A Wichita company is asking Sedgwick County for more time to pay off what was meant to be a forgivable loan after it failed to meet employment goals.
Commissioners on Wednesday will decide whether to let Burnham Composite Structures Inc. make five payments of $12,400 each over the next five years to satisfy the original $62,000 loan.
In 2006, commissioners gave Burnham a forgivable loan on the condition that it maintain base employment of 29 and add 60 jobs during the next five years. Because of a downturn in the economy, Burnham said it was unable to do that. That means the loan is due.
The county said earlier this year that Burnham had not met any conditions of the loan. Burnham did not return calls from The Eagle on Monday.
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The city of Wichita and the county typically work together to offer incentives such as forgivable loans to companies looking to locate or expand in the area.
From 2005 through last year, the city and county each had made 25 forgivable loans to businesses. The county loaned $7,866,500 during that time, and the city loaned $7,808,000.
Forgivable loans come with “clawback” provisions — guidelines for what will happen if the business doesn’t meet expectations.
Commissioner Dave Unruh, who was on the board when the county approved the loan with Burnham, said Monday that he thinks allowing Burnham to repay the loan over time is the right way to do business.
“I think it’s a reasonable arrangement to exercise our clawback provisions and try not to do any harm to the company,” Unruh said. “We want to develop these manufacturing companies in the community, so we want to be flexible.”
Unruh said he hopes Burnham eventually will be able to make good on the promise of new jobs.
The county could opt to sue Burnham, background material for Wednesday’s meeting says.
If commissioners approve the agreement, Burnham would make its first $12,400 payment by Dec. 31 and make the last payment by the end of 2016.
A letter to the company setting out the agreement says if Burnham is late on any payment, the full amount of the loan will become due.
Commissioner Karl Peterjohn, who earlier this year asked for a review of all the county’s forgivable loans, noted only two of the board’s current members — Unruh and Chairman Tim Norton — were on the commission when the loan to Burnham was made. Peterjohn has voted for and against forgivable loans during his time on the board.
Burnham’s situation illustrates “one of the challenges when you get into providing forgivable loans and then you don’t have the outcome that everybody was anticipating and hoping for,” Peterjohn said.