Denton City Council seals $870K incentive deal for drone factory in 4-3 vote

KrateoSky will lease a roughly 168,000-square-foot building at 3411 Mingo Road to build a manufacturing, testing and research plant for aerial drones.

McCarthy said the facility will employ about 260 people. City documents show the salaries for those jobs will average at about $79,000 annually, and include production technicians, warehouse staff, human resources, production engineers and a plant manager.

KrateoSky officials plan to spend about $23.5 million in capital investments and improvements at the site, city documents state. The improvements include:

• Office space buildout
• Climate control system installation
• Manufacturing floor construction
• Power distribution upgrades
• Tooling and assembly fixtures
• Testing equipment

The $870,000 in incentives include:

• $498,564 for an eight-year 65% rebate for new improvements
• $94,500 for a 50% sales and use tax rebate on construction materials
• $227,000 jobs grant
• $50,00 headquarters grant if the company makes the Mingo Road facility the company headquarters. KrateoSky has two years to decide on where the headquarters will be.

Denton County will receive about $412,000 in revenue and Denton ISD will receive just over $1 million in net revenue over that same time frame.

Economic Development Director Brittany Sotelo said if the company does not deliver on the building improvements and investments, KrateoSky will be required to pay back the value of the incentives to the city.

On the other hand

McGee voted against the incentives, saying there are a lack of safeguards against the drones' unethical use by state and federal government.

"I don't have any assurances that, quite frankly, they're not going to sell drones to certain nefarious government agencies," McGee said.

McGee said that while the city of Denton uses drones, he does not trust federal and state agencies to use the drones ethically.

"The city of Denton uses drones, but I have reasonable confidence that that the city of Denton police department isn't going to be preying on people. I don't have the confidence in our federal or state government."

Beck also voted against the incentives, saying he doesn't want the plant to produce military drones.

"I would love to have a drone facility in this town, but I don't think this is the right one," Beck said. "With them targeting 60% [to] 65% military applications, I think that's the wrong approach."

Some background

KrateoSky’s mission is to build an American manufacturing base for military drone production, McCarthy said at an April 15 Economic Development Partnership Board meeting.

“There’s an urgent need for a robust sovereign American [unmanned aircraft system] base, and that’s our mission,” McCarthy said. “We will sell to the civilian world as well, but there’s a mandate to be a premiere American manufacturer of drones.”

The company chose to set up in Denton for access to talent and a hospitable business environment, McCarthy said.

Looking ahead

McCarthy said the plant could begin operations by late fall 2026, and the company plans to move forward with the Denton facility.

"We're committed to coming to Denton and we appreciate city council's support," she said.

At the meeting, Sotelo said the company still needs to sign a lease for the building, which could take several months.