[FPSPACE] Fwd: Tax woes threaten future of Rotary Rocket

Sat, 16 Dec 2000 15:11:18 EST

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Tax woes threaten future of Rotary Rocket
Filed: 12/16/2000 
By DAVID DRUDGE
Californian staff writer
e-mail: ddrudge@bakersfield.com 

Rotary Rocket faces losing its property at the Mojave Airport if company
officials fail to pay nearly $19,000 in outstanding property taxes by the
end of the year. 

Phil Franey, Kern County's treasurer-tax collector, said negotiations began
in late September after the rocket development company became delinquent on
property taxes in August. 

Although the treasurer-tax collector's office has begun pursuing a seizure
of Rotary Rocket's assets at its Mojave Airport testing facilities, both
parties are confident they can get the debt paid before drastic measures are
taken to recoup the back taxes. 

"We're doing whatever we can to work with Rotary Rocket, understanding that
we have to maintain the integrity of our collection process," Franey said. 

About three years ago, the San Bruno-based company unveiled its concept for
the Roton, a 400,000-pound propeller-topped rocket it hoped would become the 
world's first reusable single-stage-to-orbit commercial vehicle. 

The Roton, designed to deliver satellites into low Earth orbit, was tested
at Rotary Rocket facilities at the Mojave Airport over its 31/2 year
development. 

Earlier this year, Rotary Rocket began reorganizing its business after
company founder Gary Hudson stepped down because of the increasing
difficulty in raising the $150 million needed to continue to fund the Roton
project. 

Richard Stockmans, Rotary Rocket's director of business development, said
while the company has suffered setbacks over the last two years, its future
is promising. 

"The company is still in the process of restructuring," Stockmans said. "We
have significant resources, and yes we do have a few outstanding bills which
we are in the process of paying." 

Rotary Rocket has whittled down property taxes owed to the county from an
initial balance of $40,000 at the beginning of this year. 

However, if the company does not pay the remaining balance of slightly more
than $18,000 by Jan. 1, the tax debt will increase to $38,000 because of
penalties assessed by the county. 

Rotary Rocket officials are certain the debt will be paid by the end-of-year
deadline. 

"There is nothing significant for anyone to worry about here," Stockmans
said. "Our company has never left anyone holding the bag. We have always
acted very responsibly and fair, and plan to continue to do so." 

The tax collector said he realizes businesses do encounter difficulties, and
that the county is trying to give Rotary Rocket "every opportunity under the
law" to meet their tax obligations. 

"But, at a point in time we have to protect the interests of the taxpayers
of Kern County, and that's when we will become a little more aggressive on
seizing the assets," Franey said. "It's a delicate balance, and we try to be
as fair and give them every benefit we can." 

Along with its debt to the county, Rotary Rocket also owes $22,453 in back
rent to the East Kern Airport District, which operates the Mojave Airport. 

"It's kind of a sad situation, and the future all depends on them," said Dan
Sabovich, general manager of the Mojave Airport. "They started out good, and
they came with a lot of money, or I thought they had a lot of money, but
then things changed." 

Sabovich added that the airport district has not made any decision on how to
recover the rent Rotary Rocket owes. 

The company's largest investor is millionaire Walt Anderson, who also has
invested in renovation projects on the Russian space station Mir. 

One of the first infusions of cash - $1 million - came from bestselling
novelist Tom Clancy. 

In June 1999, Rotary Rocket laid off about 80 percent of its 70-employee
local work force because of a lack of investments. 

Despite financial woes, Rotary Rocket's concept passed its first flight test
Oct. 12, 1999. 

The cone-shaped rocket, measuring more than 60 feet, reached an altitude of
75 feet and a ground speed of approximately 53 mph during its maiden flight
of 3 minutes, 47 seconds. 

Piloted by a crew of two, the Roton was created to carry an average
satellite weighing 7,000 pounds into orbit. 

Aircraft designer Burt Rutan, owner of Scaled Composites Inc., crafted the
Roton body at a cost of $3 million.

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<HTML>Tax woes threaten future of Rotary Rocket
 Filed: 12/16/2000 
 By DAVID DRUDGE
 Californian staff writer
 e-mail: ddrudge@bakersfield.com 
 
 Rotary Rocket faces losing its property at the Mojave Airport if company
 officials fail to pay nearly $19,000 in outstanding property taxes by the
 end of the year. 
 
 Phil Franey, Kern County's treasurer-tax collector, said negotiations began
 in late September after the rocket development company became delinquent on
 property taxes in August. 
 
 Although the treasurer-tax collector's office has begun pursuing a seizure
 of Rotary Rocket's assets at its Mojave Airport testing facilities, both
 parties are confident they can get the debt paid before drastic measures are
 taken to recoup the back taxes. 
 
 "We're doing whatever we can to work with Rotary Rocket, understanding that
 we have to maintain the integrity of our collection process," Franey said. 
 
 About three years ago, the San Bruno-based company unveiled its concept for
 the Roton, a 400,000-pound propeller-topped rocket it hoped would become the world's first reusable single-stage-to-orbit commercial vehicle. 
 
 The Roton, designed to deliver satellites into low Earth orbit, was tested
 at Rotary Rocket facilities at the Mojave Airport over its 31/2 year
 development. 
 
 Earlier this year, Rotary Rocket began reorganizing its business after
 company founder Gary Hudson stepped down because of the increasing
 difficulty in raising the $150 million needed to continue to fund the Roton
 project. 
 
 Richard Stockmans, Rotary Rocket's director of business development, said
 while the company has suffered setbacks over the last two years, its future
 is promising. 
 
 "The company is still in the process of restructuring," Stockmans said. "We
 have significant resources, and yes we do have a few outstanding bills which
 we are in the process of paying." 
 
 Rotary Rocket has whittled down property taxes owed to the county from an
 initial balance of $40,000 at the beginning of this year. 
 
 However, if the company does not pay the remaining balance of slightly more
 than $18,000 by Jan. 1, the tax debt will increase to $38,000 because of
 penalties assessed by the county. 
 
 Rotary Rocket officials are certain the debt will be paid by the end-of-year
 deadline. 
 
 "There is nothing significant for anyone to worry about here," Stockmans
 said. "Our company has never left anyone holding the bag. We have always
 acted very responsibly and fair, and plan to continue to do so." 
 
 The tax collector said he realizes businesses do encounter difficulties, and
 that the county is trying to give Rotary Rocket "every opportunity under the
 law" to meet their tax obligations. 
 
 "But, at a point in time we have to protect the interests of the taxpayers
 of Kern County, and that's when we will become a little more aggressive on
 seizing the assets," Franey said. "It's a delicate balance, and we try to be
 as fair and give them every benefit we can." 
 
 Along with its debt to the county, Rotary Rocket also owes $22,453 in back
 rent to the East Kern Airport District, which operates the Mojave Airport. 
 
 "It's kind of a sad situation, and the future all depends on them," said Dan
 Sabovich, general manager of the Mojave Airport. "They started out good, and
 they came with a lot of money, or I thought they had a lot of money, but
 then things changed." 
 
 Sabovich added that the airport district has not made any decision on how to
 recover the rent Rotary Rocket owes. 
 
 The company's largest investor is millionaire Walt Anderson, who also has
 invested in renovation projects on the Russian space station Mir. 
 
 One of the first infusions of cash - $1 million - came from bestselling
 novelist Tom Clancy. 
 
 In June 1999, Rotary Rocket laid off about 80 percent of its 70-employee
 local work force because of a lack of investments. 
 
 Despite financial woes, Rotary Rocket's concept passed its first flight test
 Oct. 12, 1999. 
 
 The cone-shaped rocket, measuring more than 60 feet, reached an altitude of
 75 feet and a ground speed of approximately 53 mph during its maiden flight
 of 3 minutes, 47 seconds. 
 
 Piloted by a crew of two, the Roton was created to carry an average
 satellite weighing 7,000 pounds into orbit. 
 
 Aircraft designer Burt Rutan, owner of Scaled Composites Inc., crafted the
 Roton body at a cost of $3 million.</HTML>

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