Friday, March 14, 2003 Budget has officials debating airport's development By Anne Aurand The Bend (OR) Bulletin Because of a tight budget, city of Bend officials are facing a conundrum about the municipal airport. Municipal airports can drain a city's pocketbook, but they can also boost economic development. Pilots and business owners say the Bend airport has tremendous potential for stimulating the local economy and is under-utilized and under-appreciated. They say the city has been inconsistent about airport policies and unclear about what direction it should take. Some feel that good management could even make the airport earn revenue for the city. "If it's managed correctly, this could be the one city department that makes money," said Gary Waldron, chief pilot for the Flight Shop, which provides aircraft maintenance, fuel sales, charter flights and is home of a flight school at the airport. But before the city sinks more property tax revenue into growing the airport, Councilor John Hummel said he needs to be convinced that the subsidy will create jobs and boost the economy rather than just be "a recreational amenity" for "rich pilots." Approaching the airport, a few miles east of the city's limits, it's hard to know when you've arrived. There's no welcome; there's no security force standing guard. There's just a cluster of hangars strung between the north-south runway and Powell Butte Road. It's generally quiet except for the wind wooshing over the sagebrush and juniper. Occasionally the silence is shattered by an aircraft revving up for takeoff. Waldron, the pilot, and Barry Howarth, a hangar owner, sit in the Flight Shop on the airport's developed west side and vent their frustrations. They say the city needs to improve the runway, install an automatic weather reporting system, develop unfinished office space and build hangars on unused land. They defend the idea of investing city funds in the airport because it would benefit the community. "The airport brings money into the economy," Waldron said. Charlie Spence, spokesman from the Maryland-based Aircraft Owners and Pilots Association, said airports benefit a community like a main street or a highway. Mostly, he said, airports promote economic development. A president or CEO of a big company won't locate a business where he can't communicate with the outside world, he said. Bend's Flight Shop is also home to a growing aviation program through Mount Hood Community College. Jerry Bean, coordinator for the aviation program, said the number of students doubles each quarter, and soon, a four-year aeronautical university will locate there. Bean said students can earn an applied science degree in aviation, which is the first step to any career in aviation. Andy Lindsey, Bend's Public Works Department management assistant who has been overseeing the airport since the last airport manager left the position in 2001, said "not quite half" of the city's 415 acres surrounding the municipal airport is developed. Improvements are coming - albeit at a cost. Last year, the city added a new section to its Capital Improvements Plan for $3.73 million in projects associated with the airport over the next five years. The plan includes realigning Nelson Road for safety reasons, expanding the west terminal apron and building a new runway. The plan is not to draw large, commercial airlines, according to those involved with the facility. Also included in an airport improvement plan is a project to relocate the runway a bit to the east, which would open up more land on the west to develop. Lindsey, the public works official, said the problem with developing the east side of the runway is that there is not the sewer, gas and road infrastructure necessary for development. Plus, he said, it doesn't make sense to do it before the runway is moved. Debra-Diane Jenness said the city could be raking in revenues from a lot of pilots if it would build more hangars. She has been waiting for more than a year to rent an aircraft hangar at Bend's airport. Jenness, a home-schooling parent and "back-seat pilot," and her retired pilot husband, have homes in Bend and Crescent Lake, east of Willamette Pass. She would rather rent a hangar closer to home, but out of necessity, she has taken her $175 a month fee to Prineville's airport. The city of Bend rents out 64 airport hangars for about $200 a month, said Lindsey, from public works. And, about 25 people are waiting for a storage space, which turn over about once a year, he said. City Manager David Hales said the city wants to explore whether increased revenues from hangar rentals, which could help fund airport operating costs, would justify the investment in building up the airport. Bend's general fund, which is comprised of property taxes and pays for police and fire services, has augmented airport revenues to build up the facility. "The general fund has loaned significant dollars to the airport fund," Hales said. "The airport has not been paying its own way." The good news is, after five years of free rent, airplane manufacturer Lancair will start paying a ground lease of $70,000 a year to the city. In the late 1990s, the city's former chief financial officer, assistant city manager and airport manager, Andy Parks, took interest in the airport and built up infrastructure, allowing the airport's northwest end to sprout businesses. To fund that, Finance Director Jim Krueger said, the city borrowed about $1.5 million in the form of certificates of participation, or bonds, and $900,000 from the general fund. Parks and then-Mayor Bob Woodward said the city council and the business community at that time saw the airport as an asset for economic growth. They thought the loan could be paid off with transient room tax revenues of about $80,000 a year for five years, and then Lancair's ground lease could kick in. The city's airport fund still owes about $1.4 million on the certificates of participation and $330,000 to the general fund, Krueger said. Of this year's $1.1 million airport fund, about one-third of the revenues comes from charges for service, such as ground leases and hangar rent income. About a third comes from grants from the Federal Aviation Administration; and another third comes from the general fund. Businessmen Bill Bronson, owner of Sun Air, which provides aircraft maintenance and charter flights, and Bill Dolf, owner of Leading Edge Avionics, which sells, installs and repairs navigational equipment for airplanes, feel like the city has changed direction about hangar ownership. They said the city used to prefer private parties to build and lease out hangars - renting the ground from the city. But now it seems the city wants to earn the income from hangars. This is just one issue an airport manager will deal with, when hired. The council adopted a budget that includes an airport manager's salary of $54,000 to $75,000 annually. No date has been set for having management in place. City Manager David Hales said not having an airport manager has "hampered our ability to set a clear vision for the airport." The city has has not decided if it wants to hire an in-house manager or contract out with an airport management firm. Councilor John Hummel said having a private firm manage the airport takes most of the risk away from the city. The firm would invest its own money in developing the airport. But it also could take away potential profit for the city. If a city employee was in charge, the city would pay for any improvements - although the Federal Aviation Administration covers considerable capital costs - and any profits earned would go into the city's pocketbook. Hummel said he'll need hard proof that the airport can provide jobs and stimulate the economy before he supports using property tax revenues to develop the airport further. "If it's necessary to bring in living wage jobs, I support it," he said. "If it's not, it's a government subsidy for rich pilots, a recreational amenity." Attached Photo: The Flight Shop employee Jeremiah Kessler gasses up a Cessna 172 at the Bend Airport last Saturday.