Kestrel project delayed by financing timing and reduced tax-credit tranches, city consultant says

At a Jan. 20 Common Council meeting, consultant Jim Caesar updated councilors on the status of the Kestrel project and explained financing delays that have slowed progress. Caesar outlined missing or delayed funding tranches, the timing impact on the project's financing plan and ongoing efforts to secure replacement capital.

Caesar said the original financing plan relied on three tranches of new-market tax credits; the state provided only one of the three, and timing delays moved the expected first tranche from early in the year to August. He explained that the new-market tax credits are federal credits that are sold to investors to generate cash and that of the first tranche's $10 million proceeds, about $7 million went to the project while approximately $3 million covered fees, with $2 million of those fees returning to the state. Caesar also said Small Business Investment Company (SBIC) funds through WEDC were delayed until December, further disrupting the original schedule.

Despite financing setbacks, Caesar reported Kestrel had obtained some private financing (including tranches from foreign investors) and remained current on bills, including payments to the city, the state and the landlord. He estimated the earliest flying prototypes would be "at a minimum, a year and a half away" from the Jan. 20 meeting and said he still expected the project to be completed in Superior. When asked about rumors Kestrel was shopping for another location, Caesar said they were "not shopping, but they are ... receiving requests from other locations."

The council received the update as information; the transcript records no formal action or new contract approval on Kestrel at the meeting. Caesar also reviewed other economic-development activities and partnerships in the city while answering council questions about retail, housing, manufacturing prospects and prospective hotel and retail leads.