Two States Boost Incentives For Future Spaceport Work

WASHINGTON –
The two states vying to become the primary launch site for Orbital Sciences Corp.’s planned Taurus 2 rocket are sinking money into infrastructure and creating tax incentives in an effort to boost their chances of bringing new business to their respective spaceports.

Gaining
Orbital Sciences
of Dulles, Va., as a launch customer
would be a boon for Virginia or Florida. Both states are
trying to capitalize on the anticipated growth in the emerging
commercial launch market, including
new
opportunities such as transporting people and supplies to and from the international
space station and other destinations in low Earth orbit.

Florida’s space authority, Space Florida, is turning to the commercial launch industry to help mitigate the expected
employment and economic losses that will occur as NASA retires the space shuttle fleet in 2010. The agency’s three remaining orbiters have been a major source of jobs
at Cape Canaveral.

Meanwhile the Virginia Commercial Space Flight Authority plans to expand the economy
in the Wallops Island region, which provides jobs on the Eastern shore of both Virginia and Maryland.

“Neither of us has everything in place,” said Billie Reed, executive director of the Virginia Commercial Space Flight Authority that owns the Mid-Atlantic Regional Spaceport at Wallops Island, Va. “The playing field, if you will, is pretty level.”

Lawmakers in both states committed millions of dollars this year for
launch facility upgrades – and did so
during legislative sessions marked by large overall budget cuts triggered by the nationwide economic downturn. The Florida Legislature allocated $14.5 million to reconfigure an idle U.S. Air Force launch pad, while the Virginia General Assembly approved a $16 million bond package for infrastructure upgrades at Wallops.

“There’s a new space race going on and it’s going on at the state level,” said space law attorney James Dunstan of Garvey Schubert Barer in Washington. “Keep your eye out, I think both legislatures are going to try to keep one-upping each other next year as well.”

Dunstan cited three areas in which states can have a major impact on attracting commercial space business: establishing limited liability legislation for companies involved in human spaceflight, tax incentives and launch infrastructure development. Florida and Virginia
have addressed all three.

Virginia was first to pass a limited liability law last year – the Virginia Space Liability and Immunity Act, which has been in effect since July 1, 2007.
Florida followed suit this year with the Florida Informed Consent for Spaceflight Act, which goes into effect
Oct. 1.

Those laws, Dunstan said, give Virginia and Florida an advantage over other states trying to pull in commercial spaceflight business.

Both states hope to cash in on Orbital’s development of a launch vehicle to take cargo to the space station after the space shuttle is retired in 2010. The Dulles, Va.-based company and Space Exploration Technologies (SpaceX) of Hawthorne, Calif., are working with NASA to develop a commercial cargo launch vehicle under its Commercial Orbital Transportation Services program. SpaceX already has agreed to launch from Florida.

Space Florida is pursuing 50 space-related companies to move to Florida or expand their businesses in the state, said Deb Spicer, vice president of Space Florida’s corporate communications and external affairs. With its massive Cape Canaveral facility and employee base already in place, Florida has notched commitments from Las Vegas-based Bigelow Aerospace and Planet Space of Chicago to conduct human spaceflight missions, she said, adding that the state is aggressively pursuing Orbital Sciences.

The $14.5 million approved by the Florida Legislature this year will pay for reconfiguring an idle U.S. Air Force launch pad
into a commercial launch pad capable of multiple users, Spicer said.

At Wallops Island, the Mid-Atlantic Regional Spaceport has logged two successful launches to date, both Orbital Sciences Minotaur rockets launched in December 2006 and April 2007. One NASA mission is scheduled to launch from Wallops Island this summer and a Minotaur launch with the Air Force TacSat-3 satellite is scheduled for September, Reed said.

The Virginia spaceport’s capability will be upgraded from small- to medium-class, to a full medium-class launch facility, Reed said, adding that he also needs infrastructure for liquid fuel storage, which Florida already has.

The tax incentives passed by the Florida and Virginia legislatures each have benefits and drawbacks, Dunstan said. Virginia’s Zero-G/Zero-Tax offers a state tax exemption to companies involved in flying or training humans in suborbital flight or resupplying the space station, while Florida’s tax relief is for all space-related activity but requires application and approval for tax refunds based on whether the company created new jobs or is established in an economic development zone.

“In terms of dollar amount, [Zero-G/Zero-Tax] could be a real boon to companies involved in human spaceflight and station resupply. When you’re talking about hundreds of millions in revenue, it could be millions of dollars in tax breaks,” Dunstan said.

Virginia’s tax incentive requires that launches occur or originate in the state.

Florida’s Legislature expanded an existing tax break to space companies that it has offered to defense companies since 1993. The Qualified Spaceflight Contractor tax refund program rewards companies for increasing the number of jobs, particularly in rural or depressed areas and paying workers above average wages. The new legislation gives a refund of $3,000 to $6,000 per job and an additional $1,000 to $2,000 per job bonus if jobs pay 150 percent to 200 percent of the average private-sector wage in the area.

In an effort to lure entrepreneurs working on a space shuttle replacement, Florida lawmakers approved a program that will pay $40 million to the Florida-based space company that makes the most significant advances in reusable launch vehicles between 2009 and 2013. The state legislature in future years still must allocate its share – $20 million – and the other $20 million will be raised by private sponsors, according to the legislation.

The program will mirror the Ansari X Prize program awarded by the X Prize Foundation of Santa Monica, Calif., in 2004. In that competition, Mojave Aerospace Ventures of Mojave, Calif., led the first commercial team to launch SpaceShipOne, built by Burt Rutan’s Scaled Composites, a three-person spacecraft capable of rocketing to more than 100 kilometers from Earth twice in five days. The company was paid $10 million.

Bill Parsons, director of Kennedy Space Center in Florida, said he believes Florida can offer commercial launch companies like Orbital Sciences the infrastructure they need, but said they must make the business decisions that make sense for them.

“Although parochially I’d like to see them come to Florida, the biggest thing is I’d like to see them be successful,” he said. “The most important thing for NASA, really, is making sure they can put together a launch vehicle that can do the things we’ve asked them to do in the shortest amount of time.”

Reed, who has advocated for the commercial buildup at Wallops for 16 years, said competition is good and his spaceport will gain business regardless of Orbital’s decision.

“We’re like a bunch of expectant fathers pacing around the waiting room. We’re waiting to get on with this,” he said. “If Orbital is successful in their development, and if Space X is successful, they’re going to need multiple launch sites. It’s a very positive sign.”

Comments: riannotta@space.com