Pima County floats new lease deal with balloon operator World View

Pima County officials say a proposed new lease-purchase agreement with high-altitude balloon operator World View Enterprises will bring the county into compliance with a ruling that the original deal violated the state constitution.

In a memorandum to the Board of Supervisors, County Administrator Jan Lesher recommended approval of the new lease to replace the original 2016 agreement with a lease with “market rates” based on appraisals. The proposal has an initial term of five years with four renewal terms of five years each.

The supervisors are expected to consider the proposed lease deal at its meeting on Tuesday, Jan. 10.

In late October, the state Court of Appeals ruled that Pima County violated the state constitution’s “gift clause” — which restricts transfers of taxpayer dollars to private entities — when it agreed to allow high-altitude balloon developer World View Enterprises to lease a $15 million facility at the county’s Aerospace Research Park south of Tucson International Airport.

The ruling came in a case filed on behalf of three taxpayers in 2016 by the conservative Goldwater Institute, which had alleged the deal violated state procurement laws as well as the constitutional ban on gifting public money to private entities.

The original $15 million deal includes the lease of a 12-acre county-owned site and construction of a launch pad and headquarters for the company, which has flown its stratospheric balloon vehicles for remote-sensing research missions and is preparing to offer near-space tourism flights in 2024.

The county agreed to build the balloon facility and lease it to World View for 20 years, when the company would be able to buy it for just $10. The end-of-lease purchase price was changed to $5 million in an amendment adopted in 2021.

Lesher said the proposed new lease-purchase agreement is structured like the recently approved American Battery Factory agreement to avoid the gift-clause issue “while facilitating economic development and high-wage job creation and retention in Pima County.”

Under the proposed new lease deal, World View would pay rent for the initial five-year term based on 90% of appraised value “as authorized by statute,” with 2.5% percent annual increases.

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Rent for 142,000 square feet of industrial and office space would rise from $8.10 per square foot or $1,035,180 in the first year to $8.94 per square foot and $1,142,532 in the fifth year, according to Lesher’s memorandum to the supervisors.

World View will have the option to purchase the property for $14.4 million — 90% of appraised value as allowed by statute, within two years after the deal is signed or by additional written agreement, the memo says.

The new lease also lowers the employment milestones World View had to reach under the current lease, though required salary levels have increased.

World View laid off most of its employees at the height of the pandemic in 2020, then restarted operations and expected to reach 100 employees by the end of 2021.

The proposed new lease requires the company to employ a minimum of 90 full-time employees for the first year (2023) and then increase to 125 full time employees for the duration of the lease.

The original lease required World View to to employ an average of at least 100 workers over the first four years of the contract, at a minimum annual salary of $50,000, stepping up to 400 workers with salaries of at least $60,000 annually in the fourth five-year period.

An operating agreement lease for Spaceport Tucson — a concrete launchpad facility adjacent to World View’s headquarters building — will be scheduled for consideration at the supervisors’ Jan. 24 meeting, Lesher wrote.