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:
Here's the full report.
Here's the brief executive summary.
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.
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.