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Iowa provides $7.5 million in incentives for BAE Systems project in Cedar Rapids

State, local benefits total $25.8 million for facility with 650 jobs

This rendering shows the BAE Systems building planned for 76th Avenue and Sixth Street SW near Interstate 380 in Cedar R
This rendering shows the BAE Systems building planned for 76th Avenue and Sixth Street SW near Interstate 380 in Cedar Rapids. Iowa on Friday awarded the company $7.5 million in tax credits to retain 650 skilled jobs in Cedar Rapids. (Submitted)
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The Iowa Economic Development Authority Board approved $7.5 million in state tax credits Friday for a new BAE Systems’ facility that will keep 650 jobs in Cedar Rapids.

Investment tax credits account for $5.75 million of the benefits. Another $1.65 million is coming from a refund of sales, service and use taxes. The remaining $165,000 is via a research activity credit.

The tax credits are in addition to $18.2 million in local property tax incentives through the High Quality Jobs Program. Cedar Rapids City Council approved the 20-year, 75 percent property tax exemption Tuesday.

United Kingdom-based BAE Systems agreed to buy Collins Aerospace’s military Global Positioning System business in January for $1.925 billion. The sale came after U.S. Department of Justice regulators asked Collins’ owner, United Technologies Corp., to divest the business as part of its merger with Raytheon Co.

Employees working on the military GPS units have remained working at Collins Aerospace’s facility, but BAE Systems said there would eventually be a new facility for them.

BAE Systems considered many cities across the country for the facility before agreeing to stay in Cedar Rapids, Cedar Rapids City Manager Jeff Pomeranz told The Gazette,

Debi Durham, director of IEDA and Iowa Finance Authority, said BAE Systems staying where Collins Aerospace is located “made so much sense,” among other factors.

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“We offered them incentives, but that was not what was driving the deal,” Durham said. “Early on they recognized how valuable these employees were and how well skilled they were.”

Durham said the process of keeping those jobs in Iowa started before BAE Systems was in the picture.

“When we knew (Collins Aerospace) had to divest this part of their business, we worked even with Collins to make sure that when it was appropriate — when they had a potential buyer for this piece of business — that we began to interact directly with them (the buyer) very early on,” Durham said.

While the 650 jobs from the project are officially considered new jobs, Pomeranz said most of those jobs are for people already living in the area who have worked for Collins Aerospace.

The state agency expects the 200,000-square-foot facility. which will be on 76th Avenue and Sixth Street SW, to begin construction in late September.

Durham lauded BAE Systems’ transparency during the process.

“We work with a lot of companies. My team really speaks of them in the highest of regards,” Durham said. “They’re just going to be a great corporate citizen. I couldn’t be more pleased that this day has finally come.”

A spokesman from BAE Systems declined to comment on the approval of state tax incentives, given that the GPS acquisition is not complete.

JRS Pharma

The Economic Development Authority board also approved $844,500 for JRS Pharma in Cedar Rapids, which will add 18 jobs. The city of Cedar Rapids is providing $461,845 in tax abatement.

The project will add 20,000 square feet to the company’s facility at 725 41st Ave. Dr. SW.

JRS is a global pharmaceutical excipient company. Excipients are inactive substances, such as coloring agents and preservatives, added to drugs.

Comments: (319) 398-8394; john.steppe@thegazette.com

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