Horry County asked to pick jobs over rent

An aircraft maintenance company used the lure of more jobs Tuesday night to persuade the Horry County Council to consider lowering its rent.

The council agreed to negotiate its rental agreement with AvCraft Support Services Inc. in an effort to help the company grow by satisfying a potential investor.

AvCraft, which employs about 50 people, has been hit by the downturn in the economy, losing about half of its annual revenue and dropping from $15 million at its peak to about $7 million last year. Company officials announced last year that they were seeking new investors to help expand the operations to service additional types of aircraft and increase its work force to more than 100 employees.

The company, which leases county property, went to the council Tuesday night asking for a drop in its rent to keep the possibility of new investment alive.

One of two potential investors dropped out in July. The second investor, Indaer Industrial Aeronautics International, said in August that it would not be willing to invest in the company if the cost structure, including facilities costs, remains at its current level.

The current principal creditor for AvCraft is scheduled to withdraw financial support for the company after Sept. 30.

Unless new investment is secured, the company will either be closed or sold at that point, according to a presentation by Indaer and AvCraft representatives.

"We believe Myrtle Beach is a fantastic place for customers from across the world," said Derek Nice, a member of the outside management team being brought in by Indaer. Part of Nice's presentation pitched the company as a potential linchpin for the proposed International Technology and Aeronautics Park under development for land adjacent to the Myrtle Beach International Airport runway near the company's current location.

The council also gave initial approval to the outlines of the financial development agreement for that business park Tuesday.

AvCraft began leasing the county property in 2005, including three hangars near the General Aviation Terminal off of Farrow Parkway. The rate started at $2 a square foot and increased to a rate of about $3.35 a square foot over time.

The lease was amended in 2008 during the height of the downturn in the economy, when 795 square feet of property was removed from the lease so it could be used for a telecommunications facility.

The revised terms of the lease are still subject to negotiations, but AvCraft has asked the county to consider reducing the base rent to $2 a square foot, which would then rise to $3 a square foot over five years. The company also asked that it not have to pay that base rate on two of the three buildings unless they were in use.

Under the proposed plan, AvCraft would maintain the insurance and maintenance of those two buildings and receive first right of denial if the county found new potential tenants - meaning the company would be allowed to step in and pay for the buildings to reserve or use them instead of them being rented to new users.

"I can't for the life of me see how we would not be limiting Horry County to hold that property for you ... in the chance that you may some day need it," said Councilman Marion Foxworth. "I don't mind trying to help you, and reduce the lease space, and perhaps work with you on the rent."

About two dozen employees, including current General Manager Mike Hill, came to the council meeting Tuesday night to show their support for the new investors.

Nice said the investors could bring the potential for an expanded market of airplane models from Latin American and other European manufacturers. AvCraft previously focused on the Dornier 328 product line, which has represented a decreasing portion of the product market over the last three years.

"If you lease those properties out to another company, then in effect you are artificially limiting this company's ability to grow and expand," Nice said. "With all deference, we've not asked for anything outrageous or unrealistic.

"If we were not to ask for it, we would be pricing ourselves out of the market. The request is consistent with what is and would be offered to companies ar other airports around the country."

The council approved the negotiations by resolution in an 11 to 1 voice vote so that AvCraft and Indaer could approach the principal creditors before the Sept. 30 deadline.

The result of the negotiations will be voted on in a three-reading ordinance later this year.