$1.02 Million Block Grant to Extra Air Tabled for Now
by Peter Shelton
Mar 31, 2011 | 2406 views | 0 0 comments | 13 13 recommendations | email to a friend | print
State Adds Two New Conditions

MONTROSE – A Region 10 Community Development Block Grant in the amount of $1.02 million is still in the offing to enable Extra Aircraft to begin building airplanes in Montrose, but negotiations are ongoing, and “the clock is running,” according to Montrose County Commissioner David White.

A March 24 phone conference among representatives of the Montrose Economic Development Corporation, Montrose County, Region 10, and the state’s Financial Review Committee started the clock on a 90-day review period, according to White.

The FRC tabled approval of the loan pending clarification of several details in the agreements, and with two new conditions.

The first condition is that the Federal Aviation Administration grant type-certification of the EA500 aircraft (the six-seat, carbon-fiber, business-class, turbo-prop that Extra plans to build in a Montrose facility). A March 25 release by the county stated: “Since US testing is now complete and European testing is wrapping up, European certification of the aircraft with its new Avidyne avionics package is expected within several weeks, and US FAA certification is expected shortly thereafter, the FRC requested that FAA type-certification of the aircraft become a condition of the loan.”

The second condition regards details of the loan match. Again from the county release: “MEDC will convey its two lots in the Aerospace Industrial Park to Extra. A private investor will then lend Extra Aircraft $1.5 million secured by the property. The state requested that the agreement be provided to Region 10 and thence to the FRC as evidence of the loan match before loan funds are disbursed.

“Unchanged was the condition that Montrose County and Extra Aircraft agree on a short-term (four-year or two+two year) lease of existing airport hangar facilities to correspond with the four-year term of the loan. The executed loan documents are to be provided to Region 10 and thence to the FRC. Though negotiations for the construction and long-term lease of new facilities on the airport are ongoing between the County and Extra, finalization of that arrangement is not a condition of the loan.”

When reached for comment by The Watch, Commissioner White expressed surprise. “Some of this was news to us,” he said. “We’re still in negotiations with Extra” for use of county-owned lots on the airport property. The proposed deeding of MEDC lots to Extra, while a feature of the original agreement bringing Extra to Montrose, was troubling to White. “Ken Keith (Extra Aircraft’s president and CEO) told us he didn’t want to be off-airport. That would mean having to operate ‘through the fence,’ operating from private onto public property.” However, Sandy Head, MEDC’s executive director, told The Watch that Keith in fact requested a “through the fence” agreement in February. Head said she believed that best way for Extra to move forward and begin producing airplanes here was to seek both the on-airport lease and ownership of the off-site lots. “If we would have followed through with the July agreement, we would have 100 new jobs in Montrose now,” she said.

White said he expects commissioners will have a draft lease for use of the on-airport lots ready for Extra by the end of this week.

The county’s March 25 release went on to say, “As time was short, the FRC tabled a final decision on the loan until the details of the new/amended conditions could be described and the additional information provided. Neither the capability and financial strength of Extra Aircraft, nor the quality of its products, nor the security for the loan were questioned. The importance of this loan for the economic recovery of Montrose County, now suffering with 13 percent unemployment, was unchallenged.

“Although the loan wasn't approved at this meeting, Office of Economic Development and International Trade Director Dwayne Romero and Deputy Director Alice Kotrlik stated that they are anxious to get these items resolved quickly so that ‘we can get to yes’ on this loan. Region 10 anticipates that approval of the loan with the new/amended conditions will follow shortly.”

The $1.02 million loan would be the largest ever approved by the state’s CDBG program.

Region 10 League for Economic Assistance and Planning is a six-county (Montrose, Delta, Gunnison, Ouray, Hinsdale and San Miguel) non-profit organization that, in addition to the Enterprise center, operates the Area Agency on Aging (AAA), coordinates regional transportation planning, and operates a small business loan program. To learn more about Region 10, call 970/249-2436.

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