Monday, September 30, 2013

Editorial: ICON could kick-start economic revival in Vacaville

Published by The Reporter
Posted: 09/29/2013 01:02:05 AM PDT
Vacaville City Council members didn't hesitate Tuesday night, unanimously signing off on an agreement to share future tax revenue with ICON Aircraft in exchange for the Los Angeles-based company relocating to the industrial park on the back side of Nut Tree Airport.
Councilmembers might be forgiven for not asking a single question about the deal. This was, after all, the culmination of more than two years of wooing ICON here. If councilmembers weren't personally involved, they certainly were kept up to date on what was being considered.
But members of the public who haven't been following every twist and turn of negotiations might be wondering what the city is giving up, why it is doing so and what it expects to receive in return.
Let's start with the why: Bringing ICON Aircraft to Vacaville could be a boon to the city, the county and the entire state.
ICON is a start-up company that is preparing to enter the light sport aircraft market that opened up in 2004 after the FAA adopted a new category of licensing for recreational pilots. Sport pilots are allowed to fly only during the day, in good weather and in uncontrolled airspace. The aircraft they are allowed to operate must be smaller, slower and less complicated than a regular airplane.
Enter ICON's A5, a completely portable two-seater that runs on gasoline and which can take off and land on water, turf or runways. It takes only two weeks to earn the license to fly it and even though it's pricey -- currently about $180,000 each -- potential customers are already lined up.
ICON is looking not only for space to build and sell its product, but also a place where it can teach customers how to fly it.
Almost three years ago, the company began a national search for just the right place. In California, the Governor's Office of Business and Economic Development (GO-Biz) put out the word, which reached the ears of Sandy Person, director of the Solano Economic Development Corp., who brought it to Vacaville's attention. That started the courtship.
Ultimately, ICON identified an industrial building on Beechcraft Road as one of its top three sites. The other two are in Arizona and Texas, both of which may have an advantage over Vacaville when it comes to the costs of starting businesses there. That's one reason the city feels the need to sweeten the deal by offering ICON incentives to come here.
The other reason is that a business like ICON is a gift that keeps on giving. A company whose product sells for the price of a modest home generates a lot of sales and property taxes. But that's not all. ICON's business plan calls for it to employ as many as 500 people, who would be paid much better than minimum wage. Those employees are likely to live and shop in Vacaville, generating more tax revenue for the city, the county and the state.
Asa start-up, ICON will be in the market for raw materials, which could encourage even more new businesses to form to supply them. Those businesses, in turn, would hire more workers and generate more tax revenue.
In addition, as a training site, ICON will need access to hotels and restaurants to house and feed clients -- again, creating more jobs and tax revenue.
Added together, ICON could generate up to 850 jobs and add $364.5 million for the region's economy, of which Vacaville stands to reap $1 million in new taxes, according to an economic impact report by economist Robert Eyler.
A few years ago, before the state disbanded redevelopment agencies, Vacaville might have been able to offer ICON a rebate on its property taxes to come here, as it did for Genentech. But, as City Manager Laura Kuhn told the council on Tuesday, "In a post-redevelopment world, we have to be very creative."
To her credit, City Manager Kuhn has creatively negotiated a deal that won't cost the city a dime if ICON fails as a business. If it succeeds, however, the company stands to be rebated a portion of the sales tax it generates. During the first two years, ICON's share of that rebate is 50 percent. In years 3 through 10, the rebate ranges from 30 percent to 75 percent, depending on the number of people ICON employs at an annual salary of $40,000 or more.
In addition, for every hotel room booked by ICON, the city will split with the company the Transient Occupancy Tax it collects on those transactions.
The city should be able to afford the rebates, Ms. Kuhn says, because if ICON is successful, the tax revenue from the additional business it will generate throughout the city will cover the cost of providing city services to it.
Vacaville isn't the only public entity that stands to gain from bringing ICON here. For more than two decades, the city and Solano County have recognized that Nut Tree Airport is an underused asset. ICON's presence there would change that in a hurry.
Solano Community College's aviation program at the airport also stands to gain. Not only might its graduates find work at ICON, but the college is prepared to offer training for ICON employees.
And if ICON chooses Vacaville, California stands to gain some much-needed bragging rights over Texas.
It's not a done deal yet, but Vacaville has done what it needed to do to bring a new major employer to the area. Here's hoping it's enough.