COUNCIL PLANS SUBSIDY; $800,000 INCENTIVE OFFERED TO LOCKHEED.

Byline: Jim Skeen Daily News Staff Writer

The city plans to honor its pledge to give Lockheed Martin ``Skunk Works'' $800,000 for bringing the X-33 program to Palmdale by waiving $503,000 in city fees and paying the company $297,000 cash.

The $800,000 was one of the incentives assembled by a ``red team'' of state and Antelope Valley leaders out of fear that work on the spacecraft prototype would be lured away by subsidies from New Mexico or Florida.

``This is our commitment as part of the red team,'' Mayor Jim Ledford said this week. ``The state put the enterprise zone on the table. We put the $2,000 per job on the table.''

In addition to the Palmdale incentive, the X-33 program is eligible for state tax credits because of the Antelope Valley's status as an enterprise zone.

The city plans to waive $503,000 in traffic impact and drainage fees the company owes the city from improvements made to the company's Plant 10 site since the Skunk Works relocated from Burbank in 1993. The remaining $297,000 will be paid in cash, city officials said.

City officials said the X-33 program has created 175 new jobs locally, with an additional 100 expected within the coming year. Overall, Lockheed Martin employs more than 5,700 people in Palmdale.

The incentive package will be considered by the City Council at a meeting at 7 p.m. today in the council chambers, 708 E. Palmdale Blvd.

Originally, the city had planned to offer the incentive via the Business Attraction Incentive Program through Palmdale's redevelopment agency.

But that plan was scrapped when Lockheed Martin opted to lease from Boeing North American a former B-1B bomber assembly hangar that was just outside city limits. State redevelopment agency laws bar Palmdale from extending hiring credits outside city limits, city officials said.

The incentive package to be considered tonight is being offered through the city, not the redevelopment agency. There are no state laws blocking a city from offering an incentive for jobs outside city limits, according to attorney Mark Lampkin, hired by the city to investigate the issue.

The X-33 is being developed under a $941 million National Aeronautics and Space Administration contract. Lockheed Martin is expected to invest $212 million of its own money in the program.

The X-33 itself will not go into space, but it is intended to lead to the production of a spacecraft that will lower the cost of putting satellites and other payloads into space from $10,000 a pound to $1,000 or less.

Launched vertically like a rocket from Edwards, the X-33 is scheduled to make 15 flights in 1999 to landing fields in California, Utah and Montana.

From the technology developed for the X-33, Lockheed Martin Skunk Works hopes to build a single-stage-to-orbit spacecraft dubbed VentureStar.

Rather than spending weeks preparing a spacecraft for flight after each mission, as is done with the space shuttle, Skunk Works' plan is to have VentureStar be ready for flight in a couple of days to a week.