The Tucson City Council will be asked on Tuesday to sign off on a deal to give the region’s largest private employer, Raytheon Missile Systems, $6 million worth of additional tax breaks to help the company expand and hire 1,900 new employees.
The deal is the second amendment to what is called the pre-annexation agreement that dates back to 1995 between the city and what was then Hughes Missile Systems Co., now Raytheon.
The agreement was meant to help offset costs Raytheon would incur when it was annexed by the city by depositing revenue from certain use and electricity taxes paid by the company into a fund that would be used for the mutual benefit of the company and the city.
The money, for example, could be used to fund public infrastructure improvements, such as roads around the company, improve transit services, buy property to help create a buffer around the company’s facility near the airport as well as other agreed-upon capital improvements.
Under a previous amendment, the city allowed for up to $8 million of tax revenues paid by Raytheon to be set aside to help the defense contractor expand locally.
The revised deal set for a vote Tuesday increases the cap amount to $14 million.
The proposed agreement also includes a new section that states Raytheon would agree to the city annexing its facility at 9000 S. Rita Road, in the University of Arizona Science and Technology Park, if and when an annexation petition is presented.
Raytheon is expected to spend roughly $400 million on the planned expansion, creating a minimum of 1,900 new jobs at an average salary of $110,000. The expansion, officially announced in November, is also expected to create new jobs in Tucson indirectly, ranging from construction jobs to partners that have service contracts with Raytheon.
The median household income in Pima County was about $46,000 in 2014, according to the most recent estimates by the U.S. Census Bureau.
The contract contains six separate clauses allowing the city to sever the agreement if Raytheon fails to meet expected deadlines.
For example, Raytheon must break ground on the expansion no later than September 2018, must spend at least $100 million on the expansion before September 2019 and must have hired at least 1,900 new employees by January 2021.
Another clause requires the new employees must work for Raytheon in Southern Arizona for at least three years.
Councilman Steve Kozachik is looking forward to finalizing the new agreement .
“Allowing them to reinvest money generated by their own operations to catalyze 1,900 net new high-paying jobs and see a $400 million capital improvement makes sense from everybody’s perspective,” he said.
Councilwoman Regina Romero said the agreement is a shining example of the city’s Primary Jobs Incentive program, whose mission is to attract high-wage, long-term jobs with health-care benefits for Tucsonans.
“This project exceeds all of the goals of the program,” she said.
A representative for Raytheon declined to discuss the details of the agreement.
Pima County has also approved several incentives with the company following the announcement of its expansion.
Raytheon has about 10,000 employees, according to city documents.