New Mexico officials today revealed the details of a pact with the Virgin Galactic suborbital space venture as they geared up for a crucial spaceport tax vote next month. The memorandum of agreement calls for Virgin Galactic to pay about $27.5 million over 20 years to lease facilities at Spaceport America in southern New Mexico.
"Today was one of the big milestones for developing the spaceport," Rick Homans, chairman of the New Mexico Spaceport Authority and cabinet secretary of the New Mexico Economic Development Department, told me after today's signing in Las Cruces.
The spaceport is 45 miles northeast of Las Cruces and notched its first launch last September.
Virgin Galactic, which is part of British billionaire Richard Branson's business group, intends to make New Mexico its global headquarters and start offering suborbital space trips from Spaceport America in late 2009 or 2010. However, the state has said it will take $198 million to build the facilities needed by Virgin and other space operators.
State lawmakers said they would kick in $100 million toward that capital outlay - on three conditions: The cost estimate for building the spaceport had to come in at $225 million or less; the state had to reach a lease agreement with an anchor tenant; and a license had to be awarded by the Federal Aviation Administration. That last condition is still up in the air, but New Mexico hopes the FAA's OK will come through by the end of this year.
In addition to the $100 million in state funds, another $25 million or so is expected to come from the federal government. Local tax levies would fill the remaining gap. The first vote on local-option taxes is due to take place April 3 in Dona Ana County - and the outcome of that election could well determine whether the spaceport plan rises or falls.
"I know it's a very important vote, and there's a lot at stake," Homans told me. "I think that it will probably be a very close vote. From the beginning of this project, we've had a lot of hurdles, and we've approached each one with a high degree of optimism - and there's no reason to change our strategy now."
Today's agreement could provide some extra assurance to voters that Virgin Galactic's space venture isn't just pie in the sky, although some might still wonder why millions of tax dollars are being spent to build facilities for a billionaire. (Incidentally, the same question might be asked about sports stadiums.) To address that concern, the Economic Development Department points out that Virgin Galactic is spending more than $200 million to develop its SpaceShipTwo system, plus the $27.5 million in lease payments and other fees yet to be determined.
Will Whitehorn, president of Virgin Galactic, was quoted as saying today's agreement "represents a significant commitment by Virgin Galactic to be the anchor tenant at Spaceport America, and to help New Mexico grow a thriving new industry around commercial space companies."
Among the other space companies setting up shop in New Mexico are Starchaser Industries, UP Aerospace, the Rocket Racing League and the X Prize Cup.
Here are the key points of today's memorandum of agreement, which sets the conditions for the formal facilities lease:
- Virgin Galactic will locate its primary launch and operational activities at Spaceport America and its global headquarters in New Mexico.
- Virgin Galactic will lease about 83,400 square feet of space, including office space; customer service facilities; medical facilities and sleeping quarters for space fliers; hangars for maintenance and storage of aircraft; a mission control center; and a staff clubhouse.
- The spaceport authority will provide common facilities including runways and a control tower, multipurpose training facilities, emergency facilities, fuel storage and delivery systems, restaurants and concessions, and visitor viewing areas. Virgin Galactic and other tenants will pay user fees, yet to be determined, to use these facilities.
- Virgin Galactic's lease payments would be $1 million a year for the first five years of occupancy, then $1.5 million a year for the following 15 years. Virgin Galactic can extend the facilities lease for up to 10 years.
- The spaceport authority will establish an advisory committee, consisting of Virgin Galactic and other tenants, to advise and work with the authority on operations, budget, capital improvements, maintenance, marketing and branding.
- Virgin Galactic will get "preferred status" for the use of the airfield, launch facilities and airspace for certain periods of time.
Homans said the agreement would serve as a model for other spaceport tenants.
"It lays the foundation for some significant precedents at the spaceport, related to ground rent, user fees and development of a spaceport-tenant advisory committee to participate in decision-making," he told me. "All of these issues lay the groundwork for the operation of the spaceport."