Airport Authority asks city, county to back $12 million land acquisition loan

JESSICA GREGORY:::

Now that the Airport Authority has received a FONSI (Finding of No Significant Impact) certificate for the land in and around the new airport site off Jackscon Road from the Environmental Protection Agency, it is officially ready to move forward with land acquisition.

Though the Federal Aviation Administration (FAA) will fund 90 percent of the purchase of the land, it is a reimbursement program requiring local entities to first purchase the land.

Local banks have agreed to loan the Airport Authority the estimated $12-14 million it will take to purchase the land at a two percent interest rate, but require the city and county governments to agree to back the loan.  The Authority presented facts and figures regarding the loan and the projected revenue of the new airport to a joint city and county commission meeting on Monday, June 17.

City and county governments would be responsible for roughly $240,000 in interest per year ($120,000 each if split evenly), for the six-year span of the loan, according to Airport Authority Chairman and City Commissioner Dick Morrow.

There are several options that could offset the 10 percent local match and the interest of the loan, according to Griffin Mayor and Airport Authority Secretary Joanne Todd.  As soon as the city and county commit to the new airport by purchasing land, the FAA will begin 90 percent reimbursement of the approximately $800,000 already spent on site selection and environmental studies.  In addition to that credit, if the FAA agrees to designate the walking track and the Kiwanis grounds nonessential to aviation (releasing it from the grant assurances and rent regulations), the county can save money on renting the airport park, and the Kiwanis rental or purchase payments would go directly into the Airport Authority Fund.

In addition to these revenues during the construction of the new airport, once completed and operations are transferred from the old to the new airport, “We can then sell or lease buildings and land as business dictates and use the money to reimburse city and county and/or handle expenses in opening new facility,” said Morrow, who reports that the estimated value of the current airport is somewhere between $8 and $10 million.

The estimated total cost of the new airport is $60 million, of which $54 million will be reimbursed by the FAA.  These reimbursed funds, Airport Director Robert Mohl pointed out during the presentation, come from an FAA account earmarked for airport development and funded from airport transportation fees.  If land acquisition begins this year, the transfer of operations is estimated to happen in 2019 or 2020.

The Airport Authority presented the outcomes of the four options regarding the airport: stay at current airport with no improvements; improve the existing airport; build a new airport; or shut down the airport all together.

Closing the current airport without building a new one would require the city and county to pay back the FAA for 20 years worth of grants and 90-95 percent of the current market value, effectively costing $20-25 million.

Of these options, staying at the current airport with no improvements is the cheapest, costing $5.5 million in local funds, while building a new airport will cost $6 million in local funds ($7.4 million including the interest of the land acquisition loan).

According to the Mohl, the current airport will incur $5 million in deficits over the next 20 years, and will require $500,000 in local funds ($5 million total with FAA 90 percent match) to be spent over the next five years in infrastructure repairs, “which will not be geared toward any future revenue development,” Mohl said.

Projections made by the Michael Baker Corporation (formerly LPA Group) based on six years of current airport budgets and expenditures and FAA reports of aviation industry growth show that a new Griffin-Spalding County Airport would turn a profit after 12 years, and make almost $2.4 million in profits in year 20.

Also built into the new airport’s profit and loss projections is a line item called “negative balance rollover,” accounting for each year’s operating deficit.  The deficits grow slightly each year, peaking in year 10 at $387,157. Each year’s number is placed into the budget as an expenditure for the next year, because the Airport Authority plans to pay the city and county back. For example, the opening year’s deficit is projected to be $107,231, which the authority will pay back to the city and county the next year.

As the presentation on June 17 came to a close, several commissioners asked questions or commented upon the airport, including Bart Miller, who asked why the airport couldn’t be placed on the 2014 ballot.

“I believe people elected me to study the issue and make an informed decision.  The average person out there who hasn’t seen all this… hasn’t had the ability to make this decision.  I feel I’ve done the homework and the decision is my responsibility,“ Morrow replied.

Before calling for an adjournment, County Commission Chairperson Gwen Flowers-Taylor said, “I’m married to this project. I may not be around to see the first airplane fly, but it’s something I hope I’m going to do for the future.  I think that we are trying to do our homework and we are a group of people that have a vision for what can help us move forward… None of my constituents have called me about this, but I think they expect me to do what I think is the right thing, and usually the right thing costs money.”

In a later interview with The Grip, Mohl commented, “It is a hard thing to do…. All of this – trying to convince people to build a new airport and why, and the numbers behind it is a hard thing to do.  But I can promise one thing.  If you don’t do it, you will continue to spend money, and not get a return on that money,” Mohl said.

No vote was taken at the joint meeting, though Morrow said after the meeting, “We have a consensus on the concept, which gives us the impetus to now engage the lawyers.”  The next step, he said, is to legally structure the loan to create the definitive paperwork needed; repayment schedules, city and county agreements, and the Airport Authority’s role will be defined so that the complete package can be voted upon.  “The devil is always in the details, and I want commissioners to have all the details and required paperwork when they are asked to vote,” Morrow said. Ω

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Comments

  1. Randy Ausborn says:

    What Mr Morrow is basically saying is that we the people are not intelligent enough to make a decision on his airport dream. I guess this is a father knows best mentality. I say bull to you Mr Morrow.

  2. Thomas Thurston says:

    I never saw Dick Morrow on a ballot I voted on. When he ran did he say vote for me and I’ll build a new airport? I bet not. Did any of these people have a new airport in their platform? Anybody? Raymond? Flowers?The Devil may be in the details but I suspect he is all over this project. Why wouldn’t a 90 million dollar project be placed on the ballot for the taxpayers to decide? Follow the money.

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