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Posted on Thu, Apr. 30, 2009

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How will suspension of Columbus program affect aid?

BY DION LEFLER

Eagle Topeka bureau

State and Wichita-area officials were trying Wednesday to figure out how suspension of the Citation Columbus business jet affects public assistance for Cessna Aircraft to build a new assembly plant.

The state, Sedgwick County and the city of Wichita last year approved more than $70 million in cash assistance and tax breaks to help facilitate development of the Columbus plant, which was expected to create 1,000 jobs in Wichita.

The state package included borrowing $33 million for cash assistance to Cessna, plus tax breaks worth a similar amount.

The state has sold bonds to raise the cash, but Cessna said it has not taken the money. It has used $10 million given by the city and county to pay for site preparation work for the new plant in southwest Wichita, the city and Cessna said.

The $10 million loan is forgivable, meaning that Cessna doesn't have to pay it back if it meets job creation goals on the Columbus project.

The company probably won't be able to meet annual job targets that would have led to forgiveness of part of the loan each year, said Allen Bell, city urban development director. However, the company still can have the entire loan forgiven if it creates 1,000 jobs by the end of 2018.

"If they do not reach 1,000 Columbus jobs by Dec. 31, 2018, Cessna would owe the city the unforgiven loan balance," Bell said in a statement. "The city would split the repayment funds with Sedgwick County."

Cessna also is looking into what happens with local and state government incentives now that the program is suspended, said Cessna spokesman Bob Stangarone.

"The issue is under review," he said.

Though preparation work at the site has been completed, additional work has been suspended, he said.

"We plan to pursue the program once the market recovers," Stangarone said.

The cash from the state was to be paid back by diverting future state withholding taxes from the paychecks of new employees at the Columbus plant.

Bonds to raise the cash were issued in December by the Kansas Development Finance Authority, according to Rebecca Floyd, executive vice president and general counsel of the agency.

Officials of the state Commerce Department, which is administering the plan, expected to have a conference call with Cessna Wednesday evening, said spokesman Joe Monaco. They were not sure how the state incentive package would be affected.

Rep. Jason Watkins, R-Wichita and vice chairman of the House Appropriations Committee, said even though Cessna's plans have changed and the money is already borrowed, the state probably cannot use the $33 million to help solve its own $328 million budget crisis.

"If we could, we probably would," he said. But "it's not money that's been accounted for in the budget."

Wichita-area state lawmakers said they were dismayed at the news about the program and that Cessna is laying off about 1,300 more people in Wichita.

"Very unfortunate," said Sen. Dick Kelsey, R-Goddard, whose district includes the Cessna plant site. "All the layoffs in the aircraft industry hurt people in my district."

But he said he remains optimistic that the situation eventually will get better.

"I would say it will probably be at least a year," he said.

Reach Dion Lefler at 316-268-6527.

Contributing: Molly McMillin of The Eagle