Boards continue talks on airport authority

Corporation may be formed to issue revenue bond

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— The City Council and Routt County Commissioners unanimously agreed to forge ahead to create a regional airport authority and finance improvements to the Yampa Valley Regional Airport terminal.

But an authority would not necessarily be needed under the financing arrangement consultant Jim Fritze proposed to the two boards at Tuesday night's joint meeting.

Both boards agreed the regional terminal should be expanded to handle more air service during peak hours, but they do not want to hand the taxpayers the $25 million bill to do it.

Fritze, who worked with the Eagle County Airport and is currently the Montrose County attorney, told the two governments that a corporation could be formed that would issue a revenue bond but not hold the two governments liable if the airport failed.

Known as a 63-20 Corporation, the tax law allows governments to form a corporation for a nonprofit entity that could issue a tax-free bond. In this case, the revenue bond would be paid off by the corporation.

Because it does not require taxes or the guarantee that the government will bail out the corporation, the bond does not need taxpayer approval or follow TABOR guidelines.

But a key ingredient is that the corporation must prove to underwriters it could turn a profit to get the bond.

In that scenario, Fritze said it is imperative for the airport to nail down contracts with major airline companies for long-term service that could in turn bring in rental car companies and other business to the terminal.

Right now, the county subsidizes the regional airport by more than $600,000 a year. The rest of the airport's $4.4 million budget comes from its revenue, County Manager Tom Sullivan.

The next step, Fritze said, is hiring a financial consultant to help the airport gauge if it can issue a revenue bond.

Under a motion by City Council President Kathy Connell, the boards agreed to direct staff to look for a financial consultant with the costs shared between the city and county.

Although a government could appoint an airport authority to run a 63-20 Corporation, Fritze said an authority is not a requirement.

Fritze has worked with a handful of other municipalities using 63-20 Corporations, two of which were for airports. And he also said there were other ways to fund the construction of the regional terminal.

Part of Tuesday night's unanimous consent also directed city and county staff to delve further into agreements for an airport authority. The issue will be on the city and county's next joint meeting in July.

Councilman Paul Strong said he was in favor of an authority but noted the devil is in the details, which needed to be worked out.

Commissioner Nancy Stahoviak said she does not want to see a repeat of the city and county negotiations that fell through seven years ago.

"I really want to move ahead. If we're not willing to move in that direction, I have already been involved in these discussions and I don't want to beat my head against the wall for too long over these issues," she said.

Although the two governments resolved one of the biggest points of contention both the regional and Steamboat Springs airports competing for commercial air flights obstacles still exist, Stahoviak said.

One of the reasons the authority did not work last time, Stahoviak said, was because the airport advisory was just an advisory committee and handed over all the control to the governments.

This time around, Sullivan said other issues will come up, such as who will subsidize which airports, financing capital projects, long-term leases, transferring property and creating efficient operations for both airports.

Hayden Town Manager Rob Straebel presented another point of concern when he told the boards he would like to have his town's input in the authority discussions and to see Hayden representatives on the authority. The regional airport is annexed into the town and accounts for one-third of Hayden's sales tax.

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