Quonset inks new deal with Deepwater

Wed, 05/09/2012 - 2:30pm

A new deal has been reached between the Quonset Development Corp. (QDC) and Deepwater Wind that reconfigures and reduces the amount of land for a potential wind turbine manufacturing facility in the Quonset Business Park.

In July 2009, QDC agreed to a lease option with Deepwater for three parcels totaling 117 acres, which Deepwater paid $575,000 for over the last three years. That agreement expired in October.

The new lease option agreement secures three different parcels totaling 47.3 acres in the Davisville Waterfront District of the park. Deepwater will pay a $325,000 option payment the first year, $425,000 the following year and $525,000 for the third year.

The property is located between Quonset State Airport and Pier 1.

The company is aiming to build its regional development headquarters and a regional manufacturing facility in Quonset in conjunction with plans to install more than 100 wind turbines off the state's coast — including a demonstration project within three miles of Block Island.

During the April 16 QDC Board of Directors meeting, Deepwater Wind’s Chief Administrative Officer Jeffrey Grybowski said the total cost of the project could be around $5 billion.

Deepwater Wind is backed by D.E. Shaw & Co., a global investment and technology firm with about $26 billion in investment capital, according to their website.

A recent report by a special legislative committee on the state’s ports recommended the state avoid investing any of its own money into the project because the wind energy market has much “uncertainty.”

When asked why the company was now leasing less than half of what was included in the original lease, Grybowski said it was because the new parcels are all located next to each other. Under the previous agreement, the three parcels were in three different areas within the park.

“The previous version of our agreement covered 117 acres spread across three separate parcels that were not contiguous,” Grybowski said in a statement. “The reduction in acreage is possible because the contiguous nature of the parcels and the direct waterfront access improves the efficiencies of the use of parcels. Also, the prior configuration was based on available parcels, which were not ideally sized or located for our needs. The new configuration is better tailored to our needs.”

Major development on the three parcels, one waterfront and two inland, will not take place for a while because Deepwater still needs to secure financing and pertinent state and federal permits.

The lease option essentially allows Deepwater to put a placeholder on the land but still allows QDC to lease the land to another interested party if it chooses to do so. If that happens, Deepwater would have the option to pay rent on the land to secure it.

Under the terms of the new agreement, the yearly rent during the first 10 years would be about $1.9 million, with about $285,000 going to the town in the form of payment in lieu of taxes, commonly referred to as PILOT payments.

This article originally appeared in the South County Independent.