On Tuesday, city manager Bob Myers had some bad news for the city commission — a new company at the City/County Airport is struggling, and the city is back to paying bond payments on a building.
“Kansas Chemical Coatings is not currently able to meet its rental payment obligations under the lease, and the city is providing the funds necessary to ensure that the bond payment obligations on the building continue to be met,” Myers said.
KCC is the second company in the building that has struggled to make the rental payment. The building, constructed for ABI Chemicals in 2014, cost $5.24 million to build.
ABI opened the chemical coating plant at the Newton City/County Airport in 2014, and things have been difficult for the company, leading to the city of Newton to pay on debts associated with construction of the building.
The construction of the building was funded by Industrial Revenue Bonds. Industrial Revenue Bonds were established under state statute, K.S.A. 12-1740. While cities and counties issue the IRB, the bonds are financed by a trustee, typically a bank. The bonds for ABI Chemicals were issued to the Harvey County EDC and were the only IRBs guaranteed by the city in about 30 years. The result was a 20,000 square foot building.When the project launched, it was projected that about 12 people would work at the new facility within its first year, growing to an estimated 20 employees by the fifth year.
(Read more: Newton Kansan)