The latest media reports suggest that an electronic-car factory might be built on a site managed by IRG, if a memorandum of understanding with Industrial Realty Group is approved.

Wednesday witnessed the Downey City Council approving a preliminary deal. This deal can help in bringing auto manufacturing back to Southern California for the first time in nearly two decades.

A memorandum of understanding with Industrial Realty Group was agreed by the council. Industrial Realty Group is well known manager of an 80-acre parcel, where Tesla Motors Inc. is thinking to build an electric-car plant. As of now the facility is utilized for television and film production.

A sum of $8.7 million is to be provided by the city with the aim of helping Industrial Realty Group, or IRG, negotiate a lease agreement with the San Carlos, California based carmaker.

The deal, as per estimates of city, could give rise to 1,200 to 1,500 jobs.

The city informed that almost $20 million in revenue from taxes and utility fees could be produced by the car plant.

For past many years, Tesla has been searching for a location to construct its next vehicle, an all-electric sedan called the Model S.

The company hopes the car to go into production in late 2011. The sedan which will carry a price tag of $57,400 will be able to travel up to 300 miles on a full charge. It was specified by a Downey spokesman that passage of the memorandum by the City Council was mandatory to make the deal possible between Tesla and IRG. Nearly 20 acres of the 80 acre site is owned by the city.

The agreement specifies that there is no need for IRG to pay the city for leasing the land for 15 years that amounts to nearly $7 million.

The site would be fixed up in the remaining $8.7 million in economic incentives.

"The U. S. Department of Energy, which has given Tesla $465 million in low-interest loans to build the Model S vehicle, still needs to review the leasing agreement before any deal can be finalized," concluded a source.