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New Mexico Gov. Wants $100M for Private Spaceport

December 19, 2005

Nearly 40,000 people in 120 countries have placed deposits with the British commercial space company for the opportunity to become tourists in space, according to Virgin Galactic. Last Tuesday, New Mexico's governor said he wants the state to spend $100 million over the next three years to help get them there.

Gov. Bill Richardson and Virgin Companies chairman Richard Branson announced the world's first spaceport designed for personal spaceflight will be built on 27-square miles of state land in southern New Mexico, at an estimated total cost of $225 million. The package includes development of Virgin Galactic's world headquarters, to be built underground, as well as the above-ground runway and support buildings.

The governor’s funding package will be the cornerstone of a larger $225 million financial construction package that includes local, state and federal funding to build New Mexico’s spaceport in Upham, approximately 25 miles southeast of Truth or Consequences and 45 miles northeast of Las Cruces. The state's $100 million, generated from severance tax bonds and available over the next three years, will be used to build infrastructure: including runways, roads, water, power lines, launch pads and a weather station.

The agreement between New Mexico and Virgin says the state will build and then lease to Virgin Galactic customized hangar and training facilities, and the company will pay user fees for use of the spaceport, as is customary in the aerospace industry. Virgin Galactic will sign a 20-year lease.

Virgin Galactic will set up its operations headquarters, administration, marketing/sales, launch, maintenance, pilot training, and other operations critical to basing its operations in New Mexico, creating at least 200 new jobs for New Mexicans.

At first glance, $100 million in public funds for 200 private jobs might seem a steep price, but the Richardson Administration sees larger economic spinoff from the deal based on a study done the aerospace industry consulting firm. The study pegs the annual economic impact of the Southwest Regional Spaceport in 2020 in excess of $750 million in total revenues and exceeding 3,500 jobs, including all commercial space cluster space transportation services and manufacturing activities, as well as tourism-related visitor spending. This estimate, the governor's office points out in its press materials, is strongly dependent on the ability of the State of New Mexico and early commercial space transportation sector entrants to attract vehicle manufacturers and key suppliers to the vicinity of the spaceport.

The study estimates that the earliest economic impact of the spaceport project would come from spaceport construction, which is scheduled to begin as early as 2006, and be completed in 2008. Maximum construction impacts in 2007 are estimated to be $331 million in total revenues and 2,460 total jobs.

In addition to jobs, New Mexico is expected to benefit in the form of revenue to the state and capital investment as a result of overall spending from suborbital and orbital activities, and research and development activities directly related to the Spaceport. A New Mexico State University study projects spending of $1 billion, payroll of $300 million, and employment reaching 2,300 by the fifth year of operation.

Virgin Galactic also anticipates creating a "five-star destination experience" in the area to accommodate customers, their families and space enthusiasts. The company plans to send 50,000 customers into space in the first 10 years of operation, beginning as early as 2009 or 2010.

More information is available at: http://www.governor.state.nm.us/index2.php

Editor's Note: In a 21st century twist on traditional smokestack chasing strategies, New Mexico joins the growing list of states making mega-million dollar investments to support the development of private technology-based facilities with the hope that they in turn will serve as anchors for future economic growth. Unlike the familiar auto plant inducements, nearly all of the risk is borne by the public sector in these new TBED-oriented deals. Florida's deal for Scripps is the most costly to date, but other big-ticket examples include Sematech North in Albany, N.Y., and TGEN in Phoenix.

Also unlike inducements for large factories, whose spinoff benefits are often the second tier parts suppliers or service companies that follow the OEM with little or no additional public outlay, many of the new generation of mega-deals will require supplemental public investment to achieve the initial anticipated benefits. The public cost of Scripps Florida, for instance, quickly grew from $510 million to $1 billion without the recent legal battles and new relocation costs.

The true costs and benefits of these types of deals will not be known for years. SSTI hopes there are academic researchers and policy analysts already collecting the data in all effected regions to help determine the value of these investments.

New Mexico