WAITING FOR ELON
Bloomberg Businessweek|April 19, 2021
It’s not easy to compete with Miami and Austin for high-tech jobs. But Adelanto, Calif., which boasts a light regulatory environment, an enthusiastic city manager, and plenty of dirt, is giving it a shot
Sarah McBride

One night two Januaries ago, Jessie Flores made a series of frantic calls and texts to his deputies, with a request: Could they clear their schedules to get to Elon Musk’s offices in Los Angeles for a meeting?

Flores is the city manager of Adelanto, Calif., a scrubby, mountain-shadowed city of 37,000 in the southwestern Mojave Desert known chiefly for its prisons. Adelanto’s mayor, Gabriel Reyes, is a currency trader who works out of a ramshackle strip-mall office in nearby Hesperia. But mayor is a part-time gig here, and the city manager, who’s appointed by the city council, is the full-time chief executive—in charge of finance, land use, and economic development.

Over lunch with the mayor and a county supervisor, Flores had recently learned of an unusual opportunity. Musk—whose two companies, SpaceX and Tesla Inc., had made him either the world’s richest or second-richest man, depending on the day—had a sideline in rapid transit. His Boring Co. is developing a point-to-point travel system that moves passengers in 12-foot-diameter tunnels. It recently finished a tunnel below the Las Vegas Convention Center and is in talks to build one in Ontario, Calif. The county supervisor, who’d worked on the Ontario project, mentioned to Flores that Musk was looking for a place with enough room and a flexible enough regulatory environment for the Boring Co. where it could practice digging as it improves its tunneling machines. Adelanto, the supervisor suggested, might be a good fit.

Not might, Flores shot back. Definitely! He got the phone number for Boring’s president, Steve Davis, and texted him. “I said, ‘Steve, we’re the ones you’re looking for,’ ” he recalls. “ ‘When can we meet?’ ” He suggested that Davis and his staff sit down with a team from the city who could answer questions about permits and the like. An aide to Davis proposed some dates, and Flores started planning for the meeting at SpaceX’s headquarters, two hours southwest of Adelanto.

Flores, a wiry Los Angeles native who served in the U.S. Army during the first Gulf War and worked in security for aerospace companies before getting into local government, is not alone in his ambition. Smaller municipalities across the country have been scrambling to cater to the every need of tech billionaires and chief executive officers, especially since the pandemic fueled an exodus from high-cost cities. Musk himself recently relocated to Texas, after local groups offered Tesla at least $56 million in tax breaks to open a factory. Meanwhile, Amazon.com Inc. agreed to open a second headquarters in Northern Virginia after receiving commitments for $796 million in tax breaks and transportation improvements. A handful of Silicon Valley venture capitalists have relocated to Miami, lured by a business-friendly mayor and low state taxes

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Compared with those locations, Flores doesn’t have much to work with. Adelanto has no money or political capital to spend on headline-grabbing economic incentives. “I inherited a very unstable and mismanaged city, and poorly led,” says Flores, who became city manager in 2018. “If you want to quote me on that, that would be great.”

For 2021, the city has been projecting a $4.72 million deficit. One-third of its residents live below the poverty line, and its recent history doesn’t inspire much confidence. Three years ago, the home of former Mayor Rich Kerr was raided by the FBI as part of a corruption probe. (Kerr says he did nothing wrong. He was never charged.) Flores himself hasn’t escaped scrutiny. He was placed on administrative leave in 2019 and reinstated a few weeks later. No reason was given by the city council. “Rumors, bogus allegations,” says Flores, who believes other employees were upset he was disrupting the status quo at City Hall. “It’s sad.” And these were only the latest difficulties: In 2008 the animal control supervisor resigned after he was accused of drowning kittens, and in 2013 some moms at a local elementary school were charged with a felony for vandalizing a classroom with paint and ketchup. (The former supervisor pleaded guilty to four counts of animal cruelty and received 90 days in jail. The ketchup moms pleaded no contest and had to pay $6,901 and perform 100 hours of community service.)

Adelanto may lack reputational pizzazz, and it may not even have a local police department (it was disbanded in 2001 amid an earlier corruption probe), but it has two important assets: vacant real estate and an extremely easygoing approach to regulation. In contrast with much of California, where it can take months or longer to get real estate projects approved, permits can get same-day turnaround here. Whenever a rule offers room for interpretation, civil servants, many of whom work on contract and know their jobs are riding on helping as many businesses as possible, tend to read it in the way that provides the least friction. “They understand that it’s economic development and job creation that stimulate the economy, not government bureaucracy,” says Flores, who is registered as an independent and considers himself a libertarian. “Let’s keep California employed.”

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