AMES, Iowa — The Iowa State University Research Park is facing a major financial loss after a once-promising tenant was allowed to fall behind on rent for years before going bankrupt.
The Ames research park, a nonprofit that is connected to the university, says it is likely the single biggest creditor of Etrema Products and is owed roughly $480,000 in uncollected rent.
Research Park director Steve Carter said Wednesday that the park considered evicting Etrema but gave the company more time as it sought to find new markets for its products.
The company, which had been at the park for 20 years, was seeking to commercialize Terfenol-D, a metal that was thought to have numerous applications.
“We thought they had a good plan,” Carter said. “They were pursuing some new opportunities that seemed logical and have good potential, but they simply were not able to realize them in the timeframe that they had.”
Carter said the company made “irregular” rent payments and the debt grew over time. The company signed a lease in 2008 that required monthly payments of roughly $17,000. Last year, Etrema downsized its office space and its monthly rent was reduced to $12,000.
Carter, who has been at the research park for 15 years, said the case marks the first time the park has faced such a loss from a tenant’s bankrtupcy. But he said the park would not make any changes going forward and would continue working with tenants on a case-by-case basis.
“Economic development is a primary part of our mission. We probably are more flexible than others,” he said.
It’s unclear what percentage of its debt the park might receive in the bankruptcy proceeding. More than 100 other creditors are seeking money. The trustee appointed by the government wrote in a court filing last week that the research park’s lien on Etrema’s property in its lease agreement “is avoidable” under the law and was “never perfected.”
The trustee is therefore seeking to sell the company’s property assets for $280,000 for the benefit of the entire estate, rather than letting it go only to the research park. A hearing on the request is set for next month.
The 220-acre research park is funded mostly from rent that it collects from tenants, who now number about 60, but it also receives $120,000 annually from the state’s general fund.
Its mission is to support research and economic development by giving reduced rent to technology firms seeking to expand and startups hoping to get launched. It is planning a major expansion.