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Cape stuck with bond bill for hangar
When Renaissance Aircraft closed in November, the city was left with a vacant hangar at the Cape Girardeau Regional Airport and the burden of making costly bond payments that will begin drawing down city financial reserves on Friday.
A $168,000 payment is due that day. The city will use the $28,000 remaining in the bond fund to help make the payment.
But the rest -- $140,000 -- will have to come out of the city's general fund reserve.
At one time there was more than $146,000 in leftover bond proceeds before the city began spending the surplus money last year to make bond payments and reimburse the city for related expenses.
In October, the city will have to make another bond payment, although it will be smaller.
The city could end up having to pay about $260,000 annually in bond payments unless it can find a new tenant or a buyer for the building, city finance director John Richbourg said.
While the city doesn't like paying the bond issue, he said, "defaulting is not an option."
In 2001, the city sold $2.6 million in bonds to construct the hangar and pay for extension of water and sewer lines to serve the business.
Under the plan, Renaissance Aircraft was to pay off the bonds over 17 years, starting last April. But in November, the financially troubled company -- unable to make bond payments -- abandoned plans to build airplanes in Cape Girardeau. Company president John Dearden blamed the company's demise on litigation and a lack of investors.
Now the city is left holding the debt on a building that so far no one wants to buy or lease. Adding to the difficulty of marketing the empty hangar is the fact that it can only be used for aviation manufacturing under the bond restrictions.
The city, however, could refinance the bonds and eliminate that restriction or sell the building to another aviation business and use the revenue to pay off the bonds, airport manager Bruce Loy said.
If sold, the building could be used for any type of aviation business, not just aviation manufacturing, Loy said. Federal Aviation Administration requirements would prohibit the building from being used for a non-aviation business, he said.
The city would still own the land on which the hangar sits. Any new owner of the building would have to rent the ground from the city, city attorney Eric Cunningham said.
This year and next year, the expense of bond payments won't cut into city spending on municipal operations, Richbourg said. The city currently has slightly over $1 million in its general fund reserve.
But the city can't draw down the reserves indefinitely, he said.
Moved from Georgia
At the hangar, not much is left of the aviation manufacturer's three-year struggle to build recreational planes.
Some industrial equipment still stands on the concrete floor. Loy said the equipment is now the city's responsibility.
A box of screws sits on a wooden table. Three aluminum propeller-driven airplanes in various stages of construction are parked in the building. Some office furniture remains piled in a corner.
Renaissance Aircraft relocated from Eastman, Ga., to Cape Girardeau in 2001 with promises of manufacturing hundreds of two-seater propeller planes a year and creating at least 200 jobs.
But the promises never materialized.
The company at one time had 20 employees, but by last year it had no full-time workers, owed money to former employees and had trouble paying its light bill.
Renaissance Aircraft was hurt financially by a lengthy legal battle with Don Luscombe Aviation History Foundation in Arizona, an organization which sued over Renaissance's plan to manufacture the Luscombe 8F, a two-seater plane whose design dates to the 1930s.
The court battle for a time prevented the company from obtaining clear rights to make the plane. But after winning the court fight, Dearden still couldn't find the investors needed to get the business up and running.
After moving out various industrial tools, equipment and supplies, Dearden turned over the hangar to the city earlier this year.
City officials aren't sure what they'll do with the airplanes in the hangar. It's possible Dearden might still remove them. City attorney Eric Cunningham said that issue won't interfere with efforts to find a new tenant or buyer for the building.
Loy remains optimistic that the building won't be empty for long. Hangars this size, he said, aren't readily available.
Ideally, he said, the city would prefer to sell the 52,000-square-foot hangar at a sufficient price to pay off the bonds.
Loy said he had discussions with an airplane manufacturer about using the hangar. "We had one really good possibility," he said.
But the effort proved unsuccessful. Loy said the city now plans to work with a commercial real estate company and advertise the building for sale or lease in aviation magazines.
Loy also plans to see if any aviation museum would be interested in acquiring the hangar.
335-6611, extension 123