CR council backs $14.5M incentive deal for BAE

By CBJ News Staff
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A $14.5 million local incentive package to attract a new BAE Systems classified defense facility for GPS products is moving forward in Cedar Rapids.

Citing the importance of some 650 jobs during a time of recession and gaining a new aerospace industry for the city, city council members on Tuesday unanimously authorized staff to negotiate a final development agreement with the defense contractor and Ryan Companies US to bring the project to the 380 Commerce Park at Sixth Street and 76th Avenue SW.

City Economic Development Analyst Caleb Mason said the project will consolidate the current military GPS operations of Collins Aerospace, which BAE is acquiring, and generate about $60 million in annual payroll. Most of the jobs are already in Cedar Rapids, however they were at risk because other communities were bidding for the project.

About $38.5 million of the project cost will be for the 200,000-square-foot building, which will be developed and owned by Ryan Companies. The city proposed exempting 75% of the increase in the value of the property from its $150,000 base for a period of 20 years. Post-exemption, the property will generate taxes on a valuation of $9.7 million.

“This project is a tremendous opportunity for our city and one that we fought hard through the COVID-19 pandemic to win for Cedar Rapids,” City Manager Jeff Pomeranz said in a statement shared with the CBJ. “This is a global company and they had options to build this facility and take these jobs anywhere in the world.”

“As you can imagine, we were very relieved and excited to hear the news that they chose our community,” Mr. Pomeranz added. “I am pleased with the strong relationship we have built with them over the last few months, particularly under these unprecedented circumstances.”

Mayor Brad Hart said he’d met with BAE’s leadership and president, finding them concerned about COVID-19-related delays, and “itching to get started.” The company did not have a representative speak at the meeting.

The council also unanimously supported sponsoring BAE and Ryan Companies’ application for state incentives under the High Quality Jobs program at the Iowa Economic Development Authority Board’s meeting on July 17. The project will be required to create 550 full-time equivalent jobs at a minimum qualifying wage. City officials will move forward with creation of a Tax Increment Financing district through which to collect and distribute the property tax incentives, and will return a final development agreement to the city council for approval in August. The city will also seek a state RISE Grant from the Iowa Department of Transportation to pay for turn lanes on Sixth Street for access to the facility.

Council members who spoke praised BAE, Ryan Companies and the city staff’s work in reaching a preliminary development agreement despite COVID-19, and pointed to long-term advantages of having a second major defense contractor in the community that could help form an industry cluster and keep graduates from leaving the area for employment. CBJ