As Tesla Motors attempts to decide between building a new electric automobile production plant in Long Beach or Downey, officials from both cities are speaking out in hopes of appearing more attractive to Tesla. Armed with $456 million in loans from the Department of Energy, Tesla is ready to move forward with production plans for its attractive Model S four-door electric sedan.

But new documents obtained by the staging-live.lbpost.com today indicate that the City of Long Beach may be at a distinct disadvantage when it comes to drawing Tesla to the city, despite being able to offer greater tax incentives than Downey can. Namely, the fact that Boeing is the sole owner of the facility and therefore is solely in charge of negotiations with Tesla; Long Beach has virtually no say in the matter. The City of Downey, on the other hand, owns about one-third of their proposed site and can therefore be involved in negotiations from the standpoint of city government.

In fact, Long Beach Economic Development manager Robert Swayze wrote to City Manager Pat West in August, “The decision to locate Tesla in Long Beach is ultimately in the hands of Boeing and Tesla.”

Today’s news that Councilmember Gerrie Schipske recently created and posted a YouTube video (UPDATE: video has been removed from YouTube) touting Long Beach’s tax credits for new businesses is making a lot of noise throughout the city, amid rumors that Tesla has been leaning towards choosing Downey after the city took out a full-page ad in the LA Times and made other efforts to court the automaker. Schipske’s video is framed as a love letter and ends with: “Tesla, if you want tax credits… Long Beach is your site…”

The proposed Tesla site in Long Beach is a former airplane production facility that is owned and operated by Boeing, while the proposed site in Downey is a former NASA production facility that is majority-owned by Industrial Realty Group and part-owned by the city of Downey. That, says Downey mayor Mario Guerra, is a distinct advantage for his city.

“In Long Beach, Tesla has been negotiating with Boeing,” he said today. “In Downey, the city has ownership of the site and therefore more insight into negotiations.”

Guerra also says he disagrees with some of the assertions in Schipske’s videos. It’s true, he says, that Long Beach can offer tax credits that Downey – as of now – cannot.

But Guerra is downright bubbly when talking about Tesla, excited over the possibilities. He also refuses to acknowledge a rivalry between the two cities, referring to Long Beach as “our friendly neighbors to the south.” He does point out, though, that both cities are competing for a Los Angeles County Economic Development Corporation (LAEDC) award for the county’s most business friendly city. He calls Long Beach the front runner for the award, as Downey is a first-time finalist.

“It’d be kind of ironic,” Guerra says with a laugh, “If Long Beach won that night and we ended up with the bigger prize.”

In past Long Beach City Council meetings, Councilmember Schipske has called into question the efforts that the City of Long Beach has taken to woo Tesla. Documents obtained by the staging-live.lbpost.com include letters from Manager of Economic Development and Management Affairs Robert Swayze to City Manager Pat West that explain representatives from Tesla met with Long Beach officials in both January and March of 2009 to discuss production plants in the city.

Swayze also sent a letter to Tesla CEO Elon Musk in June that congratulated the company on receiving the Energy Department loan and touted Long Beach’s commitment to green transportation. But that letter’s main topic is the possible creation of an EV Mall in Long Beach – essentially a dealership row of electric automakers that could potentially include Tesla and other upstarts like Fisker, CT&T, Aptera (pictured at right), Coda and others. The letter includes an article from the Long Beach Business Journal that outlines the EV Mall idea, but there is no mention of bringing Tesla to the city for production in that particular letter.

In fact, Swayze’s letter to West essentially takes responsibility away from the City of Long Beach and places it on negotiations between Tesla and Boeing. The property owners will seek a deal that is most advantageous for them, he says, and that the City of Long Beach will assist however possible but is not involved in the business negotiations.

Swayze wrote to West in August:

The decision to located Tesla in Long Beach is ultimately in the hands of Boeing and Tesla. The real estate negotiations are complex, particularly in light of the fact the $465 million dollar loan cannot be used for construction or tenant improvements. The City stands ready to assist the company Boeing selects as the future owner of the 717 site.

To download and read the 28-page document which includes Swayze’s letters to West, Musk and other automakers, click here.

We will continue to monitor the process of these negotiations. For now, Tesla is taking deposits for the Model S. There are a myriad complications with Tesla building a brand-new model from the ground up, most of them financial. The process often costs even large manufacturers close to a billion dollars to design and produce a new platform, not including the purchase and retrofitting of a plant that lists in the hundreds of millions of dollars. The $465 million loan is a large chunk of change, but Tesla has danced near the limit of their bank account before and the Model S will be a true test of the company’s efficiency. Time will tell whether or not Long Beach becomes part of that wild ride.

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