Commission approves bonds for potential Project Ranger facility

Calif. Corp. eyes Sandoval Co. as potential site for rocket facility

RIO RANCHO — Sandoval County is in the running for a major investment in a project that coul…

BERNALILLO — Sandoval County has taken the next step in its bid to be the home to a 1,000-acre rocket motor production facility.

On Wednesday, the commission voted unanimously to approve $125 million in industrial revenue bonds for the project, dubbed Project Ranger, to Castelion Corporation, a company with a mission of rebuilding “industrial agility to strengthen national security and outpace evolving threats.”

According to documents provided to the commission and a previous release from the New Mexico Economic Development Department, the proposed facility would produce next-generation hypersonic systems. The initial capital investment would be $101 million with employment of up to 300 engineers, technicians and executives with and average salary of $100,000 per year.

Sandoval County is one of three locations being considered for the project, with the other two being out of state, though they were not disclosed by Castelion representatives.

Additionally, the project, if Sandoval County is selected, is projected to generate more than $659 million in economic output statewide over the next decade and has the potential to grow to more than 1,000 employees by 2035 with an additional capital investment of up to $150 million.

“We’re already having ongoing conversations on how to expand,” said Rob Burpo of First American Financial Advisors, Inc., during a presentation on the bonds.

“A lot of times, we do these transactions and they are nothing more than transactions,” he said. “It’s just the company and the county negotiating, passing paper back and forth. I can tell you, this particular transaction has been one of the most relationship-building transactions I’ve been involved with since I started doing this in 1999 with you all.”

During the presentation on the bonds, Burpo highlighted that the issuance of the bonds was at no risk to the county’s taxpayers.

“This is not a bond in the traditional sense. It is basically a financing agreement for tax abatements and things like that,” he said. “The company is responsible for everything: for the payments, for the operations. No taxpayer funds are involved with this at all.”

In fact, he said, the company is also responsible for the county’s legal and financial advisory expenses. “The county literally doesn’t have expenditures. The company pays for all those things.”

County Manager Wayne Johnson expanded on the details after the meeting.

“The project itself will buy its own bonds from the county,” he said, noting that the county will technically own the land, equipment and buildings associated with the project, meaning the company doesn’t have to pay property taxes and GRT on the equipment.

However, he said, the company would then lease the property and equipment from the county, making payments on both the county-owned land and land leased from the State Land Office. Additionally, he said, they will make payments in lieu of taxes, commonly referred to as PILOT payments, which typically reduces what the company would pay in property taxes by an average of 80-95%, he said. Then, at the end of the 30-year term of the agreement, ownership of the property and equipment would revert back to the company and return to the tax rolls, he said.

“That’s how we get some of the money back,” Johnson said.

During the presentation, Burpo also told the commission that the amount the county is currently collecting on property taxes on the land is about $4,000 per year.

“This project will end up generating about $26,600 in property taxes and PILOT every year for the next 30 years,” Burpo said. “But it’s all the other revenues that it’s going to bring that makes this such an attractive transaction. They will be making lease payments on the portion of the land that the county owns, and they will be making two different lease payments on land owned by the State Land Office.”

Johnson called it an investment for jobs, noting that in addition to the 300 jobs the project could bring the county, the county would also collect additional GRT “as part of induced economic activity from this project,” including property taxes paid by employees and taxes paid on their everyday purchases, such as cars, gas, food and more. Additionally, he said, the company would be subject to GRT on the sales of its products.

“That’s all new money coming in from outside,” he said.

Ahead of the presentation and vote on the industrial revenue bonds, state Sen. Jay Block spoke in favor of the project.

“This is one of the most important IRBs in county history,” he said. “This is a game changer, not just for Sandoval County or our great state of New Mexico, but for our country.”

He went on to say that Castelion offers “incredible economic benefits,” citing the number of jobs, their salaries and the capital investments.

“We have the opportunity here in Sandoval County and Rio Rancho to impact our country’s national security when it comes to the type of systems that this company will build,” Block said. “We are way behind against China and Russia when it comes to hypersonics.”

He also highlighted the safety evaluations on the project proposal done by Sandia and Los Alamos National Labs. “They have reported back to the state, to the county, to the city that the facility that will be built will meet and exceed stringent safety requirements as well as 24/7 security at this facility,” he said, noting that he would feel safe with the project being “sort of close” to his house.

When Commissioner Josh Jones asked about the location for Project Ranger and potential noise pollution, Burpo called the location near 29th Avenue “very rural” and “pretty remote” — Johnson later said it’s a little more than three miles from the nearest Rio Rancho boundary — and noted that noise disruptions would be “limited, at best.”

“I don’t want to speak for the company on that. … There might be a test from time to time, but that’s really limited,” Burpo said. “Most of it’s going to be engineering, studying, whatever. … Nothing’s going up in the air.”

Commission Chair Mike Meek also asked if there were any remaining issues that need to be tied up after the vote, including “any third parties we’re still waiting on to fill in these gaps?”

Burpo said the biggest issue is finalizing the two lease agreements between Sandoval County and the State Land Office, though he said that was scheduled to be worked on Friday.