Title
Resolution Approving the Assignment of a Commonwealth's Development Opportunity Fund Performance Agreement from HII Technical Solutions Corporation to Huntington Ingalls Incorporated
Purpose
PURPOSE/BACKGROUND:
By resolution, on September 23, 2020, City Council approved the City of Hampton's (the "City") participation in a Commonwealth's Development Opportunity Fund ("CDOF") Performance Agreement to facilitate the transfer of certain grant funds to be received from the Commonwealth of Virginia pursuant to an award by the Governor through the Virginia Economic Development Partnership Authority ("VEDP") to the Economic Development Authority of the City of Hampton, Virginia ("EDA"), to ultimately be disbursed to HII Technical Solutions Corporation ("HII TSC") for the purpose of inducing HII TSC to acquire, construct, equip, and improve a facility, to be known as the Unmanned Systems Center of Excellence (the "Facility"), in the Hampton Roads Center North ("HRCN") area of the City to design, assemble, and manufacture unmanned systems, provided the HII TSC meets certain criteria relating to capital investment and new job creation. Due to changes in circumstance outlined below, HII TSC desires to assign its rights and obligations under the CDOF Performance Agreement to Huntington Ingalls Incorporated.
Discussion:
In late 2019, HII TSC sought to construct an Unmanned Systems Center of Excellence focused on the construction of extra-large unmanned underwater vehicles (“XLUUV”) as a subcontractor to Boeing which had received the prime contract for the vehicles. In early 2020, following a multi-state search to identify an appropriate location, the Company opted to construct the facility in the City of Hampton. Based on HII TSC's commitments to make $46M in capital investment and create 268 new jobs, the Commonwealth and the City of Hampton offered a variety of incentives including a Commonwealth Development Opportunity Fund Grant and a Transportation Partnership Opportunity Fund Grant, each of which included certain targets to be achieved by December 31, 2025. HII TSC exceeded the capital investment target by December 31, 2022. However, the New Jobs Target was not met due to significant delays in the Navy’s XLUUV program and the subsequent termination of the Boeing-HII partnership. Rather than leaving the Center of Excellence underutilized, Huntington Ingalls Newport News Shipbuilding division intends to repurpose the facility as a Light Manufacturing Advanced Technology (“LMAT”) site, expanding additive manufacturing and sheet metal capabilities across all shipbuilding programs. This initiative includes an additional $28 million investment in production machinery, tools, renovations, and facility enhancements. The LMAT facility will employ 250-300 skilled workers, primarily transfers from existing sites, including 231 sheet metal positions with an average salary of $61,000 and up to 50 added manufacturing positions averaging $75,000 annually.
To date, HII TSC has received partial payment of the portion of the grant funds allocable to the New Jobs Target commensurate with the New Jobs that have so far been created and is eligible to receive the full portion grant funds allocable to the Capital Investment Target. VEDP is amenable and willing to consent to the requested assignment, subject to the consent of the City and the EDA. The EDA, by motion, at its meeting on November 18, 2025, consented to the assignment, and recommends the City do the same. Through that motion, the EDA also consented to the assignment of certain other agreements related to this transaction to which the City is not a party, including a Local Incentive Performance Agreement, Memorandum of Right of First Refusal; and the sub-agreement for the Transportation Partnership Opportunity Fund Grant paid directly to the EDA; and agreed to an extension of the Performance Period proposed by the Virginia Department of Transportation under the Transportation Partnership Opportunity Fund Grant.
Impact:
This assignment will ensure the continuity of business at the Center of Excellence and will expand the City's skilled workforce; and will enable Huntington Ingalls Incorporated to fulfill the New Jobs Target required under the Performance Agreement.
Recommendation:
Rec
Approve the Resolution.
Body
WHEREAS, the City of Hampton, Virginia (“City”), HII Technical Solutions Corporation ("HII TSC”), the Economic Development Authority of the City of Hampton (“EDA”), and the Virginia Economic Development Partnership Authority (“VEDP”) are parties to a Commonwealth Development Opportunity Fund Performance Agreement with an effective date of November 10, 2020 (the “Performance Agreement”);
WHEREAS, pursuant to the Performance Agreement, HII TSC constructed, equipped, and improve a facility to design, assemble, and construct extra-large unmanned underwater vehicles (“XLUUV”) for the United States Navy ("Navy"), as a subcontractor to Boeing, to be known as the Unmanned Systems Center of Excellence (the "Facility");
WHEREAS, due to significant delays in the Navy's XLUUV program, and the subsequent termination of the relationship between HII TSC and Boeing, HII TSC has not met the New Jobs Target;
WHEREAS, Huntington Ingalls Incorporated, an HII TSC affiliate, desires to repurpose the Facility as a Light Manufacturing Advanced Technology (“LMAT”) site, expanding additive manufacturing and sheet metal capabilities across all shipbuilding programs;
WHEREAS, VEDP is amenable and willing to consent to the requested assignment, subject to the consent of the City and the EDA;
WHEREAS, the EDA, by motion, at its meeting on November 18, 2025, consented to the assignment, and recommends the City do the same;
WHEREAS, the stimulation of the additional tax revenue and economic activity generated by the total capital investment and to be generated by the creation of new employment opportunities constitutes a valid public purpose for the expenditure of public funds and is the animating purpose for the CDOF Grant.
NOW, THEREFORE, BE IT RESOLVED by the Council for the City of Hampton, Virginia, that:
1. It consents to the assignment of the Commonwealth's Development Opportunity Fund Performance Grant from HII Technical Solutions Company to Huntington Ingalls Incorporated; and
2. Authorizes the City Manager or her designee to execute an assignment and any other documents necessary to effectuate the purposes of this resolution, subject to approval by the City Attorney.