Copyright © 2021 Roswell Daily Record
The City of Roswell will provide an inter-fund loan of $ 11.1 million to be used for the Ascent Aviation Services wide-body hangar project following approval by the Roswell City Council at a meeting Thursday night.
Votes in the city council passed despite public comments, and some city council deputies questioned the timing of events a few days before the city election, the reasonableness of using funds for such purposes and claims of preferential treatment for Ascent Aviation compared to other Air Center tenants.
Convened at a special council meeting Thursday at the Roswell Convention Center, nine City Council deputies voted 7-2 to approve a loan from water, sewage, sanitation and common funds to the Roswell Air Center Fund. The group also passed a resolution by 7-2 votes to allow remittance adjustments to the budget.
The general fund contributes $ 4.1 million. The water fund provides a $ 4 million loan. The solid waste fund allocates $ 2 million and the sewerage fund $ 1 million.
Council deputies Juan Aropes and Angela Moore voted against both measures. Moore said that although she supports Ascent Aviation, she was not sure she fully understood the financial arrangements. She also asked and received assurances that the voting time a few days before the mayoral and city council elections on Tuesday was not politically motivated.
Support local journalism
Subscribe in the Roswell Daily Record today.
Aropesa has repeatedly said he is against haste with decision-making. He also repeatedly asked Mayor Joe Nibo to explain or explain the reasons for convening the special meeting, rather than hearing the resolution during the next meeting of the governing body on March 10.
Neeb said Ascent Aviation showed that March was too late for her needs and he was working to meet the company’s needs. Asked by Aropesa, he said Ascent had never threatened to end its relationship with the city if the vote took place after February. Aropesa postponed voting on the inter-fund loan after March 1st. This decision was negative 8 against 1.
Nib also told advisers that the loan does not go directly to private business.
“Simply put, it’s a city that fixes their property,” Nib said. “We own all the property, so we invest in property repairs.”
He and Mike Espiritu, president of the Roswell-Chaves County Economic Development Corporation, called the interfunded loan another type of economic development tool. They compared the loan to construction paid by the city in an air center building used by Red Mountain Arsenal, industrial income bonds issued by the city on behalf of companies, or a ROAR revolving loan fund for businesses financed by the city and managed by EDC.
Espirito said at a meeting of Roswell City Council’s legal committee that preceded the city council’s extraordinary meeting that he considered the risk to the city low.
“What can happen? Well, I think we could be stuck with this beautiful building that we need and that everyone around the world would like to have, ”he said. “So I think we’re very lucky that we have a company that will invest in Roswell and our people to make it a better place.”
Espirito has reaffirmed the economic benefits that Ascent Aviation is expected to gain in the area as soon as it commences maintenance, repair and overhaul (MRO) operations here. The 40-year-old company already has MRO facilities at Pinal Air Park in Marana, Arizona, and near Tucson International Airport. It is projected that after the opening in late December 2022 or early 2023 will employ at least 100 technical and support staff, and by the fifth year – up to 360 people. The company’s president said it has been investing about $ 18 million in local operations over 10 years, and the New Mexico Department of Economic Development predicts the company’s economic impact in the state will be $ 545 million over a 10-year period. Ascent also talked about plans for Phase II after the fifth year of operation, which will include another 300- to 300-foot hangar and expanding its operations to include the conversion of commercial passenger aircraft into cargo or cargo aircraft.
Neeb, city officials and city councils expressed several other points about interfunded loans. They said the interest rate of 3% per annum on the loan is more than the funds earned now, which were reported as less than 1%. They also said four city funds could save money and still have enough funds to meet expected future needs.
The Roswell Air Center Fund, which receives $ 11.1 million, repays other city funds over a 10-year period by making annual payments of $ 1.3 million starting in June 2023. The annual payments will cover the principal amount and $ 1.91 million in interest. The Aviation Center intends to compensate Ascent Aviation Services LLC through lease payments and other lease agreements.
For this reason, in the relevant action, city council deputies also voted 8-1 for the approval of a 45-year lease of land with Store Master Funding LLC, a financial group of Ascent Aviation. Aropesa voted against.
The rent is for a hangar area of 10.65 acres, with about 9.9 acres for the hangar and the rest for parking. The initial rental rate of the plot is 10 cents per square foot per year, with an annual increase of 3% after the fourth year. The lease will be revoked if the plot on the West Earl Cummings Loop loop is not used for aviation purposes and the Store Master Funding cannot sell, transfer or transfer the lease without the approval of the city council.
According to information shared by Neeb, Ascent Aviation or its financial group will pay about $ 10.64 million for the first 15 years of the lease, with $ 4 million in the first four years coming from a grant from New Mexico to the Local Economic Development Act .
Nib told city councilors that future leases to be approved by the city council are a sublease between the Store Master Fund and Ascent Aviation for the use of the hangar, and between the city and Ascent Aviation regarding its responsibilities as an air center tenant. In addition, Ascent Aviation also plans to lease three more Air Center buildings for use prior to the construction of the hangar.
Randy Phelps, vice president and general manager of AerSale, MRO, which employs about 300 people and has been working in Roswell for about 10 years, read a statement opposing the lease and interfund.
According to him, the decisions on the “11 o’clock” do not allow for proper discussion and consideration.
He also said that public funds are being used to “support and promote the business opportunities and efforts of one private company to the detriment and discrimination of other companies in the same position operating in the Air Center”.
The statement also said other Air Center tenants saw increased rents and compliance with their activities and facilities, which “hamper and severely limit and potentially exclude the ability of other tenants, including AerSale, to run their businesses.”
Three candidates in the municipal elections also expressed concern about the use of funds. These were mayoral candidates Tim Jennings and city council candidates Robert Korn and Ed Heldenbrand.
Among Jennings ’comments were his views that the city should use its common funds, funds for water, wastewater and sewage for current and future road, water, landfill and sewer projects, and to facilitate the need to raise tariffs for customers.
Corn said he supports Ascent Aviation, but asked, “Why didn’t we have this discussion back in November and December?”
He also said he was unsure of how all the dollar figures on costs and funding sources came from the presentation. “But that’s what happens when you’re in a hurry,” he said.
Heldenbrand said that, in his opinion, city councils are obliged to ensure that the city receives a fair return on its money.
“Three percent on a 15-year deal is not a fair return on our money,” he said. He added that the city should investigate the floating rate, which will rise if interest rates and inflation rise significantly in the coming years.
While Heldenbrand and several others at the meeting referred to 15 years to repay, the city indicated that four city loans that gave money should be repaid in 10 years.
Some of the city authorities ’responses to comments included that the city is committed to treating all air center tenants fairly and equitably and that everyone has been given the opportunity to investigate possible city funding to help their projects.
You can contact Lisa Dunlap at 575-622-7710, ext. 351, or at email@example.com.