Title
Adopt Resolution Authorizing a Supplemental Economic Development Loan and Escrow Agreement With Nex-Tech Aerospace, Inc.
Body
Recommended Action: Adopt the resolution.
On June 2, 2009, the Board of County Commissioners and NEX-TECH AEROSPACE, INC. (“NEX-TECH”) entered into a forgivable loan agreement for a term of five years wherein the County agreed to loan $225,000 for the purpose of expanding NEX-TECH’s physical plant and engineering department to develop new products for aircraft power management. Portions of the loan would be forgiven if the Company met certain annual employment and payroll benchmarks. Two years remain under the agreement.
NEX-TECH has recently informed Sedgwick County and the City of Wichita that it is negotiating to sell the assets of the company to a private equity capital firm who has declined to assume the obligations under the forgivable loan agreement. It is expected that the manufacturing operations will continue. NEX-TECH has tentatively agreed to place $90,000, representing the remaining years under the agreement, in an escrow account at a financial institution agreeable to the parties. Each year’s forgivable portion would be released if, upon audit by the County’s designated representative, the employment and payroll requirements would be met. The company is on pace to achieve its contractual commitment of 227 jobs at an average wage of $47,125 on or before the end of the five year term.
Analysis:
This resolution shall take effect and be in force from and after its approval and adoption by the Board of County Commissioners of Sedgwick County, Kansas, and upon its publication once in the official county newspaper.
Alternatives:
Financial Considerations: The Supplemental Agreement requires no additional loan money from the County to NEX-TECH. The approval requires no additional transfer of funds.
Legal Considerations: The Supplemental Agreement provides that principal amounts not yet forgiven under the final two y...
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