Studer Community Institute

City to ink airport aerospace deal

September 4, 2014
/ Carlton Proctor
/ community-dashboard

After three years of negotiations and fending off rival competitors, the City of Pensacola is just days away from approving a $37.3 million contract with ST Aerospace. Pensacola City Council has scheduled a special meeting at 2 p.m. Tuesday to vote on authorizing Mayor Ashton Hayward to sign the proposed contract with VT Mobile Aerospace Engineering, Inc. VT Mobile is the U.S. arm of ST Aerospace, a Singapore-based company specializing in commercial aircraft refurbishing and maintenance. “Everything with regards to the lease is where it’s supposed to be,” said Scott Luth, senior vice president for economic development with the Greater Pensacola Chamber. “We’ll have to wait and see what the City Council will do on Tuesday, but I’m optimistic this project will move forward. “This project has involved a lot of folks, and was a real team effort,” Luth said. “I think it’s going to be an exciting month for economic development in this community. We’ve got some interesting things in the pipeline.” The 90-page contract and lease agreement calls for VT Mobile to create a minimum of 300 jobs that will pay between $30,000 and $58,000 annually. That wage level is of note given that the total personal income per capita for the Pensacola Metro Area stands at $39,041 for 2014. The deal includes the construction of two large hangars, two concrete aprons and two parking lots on property located within Pensacola International Airport. [sidebar] Lease highlights: -- If the company fails to achieve the minimum number of jobs within the first 10 years of the 30-year lease, it shall reimburse the City $2,286 multiplied by the difference between the minimum number of jobs and the number of actual jobs created. -- The lease contains no automatic extensions. At the end of the lease term, the company has the option to buy the facilities, but not the land, for fair market value. -- Rent is set at $0.30 per acre, for an annual total of $243,848.88. In the first 10 years of the lease, rent will increase by the Consumer Price Index, capped at 2 percent per year. The rent will be re-determined at the end of 10 and 20 years based on appraisal. -- During the first 15 years of the lease the company has the right of first refusal and an option to lease additional land (16.56 adjacent acres) at the airport. [/sidebar] Funding for the project, which puts Pensacola squarely on the Gulf Coast aerospace map, comes from five sources: -- $11.6 million from a Florida Department of Transportation grant. -- $8 million from Escambia County and the City of Pensacola. -- $7.24 million from ST Aerospace. -- $7 million from the state-funded Oil Spill Recovery Act, administered by the University of West Florida’s Office of Economic Development and Engagement. -- $3.5 million from the FAA’s Airport Improvement Program. Brice Harris, associate director of the university’s OEDE, said the ST project appears ready to launch. “I spoke with ST executives last week and they advised me they finally have approval of their American board of directors, as well as the Singapore-based board to sign our OEDE contract,” said Harris. “We have $7 million on the table for that project which is the highest of all the allocations we’ve made from the Oil Spill Recovery Act funds.” The Oil Spill Recovery Act of 2011, spearheaded by Sen. Don Gaetz, R-Niceville, is a three-year, $30 million state grant project designed to help those eight Panhandle counties most adversely affected by the 2010 BP Deepwater Horizon oil spill in the Gulf of Mexico. A needed jobs boost The proposed 18.5 acre VT Mobile plant site will be located in the northeast section of the airport, and will be accessed by a new road built near the intersection of Langley and McAllister avenues. Due to the close proximity of the proposed hangar facilities, earlier this year some homeowners with property adjacent the airport expressed concern about potential noise and traffic as a result of the ST plant. However, in February the City and ST executives held a public forum to detail the proposed plant’s operations and efforts to reduce noise and restrict hours of operation. The event was attended by more than 300 area residents. Both Hayward and Joseph Ng, president of ST Aircraft Maintenance in Mobile, said they were pleased by the outcome and the public’s generally favorable reaction to the project. For Hayward, the ST contract is perhaps the centerpiece of his 2010 campaign pledge to bring more jobs to the city. Hayward personally took up the cause of bringing ST to Pensacola after company executives in Mobile first approached him in 2011 about building a satellite maintenance facility at Pensacola’s airport. ST operates a major aircraft maintenance facility in Mobile where its U.S. operations are headquartered. Once word got out that ST and Pensacola officials were talking, other regional communities, including Crestview and Dothan, Ala., became involved to some degree in the competition for ST and the 300 jobs the company would bring. Earlier this year, when the ST project appeared stalled, Hayward and Luth flew to Singapore to meet with the company’s top executives. They returned from that trip with ST’s assurances Pensacola was its top choice. Contract negotiations began in earnest earlier this year when the city received a Letter of Intent from ST, this after Hayward, county officials and Gov. Rick Scott assured ST of some $30.7 million of incentive funding. Ng said in late February that once negotiations were complete and a contract signed by both parties, construction could begin within a few months, with completion sometime in late 2016. Once construction is completed, the hangar facilities, which will be leased long-term to ST, Ng said the company expects to service between 40 and 60 commercial aircraft each year.

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City to ink airport aerospace deal

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