Aircraft maker, Cape dispute lease

Renaissance Aircraft and the city of Cape Girardeau remain at odds over lease payments surrounding the financially troubled airplane manufacturer after the company paid out far less than the amount city officials said was owed by the Friday deadline.

John Dearden, company president, this week paid only $4,585 of the nearly $65,000 Cape Girardeau officials said Renaissance owed the city and United Missouri Bank to avoid defaulting on its lease and bond-issue agreement.

But Dearden's attorney, Eric Rowe of Washington, D.C., argued Friday that the rest of the money isn't owed now, and that Renaissance Aircraft's first priority is putting money into building airplanes. He said that would generate income and help ensure that the next bond payment can be made on time on April 1 next year.

"We are not refusing to pay at all," Rowe said. "It is just a question of timing and structuring."

Rowe said he and his client only learned of some of the requested payments within the last week. But city attorney Eric Cunningham said that's not true. He said the money owed was clearly spelled out in an amended lease agreement this summer.

Cunningham said city officials have two options: Either evict Renaissance Aircraft from the city-owned hangar at the Cape Girardeau Regional Airport and try to find another tenant, or give the company more time to get its finances in order. That decision rests with the city council, he said.

On June 21, the city council approved an amended agreement that gave Renaissance Aircraft until the first day of October -- six months after the original unmet deadline -- to make payments on retiring the bonds used to finance construction of the manufacturing plant and on the company's lease with the city.

Dearden wrote a $4,585 check to the city that covered lease payments owed from April 1 to Oct. 1, city finance director John Richbourg said. The city received the check by Federal Express on Thursday.

The city also received over $38,000 this week from a bank-maintained fund holding surplus bond proceeds as reimbursement for expenses incurred by the city in making a bond payment in April. That figure was not part of the nearly $65,000 the company had to pay, city officials said.

Richbourg said Dearden's company owes the city another $24,000 in additional site lease payments due for the same time period as well as more than $36,000 in bond payments to United Missouri Bank.

"There is a disagreement between Dearden and the city," Richbourg said. "We think he should pay it."

City manager Doug Leslie said the city staff and the city council will discuss the issue Monday night in closed session.

"We have to see if the payment was a good-faith effort to comply with the agreement," Leslie said. If that's the case, city officials will want to know what steps Renaissance Aircraft will take to pay the rest of the money it owes the city, Leslie said.

Mayor Jay Knudtson declined to comment on the issue Friday, saying he and other council members first need to get legal advice about the city's options.

Dearden couldn't be reached for comment. Telephone calls to the Renaissance Aircraft hangar went unanswered Friday.

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 new jobs. The city sold $2.6 million in bonds to construct a hangar for Renaissance and to pay for the extension of water and sewer lines to serve the business.

The Missouri Department of Economic Development approved a grant of nearly $480,000 to assist the city with constructing a major water line to the Nash Road area near the airport and a $750,000 loan for working capital for Renaissance Aircraft.

After operating temporarily out of various buildings, the company moved into its new hangar in October 2002.

So far there's little to show for the state and local investment except an approximately 50,000-square-foot hanger owned by the city and leased to the firm. The city also owns the land on which the hangar sits.

The state may not be repaid, said Economic Development spokesman Jim Grebing. "I think we are behind the city as far as what we could recover," he said.

"Sometimes loans don't get paid back," Grebing said. "We are taking a risk."

The state gives such loans to help firms get started, he said. "Sometimes it doesn't work."

mbliss@semissourian.com

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