City agreement: If Spirit AeroSystems leaves in next 20 years, it pays $10 million

Spirit AeroSystems employees work on a 737 in 2014.
Spirit AeroSystems employees work on a 737 in 2014. The Wichita Eagle file photo

A development agreement for Spirit AeroSystems' Wichita expansion offers new details on the project — including a provision requiring the aircraft supplier to pay $10 million should it leave Wichita in the next 20 years.

The agreement stems from Spirit's announcement last December that it would invest $1 billion in its Wichita plant over five years and hire 1,000 new workers between now and 2019.

It will be considered by the Wichita City Council at its Tuesday meeting.

The agreement calls for the city and Sedgwick County to establish an entity called Eclipse Investment Association that will hold the mortgage on a 150,000-square-foot, $23 million building to be constructed on the Spirit campus, according to city documents.

Cash contributions for the building's construction — $7 million from Sedgwick County and $3 million from the city — will be held in escrow by EIA and paid out incrementally to Spirit during construction, the documents said.

Spirit will pay the remaining $13 million for the new building.

The city will forgive Spirit $3.5 million in fees related to water use and invest about $1 million in additional equipment to improve the quality of water the company receives from the city.

The city also agrees to issue industrial revenue bonds to finance construction of the new building as well as exempt its construction from sales taxes. And the city will provide a 100 percent property tax abatement on the building for five years, with an option to extend it another five years.

If Spirit doesn't meet its capital investment or job requirements, it would be responsible for paying "liquidated damages," the documents said.

For instance, if the company leaves Wichita anytime during the 20-year agreement, it would have to pay $10 million, the total of the city and county's cash contributions to the new building, said Scott Rigby, assistant city manager.

And "we have the ability to claw back property and sales taxes" that are abated in the agreement should Spirit fail to meet the requirements of remaining in Wichita for the length of the agreement or failing to maintain the 1,000 jobs it is adding, Rigby said.

Moreover, Spirit could see an increase in its recycled water rate of up to 20 percent if it "falls short of employment requirements," the documents said.

Not that Rigby thinks any of those scenarios will happen.

"It's a good project and we're excited about it," he said.

The new jobs, at an average wage of $56,000 a year, are "wealth-building jobs," Rigby said, allowing people to buy homes and new cars.

Spirit AeroSystems president and CEO Tom Gentile, center, speaks at a ceremony Tuesday marking the opening of the company’s Five-Axis Center of Excellence. Spirit AeroSystems officially marked the opening of a new center Tuesday that is part of it

Jerry Siebenmark: 316-268-6576, @jsiebenmark