Spirit AeroSystems heading back to City Council for up to $40 million in IRBs

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Spirit AeroSystems Inc. on Tuesday will request the issuance of up to $40 million in industrial revenue bonds from the Wichita City Council. 

According to the Wichita Business Journal, The IRBs would be used to finance upgrades from throughout the course of the year and would come from the up to $280 million on IRBs that the City Council approved for Spirit (NYSE: SPR) in 2016.

IRBs do not require any taxpayer commitment and the city is a pass-through entity. However, using IRB financing can help the company secure a lower interest rate on the project. 

City documents indicate that Spirit invested $40 million in real property improvement in 2019, with the bonds slated to help cover things like new chillers, cranes, upgraded lighting and industrial waste line and road replacements. 

The city also say that Spirit intends to request property on its campus financed with bonds from 2008 be deeded back to the company, though the documents don't provide further details.

The latest IRBs — which also include a 100-percent abatement of ad valorem property taxes for up to 10 years — come with a benefit/cost ratio of 5.38 to 1 for the city, according to an analysis from the Center for Economic Development and Business Research at Wichita State University. 

City staff is recommending approving the issuance of the bonds. 

Earlier this week, the company was granted up to $23 million in IRBs to help finance its recently completed Global Digital Logistics Center in Wichita. 

That project, which was done with collaborative funding from the city of Wichita and Sedgwick County, as well as the other upgrades in 2019 are part of Spirit’s commitment in late 2017 to invest $1 billion in its local facilities over the course of the following five years. 

Spirit, Wichita’s largest employer with more than 13,000 local workers, is a major aerospace supplier to customers like the Boeing Co. (NYSE: BA) and Airbus. 

The company also has a growing defense portfolio and announced last week a further expansion of its work via a planned acquisition of Bombardier Inc.’s aerostructures business. 

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