The Arkansas Democrat-Gazette this morning confirmed the expected news that it will be years, up to five, before a Czech gunmaker builds a factory at the Little Rock Port. Though we are assured that day will eventually come.
Missing in the story was an element that I’ll get to in a minute.
Last Friday, the company, known here as d, announced a deal to acquire Colt, the American gun maker. The deal includes existing Colt factories in Canada, and even more key, the United States. U.S. production facilities give gunmakers a way around difficulties foreign manufacturers face, one of the reasons for the CZ plan to build in Little Rock.
When I saw the story last Friday, I immediately wondered about the future of the Little Rock factory, which was announced with great fanfare by the governor and others almost two years ago. No spades of dirt have turned. I asked Port Director Bryan Day last Friday if CZ’s purchase of existing facilities would affect plans here. His response then:
I do not know the answer to that – we are in constant contact with CZ and they are still planning to build at the Port. I do know the global pandemic has complicated their efforts, but I have no reason to believe they are not coming.
From the D-G story today I now know this answer was incomplete. CZ said it notified state officials of the delay. The governor said he’d been notified of the Colt acquisition, but not of the delay. He said he’d also work on attracting Colt here. The cost of a new plant would be significant against existing facilities, but Colt workers in Canada and Connecticut likely enjoy better pay than workers in right-to-work-for-less Arkansas, so who knows?
The Little Rock project has faced difficulties for some time, particularly when CZ’s attempt to raise capital in a stock offering fell short of its hopes.
Now the missing element:
At the urging of the state, the city of Little Rock gave 73 acres to the company for free to lure them here. This was land purchased with city sales tax proceeds. It is worth $1.7 million.
Will the city and state allow CZ to hold onto taxpayer-purchased land indefinitely? Might an option with a time limit have been a better development strategy? Might coming plans to ask taxpayers for still more sales tax money to buy still more port land seem a little ambitious since there are 73 unused acres out there?
There is at least a “clawback” provision on the property. The land isn’t CZ’s to sell if it doesn’t build; the land reverts to the port. The question is when.
PS: There’s more, I was reminded. The city of Little Rock approved an industrial development bond issue to develop the factory. The state has promised an $18 million construction loan to CZ, with the company agreeing to a schedule of payments. For this, the company agreed to transfer the land back to the Port, with rents dedicated to paying off the construction loan.
I’ve asked the AEDC about this.
UPDATE: No bonds have been issued yet and no state loan made. Said an AEDC spokesperson:
We are in conversations with CZ leadership about their acquisition of Colt and the delay/ possible opportunity this presents for the company and its future in Arkansas
A good time to remember how Arkansas “landed” this deal thanks to effort of a guy who specializes in pitting states against one another for tax incentives. A duck hunt with Asa was part of this deal, which already has cost the state $4 million from his “quick action closing fund” on a deal that may not close for five more years.
One final note: Bryan Day at the Port says an amended agreement with CZ says that if they do not start construction by June, the land reverts back to the Port. The agreement could be amended again, presumably.