Regional Report Eastern May 2011
Legislator: TransPark can’t climb above debt
The North Carolina Global TransPark’s $39.7 million IOU to the state Escheat Fund underscores Benjamin Franklin’s axiom that those who go borrowing end up sorrowing. GTP’s latest audit warns that the debt, which has been growing since 1993, threatens the 2,500-acre industrial park’s future, and this time the hand-wringing that traditionally follows the annual release of its financial figures is likely to force lawmakers and TransPark executives to come to grips with congenital flaws in the project.
“The debt, quite frankly, is something they can never pay back,” says Rep. Stephen LaRoque, a Republican from Kinston, GTP’s home. “I wish everybody had sat back at first and said, ‘Let’s look at how this thing is being financed and how we’re going to pay for it.’”
The brainchild of UNC Chapel Hill professor John Kasarda, GTP was intended to attract just-in-time manufacturers who would use its two-mile runway to fly products worldwide. It attracted no major tenant until 2008, when Wichita, Kan.-based Spirit AeroSystems Inc. announced it would make airplane parts there. Lured by incentives that cut its rent to $100 a year, it agreed to hire 1,031.
The report from the state auditor’s office shows GTP grossed about $1.4 million during the fiscal year that ended in June but spent $5.4 million. Executive Director Darlene Waddell says revenue came mainly from tenant leases and fees charged for aviation fuel pumped there. Kasarda’s plan called for companies to support the park by paying big money to lease space, but with few tenants and its biggest one paying nominal rent, that revenue stream has been disappointing. Meanwhile, interest continued to mount on the original $25 million loan from the Escheat Fund, pushing its balance by January to $39,719,902.
The fund, which has more than $400 million, was established to hold unclaimed property such as abandoned bank accounts. But the General Assembly, desperate in 1993 for ways to finance the project, tapped it for a $25 million loan. “The Escheat Fund should never have been used to finance the TransPark in the first place,” LaRoque says. “It should have come from a general appropriation.” He and other legislators have worked behind the scenes on a plan for dealing with the debt. But the options are few: GTP can go bankrupt, at least technically; ask the General Assembly to pay off the loan from general tax revenue; or hand over the deed to the state.
The project has been criticized since birth as a boondoggle, and legislators say using the general fund to pay its debt would trigger a firestorm. LaRoque is coy about lawmakers’ plans but doesn’t rule out steps to make GTP self-sustaining. “You’re going to have to build more buildings that you can rent out at market rates. That would have to be done through an appropriation, not a loan, because it’s not generating enough revenue to pay off the debt.”