CEDAR RAPIDS — The City Council unanimously advanced a plan Tuesday to provide 20 years of tax incentives so global company BAE Systems will build a $139 million aerospace facility here with hundreds of well-paying jobs — and perhaps become a catalyst for more economic development.
The council approved a project term sheet with an estimated $14.5 million worth of property tax incentives to build a 200,000-square-foot classified defense aerospace facility at 76th Avenue SW and Sixth Street SW. Developer Ryan Companies will start in October and is expected to finish by September 2022.
“I think it’s going to be a terrific addition besides all the dollars and the jobs that we’re keeping and that will grow in this community, so I’m really excited about it,” Mayor Brad Hart said.
BAE Systems, based in the United Kingdom, agreed to purchase Collins Aerospace’s military Global Positioning System business in January for $1.925 billion after U.S. Department of Justice regulators asked Collins Aerospace, Cedar Rapids’ largest employer, to divest the unit as part of the merger between Raytheon Co. and Collins’ owner, United Technologies Corp.
Those military GPS employees remained working in Collins Aerospace’s facilities since the January purchase agreement, but BAE said it would build a new facility for them.
The city plans to incentivize that project with infrastructure improvements around the facility and a 20-year, 75 percent property tax exemption, which applies to any added value to the property.
The tax exemption is subject to approval Friday by the Iowa Economic Development Authority under its high quality jobs program.
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Caleb Mason, a city economic development analyst, said the incentive package also is subject to the company maintaining a minimum n employee threshold.
Developer Ryan Companies and BAE Systems would assist the city in applying for RISE grants, a state program that promotes economic development through street construction and improvements, Mason said.
After the IEDA board considers state incentives, in July and August, Mason said the city would need to take action to establish a tax increment financing district, apply for the RISE grant through the Iowa Department of Transportation and make the project terms legally binding in a development agreement.
Mason said 550 of the 650 jobs the company will have at the facility qualify at or above high-quality job pay rate, resulting in “a very significant ripple effect in the community.”
Hart said BAE Systems is working with Kirkwood Community College to develop a curriculum so that when people are certified with necessary training, the individual could secure a job with the company. The company also supports STEM initiatives in local schools, he said.
BAE Systems will occupy 160,000 the facility’s 200,000 square feet initially, Hart said, to allow for expansion later.
No BAE Systems representatives spoke Tuesday at the meeting.
Council member Ann Poe said city officials hope to be a good partner as the company grows in Cedar Rapids.
She said she hopes to see opportunities for local workers to be involved in building the facility to pump additional money into the economy and tap into the city’s workforce.
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“We understand you had many other opportunities, but you chose us and we’re thrilled,” Poe said of the BAE management team. “The new $139 million facility and bringing with you the annual payroll for these jobs is just over the top.”
The jobs, with an average salary of about $100,000, are “phenomenal jobs” to keep in the area with exciting growth prospects for young talent, said council member Ashley Vanorny.
“I think we have a wonderful pipeline between Iowa and Iowa State and Kirkwood to make sure that we continue to retain the talent and create this talent at home,” Vanorny said.
Council member Scott Overland said he sees potential for “clustering” of aerospace businesses as Collins Aerospace and now BAE Systems locate in Cedar Rapids.
Cedar Rapids has already seen that happen in the city with grain-processing companies like Cargill, Ingredion and Quaker Oats.
“We’ve concentrated that and it’s led to tremendous job growth over time, so I’m very excited to have that,” he said. “It adds to the diversity of the employment base in Cedar Rapids on a long-term basis and I look forward to growing with them as the years go by.”
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