LAS CRUCES, N.M. (AP) — New Mexico officials have set the ground work to lease part of its commercial spaceport to Virgin Galactic as a base for its space tourism company.

British entrepreneur Richard Branson and the state signed a 37-page memorandum of agreement Monday, setting the terms of a lease that calls for the company to pay the state $27.5 million over 20 years.

The agreement isn’t legally binding, but state Economic Development Secretary Rick Homans said he expects a lease based on the agreement to be signed within three months.

Spaceport America launched a rocket from a temporary launch pad last fall, and authorities expect to complete the $198 million facility in late 2009 or early 2010. The state already has appropriated $115 million for the project and expects about $25 million in federal funds over the next five years with the goal of creating a home for future public space flight.

Under the agreement, Virgin Galactic pledged to lease about 83,000 square feet of hanger and terminal space. The company will pay $1 million per year for the first five years of the lease and $1.5 million per year for the remainder of the term. It also will pay user fees and ground rent.

Virgin Galactic’s initial goal is to become the first company to provide suborbital flights to the general public, according its Web site. It sets no deadlines for launch but says if test flights of a suborbital craft go well later this year it could start commercial operations a little over a year later.