the Economic Development Authority of Western Nevada. This report also projects a total of 52,000 new Tesla and Switch-related jobs for the five-county area that encompasses Washoe, Carson City, Lyon, Douglas and Storey counties.

Hardcastle also projected a population growth of 528,000 for the entire state by 2035, with 328,000 of those coming from the Las Vegas area.

But, he told me, population forecasting is akin to weather forecasting, which relies on new information as it develops. He warned of possible future scenarios that would make the projected population and economic growth in Nevada smaller than his current estimates.

Among these scenarios are a recession, the deterioration of China’s economy, increasing international tensions, declining tourism and competition for Tesla and Switch.

David C. Henley is Publisher Emeritus.

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