Inside Pratt & Whitney’s Columbus expansion agreement: bonds, jobs and what’s required

On Feb. 24, the Ledger-Enquirer reported that Pratt & Whitney, an RTX company, will invest $200 million to expand its Columbus operations. The new project is expected to create 15 jobs, with more to come, according to a news release.

The L-E request the inducement agreement documents from the Development Authority of Columbus.

Here is an inside look at the deal:

What is an inducement agreement?

An inducement agreement is commonly signed when two parties formalize plans for a major investment project. The documents outline the incentives offered, approvals granted and commitments from each side.

The documents for this project were signed by Selvin Hollingsworth, chairman of the development authority, and yet-to-be designated Pratt & Whitney representatives, according to the copy the L-E received.

What does Pratt & Whitney get out of this deal?

According to the documents, the development authority agreed to issue bonds, or loans, at a lower interest rate to finance the Pratt & Whitney expansion. The development authority has issued $200,500,000 in bonds.

The bonds being offered are industrial revenue bonds, which are typically issued by a government entity to help provide capital to private businesses to stimulate economic development. Individual taxpayers are not responsible for the repayment of these bonds.

What does Pratt & Whitney promise in this deal?

In return, Pratt & Whitney must retain “approximately 2,301” full-time positions and create 15 new job positions by Dec. 31, 2029, the agreement says. The project must be completed within five years.

The agreement may terminate in 18 months if Pratt & Whitney does not begin the construction project. Pratt & Whitney can terminate the agreement at any time if it provides a written notice and reimburses the development authority for any costs incurred.