State might give even more to Virgin Galactic

A Sunday article in the Albuquerque Journal revealed an interesting little detail that has, thus far, been left out of public statements about the deal between the state and Virgin Galactic.

Virgin Galactic is the company that has verbally agreed to a 20-year lease of a new facility the state is going to build at Spaceport America. But the agreement has not been put on paper, so many remain skeptical about the project.

Some legislators opposed the state’s approval earlier this year of more than $100 million to begin construction on the facility, saying they wanted to see Virgin Galactic commit to the state before they pledged money. Their voices were silenced by a larger crowd that went along with Gov. Bill Richardson.

An architect has already been selected and design of the facility has begun. Economic Development Secretary Rick Homans told me earlier this year he expected a signed agreement with Virgin Galactic in the third quarter of the year, but we’re still waiting.

State officials have repeatedly insisted that Virgin Galactic is committed to the project and will put up something like $20 million of its own money in the lease, which they say will be for no more than $1 million per year for 20 years.

What they have failed to mention is that the state wants to invest $20 million in Virgin Galactic. That detail was finally reported this weekend in the Journal article.

Though no investment has been formalized, that’s a big chunk of change about which we weren’t told. A Richardson spokesman told me earlier this year, when the governor was promising money for another investment before the State Investment Council voted to approve it, that the council would do what he wanted because he appoints the majority of its members and controls the council.

If the state invests $20 million in a company that agrees to pay the state $20 million to lease a facility the state builds, who’s paying the lease after all?

The Journal article was detailing the resignation of an Ohio investment adviser who wouldn’t sign off on the money the state wanted to invest in Virgin Galactic and another space-related company, t/Space. The advising company was reluctant to sign off on such investments, the Journal reported, because they were “more like economic development projects than private equity transactions” and it wanted to limit its liability.

Translation: the adviser didn’t see these as safe investments for itself or the state. That’s a no-brainer: Even the governor admits that the spaceport isn’t a sure bet. But the potential promises far outweigh the risk, he believes.

I don’t mean to sound like a spaceport detractor, because I’m not. But it sure would be nice to see Virgin Galactic put up some of its own money for this project, especially since the founder of Amazon.com is building a spaceport east of El Paso without any public financing.