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 ā€” 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 ā€” 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: , , ,


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

  • The arrival of autumn open line

    Here's the open line. Harvest Fest still happening in Hillcrest. Hog Roast tomorrow in North Little Rock in perfect weather.
    • Oct 22, 2016
  • Nasty women rise up against The Deplorable Donald

    It had to happen. Donald Trump's debate interjection that Hillary Clinton was a "nasty woman" has become a battle cry among women; a Twitter meme; a Facebook favorite, and, naturally, a marketing opportunity for T-shirt, button and bumper sticker makers.
    • Oct 22, 2016
  • Formal opposition emerges to Issue 3, the corporate welfare amendment

    It became apparent this morning that at least some money would be spent in opposition to Issue 3, a massive corporate welfare proposal to allow the state to pledge unlimited tax money to private projects and to allow local governments to also give money to private business and chamber of commerce lobbyists, a practice that has been ruled unconstitutional currently.
    • Oct 22, 2016
  • More »

Readers also liked…

Most Shared

Most Recent Comments

  • Re: The arrival of autumn open line

    • No wonder Arkansans will vote overwhelmingly for Trump. "White nationalism has not only arrived, but…

    • on October 23, 2016
  • Re: The arrival of autumn open line

    • So connected on inner planes am I with my Razorbabies that I sense your deep…

    • on October 23, 2016
  • Re: The arrival of autumn open line

    • Games, you say? Sports, you say? I say the Chicago Cubs are going to the…

    • on October 23, 2016



© 2016 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation