Trains and planes: Why a railroad is buying Boeing's expansion site in North Charleston
Contrary to previous and repeated public pronouncements, Boeing Co. won't be buying a big parcel of land near its 787 campus at Charleston International Airport.
Not anytime soon, at least.
On the web
To see details about the state of South Carolina's Boeing bond sale, go to scstatehouse.gov/agendas/agns951.pdf.
Instead, a small public railroad is preparing to pounce on the 267 acres, though it's hardly a back-door land grab.
The public bond market is at the root of this latest plot twist in the Boeing South Carolina growth story.
The Palmetto State parachuted back into the murky world of municipal finance last week, when it raised $146 million by issuing tax-backed debt to investors.
Some of the money is going to the University of South Carolina in Columbia, Lander University in Greenwood and Winthrop University in Rock Hill. Other proceeds will be used to replace older, higher cost loans from various state highway projects.
But the bulk of the cash — $85 million — is coming from 10-year “economic development” bonds to support Boeing's expanding 6,000-plus-worker outpost in North Charleston.
As the seller of the land, the county agency that runs Charleston International will get paid first in the form of a check for $13.8 million.
Boeing will be able draw down the other $71.2 million as needed to clear land, build roads and prepare the site for who knows what.
Last week's bond issue accounted for slightly more than two-thirds of the $120 million in all-cash financial aid South Carolina promised the company back in April. In exchange, Boeing has agreed to create at least 2,000 more jobs and invest another $1.1 billion in the state before 2020.
The land purchase is central to the company's as-yet undefined “Phase II” expansion in North Charleston, where it assembles and makes parts for its 787 Dreamliner jet.
The real estate transaction hurtled toward the closing table last week. On Wednesday, a Boeing South Carolina spokeswoman said the Federal Aviation Administration had given its blessing to the sale of the airport-owned land.
By that time, the money from the bond issue was already in the bank to pay for the property.
For months now, it's been widely stated by officials that Boeing Co. will be buying the land.
For the record, that's not the case.
The name on the deed will, in fact, be Palmetto Railways, a division of the state Department of Commerce. The aerospace giant then will lease the property from the Charleston-based commercial train operator, known until recently as S.C. Public Railways. The State Ports Authority fills a similar landlord role with the BMW plant in the Upstate.
“The land purchase won't go directly to Boeing,” said Paul Campbell, airports director for Charleston County and a state senator. “That's because the land is public collateral for the bonds.”
When all is said and done, the ownership distinction probably won't amount to more than a minor legal technicality. For starters, Boeing is highly unlikely to default on its lease and trigger an eviction notice. Also, once the state debt is paid off and redeemed, the company can take clear title to the property, Campbell said last week.
Until then, a tiny operator of trains will be the landlord for a global manufacturer of planes. Now boarding. Or should it be, all aboard?
Contact John McDermott at 937-5572