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Spaceport America Faces Delays, Tough Questions

By Colleen Heild
Copyright © 2011 Albuquerque Journal
Journal Investigative Reporter

          New Mexico's Spaceport America has hit turbulence.
        Once aimed at completion last year, the $209 million taxpayer-financed project in the southern New Mexico high desert stands half-finished.
        In her first two weeks in office, a wary new governor sacked both the Spaceport Authority's board and its executive director. Records show the ambitious project launched under Democratic Gov. Bill Richardson has faced construction delays and a lack of planning. Competition from other states interested in commercial space flights continues to loom. There's also the prospect that the state may need to spend an additional $10 million to $20 million to build a second runway to deal with the problem of crosswinds.
        Republican Gov. Susana Martinez, signaling a possible change in direction, on Friday removed the Richardson-appointed board of directors for the spaceport. A week earlier, she sought the resignation of Rick Homans, the second executive director to leave in the past year.
        Martinez also ordered a financial audit of construction costs of the project, which have so far totalled about $130 million.
        "The state has already contributed more than half of the project construction costs to date, so it is important to explore ways in which increasing private sector involvement might decrease the significant level of taxpayer responsibility," said Martinez spokesman Scott Darnell.
        Martinez believes the "state can continue to be a partner in the project, but no longer its major financier," Darnell added.
        Located in a remote area 30 miles southeast of Truth or Consequences, the project is billed as the world's first "built-from-scratch" commercial spaceport. The state hopes to stimulate economic development by attracting companies interested in commercial space travel and research. One major tenant is already on board.
        A Martinez transition team studying Spaceport operations, financing, contracts and other facets is expected to give its recommendations within the next few weeks, Darnell said.
        Whatever is ahead, getting the initial phase of the multifaceted project off the ground hasn't been easy.
        Nearly a year ago, a top Richardson adviser found a lack of planning on critical issues, such as getting permanent electric power to the site and installation of highly complex systems, including mission control functions and radar tracking.
        Some of those issues have since been resolved, said Homans, who had overseen the project off and on since its inception in 2003.
        But there's more work to be done.
        What's needed is strong will, determination and a certain amount of boosterism at the top level of state government, Homans said in an interview before he resigned.
        "The challenge is that this is viewed so much as a Richardson project." he said.
        Virgin Galactic anchors project
        The future of the Spaceport's success relies heavily on the involvement of anchor tenant Virgin Galactic, which signed a 20-year lease to operate a commercial space tourism business from the site. Over the next two decades, the company's lease payments and user fees are expected to generate $250 million and more.
        Homans refused to release copies of the agreements the state signed with the company founded by British billionaire Sir Richard Branson, so it isn't publicly known what the penalty might be if Virgin Galactic or the state pulled out or failed to live up to the agreement's terms.
        Homans said the records couldn't be made public because they contain proprietary or business information, and that he refused to give them to Martinez's transition team. Copies were provided to Jon Barela, Martinez's Cabinet nominee to head the state Economic Development Department. Martinez's administration is now reviewing a formal Journal request to inspect the records.
        A top official at Virgin Galactic, which has been estimated to have invested $300 million on its spaceflight system, has said the company was "looking forward to working with the Martinez administration."
        What is recognized is that other clients will be needed to shore up the operation, which has also attracted at least two smaller companies that have undertaken a series of vertical launches.
        Troubled trajectory
        In early 2007, plans called for launches of small Virgin Galactic craft from the site to the edge of Earth's atmosphere by the end of 2009, news report show.
        The date was pushed back to the spring of 2010. A sign outside the entrance to the spaceport proclaimed early 2011 as the estimated completion date.
        But that isn't going to happen.
        The progress, or lack of it, prompted then-Richardson adviser Eric Witt to visit the site last April, when then-executive director Steve Landeene — Homans' predecessor — was in charge.
        Witt, in a memo to Richardson, cited problems in the project management and the eventual transition from construction to operations.
        The construction was largely on track, he said last year, but other related issues "cannot be minimized."
        For instance, because of the cost and scope of the facility, the project was separated into 14 bid packages with no single general contractor "running the show," the memo stated.
        That allowed New Mexico companies to bid on the work but left the state Spaceport Authority "holding the bag in terms of ultimate liability for cost, job completion and quality control/assurance," he wrote.
        "NMSA management is not fully equipped to deal with this," Witt added. He noted that the private project manager hired "has no liability for cost or completion."
        Witt cited delays in the construction of the terminal-hangar building even back then. It still isn't finished.
        Part of the problem, Witt wrote, was that the executive director hadn't been at the spaceport on a daily basis and hadn't been engaged enough with prime contractors, key local figures, and Spaceport suppliers.
        Landeene announced his resignation days after the memo was written. But in an interview from his home in Phoenix earlier this month, Landeene said he wasn't aware of Witt's report, and insisted there were no project management problems.
        "Never were any construction or construction management issues raised to me," Landeene said, adding that the project was "on track, on schedule and under budget."
        Homans took over in June.
        Homans at the helm
        Homans, a former top campaign aide to Richardson who served as the administration's state economic development director and head of the state Tax and Revenue Department, pitched the idea of a commercial spaceport to Richardson in 2003.
        As executive director, Homans said he improved project management, started the bid process to hire spaceport operators, and negotiated agreements with White Sands Missile Range and the Bureau of Land Management, whose approval for right of way was needed to bring electric power to the site.
        The state's to-do list now includes setting up visitor centers in Hatch and Truth or Consequences and on-site, building a southern road to the spaceport from Interstate 25 and installing communications systems.
        Construction on the two primary buildings should be finished by this summer, he said. Another six months to a year of testing and other preparations will be needed before any space tourist takes off in a Virgin Galactic $200,000-a-person suborbital rocket flight.
        Homans predicted that commercial operations wouldn't begin until 2012. The construction financing came from severance tax capital outlay and voter-approved gross receipts tax increases in two southern New Mexico counties.
        He said the spaceport is designed to pay for itself, but a state subsidy may be needed for its first few years of operation.
        Scrutiny in the Legislature
        Other states getting into the commercial spaceport business are enticing tenants and spacecraft manufacturers with more generous liability laws.
        Last year, New Mexico enacted a spaceport liability law, but Virginia and Florida have more comprehensive protections.
        A bill is expected to be introduced in this year's legislative session to extend liability protections in New Mexico to spacecraft manufacturers and suppliers, Homans said.
        Homans said New Mexico is unlike other competitors, because it offers an inland spaceport with a generally dry climate and shared restricted airspace with White Sands.
        The Spaceport Authority has an annual operating budget of about $1 million.
        Though no additional funding will be sought this year, there's likely to be new legislative scrutiny of the project.
        Senate President Tim Jennings, D-Roswell, said he doesn't believe lawmakers have a good handle on what's happening with the project.
        "I think somebody has an obligation to tell us what's going on here," Jennings said, blaming the prior administration for not being forthcoming. "The Senate is going to demand answers to some of these questions this session."
        For instance, Jennings asked, why was construction on the spaceport's air-fire-rescue building halted last November? An evaluation on its design is under way, Homans told the Journal.
        Elsewhere on the site, some of the concrete laid for the runway and an area outside the terminal hangar had to be replaced after failing to meet specifications, state officials said.
        Future plans call for a cross runway in addition to the $29 million runway dedicated by Richardson and Branson last October. The second runway would be used "if there are crosswinds, and these craft are fairly sensitive to crosswinds," Homans said.
        He said "some" wind research was conducted during the planning process, but "everyone probably would have like to have done years of research."
        Until the new runway is built, Virgin Galactic is expected to schedule its flights for the early morning when it typically isn't so windy.
        "Once we do our first commercial launch, and this thing takes on a whole new credibility and fundability, we will be definitely (planning the second runway construction), and that is something they (Virgin) would like to see," Homans said.
        Former Republican Garrey Carruthers, now dean of the college of business at New Mexico State University, said the idea of creating a New Mexico spaceport didn't originate with Richardson.
        "This idea has been around for a long time, for at least 15 to 20 years," Carruthers said. "I think Gov. Richardson saw this as an opportunity."
        About five years ago, Carruthers said, NMSU Arrowhead Center produced a business plan that studied the economic impact of such a venture.
        "I think the opportunities for this to be successful have actually improved" since then, Carruthers said. "The space tourism thing always gets the sizzle, but we've had ... a number of launches out here of experimental materials sent into space."
        In an interview before his appointment to the transition team, Carruthers said he supports auditing the project to find out early on if there are issues or problems that need to be corrected.
        "I find it somewhat necessary when a new governor comes in. ... The reason you do that is within a matter of months, no more than a year, Governor Martinez owns this project, whether she wants to or not."

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