IDA loses $286K from Luscombe loan
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The Chautauqua County Industrial Development Agency has agreed to settle a loan with a former aircraft business, losing around $286,000.
During the county IDA meeting, Chief Executive Officer Mark Geise said one of the owners of the former Luscombe Aircraft has offered the county $45,000 to settle its debt to the county.
The Luscombe Aircraft Corp. of Chino, Calif., was leasing Hangar A at the Jamestown airport to build and refurbish airplanes. In 2021, the company recently received a $322,000 low-interest loan from the county IDA that was financed with the CARES Act money, which the county received from the federal government after President Trump signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act in 2020, following the COVID-19 pandemic.
The money to Luscombe from the county IDA was to be used for working capital, machinery and equipment.
Luscombe made a few payments but still owed the county about $305,000 when it stopped.
Geise told members of the county IDA Board of Directors that the IDA was given personal guarantees and other collateral tied up with the loan. Once it became evident that Luscombe was not going to succeed, the county went after those guarantees. "It's our fiduciary duty to pursue getting our money back," he said.
The hangar was auctioned off and the county netted about $40,000, leaving Luscombe owing the county about $265,000.
"The settlement is $45,000. I don't think we're going to get anymore blood out of that stone," Geise said.
Geise said the IDA spent about $66,000 in attorney fees as well.
The attorneys won a judgment in court but there was no money to collect. They investigated the company's assets in California to ensure they didn't have money they were hiding.
Shelby Bilskie, chief financial officer for the county IDA, said there were two individuals who had given personal guarantees. One of them has filed for bankruptcy. The other one offered the $45,000 settlement.
Geise said originally it was thought the equipment in the airport hangar was going to be worth more when it was auctioned off.
He did add that Luscombe made a lot of improvements at the hangar, which is now owned by the county.
"They put offices in there, they put in a bathroom. They did spend a fair amount of money improving that (hangar). They left the hangar better than they inherited," Geise said.
Bilskie said Luscombe's total project cost was to be $1.4 million with the owners scheduled to invest $320,000 of their own.
The county IDA Board of Directors approved a resolution at its September board meeting accepting the $45,000 settlement. Of that amount 50% would be paid immediately and then the remaining 50% would be due in one year.