Private aviation firm with eyes on Brunswick base thrives on public funds, political connections

OXFORD — On Nov. 1, 2006, Gov. John Baldacci and other political figures converged on Sanford Regional Airport to commemorate what was supposed to have been a significant economic development project and a victory for the governor and his political allies.

The groundbreaking for the $10 million Sanford Jet Division, an expansion of privately owned Oxford Aviation, came just six days before the Nov. 7 election. Baldacci, who was seeking a second term, championed his Pine Tree Zone tax-incentive program and a complex public grant and loan package for helping to pull together a deal backers said would create 200 jobs.

He also credited Jim Horowitz, president of Oxford Aviation, for keeping his aircraft refurbishing business in the state, rather than move to the Pease International Tradeport in Portsmouth, N.H..

"This expansion is important to Oxford Aviation, it's important to the town of Sanford and it's important to the state of Maine," Baldacci said.

Today, a ceremonial shovel used during the groundbreaking hangs on a glory wall at Oxford Aviation's headquarters in the Oxford County Regional Airport.

But there is no Sanford Jet Division. 

The project failed when Oxford's financing collapsed just over a year ago, leaving behind an unfulfilled investment of about $1 million by Sanford taxpayers and a $400,000 loss for Oso LLC of Burlington, Mass., Oxford's would-be financial partner.

Two months later, Oxford announced another expansion project, the Brunswick Jet Division, at Brunswick Naval Air Station.

Once again Oxford Aviation is claiming it will create 200 jobs, and probably more. Again, the private company is seeking public assistance. And once again, that assistance is being stewarded by political figures in Augusta, including Commissioner John Richardson of the Department of Economic and Community Development, a Baldacci appointee and potential gubernatorial candidate.

But the Brunswick project has been dogged by persistent questions about the Sanford experience and about the public funding that has helped Horowitz expand his business three times at the Oxford County Regional Airport – an unremarkable, weed-strewn facility sandwiched between the Oxford Plains Speedway and the adjacent hills.

Compared to the Sanford project, the state's appeal for public support for the Brunswick Jet Division is subdued. Oxford Aviation, on the other hand, has trumpeted the potential benefits of the project through a high-profile surrogate, attorney F. Lee Bailey.

Recently, the charismatic Bailey – who helped defend O.J. Simpson against murder charges – has upstaged redevelopment authority meetings with promises of 200 to 500 jobs and unconsummated deals with industry titans. The project, he and Horowitz say, could make Oxford and Brunswick aviation industry leaders. 

Such promises may entice communities affected by the 2011 base closure, not to mention the Midcoast Regional Redevelopment Authority and state officials tasked with replacing the 5,000 jobs and $140 million in income associated with the U.S. Navy's departure. As the ceremonial sendoff for Patrol and Reconnaissance Wing Five demonstrated on Aug. 27, the reality of those statistics is fast approaching, as is the pressure to meet them with job growth and economic recovery.

But Oxford Aviation's blue-sky predictions, and its reputation for high-quality work, must be reconciled with concerns raised about the company's ability to follow through on job creation promises, its overall public benefit and the failed Sanford deal.

Tenuous deal

Proponents of the Brunswick project are sensitive to questions about Oxford Aviation. MRRA Executive Director Steve Levesque worried last week that "negative press" could kill the deal for Oxford to lease a 166,000-square-foot hangar built in 2005.

MRRA is also contemplating purchasing a paint booth, worth an estimated $800,000, to accommodate Oxford's plans to refurbish airliner-sized aircraft. The town of Brunswick, meanwhile, could be asked to authorize a Community Development Block Grant to help fund the paint booth.

"If we don't do this, we could lose (Oxford) to somewhere else," Levesque said. "We could potentially lose a good opportunity for us and the community. ... They have other options, just like any other business."

Levesque's concerns will undoubtedly weigh on MRRA's directors as they contemplate the lease agreement. But so, too, may comments from Oso Chairman Roberto Tenenbaum, who recently said he terminated his partnership with Oxford Aviation because Horowitz "low-balled" the cost of the Sanford project.

Tenenbaum's comments were relayed by Laura Carroll, his spokeswoman in Burlington.

"During (Tenenbaum's) due diligence he found out that the project would cost $4 million to $5 million more than (Horowitz) said it would," Carroll said, adding that Tenenbaum had already invested close to "half a million dollars" in the project. 

At the end, Carroll said, Tenenbaum felt Horowitz wasn't someone he wanted to do business with.

Oxford County

The Oxford County Regional Airport is a sore topic for Steven Merrill, an Oxford County commissioner since 1994. Merrill has seen about $5 million in county, state and federal money directed to the facility over the last decade.

Most of it, he said, has benefited Oxford Aviation, not Oxford County.

"(Horowitz) runs a world-class business," Merrill said. "But (Oxford Aviation) is basically a publicly funded private enterprise. ... There's quite a lot of sentiment that it's been negative for the county."

Horowitz, meanwhile, maintains that the county has received plenty of benefit.

"If Oxford Aviation owned this facility we probably would've invested more of our own money in it," he said last week. "But it remains a county asset."

Such comments illustrate a relationship that has grown increasingly sour since Oxford Aviation arrived in 1989. Back then, Horowitz, who'd previously operated a boat refurbishing business in Florida, was welcomed by county officials hopeful he could revive the airport.

The early returns were promising.

In 1989, county and state officials helped Horowitz win a nearly $290,000 grant from the federal Economic Development Administration that allowed him to expand a 6,000-square-foot hangar. He reportedly created 20 jobs in return. 

The 1989 expansion set the stage for a more ambitious $935,000 expansion in 1996. That project was made possible by a complex combination of grants that required political support in Augusta.

Levesque, then Gov. Angus King's DECD commissioner, eventually signed off on a deal that funded the hangar expansion and authorized a DECD expenditure of $200,000. In return, Horowitz was to create another 50 jobs by the end of 1999, bringing Oxford Aviation's payroll to about 80 employees. 

According to a December 1999 report in the Lewiston Sun Journal, Horowitz created 12 jobs to bring his payroll to about 45 employees. According to the newspaper, state and federal officials waived the job-creation requirement because Horowitz was having difficulty growing at a small airport, and because the town of Oxford would have been forced to pay back a $326,000 DECD grant.

The size of Oxford's airport became an issue in 1999 when Horowitz sought a runway extension that would allow his business to begin refurbishing larger aircraft. By then, Oxford county commissioners were wary of diverting public funds – in this case about $9 million – to benefit Horowitz. 

"It just wouldn't have been worth it to Oxford County to do anymore," Merrill said, adding that the disappointing strides in general aviation have recently prompted commissioners to reduce funding at the airport. 

Horowitz, who had support from King and DECD, later claimed county commissioners had "sabotaged" his plans with an erroneous feasibility study that overestimated runway expansion costs.

The relationship has deteriorated ever since. Horowitz last year sued the county over a leaky roof and mold issues and he frequently withholds his $1,800-a-month rent. According to the county clerk's office, he hasn't made a monthly lease payment since April.

In February, the county filed a counter-suit against Oxford Aviation claiming breach of contract.

Job creation

Despite Oxford Aviation's job-creation track record, the company has continued to secure public financing.

Horowitz said he employs about 65 in Oxford and at a smaller operation in Fryeburg. Last week, a reporter counted 22 cars in the Oxford parking lot. Inside, about 15 people were working on aircraft. The visit occurred on a Friday, and Horowitz explained that most employees had worked a four-day week, while others were either on vacation or working flexible time. 

When asked about job creation, Horowitz was adamant that Oxford Aviation "met or exceeded each and every one of" its requirements. That statement is supported by officials from the agencies that helped facilitate and promote Oxford's funding sources, including DECD and the Androscoggin Valley Council of Governments.

"From my perspective, (Oxford) has met its requirements," said Bob Thompson, the executive director of AVCOG, a direct participant in the 1996 hangar expansion. "I have the close-out (documents) showing they did."

Thompson ignored a request for copies of those documents. 

MRRA's Levesque said economic conditions may have prevented the company from reaching the 80-employee threshold in 1996.

"Just because they didn't add (50 employees) doesn't mean they should get nailed," he said. "People say what they'd like to do. These aren't contracts. ... If (Oxford) didn't meet the job requirements, (MRRA) wouldn't be able to apply on their behalf now." 

Even if employment hasn't surged, Oxford Aviation's physical plant has grown – to nearly seven times its original size. Hangars are full of aircraft, ranging from a single-engine Cessna, to a multi-million dollar Swedish plane and a Zivko Edge 540 owned by Michael Goulian, one of the top aerobatics pilots in the world.

Horowitz, who wears a ponytail and speaks with a soft voice that belies his pride and ambition, said Oxford Aviation has worked on 4,000 planes since 1989.This fall, he said, would "exceed anything we've done in the history of the company."

Outside the company's facility, a handful of planes were tied down, signifying the county's lone source of airport revenue.

Horowitz consistently credited the pride and craftsmanship of his workers for his success. The claim is echoed in testimonials from three Maine governors, including Baldacci, and former U.S. Sens. George Mitchell and William Cohen. Their words hang on the glory wall, a few feet from the Sanford ceremonial shovel.

As for Sanford, Horowitz said he's sorry that he has waited to address the project's collapse. He said the original estimate he delivered to Oso LLC was driven higher by unforeseen costs, such as site preparation and the rising price of steel. When asked if he'd considered scaling back the size of the project, Horowitz said that's where the deal fell apart.

"We tried to change the concepts of what we wanted to do," he said. "(Oso) had different ideas."

Horowitz acknowledged that some mistakes were made, but it's clear he has moved on. He said he'll spend more than $1 million on the Brunswick Jet Division, a sum he said will well exceed any public investment.

Oso, meanwhile, is still smarting from the Sanford deal. Tenenbaum, through his spokeswoman, said he was breaking his silence because "he didn't want another investor to make the same mistake he did."  

Oso and Horowitz were brought together through political connections. Oso partner Marshall Frankel is the former mayor of Bangor, and a family friend of U.S. Sen. Susan Collins, R-Maine. According to Oso's spokeswoman, Tenenbaum and Frankel contacted Collins to complain about Horowitz after the deal went south. 

So far, it appears Horowitz has retained his political allies. He said he is proud of his relationship with Maine's power brokers and unapologetic about the money they've helped channel to his business.

"I haven't met anyone in public office, whether it be commissioners, governors or federal agencies," he said, "that hasn't felt good about the projects we've done."

Steve Mistler can be reached at 781-3661 ext. 123 or smistler@theforecaster.net