County supes OK incentives for Raytheon expansion

Pima County officials voted Tuesday to approve a $16 million tax abatement and incentive package for defense contractor Raytheon, which plans to add 2,000 jobs at its Tucson missile factory.

The Board of Supervisors OKed the incentives with a 4-0 vote. Supervisor Ally Miller, whose husband works for Raytheon, abstained due to the conflict of interest.

Expansion plans at Raytheon will mean about 2,000 additional jobs over five years and a doubling of the property tax base at the plant. Pima County will lower taxes on the factory for a decade and restrict development next to the expanded facility. After months of rumors, the company confirmed its plans last week.

The county and Pima Association of Governments have already invested $33 million in attracting new Raytheon jobs here, purchasing land for a buffer zone and constructing a new roadway near the factory, south of Tucson International Airport.

As an incentive, the county will support a Foreign Trade Zone application by Raytheon to the Department of Commerce, which would include lowering the 18 percent property tax rate to 5 percent of assessed value for a decade. Pima County Administrator Chuck Huckelberry told the Board of Supervisors last week that Raytheon's local tax base would double as the company expanded here.

The company "will build and equip significant new capital facilities ... The expansion construction and employment growth ensure that Raytheon, as the single largest employer in Pima County, will continue to be a major economic driver of our local economy," Huckelberry said.

"For a variety of reasons, detailed information regarding their expansion plans are not being released, but they are real and verifiable," the administrator wrote in a memo asking the supervisors to approve the deal.

Raytheon will continue to pay the full property tax rate to the local educational districts: Sunnyside School District, Pima Community College and the Joint Technology Education District, Huckelberry said. The tax abatement will cost the county about $16 million over 10 years.

The incentives to be given to Raytheon include, according to a county news release:

Voluntary restrictions on County property for sale or lease adjacent to Raytheon

Support for an application for a federal Foreign Trade Zone designation that will allow the company to realize a reduction in its property taxes

Expanding the Aerospace and Raytheon parkways to accommodate more traffic

Selling property south of the plant to the Air Force for the construction of a new state-of-the-art secure entrance

The voluntary development restrictions include restricting building heights to no more than 40 feet, angling buildings away from the plant to prevent interference with Raytheon's radar testing, preventing foreign-owned companies from locating in the area, and 1,500-foot setbacks from Raytheon's test and storage facilities.

The overall economic impact of the expansion could run into billions of dollars over the next decade, officials said.

TucsonSentinel.com reported last month about Raytheon's local expansion plans, although county officials would only comment anonymously at that point, and did not provide details about the incentives that would be offered.

The much-hyped expansion by the missile manufacturer could bump the company's local workforce nearly back to employment levels seen in 2009. The region's largest private employer would add nearly 2,000 jobs, bringing it to about 11,500 workers. In 2009, Raytheon reported more than 12,000 Tucson employees.

The company is ramping up production of the Standard Missile-3 and SM-6 interceptors, and has inked a deal with Norway's Kongsberg, with plans to assemble and test that company's Naval Strike Missile in Tucson.

Also in the Aerospace, Defense and Technology Business & Research Park, the county is building a headquarters for high-altitude balloon firm World View, and facilitating a plant for new small-rocket company Vector Space Systems.

Raytheon reported that it has about 9,600 workers now. In 2009, about 12,140 were employed by the company in Tucson. In early 2013, Raytheon reported 10,300 local workers.

The new hires will have an average salary of $110,000, the company told county officials.

In 2010, the company chose Huntsville, Ala., as the location for final assembly of the SM-3, with about 300 jobs created in a new plant on the U.S. Army's Redstone Arsenal. The company chose the location because of the large buffer zone and significant tax incentives unavailable in Arizona.