By Tina Fisher Cunningham
The Forde Files No 71
tehachapi incubates a startup sport plane moves to vacaville
The Forde Files No 71
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Photo courtesy ICON Aircraft website
Flight Test 1 at Lake Isabella: l-r, ICON Founder and CEO Kirk Hawkins; Lead Aero Engineer Jon Karkow; Chief Technical Officer and Vice President of Engineering Matthew Gionta
The sleek, uber-sexy ICON A5 Light Sport Aircraft will be manufactured in Northern California but Tehachapi is where it was born.
From 2008 to the present, research and development of the recreational amphibious aircraft has been taking place in relative obscurity inside hangars at Tehachapi Municipal Airport.
Now it is ready to meet the world and the A5 is leaving the nest.
ICON Aircraft Company officers confirmed on May 14, 2014, that they selected Vacaville as the location for its headquarters and manufacturing facility. The company has leased a 140,000-square foot warehouse adjacent to the Solano County Nut Tree Airport for production and will construct an office building on land the company has purchased.
The Tehachapi city staff put on a full-court press to get the company to stay, but the rural location and lack of nearby water for testing and demonstration bumped the city off the list early on. (The aircraft is water-tested at Lake Isabella).
"We are the incubator," Tehachapi City Manager Greg Garrett told Forde Files. "The city of Tehachapi nurtured and assisted ICON as a start-up business. As sometimes happens, businesses may need to relocate" – in this case, he said, due to location of customer base and presence of water resources that allows for aircraft testing and customer flight training.
"We wish ICON much success on their journey and we stand ready to further assist them should they decide to utilize our airport and the city in the future," Garrett said.
Approximately 50 people work at the ICON Tehachapi R&D facility, according to a company spokesperson. It is unknown how many will be heading north with the company.
Many of the engineers developing and testing the A5 are products of that
hotbed of aviation design, Burt Rutan's Mojave-based Scaled Composites.
Garrett said that the majority of aerospace technology is dreamed up and tested in the "aerospace region" of Tehachapi, Mojave, Edwards Air Force Base, the Antelope Valley and China Lake.
"All of the technology for aviation is designed and tested in our back yard," Garrett said. "We feel blessed. This is where the smarts live."
Vacaville City Manager Laura Kuhn told Forde Files that part of the city's attraction is the quality of the local labor force. ICON will employ as many as 500 people (or maintain 500 jobs, which would be a different figure as Full Time Equivalent numbers are added up) at the plant and office headquarters.
"The bulk of the employees will be hired up here rather than relocating," she said.
Much like the Antelope Valley-Mojave-Tehachapi aerospace region, Vacaville wants to grow its own local engineers. To that end, Solano Community College will be offering Airframe and Powerplant courses at the Nut Tree Airport.
ICON is advertising and hiring in anticipation of starting manufacturing in Vacaville by early 2015.
Tenant improvements for the warehouse are in the permitting process and the headquarters building has received county approval, Kuhn said.
Vacaville (translation from Spanish: "Cowtown"), population 93,899, is 35 miles from Sacramento and 45 miles from San Francisco on the main thoroughfare I-80. In common with Tehachapi, Vacaville's biggest employer is two state prisons. A former Pony Express stop and home of the historic Nut Tree farm stand (now a destination restaurant and shopping center, complete with train ride and carousel), Vacaville met the key elements of ICON's search consultants – access to customers, suitable labor force, business-friendly government, infrastructure, water for testing and demonstration (Lake Berryessa is near), year-round good weather and cultural and recreational amenities. Kuhn said the city has received approval from the Bureau of Land Management to land airplanes on Lake Berryessa.
Photo courtesy ICON Aircraft website
Consultants use a sophisticated process for site selection, Kuhn said. They send their requirements to economic development offices at the state level, and regional EDCs are in the pipeline. ICON's request made its way to the Solano Economic Development Council. Officials at the City of Vacaville saw that it looked like a good fit.
"We submitted our proposal. We met their criteria," Kuhn said. "We've been working the deal for over three years now. It's been a long haul.
"ICON worked diligently with us to address the issues. We got a lot of help from the County of Solano."
ICON CEO Kirk Hawkins, who flew F-16s in the U.S. Air Force and holds a Masters in Engineering from Stanford University, founded the company in 2005 in Silicon Valley after the FAA created the Light Sport Aircraft category in 2004. According to company sources, 1,050 orders have been placed for the A5.
Sales, hotel tax rebates sweetened the deal
Photo courtesy ICON Aircraft website
The city of Vacaville offered creative incentives to attract ICON Aircraft, including rebates of a percentage of sales taxes on aircraft sold, a 50 percent rebate on ICON-related Transient Occupancy (hotel) Tax, direct access to the Solano County Nut Tree Airport runway through a private gate and the re-naming of streets.
Details are spelled out in the agreement between ICON and the city of Vacaville that the City Council approved on Sept. 24, 2014 (See Vacaville city website for staff report and agreement).
The agreement does not prescribe a loan or cash from the city. It states: “As all funds provided to ICON are based on revenues already received by the City which can be specifically tracked to ICON, there is limited risk to the City.”
The amount of the sales tax rebate is based on the amount of taxes received on the sales of the $189,000 aircraft and the number of jobs at ICON. The number of jobs is defined in the agreement as the number of jobs at the facility paying an average salary of $40,000 or more.
The city and ICON will divvy up the city’s portion of the sales tax on aircraft sales. At this time, the city retains 1.25 percent of the 7.875 percent sales tax until 2018, when it drops to 1 percent. (The rest goes to the county and state. )
In the agreement, the city warns ICON that the state of California might change the way it allocates sales taxes, which would affect ICON’s rebate:
“ICON understands and acknowledges that ICON bears the sole risk that City’s Sales Tax revenues generated by ICON‘s operations may be reduced or no longer available to the City due to the actions of the State, which could reduce or eliminate the Sales Tax Payments to ICON.”
The city concluded that ICON will bring in numerous guests – employees, contractors, directors, visitors – to the local hotels, increasing the city’s hotel bed tax (TOT) revenue. The agreement calls for the parties to work with the local tourism booster organization, Visit Vacaville, to establish a reservation coding system to track the ICON-related overnight stays.
Payment to ICON will be swift: “The City shall, within thirty (30) days after receipt of the TOT Report, pay to ICON by check or wire transfer fifty percent (50%) of the TOT Received … “[See City of Vacaville website for full document].
In its agreement with ICON, the city promises to expedite building applications. ICON will pay normal application fees.
The warehouse in Vacaville that ICON has leased for manufacturing (“The Property”) is at 2141 Beechcraft Road. Other streets surrounding the facility also carry names of aircraft manufacturers. The city offered to change the street names. The agreement reads:
“ICON is establishing an aircraft production facility at the Property and several of the streets in the vicinity of the Property currently have manufacturer trade names (e.g., Beechcraft Road, Cessna Drive, and Piper Drive). The street names, including the street of the Property (Beechcraft), would potentially interfere with ICON’s planned operations. The Parties agree that it may be appropriate to rename such streets to general aviation or aviator names. The City agrees to process and review ICON’s application to rename these streets in a timely manner…”
The agreement establishes the ICON Vacaville headquarters as the “principal point of sale in California for the sales of its aircraft…” and requires that the company not receive the same tax incentives from any other city in California.
ICON at one time had planned to build the first five production A5s in Tehachapi. Although it’s unclear, apparently now the only units to be completed in Tehachapi are the proof of concept (POC) prototype and the Engineering Serial Number 1 (ESN1) that is being made to production standards and will be used to pass FAA tests. A provision in the agreement establishes that all manufacturing of the sleek aerial amphibian will commence in Vacaville:
“No Prior Sales. ICON has taken orders for the future sale of aircraft to be produced at the Property but, to date, represents that it has not sold any aircraft that ICON intends to produce or sell at the Property, which might otherwise prohibit the incentives provided for hereunder as provided by California Government Code Section 53084 or 53084.5.”
Vacaville City Manager Laura Kuhn said the ICON plant will have a private gate that provides direct access to the airport. She said a proposal to build a body of water adjacent to Nut Tree Airport where airplanes can take off and land is being contemplated.
As a bonus to tourism, ICON has agreed to offer tours of its manufacturing facility in Vacaville.
