2010-351

Jacksonville Economic Development Commission Business Development

Project First Flight Project Summary – April 14, 2010 Revised April 27, 2010 ______

Company: Aviation Systems Engineering Company, Inc. (ASEC) Vincent Bellezza, President 7255 Golden Wings Road, Suite 2 Jacksonville, FL 32244 (904) 772-8442

Executive Summary Aviation Systems Engineering Company, Incorporated (ASEC) is an engineering services firm specializing in aviation system development, analysis and testing. ASEC currently operates a small branch office in Jacksonville. ASEC corporate headquarters is located in Lexington Park, Maryland. ASEC’s major customer is the United States Department of Defense. ASEC is evaluating expanding their Jacksonville, Florida branch location from seven employees by creating up to 10 new full-time economic base jobs within 12 to 18 months after the agreement is executed. The average wage of the jobs to be created is 200 percent of the state average wage or $79,242 plus benefits. The private capital investment to expand the Jacksonville branch office is approximately $133,000. The additional capital investment for machinery, equipment, R & D equipment is $76,000. Leasehold improvements to their branch office including the leasing of an additional 1,540 square feet are estimated to cost $57,000.

The inducement to add the proposed 10 new full time jobs in Jacksonville is the availability of the Qualified Target Industry Tax Refund, which will help defer the cost of expanding the Company’s office to support the new employees. Other locations being considered include Lexington Park, Maryland, Seattle, Washington and St. Louis Missouri. This project will strengthen the state and local target industry, professional, scientific and technical services, and support the aviation industry within the Jacksonville region.

Company Background ASEC was started and incorporated in Maryland on November 25, 2003. The Company is headquartered in Lexington Park, Maryland and currently employs 90 persons. ASEC is a closely held corporation owned by the three founding corporate officers. The founders share a combined 70 years of experience in aviation systems engineering and testing. ASEC specializes in providing developmental and operational aviation systems engineering experience to its clients. The focus of the services provided is system engineering for new Department of Defense aircraft and aviation electronics (avionics), including mission systems and sensors. Aviation systems engineering includes ASEC Project Summary – April 14, 2010 Page 2 of 4 development of operational concepts/prototypes, performance-based requirements definition for new and modified avionics, testing of new/modified avionics, training, life-cycle support, as well as general Department of Defense program management/acquisition support throughout the systems engineering process. Additionally, ASEC provides highly skilled and experienced engineers, analysts and operators to the Department of Defense and its contractors to fill and augment critical positions.

Project Parameters: . Employment: ASEC proposes, through the expansion of its Jacksonville branch office, to create up to 10 new, full-time employees in one phase by December 31, 2011. The average wage of the new jobs to be added is approximately $79,242 plus an excellent employee benefits package valued at $48,000, generating an annual payroll of approximately $1.2 million, including benefits. The average wage is in excess of 200 percent of the state average annual wage. The types of jobs to be created are aviation engineers.

. Estimated Investment: ASEC estimates that this project will result in a new private capital investment of $133,000 through purchases of R & D equipment, IT equipment, furniture and fixtures valued at $76,000 and leasehold improvements totaling $57,000.

. Public Investment: ASEC is seeking public investment through the Qualified Targeted Industry (QTI) Tax Refund Program. Because the jobs being proposed are within a state-targeted industry (professional, scientific and technical services) and will offer an expected average wage of approximately $79,242, which is in excess of 200 percent of the state average, the project meets the requirements for $5,000 per job under this state program. The total QTI award would be $50,000. The city portion of the QTI award is 20 percent of the basic award, up to $10,000. The State of Florida funds 80% of the QTI award, up to $40,000.

. Public Investment Ratios: City Dollars: Job $1,000:1 State Dollars: Job $4,000:1 Taxable Private Capital Investment: Job $13,300:1 Taxable Private Capital Investment: City Dollars $13.3:$1.00 Taxable Private Capital Investment: State Dollars $3.33:$1.00 Annual Payroll: City Dollars $79.24:$1.00 Annual Payroll: State Dollars $19.81:$1.00

. Public Investment Rationale ASEC Project Summary – April 14, 2010 Page 3 of 4

The availability of state and local public investment programs will help to off-set the cost of having a regional office to support the new employees. The Jacksonville- based employees dedicated to the project will be on-site instructors providing training related to the replacement of the existing Orion P-3 aircraft by Boeing with the P-8A Poseidon aircraft.

. Public Investment Protections: The QTI Program has a built-in remedy related to both the number of jobs and the actual wages. In accordance with the requirements of the QTI Program, and in consideration for the total tax refund grant of $50,000 (the city’s portion equals 20 percent, or $10,000), if the company fails to create 10 new, full-time economic-based jobs at the anticipated wage levels within the timeframe set forth by the QTI application, the annual payments will be adjusted downward proportionately with the adjustment of the state QTI refunds. The QTI refund will be made annually based on the actual number of full-time jobs created (not to exceed 10) and only after verification of the average wages actually paid. The QTI refund will also be based on the amount of state and local taxes actually paid by the Company. Therefore, the refund payments will not be made until it can be verified that the company has achieved its contractual obligations. This verification will be performed each year during the term of the QTI program. It is important to also note that the payments are made in increments of 25 percent of the total QTI award per year over a four year period as the 10 new full-time permanent employees are added.

. Project Site: ASEC proposes to lease up to an additional 1,540 square feet of space within their existing leased facility located at 7255 Golden Wings Road, Suite 2, Jacksonville, Florida 32244. This project site is located within Council District 14, represented by Councilmember Michael Corrigan.

. Community Service Commitment: ASEC and its employees are actively involved in Community Service activities in Maryland and expect to participate in similar activities in Jacksonville. These activities include helping veterans transition to the civilian workforce; corporate sponsorship of The River Concert Services in Southern Maryland; and financial donations to numerous charitable groups, including Silver Sponsor of the St. Mary’s Hospital Association, Disabled Veterans, St. Vincent De Paul Society and Friends of the Poor. ASEC employees volunteer to provide construction services to needy families to upgrade their housing units; serve on the boards and volunteer to support over 25 different professional organizations, including the Navy League, National Business Aviation Association and Patuxent Partnership.

. Public Purpose: ASEC Project Summary – April 14, 2010 Page 4 of 4

 The project supports sustainable job growth by creating 10 new full-time economic-based jobs generating an annual payroll of approximately $1.2 million, including benefits.  The project supports the Mayor’s and the Commission’s objective to recruit and expand higher wage jobs.  The project allows for the expansion of a targeted industry business (aviation) with additional growth potential.  The project will contribute to Duval County’s tax base through a taxable private capital investment of $133,000.

Requested Action Recommend the Jacksonville Economic Development Commission authorize the introduction of legislation to the Jacksonville City Council which: . Recommends that ASEC, Inc. be approved as a Qualified Target Industry business; . States that the commitment of local financial support for the Qualified Target Industry Tax Credit Program exists and will be appropriated in the not to exceed amount of $10,000; and . Authorizes JEDC to utilize the authority provided by City Council Ordinance 2005-1460-E requiring only two readings before City Council and authorizes JEDC to submit the proposed Ordinance and all pertinent background information to be provided to the City Council Auditor simultaneous to filing with Legislative Services Division.