Cape begins looking at other uses for Commander building at airport

In July, Cape Girardeau officials received the best news they could have hoped for to help turn around the city's ailing finances -- a buyer announced he would purchase Commander Premier Aircraft Corp.

That announcement was big news because Commander Premier has been operating in a city-owned building at Cape Girardeau Regional Airport since November 2005 but the company had made only eight of 37 scheduled rent payments. During that time, the city was paying out nearly $200,000 annually to retire the bonds, depleting the city's unrestricted reserve, which stood at $1.4 million in June 2004.

But nearly five months later, Ronald Strauss, the Canadian financier who said he was putting together the deal, has not completed his financial arrangements, and the city's optimism about the purchase is starting to wane.

"We have told them we are no longer in a position to not pursue other people out there who may have an interest," city manager Scott Meyer said. "We have begun looking at other uses, even though we are limited in the uses allowed, and nosing around for where we might be able to remarket this."

Strauss has repeatedly told the city he is on the verge of completing his arrangements.

"He still contends he has everything lined up, he has worked with everybody and it is just a matter of days," Meyer said.

Commander Premier was brought to the city in 2005 by a group of investors who purchased the assets of a defunct aircraft manufacturing company. They were installed in a building constructed by the city for a company called Renaissance Aircraft. The building had been vacant for many months because the bonds issued in 2002 to finance it restricted the use of the building to airplane manufacturing. Until the bonds are paid off, that restriction will remain in place.

The new owners of Commander promised dozens of jobs once they began building new airplanes. While some regulatory hurdles were cleared, the company has never built an airplane in Cape Girardeau and employs only a handful of workers doing maintenance on existing Commander models.

Last week, Strauss said the delays are due to financial considerations, which he said have been difficult to arrange because of the global economic climate.

"On my side, nothing has changed," Strauss said. "I am still committed to the project, but the delays I have, how would you say, had to accept. I must work with them, and I can't proceed any faster."

When Strauss announced his intention to buy the company, he said it would be part of a larger deal to create a company called Aero-Base Inc., combining small airplane companies into one.

"I have been hoping every day that the transaction would be finalized, but I don't have control over it," he said.

The city budget for the current year contemplated the possibility of making both an October interest payment and an April interest and principal payment on the approximately $2 million in debt left on the airport building housing Commander. If those payments were made and no rent was received, the city's reserve fund was estimated to fall to less than $100,000.

But with city revenue flat, making another $200,000 in payments with no revenue to support it would put a strain on the budget for the year after, Meyer said. He wants a resolution, one way or another, before those future payments are due.

"I don't want to be in a position to give them as much time as they want or let them set the time frame," Meyer said. "We have to be active in doing what is right financially for the city by keeping an offer that is on the table alive as well as looking at what the alternatives are if the plan does not work out."

The city received an inquiry about the building last week, Mayor Jay Knudtson said. It was a common inquiry, made by an economic development site search firm, but it shows that the building could be marketed successfully, he said.

"That doesn't mean the city isn't holding out hope," he said. "It doesn't mean the city isn't willing to execute the agreement. But every day and every week that goes by puts that in a more unlikely situation."

Strauss' commitment to the city is the best option, Knudtson said. "It is still the best opportunity to stop the bleeding, if you will, and recover from the losses and move forward."

The city's only option if another suitor is serious about the building would be to evict Commander. Strauss said he's working to prevent that and keep Commander in Cape Girardeau. "If they did make a decision on the building, on the hangar, we would have to renegotiate. There is other room at the airport to reconstruct if necessary."

rkeller@semissourian.com

388-3642

Pertinent address:

Cape Girardeau Regional Airport, Cape Girardeau, MO