Updates to Queen Creek LG battery plant include water updates, workforce training facility
Queen Creek Town Council approved changes to its agreement with LG Energy Solutions that extend deadlines for various construction and payment obligations for the town and the car battery maker.
The South Korean-based battery manufacturer initially announced it was coming to the town in April 2022 and later announced in March it was quadrupling its initial investment at the plant.
The state will provide millions in incentives, including tax credits and a deal-closing fund.
Locally, Queen Creek and Pinal County approved a development agreement with LG in 2022 to provide employment incentives and outlined timeline obligations both parties needed to meet.
However, with the expansion, the town needed to revisit its timeline in the agreement for phase one of the plant.
The factory will become the town’s largest employer and is expected to create more than 2,800 jobs. The development agreement approved between the town, county and LG provided incentives for hiring residents in Queen Creek and Pinal County.
Learn more: Is Mesa ripe for business investment from South Korea? Mayor John Giles thinks so
The contract included extensions to employment incentive deadlines, a water waiver and details for the construction of a workforce training facility.
Queen Creek is also obligated to build new roads, water and sewer infrastructure that will amount to $84 million. The town is in the process of securing $50 million in external financing to pay for the construction while it waits to receive construction sales tax revenue.
The town will need to start construction by June 16 and complete the improvements within seven-and-a-half years, according to changes in the agreement.
The town has no specific date of when LG will break ground but said the company is looking at late this year or early next, said Constance Halonen‑Wilson, a town spokesperson.
Employment incentives
Pinal County and Queen Creek will pay LG to hire its residents, according to the development agreement.
The initial agreement stated the company has to hire a minimum of 2,800 full-time employees within 10 years of the land acquisitions. Now, that date is Dec. 16, 2033.
The county and town will need to start providing job reimbursements by Aug. 31 for town and county residents.
The amount of payment didn’t change from the initial agreement. Pinal County will pay the company $3,000 per county resident employed at the factory and $1,500 for each non-Pinal County resident employed at the factory for training assistance. Queen Creek also will provide $250 in reimbursement per employee, up to $700,000.
Water agreement waiver
Queen Creek waived a part of its water ordinance that would have required it to enter into a Sustainable Water Allocation Agreement for non-residential customers that go beyond a Tier 1 water allocation, which allows an average customer to consume up to 60 acre-feet of water annually.
Any annual water use above 100 acre-feet of water or 89,275 gallons of water per day would put the customer within the town’s Tier 2.
One acre-foot of water serves about three average households a year.
Instead, the town will enter into a separate utility agreement with LG that will detail the rate the company will pay for its water.
Councilmember Travis Padilla said at Wednesday’s council meeting he was comfortable voting to waive the agreement because in the future utility agreement, the town would be “ensuring LG does fund and pay for their own water like every other business of this magnitude.”
That agreement will come to the Town Council for approval. “Having a separate utility agreement will allow the Town to work with LGES on their specific needs without impacting current utility customers,” Halonen‑Wilson told The Arizona Republic.
A preliminary rate letter outlined the projected annual water usage at the buildout. Those 2022 numbers suggest it would use more than 645 million gallons of water a year or 1,981 acre-feet of water a year. It is also projected to produce nearly 328 million gallons of wastewater.
But those numbers for buildout are no longer accurate, as LG has expanded its campus and changed the site plans for phase one, Halonen‑Wilson said.
Go deeper: Korean battery giant LG announces huge expansion of plans for battery factory in Queen Creek
Training facility
A part of the agreement is details on Pinal County’s obligation to build a training facility for workforce development.
Central Arizona College, a Pinal community college, and the county will construct the building at the Superstition Mountain Campus in Apache Junction.
The Pinal County Board of Supervisors in September approved the use of $9.3 million in American Rescue Plan Act funds to help fund construction of the facility. Queen Creek will not be contributing any cost to its construction, Halonen‑Wilson said.
The county has capped its contribution to the workforce facility and employment incentive at $17.4 million.
According to the updated agreement with LG, the center needs to be completed by Sept. 30. If the training facility is not ready in time for the company to start training its employees, the county will need to make space elsewhere on the community college’s campus at no cost to LG.
The battery manufacturer will have priority use of the training facility for the first five years following the issuance of a certificate of occupancy.
A college spokesperson did not provide a total cost of the training facility, for which it has yet to break ground.
Reporter Maritza Dominguez covers Mesa and Gilbert and can be reached at maritza.dominguez@arizonarepublic.com or 480-271-0646. Follow her on X, formerly Twitter: @maritzacdom.
This article originally appeared on Arizona Republic: Queen Creek, Pinal update contracts for LG battery plant
