CZ-USA, which already has promised to deliver nearly 600 jobs, a gun manufacturing plant and its North America headquarters to 73 acres at the Little Rock port, wants the option to buy an additional 65 acres next door.
The Little Rock Port Authority Board on Wednesday agreed to give the Czech Republic firearms manufacturer a five-year option to purchase the additional land for $1.5 million.
Once the deal is finalized, CZ-USA in turn has agreed to immediately deposit $1 million into an interest-bearing port account for the port's use, Bryan Day, executive director for the port, told the board.
The company also agreed to bear the cost of relocating Fletcher Road if that becomes necessary. Fletcher Road separates the two parcels and provides access to private property. The cost to relocate the road is estimated to be $500,000, Day said.
CZ-USA, if it does purchase the property, won't be able to sell it to anyone else, Day said.
The company has "no project on the horizon," he told the board. "But they don't want to lose the opportunity to acquire the 65 acres."
Whatever the company might develop on the site, it will be distinct and separate from the manufacturing facility and headquarters it is building on the first parcel, Day said.
The agreement must meet the approval of the city Board of Directors.
If CZ-USA declines to exercise the option, the $1 million must be returned. Still, the money is available for the port's use should its board authorize it.
"If we move forward with the option to purchase and it is approved by the city board, these funds would be available for use in other areas," Day said. "We could buy land, we could create shovel ready sites, we could make infrastructure repairs or we could focus on the VOR Cone."
The VOR, which stands for VHF omnidirectional radio range station, is a ground-based navigation aid for aircraft. A station is on port property, blocking a wide area around the Federal Aviation Administration-controlled station from being developed to prevent interference with the signal.
The FAA has agreed on another site for the station, but the port will have to pay for the testing.
"At this point, I am not sure what, if any, recommendations we would make to the board on how to spend the funds," Day said. "The funds give us options, but we must be responsible for the money, if the option is never exercised."
The resolution authorizing the agreement won the unanimous consent of the board members present Wednesday, including Chairman Melissa Hendricks, Greg Joslin, Clay McGeorge, Dexter Doyne and Joe Bailey but not without some questions.
Doyne wanted to know the price per acre and how it compared with the going rate. The sale price is about $25,000 an acre, according to Day, who said the property was acquired for $14,000 per acre in 2008.
"We've been buying land," he said. "We've paid a lot more than that, we've paid a little bit less. We think in today's market, the price -- the $1.5 million -- is a good price. That doesn't mean it won't go up, but if it closed today, it would be a fair price."
Bailey expressed concern that no price escalator is built into the agreement.
"We're locking this in for a pretty significant time frame -- five years -- when this property could conceivably double [in price] in that time," he said.
"They originally asked for us to deal with Fletcher Road," Day said. "We said no. Somebody's got to deal with that. We added all that together and that's how we came up with the price."
Jay Chesshir, president and chief executive officer of the Little Rock Regional Chamber of Commerce, said the cost of land is typically part of the incentive package to attract companies such as CZ-USA. The company, for example, will take title to the initial 73 acres once its employment level reaches 565.
"It shows the commitment of this company not only to this community and this region, but in what they think might be a different industry, a different option, a different project, that they're willing to put money up as a placeholder to not only have the option to exercise the purchase of this property over a five-year time frame but to do so at an agreed-upon price," Chesshir said.
Business on 05/16/2019