Mitsubishi incentives include $585,000 from Fort Smith chamber

The Fort Smith Regional Chamber of Commerce could pay $585,000 in incentives to Mitsubishi for the company’s construction of a $100 million wind turbine assembly plant at Chaffee Crossing.

Mitsubishi Power Systems Americas announced Oct. 16 plans to build the $100 million, 200,000-square foot wind turbine manufacturing plant on 90 acres at Fort Chaffee. The plant could employ up to 400 once fully operational. Company officials said construction will start in the fourth quarter of 2010 and be complete by the fourth quarter of 2011. Mitsubishi officials expect full production and 400 jobs in place by the first quarter of 2012.

In addition to the chamber incentives, federal stimulus funds will be used to support $3.7 million in tax-exempt bonds as part of the Mitsubishi incentive package. The bonds, issued by the state, will be paid back by Mitsubishi but at a lower interest rate than traditional bond proceeds.

Also, the city of Fort Smith has committed to about $1.626 million in road and water/sewer infrastructure support for the plant. The city will also issue $75 million in Industrial Revenue Bonds of which Mitsubishi will make payments in lieu of taxes equal to 50% of the normal property taxes for the first 20 years on building improvements and 12 years equipment. Even with the reducde property tax payment, the gain in property taxes for the county is estimated at $224,000 for the first year.

The chamber incentives have four components. They are:
• Mitsubishi is paid $166,667 upon groundbreaking;
• Mitsubishi is paid $166,667 when the plant opens;
• Mitsubishi is paid $166,666 upon hiring 300 employees; and,
• Mitsubishi will receive $85,000 for support of temporary office space for “key employees to begin typical start-up activities,” temporary housing for key employees for re-location and a corporate Hardscrabble County Club membership for one year.

According to the incentive agreement document between Mitsubishi, Sebastian County, the city of Fort Smith and the chamber, the standard for a qualified employee is a person with an average hourly wage, to include overtime pay, of not less than $18.

It’s possible the plant could be idled as soon as it’s built. On May 20, Mitsubishi officials filed a lawsuit in the U.S. District Court for the Western District of Arkansas claiming that GE has engaged “a scheme to monopolize the market for variable speed wind turbines in the United States.” The lawsuit is part of a lengthy patent dispute between GE and Mitsubishi and could see the large facility at Chaffee Crossing sit idle.

“If GE’s unlawful conduct continues, the plant will have to sit idle, as there may be no U.S. demand for Mitsubishi turbines at a time when America is moving forward with an energy strategy that seeks to harness the power of the wind,” Sonia Williams, Mitsubishi spokeswoman and counsel, noted in the May 20 statement.

The Fort Smith board of directors and members of the Sebastian County Quorum Court are scheduled on Tuesday (June 15) to review and consider for approval their portions of the incentives agreement. The Fort Chaffee Redevelopment Authority will consider its portion of the agreement during a June 17 meeting.

Link here for a PDF copy (provided through the agenda document for the Fort Smith board’s June 15 meeting) of the incentive agreement.