Belfast Telegraph

Friday 26 December 2014

Virgin threat over spaceport lease

The new Spaceport America hangar in Upham, New Mexico (AP/Matt York)
The new Spaceport America hangar in Upham, New Mexico (AP/Matt York)

Virgin Galactic has agreed to start paying the state of New Mexico rent on the nearly 250 million-dollar spaceport built for Sir Richard Branson's space tourism business, but refuses to rule out abandoning the project altogether, it has emerged.

But the company said it was doing so under protest and without waiving its right to walk away from the project, according to documents obtained by The Associated Press.

In a January 16 email to the New Mexico Spaceport Authority (NMSA), Virgin Galactic says it does not believe the state has finished the work necessary to trigger activation of its million-dollar annual rent obligation and said if the work was not completed to its satisfaction by March 31, it "may either stop paying rent, pay reduced rent or give notice to terminate" its lease.

Virgin Galactic has publicly expressed concerns about the state's inability to attract more businesses to the project and has hinted it could leave if politicians refuse for a third year in a row to expand liability exemptions for the commercial space industry. The legislature is in session until mid-March and a compromise bill was endorsed on Monday by the Senate Judiciary Committee.

The dispute also comes as questions mount about whether the company will be able to start flying later this year or early next year, or whether it expects further delays in getting its 200,000 dollars-a-head (£128,000) spaceflights off the ground.

Spaceport America was developed with much fanfare under an agreement between former New Mexico governor Bill Richardson and Sir Richard. The deal called for taxpayers to build the spaceport and Virgin Galactic to develop the spacecraft.

In November, with buildings mostly done, the state received from the architect a certificate of "base building standard completion", which under the agreement signed by the state and Virgin Galactic in 2008 is supposed to trigger rent and user fees from Virgin Galactic, the project's anchor tenant. At that time, Virgin Galactic is also supposed to give the state a two million-dollar letter of credit to serve as a deposit.

In the January 16 email to NMSA executive director Christine Anderson, Jonathan Firth, Virgin Galactic's director of projects and operations, said that while the company did not believe the state had finished the work required, it was agreeing to start paying under protest, "being mindful that NMSA has agreed not to charge VG any user fees until VG starts flying".

In a response dated last Thursday, Ms Anderson said the statement that New Mexico had agreed to waive user fees "is not quite correct" and stated that "NMSA confirms its current right to demand User Fees for a minimum number of missions or terminate the lease if VG fails to fly at least 25 missions in a calendar year". "While the starting date is ill-defined in the lease," she said, "I think this highlights the need for VG to provide NMSA accurate flight projections with frequent updates as appropriate."

The first rent payment is due on Friday.

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