A Utah-based lithium battery startup plans to invest more than $1 billion to build a “gigafactory” complex south of Tucson International Airport, projected to eventually employ 1,000 workers, under a proposed lease-purchase agreement with Pima County.
The county Board of Supervisors is expected to vote on the proposed agreement with American Battery Factory at its meeting Tuesday, Dec. 6.
The company, a spinoff of energy-storage systems maker Lion Energy, based in American Fork, Utah, plans to produce lithium-iron-phosphate battery cells for home and commercial energy-storage systems.
The company says it’s looking forward to opening its first factory in Tucson and is eager to share more details, pending the supervisors’ vote next week.
“We have been in close coordination with officials at all levels of state, county and city leadership to ensure that our proposal for the site will benefit both the local community in Tucson as well as the broader Arizona economy,” the company said in an online post.
Under a lease-purchase proposal, American Battery Factory would lease up to 267 acres of land at the county’s Aerospace Research Campus, south of Raytheon and the airport, at fair market value as determined by an appraisal, according to a memorandum filed by County Administrator Jan Lesher.
The company will have the option of buying the land as soon as 30 months after the lease is finalized, at a price of about $21 million for all 267 acres, provided it makes lease payments on time and meets initial construction and employment milestones, the memo says.
The lease-purchase agreement has an initial term of five years, with four possible five-year renewals, including annual 2.5% rent increases, for 70 acres initially slated for the first phase of a three-phase construction project. Rent for the initial 70 acres will total about $500,000 annually in the first five years.
American Battery Factory is expected to invest about $1.2 billion over 10 years at the new campus, and employ 300 full-time workers at an average annual wage of $65,000 within two years of the project start.
While meeting phased construction milestones, the company is expected to employ 600 full-time workers within four years and 1,000 within five years, the memo says.
At full buildout, the American Battery Factory operation will have an estimated economic impact of $3.1 billion over 10 years, the county says.
The proposed lease-purchase agreement meets all state legal and constitutional requirements, and the agreement has been carefully crafted to assure job creation and capital investment “while safeguarding the valuable economic development land at the ARC,” Lesher wrote in the memo.
Pima County found itself in legal hot water over its lease-purchase agreement with World View Enterprises, a high-altitude balloon tourism company for which the county built a building and launch pad at the Aerospace Park in 2018.
In legal challenges filed by the conservative Goldwater Institute, Pima County won state court judgments that the no-bid World View deal did not violate state procurement laws.
But in October, the state Court of Appeals ruled that the deal violated Arizona’s constitutional “Gift Clause” restricting the granting of public funds to private individuals or entities.
The Board of Supervisors is still considering whether to appeal that ruling.
Incentives provided by Pima County are limited to job training support, recruitment assistance and possible county support for Foreign Trade Zone activation of the site, the county memo says.
Negotiations on possible incentives provided by the city of Tucson and the state Commerce Authority are still in progress, the memo says.
The county land is within the city’s jurisdiction, but Pima County Development Services will handle permitting review and approval under agreement with the city, Lesher wrote.
American Battery Factory plans to build a complex of buildings at the county site, including office and manufacturing space totaling at least 400,000 square feet within two years and 800,000 square feet within five years, the memo says.
Tucson-based World View Enterprises plans to start flying tourists to the stratosphere in balloon vehicles by 2024. Video courtesy of World View.
