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Berkshire Hathaway : Wichita, Sedgwick County disagree over providing financial aid to help FlightSafety rebuild

04/18/2015 | 01:05pm US/Eastern

April 18--After a plane crash that killed four people and devastated FlightSafety International's building at the Wichita airport, the city government appears poised to help the company rebuild, while Sedgwick County is saying no to assistance.

The conservative majority on the County Commission, Richard Ranzau, Karl Peterjohn and Jim Howell, have blocked a request to match the city in providing financial aid to help the stricken company rebuild and expand in Wichita, according to interviews with officials at both the county and city.

County Manager William Buchanan presented the package to the commissioners and said "I was instructed not to put it on the agenda."

Commissioners Tim Norton and David Unruh said they both supported the aid package. But the commission generally won't bring an economic development proposal to a vote unless it seems to have the three votes needed to pass.

"I don't think it will ever come to us as an agenda item," Unruh said.

The situation highlights an ideological divide between the city, which is traditionally generous in offering incentives to get businesses to move to or stay in Wichita, and the County Commission, which took a conservative turn in January after Howell replaced Jim Skelton as a commissioner.

Since the switch in the majority, the commission has worked to reduce the size and scope of county government. Commissioners have rejected state and federal health grants in order to shrink the county's footprint and moved to quit regional and national governmental associations that the commission majority sees as too liberal.

No decision yet

So far, FlightSafety is playing its cards close.

"No decision has been taken as to what we're going to do there yet," spokesman Steve Phillips said. He said further discussion would be premature.

Full details of the proposed subsidy package are confidential. Multiple sources told The Eagle that the cash part of the package was in the range of $300,000 in forgivable loans with the county and city sharing the expense equally.

The money would go mostly to replace a flight training simulator lost to the crash and subsequent fire Oct. 30.

Forgivable loans provide up-front cash to a company and the money doesn't have to be paid back if the firm meets job-creation goals. Other incentives could be included as well, as the company would likely expand in combination with rebuilding its damaged facility, officials said.

FlightSafety received forgivable loans of $150,000 each from the county and city in 2008 for a planned expansion that was supposed to add 253 new jobs to the company's 454 Wichita employees over five years.

Both city and county officials acknowledge that the company hasn't met that goal.

Howell said that weighed into his consideration of the latest request for aid.

"Since then (2008), they've lost jobs," Howell said. "They haven't created a single job."

Peterjohn praised FlightSafety as "a great corporate citizen in our community" and added "we're glad they're here."

But he noted that FlightSafety is a subsidiary of Berkshire Hathaway, the multinational conglomerate run by multibillionaire Warren Buffett. He questioned whether a company of that size would really need a relatively small county subsidy and whether it would be a make-or-break factor in rebuilding here.

"There are a lot of people who would like to have some assistance," he said. "The county's funds are limited. Is this the best way we could spend our limited resources?"

Of Berkshire Hathaway, he said "$150,000 would probably be a rounding error on their balance sheet."

Peterjohn, the head of the anti-tax Kansas Taxpayers Network before becoming a commissioner, is generally opposed to government "picking winners and losers" through targeted subsidies. He said he would prefer to concentrate on his own plan to eliminate property taxes and replace them with sales taxes, which he says would improve the overall climate for all businesses, not just a favored few.

A special case?

Supporters of the proposed incentive package argue that even if you generally oppose business subsidies, FlightSafety is a special case because of the tragedy that occurred there.

"We wouldn't even be here talking about this if it wasn't for a disaster," City Manager Robert Layton said.

About 10 a.m. on Oct. 30, a Beechcraft King Air 200 twin-turboprop plane went out of control and smashed into the FlightSafety building at the recently renamed, city-owned, Wichita Dwight D. Eisenhower National Airport. Four people -- the pilot and three people inside the building -- were killed. Another five were injured.

The crash and subsequent fire so drastically weakened the building structure that emergency workers couldn't safely recover the last body inside until two days later, after dangerous wall sections were demolished.

Norton said he thinks the incentive package is less about the money and more about showing the people of FlightSafety that the community stands with them in the wake of tragedy.

"They went through a terrible experience that cost them their facility and equipment and even lives, through no fault of their own," Norton said. "That certainly makes it a different dynamic to me. They went through that traumatic experience and asked us for help. I'm in favor of moving forward and trying to partner with the city and try to help FlightSafety stay here."

He said the commission snubbing FlightSafety's request sends the wrong message.

"I would hate to think that (accident) would be the catalyst, along with a lack of county support, for them to move out of our community," he said.

City package

FlightSafety has been in Wichita for more than 20 years. It operates at several locations in the city providing flight-simulation training.

Officials said a recent economic impact study using company data estimated FlightSafety brings about $25 million a year in economic activity to the area, including lodging, meals and retail purchases made by the thousands of pilots from around the world who come here to train.

"I think FlightSafety is an extremely important piece of our aviation puzzle," said City Council member James Clendenin. "They contribute tens of millions of dollars to our economy and these are dollars from outside our city and around the world."

The City Council hasn't acted on its proposed share of the package yet. But city officials are still working behind the scenes to try to put together a package, possibly with support from the state Department of Commerce, officials said.

"Why it hasn't been before the council yet is we didn't want to drag them (FlightSafety) through the mud, through the process, without knowing there was at least some support" from the county, Clendenin said.

Supporters of the incentives say FlightSafety has many options if it decides to rebuild its lost facility in some other city. "These are jobs that are coveted around the world," Clendenin said.

Supporters say while the company is unlikely to exit Wichita entirely or immediately, it could relocate operations from the Eisenhower airport to an existing or new facility elsewhere, and then gradually reduce operations at its other Wichita sites. Wichita would almost certainly lose out on any opportunities for the company to expand here, they said.

Clendenin said the company didn't ask for a lot of money. "But it was definitely a show of goodwill and I think the package was going to help the company maintain its presence here in an economical fashion," he said.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

___

(c)2015 The Wichita Eagle (Wichita, Kan.)

Visit The Wichita Eagle (Wichita, Kan.) at www.kansas.com

Distributed by Tribune Content Agency, LLC

© Tribune Content Agency, source Regional News

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