American Airlines seeking $21.25 million tax incentive deal from Fort Worth

American Airlines is asking the City Council for a 15-year, $21.25 million tax incentive for the $350 million corporate campus it wants to build on nearly 100 acres south of American’s training and operations centers west of Texas 360.

American is also asking the city to nominate existing facilities, including its current headquarters buildings east of Texas 360, for the Texas Enterprise Zone program that, if approved, could give the airline about $3.75 million in state sales and use tax refunds.

Under the proposed deal with Fort Worth, American will need to invest at least $200 million in a planned four-building campus to be built by Dec. 31, 2019. Moreover, the airline must spend $50 million with Fort Worth companies and minority and women-owned businesses. The scope of the project has not yet been revealed.

The level of incentive will be based on the appraised value of real and business personal property. For the first $100 million invested, American receives a 75 percent abatement on its taxes. That climbs to 90 percent if the appraised value exceeds $300 million.

Even with the incentive, Fort Worth will receive about $7 million in tax revenue over 15 years.

Council members were briefed Tuesday on the proposed incentives and a new lease arrangement American worked out with Dallas/Fort Worth Airport. The council will vote on both issues on Nov. 10 and the Texas Enterprise Zone nomination on Nov. 17.

American wants the state tax rebates on investments it will make to maintain its current buildings. The state will need to approve before the zones go into effect.

“A lot of hard work has gone into this project in the last 14 months,” said Mayor Betsy Price. “This is a great project for the entire region. Where they’re building this building is part flood plain. It’s a great adaptive reuse of this flood plain area. It’s going to give them a beautiful campus.”

Councilwoman Gyna Bivens, whose district includes the headquarters site, said, “It means so much that American has made this decision and that the airport is such a willing partner. This is big.”

Details of the incentives were revealed less than two weeks after American announced its plan to build a corporate campus on the site of the former Sabre Holdings headquarters.

John Terrell, the airport’s vice president of commercial development, said American decided in March to stay in Fort Worth and signed a letter of intent with the airport in September.

“We are thrilled to have the opportunity and to have been working with American Airlines,” Terrell said.

Robert Sturns, Fort Worth’s interim director of economic development, said other Metroplex cities made a “strong push” for the project. “In order to finalize a deal we still have a couple of hurdles to get past,” Sturns told the council. “This was not a deal that was done by any measure. There were other sites that were under consideration.”

One of those was the former Texas Stadium site in Irving.

American will build the new headquarters adjacent to its Flight Academy and Training and Conference Center and near its $88 million Integrated Operations Center, which opened in September. In June 2014, the City Council approved a 15-year, $6.5 million tax incentive for the operations center.

By moving the headquarters from Amon Carter Boulevard south of DFW Airport, American will create a corporate campus west of 360 that encompasses about 300 acres. It is also where the company had its headquarters when it moved to Fort Worth from New York in the 1970s.

The location later became the headquarters for Sabre, a former American Airlines technology company that was spun off in 2000. Sabre eventually moved to Southlake and subleased the buildings until 2009. They have been vacant since. American plans to demolish the buildings. The new campus will house about 5,000 employees, the airline said.

Construction is scheduled to start in the spring and the new facilities would open sometime in 2018.

“American is delighted to call Fort Worth home,” said American spokesman Matt Miller. “We look forward to creating a new headquarters that all 100,000 American Airlines employees can be proud of and a space that brings everyone closer together for greater collaboration as we move ahead with plans to restore American to the greatest airline in the world.”

The lease arrangement still needs approval from the Dallas City Council. The council will be briefed next week and vote on the lease at a later date.

Tarrant County is also being asked to provide a tax incentive, but those details are not yet known. Tarrant County commissioners are tentatively scheduled to vote on those later this month.

Last week, the DFW Airport board approved a lease extension for American Airlines related to its headquarters plans. The lease on the airport-owned property, initiated in 1978, was extended to 2114 from its original expiration of 2043. As part of the deal, the airline will make a $10 million lump-sum payment to the airport.

American built its two current headquarters buildings in the Centreport business park in 1988 and 1990. The buildings, the airline said, are too old, costly to maintain and not suited to its corporate structure.

Since merging with US Airways and exiting bankruptcy nearly two years ago, the company has added 15,000 workers. It employs about 25,000 in North Texas and recently began hiring an additional 400 office-based reservations agents for its Fort Worth office.

This story was originally published November 3, 2015 at 9:59 AM with the headline "American Airlines seeking $21.25 million tax incentive deal from Fort Worth."