Commissioners OK plan to borrow money for Blue Origin's $8 million incentive

Brevard County commissioners narrowly approved a plan that would allow the county to borrow money to pay for an $8 million economic incentive to rocket manufacturer Blue Origin.

The vote was 3-2, with Chair Rita Prichett and Commissioners Jim Barfield and Curt Smith supporting the proposal. Vice Chair Kristine Isnardi and Commissioner John Tobia voted against the plan.

Brevard County Clerk of Courts Scott Ellis told commissioners he plans to go to court to challenge the legality of the county borrowing money to pay for the grant to Blue Origin.

The cash grant to the company was approved in 2015 by the County Commission and the North Brevard Economic Development Development Zone board.

[Blue Origin begins moving into massive New Glenn rocket factory at KSC]

[Legal questions raised on Brevard borrowing $8 million to pay Blue Origin incentive]

In return, Blue Origin agreed to create at least 330 jobs paying an average of $89,000 a year by the end of 2026, and to make a $160 million capital investment.

Blue Origin already has added 90 local jobs and made a capital investment of more than $200 million.

That puts the company ahead of its required hiring schedule. As part of the incentive deal, Blue Origin said it would create 145 jobs in Brevard by the end of 2018, another 145 by the end of 2022 and another 40 by the end of 2026.

The $8 million grant will come due April, as Blue Origin received a certificate of occupancy earlier this month on the office section of its new manufacturing complex at Space Florida's Exploration Park complex at Kennedy Space Center.

An orbital launch complex that includes development and construction of a launch pad and associated facilities also is part of Blue Origin's overall project.

Blue Origin expects to get a certificate of occupancy on the manufacturing section of its Exploration Park complex this week or next.

Under its agreement with the county, the grant is supposed to be paid within 120 days after the certificate of occupancy is issued.

Tuesday's County Commission action centered on how the county would pay for the Blue Origin grant. 

The three commissioners in the majority on Tuesday supported asking a Circuit Court judge to rule that it is legal for the county to borrow money for the grant, which is part of a required process under the Florida Constitution.

The judge would have to determine that the project to be funded serves "a paramount public purpose," according to County Attorney Scott Knox.

[Blue Origin subcontractor barge fire caused by fuel spill]

[SpaceX launches, lands Falcon rocket at Cape Canaveral]

But Isnardi and Tobia opposed that plan. They were not on the County Commission when the incentive was approved in 2015, in a 4-1 vote, with then-Commissioner Trudie Infantini voting no.

Isnardi said, in addition to Ellis' legal concerns, she questioned why the county was giving $8 million to Blue Origin, which was founded by Jeff Bezos, who also founded and is chief executive officer of Amazon.com. Bezos had his net worth top $100 billion last month.

"The argument to me made by" North Brevard Economic Development Development Zone officials "was that they wanted to have those funds available now for other projects," Isnardi said. "And that's fine, but, you know, whether or not you agree with the North Brevard Economic Development Zone getting $3 million of tax increment per year, I don't think that that's a valid reason to try to take out a loan for $8 million for the payment, and to pay over $1 million in interest, so they can do more projects and provide more incentives for billionaires. I have a hard time swallowing that."

"I don't think it's a great policy to give $8 million to a billionaire," Isnardi added.

Commissioners who supported the plan noted the large investment Bezos was making in north Brevard and the large number of jobs he is creating at Blue Origin.

"This thing is starting to work," said Pritchett, whose County Commission District 1 included north Brevard. "We're starting to get the businesses in. Blue Origin has got the building built. They're going to start manning it now, and bringing in the employees. It's pretty exciting what's coming into the area, with the space opportunity and jobs and families and even the housing market up in District 1 has taken off. It puts a lot of smiles on our faces up there, because awhile ago, it was tough for people to put food on their tables. So I really appreciate everything we're doing. And the way the money is spent, it's all for jobs and economic recovery. It's benefiting the whole county."

Pritchett said, contrary to Ellis' opinion, she believes that borrowing money for the incentive is legal because it reimburses Blue Origin for capital improvements that will create many high-paying jobs that are boosting the local economy.

"I'm really excited about this one," Pritchett said.

Smith said he is in favor of moving the process forward, and letting the Circuit Court judge decide the legality of borrowing money for the grant.

Blue Origin said its manufacturing complex will be more than 650,000 square feet, which is more than 2½ times the size of the 250,000-square-foot industrial building the company initially agreed to build.

The Blue Origin facility will assemble 270- and 313-foot variants of the company's reusable New Glenn rockets, which will launch about 10 miles away at Cape Canaveral Air Force Station's Launch Complex 36. The factory also will function as launch control for Blue Origin's missions, due to the pad's proximity and advances in automation.

As part of Tuesday's vote, the majority of the County Commission authorized hiring bond counsel Nabors, Giblin & Nickerson at a cost not to exceed $25,000 to pursue what's known as a "validation suit," seeking the Circuit Court judge's approval of the county borrowing the $8 million for Blue Origin's incentive. Commissioners also approved a resolution authorizing the borrowing.

Under the plan, the $8 million would be repaid from money generated by the North Brevard Development District. The money comes from property tax revenue from new commercial and industrial construction in north Brevard under a process the Brevard County Commission created in 2011 to help spur economic development in the area.

Ellis questioned the legality of the proposed borrowing.

"You can go for your bond validation," Ellis told commissioners. "Our belief is it is unlawful, and we will intervene in the bond validation" process through a legal challenge.

"It is unlawful for the county to borrow money for operational expenses," Ellis said. "The contract is unlawful" between Blue Origin and the North Brevard Economic Development Zone.

Knox, however, told commissioners that he believes Ellis is "dead wrong" on this issue. 

North Brevard Economic Development Zone Executive Director Troy Post told commissioners that one possible financing approach would be a 10-year loan with an interest rate of somewhere between 2 percent and 3.5 percent. 

Any such borrowing deal would have to be approved by the County Commission in a separate vote.

In a related action, commissioners voted 5-0 to approve a first-year cash payment of about $1.38 million to Blue Origin, should the Circuit Court validation process drag on beyond the time that the county would have to start making its payment to the company. Money for this payment would come out of money in the North Brevard Economic Development Zone budget.

Dave Berman is government editor at FLORIDA TODAY. 

Contact Berman at 321-242-3649 or dberman@floridatoday.com.

Twitter: @bydaveberman

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