Friday, May 22, 2015

Analysis favors $87 million handout for Lockheed Martin

Posted By on Fri, May 22, 2015 at 4:14 PM

click to enlarge CAMDEN OPERATIONS: Lockheed Martin's current operation in Camden industrial park.
  • CAMDEN OPERATIONS: Lockheed Martin's current operation in Camden industrial park.
The state released today a consultant's analysis of a proposal to sell $87 million in bonds to be used primarily to give $83 million to Lockheed Martin for its Camden facility to begin assembling military vehicles.

The analysis concludes the expenditure — which would mean $6 million a year in interest on the bonds for 20 years and a gross cost well in excess of $87 million — would be justified by new economic activity, mostly in the final five years of the 25-year study period when interest payments have dropped. The report said there'd actually be a net loss for the first 20 years.

Our principal finding is that the proposed JLTV project would generate positive, net economic benefits to the State of Arkansas over the 25-year analysis period if it provides $84.165 million in infrastructure improvements and job training services for the JLTV project. Stated another way, the net present value of the additional state-level tax revenues generated by the increase in statewide economic activity flowing from the JLTV facility will be higher than the net present value of the bond debt service. We estimate that the net, positive economic benefit would be:

 The net economic benefits would be a positive $16.3 million using a discount rate of 3.38%, or the true interest cos of the proposed bond issue. The net economic benefit would be 19% than the npv of the costs, or the annual bond debt service

The net benefits are produced primarily during the last five years of the analysis period when the incremental tax revenues are at their peaks, and when the bond debt service has been paid. Using an analysis period of 20 years yields a net economic cost of -$1.6 million using the 3.38% discount rate.

Here's the full report.
Here's the brief executive summary.
The analysis notes that benefits could be greater because the vehicles likely would end up costing more than the estiamted $250,000 each and production could produce greater than anticipated through sales to other countries. Lockheed Martin isn't guaranteed the contract, but will be competing against others for a new vehicle to succeed the Humvee.

All told, the bond issue will cost Arkansas about $118 million, the state's bonding agency reported. 

Here's that report.
I've only had a quickie look at the documents. But peruse at your leisure this holiday weekend.

Tags: , , ,

Favorite

Speaking of...

Comments (4)

Showing 1-4 of 4

Add a comment

 
Subscribe to this thread:
Showing 1-4 of 4

Add a comment

More by Max Brantley

  • Google says: It's Lee's Birthday in Arkansas

    Several people have been shocked in checking to see whether a business or government office was open today and found, along with normal hours, a statement that hours might vary because it is Robert E. Lee's birthday in Arkansas and hours might differ. No mention of Martin Luther King Jr.
    • Jan 16, 2017
  • Pork barrel included more than $40,000 for ozone therapy shipped from NWA to Benton

    Blogger Russ Racop uncovers another curious bit of spending of the pork barrel money known as the General Improvement Fund: Shipment of more than $40,000 from Northwest Arkansas legislators' allotment to a little-known outfit in Saline County that promotes an alternative medicine known as ozone therapy. Familiar legislative names were involved.
    • Jan 16, 2017
  • Women's march set Saturday, Jan. 21 in Little Rock

    Here's another march to plan for: The Women's March in Little Rock Saturday in conjunction with the post-inauguration event the same day in Washington, D.C.
    • Jan 16, 2017
  • More »

Readers also liked…

Most Shared

  • UPDATE: Retired Arkansas Arts Center director Townsend Wolfe dies at 81

    Townsend Durant Wolfe, III, retired director and chief curator of the Arkansas Arts Center, has died at 81.
  • Subpoenas identify names of federal interest in kickback probe

    The Northwest Arkansas Economic Development District today provided me with the subpoena it received from federal investigators in a probe that led to former Republican Rep. Micah Neal's guilty plea to taking kickbacks from money he guided to a nonprofit agency and a private college in Springdale, apparently Ecclesia College.
  • Human Services says it's eliminated Medicaid application backlog

    The state Human Services Department has informed Gov. Asa Hutchinson that it has all but eliminated a backlog in applications for Medicaid coverage.
  • Praising Asa

    Let us now praise the governor for a starkly moderate record, at least in comparison with other red-state executives.
  • Glass houses

    Having gotten a deep security briefing and probably a confidential glimpse of our own vast cyberspying operation, Donald Trump is no longer pretty sure that the Kremlin didn't hack Democratic computers or employ other tactics to help his election.

Visit Arkansas

Indian Rock House at Fairfield Bay

Indian Rock House at Fairfield Bay

Winter is the perfect time to explore the natural stone shelters where native Arkansans once lived

Most Viewed

Most Recent Comments

Blogroll

 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation