Tucson giving $4.3M incentives to battery makers, who promise 75 manufacturing jobs, $1.4B local investments

The city of Tucson will return all the money collected from construction and permitting fees paid by American Battery Factory and Sion Power, the renewable energy battery companies who say they plan to create 1,000 high-paying jobs for local residents and invest more than $1 billion in the area over the next five years.

Both companies are setting up new plants in Tucson.

The Tucson City Council approved a Primary Job Incentive for the companies at a meeting last week. The businesses will be required to create 75 manufacturing jobs, pay 75% of the health insurance premiums for those positions and will have to spend more than $5 million building their new facilities.

American Battery Factory and Sion Power got nods from the Pima County Board of Supervisors and Tucson City Council in December to build new factories with the promise of major returns for the city, county and local taxing districts.

Utah-based American Battery Factory makes lithium iron phosphate cells, or metal casings, used by electric car batteries to store energy. Sion Power has been in Tucson for more than three decades and already has more than 100 local employees making average salaries of $85,000.

Sion already has a plant just north of Tucson International Airport and is starting an $81 million expanion project, which will add about 150 engineering and manufacturing jobs along with more than $2 million in local tax revenue, according to a city memo.

American Battery Factory is building a corporate headquarters and 2.2 million-square foot “gigafactory” south of the Raytheon facility. It would be their largest factory and is expected to create 1,000 jobs and more than $30 million in local tax revenue, according to a city memo.

The incentive agreements with the city are expected to return about $300,000 to Sion Power and $4 million to American Battery Factory after they’ve paid their construction and permitting fees, but in exchange, both companies have to spend money on buildings and create jobs.

Sion Power, per their agreement with the city, needs to create 25 manufacturing jobs with a salary of $55,000, cover 75% of the health insurance premiums for each employee who takes the job and retain them for five years.

American Battery Factory has to create 50 manufacturing jobs with the same pay and health care benefit and retain them for five years as well, per their agreement with the city.

Similarly, they’re both required to invest a certain amount in each of their construction projects. Scion Power has to spend about $19 million while American Battery Factory has to put about $1.2 billion on their new factory and offices.

The Pima County Board of Supervisors approved a ground lease with American Battery Factory in December. On the same day, the Tucson City Council first approved the use of the primary jobs incentive with Sion Power, who just announced their plans for the expansion.

The City Council approved the creation of the Primary Jobs Incentive Program in late 2011. It allows up to 100% reimbursement of construction sales tax and eligible building permit fees for companies that promise to create manufacturing jobs.

The incentive program specifically requires that a company spend at least $5 million on building facilities or equipment, also known as capital improvements. It also requires that the company creates at least 25 manufacturing jobs with starting salaries of about $55,000 or more and that they cover at least 75% of employee health insurance premiums.

Neither company will see the money they're expecting from the incentive until they create the number of $55,000-salary manufacturing jobs that they promise in the agreement. The reimbursement is meant to be used to offset the costs of fees and workforce training, according to the city.

When Mayor Regina Romero was running for office in 2019, she boasted that she wrote the city’s Primary Jobs Incentive while she was a councilwoman, resulting in hundreds of high-paying jobs in the area. The incentive agreement is frequently used by the city, especially with companies expected to be large employers in the area including Raytheon, Caterpillar, Comcast, Texas Instrument, HomeGoods and World View.