Burlington International Airport, struggling with a junk bond credit rating, diminished air traffic and debt from a $14.5 million garage expansion built without a funding source in place, is resisting financial demands from South Burlington.
South Burlington is seeking $205,000 in “fees for services” — $101,000 for fiscal year 2010 and $104,000 for 2011, according to invoices provided to the Burlington Free Press by South Burlington that do not specify what the fees cover. The newspaper requested but did not receive a breakdown of the bill from South Burlington.
The airport has paid such fees in the past, said Interim Airport Director Bob McEwing, but it doesn’t believe the new bill is warranted. Indeed, emails obtained by the Free Press show, the airport is now questioning more than $260,000 paid to South Burlington in three previous years and wants those payments reimbursed.
South Burlington officials have said the fees are for police, fire and disposal of the de-icing solution glycol. The airport, however, hasn’t used South Burlington’s glycol disposal center for seven years. In addition, the airport has its own fire department and pays Burlington for a police presence, McEwing said.
How the issue gets resolved is not entirely clear.
Friday afternoon, South Burlington City Manager Sandy Miller and Burlington Mayor Bob Kiss released a joint statement saying they had “negotiated an agreement in principle” on airport fees and payments to South Burlington for the current fiscal year, ending June 30, 2012. The statement said discussion to extend that agreement would begin in November. Details would not be released, the two city leaders said, until they have acquainted their respective city councils with the details.
For his part, McEwing said Friday he was not told the details of the agreement. It could not be learned if the new plan impacts the airport’s concerns over the $205,000 bill from South Burlington.
The Free Press has made requests to both cities for details of the agreement and related documents or communications under provisions of the state’s public records law. Kiss’ assistant, Joe Reinert, responded by saying that because the agreement “is subject to pending negotiations,” it is exempted from disclosure. And, he said, “the ‘agreement in principle’ referenced in the joint statement ... has not been reduced to writing and does not exist as a document.”
Miller on Friday praised Kiss for his willingness to discuss the issues with South Burlington. “This will allow us to move forward on all matters in a constructive way,” he said.
Roots of the dispute
McEwing and Airport Commission Chairman Gene Richards argue the airport’s property tax bill should cover city services, as it does for other taxpayers. That current tax assessment is approximately $1.1 million, and Richards said the airport is up to date on that. South Burlington also charges the airport $160,000 annually for stormwater services and from $5,000 to $7,000 a quarter for water and sewer charges.
Earlier this year, however, South Burlington rankled airport officials when it submitted the bill for $205,000 covering the past two years. Richards said City Manager Miller and City Council Chairwoman Sandra Dooley asked him to join them for lunch in June and presented the $205,000 bill. “He said he didn’t want to meet with Bob,” Richards said, referring to McEwing. “I realized afterwards Bob wasn’t going to give him the yes he wanted. It’s not really my job to meet with people in that capacity.”
Three months later, the dispute had escalated. One email obtained by the Free Press and dated Sept. 14 highlights the dissatisfaction of airport officials. It was written by McEwing to Richards and to attorney Joseph McNeil, who represents Burlington and the airport. It describes the airport commission’s opposition to paying the recent bill.
The commission, McEwing wrote, was concerned that the airport had ever made such payments, and he added they seem to be prohibited in any case by Federal Aviation Administration regulations. “Assessments not based on the value of services or that are not based on an acceptable cost allocation formula,” he said, citing the FAA regulations, “are prohibited uses of airport revenue.”
As a result, “the legality of the previous payments is being questioned, especially since they were not part of any written agreement, are not clearly identified, nor did these payments have the approval of the Commission or the City Finance Board of City Council,” McEwing wrote. McEwing suggested that the airport be reimbursed for a total of $261,730 in payments made in the 2007, 2008 and 2009 fiscal years.
Another email written McEwing to South Burlington airport commission representative Peter Plumeau indicates another concern.
“I cannot support the payment to South Burlington for this ‘outside of the normal’ payment for services,” McEwing wrote. “Also, I am particularly offended by the threat of closing down permit processes for the Air Guard road project and the Aviation Tech Center. Why blackmail enters into the picture is not clear.”
On Sept. 8, South Burlington City Attorney Steven Stitzel wrote to attorney McNeil, representing Burlington and the airport. “I am told that there is great urgency in getting this resolved,” Stitzel said of the fees, “since South Burlington is not giving the National Guard road project the go-ahead while this is pending.”
In response to questions from the Free Press, South Burlington City Manager Sandy Miller acknowledged linking the Air National Guard and the Aviation Tech Center permits to the demand for the money.
“We had indicated when were working on this ... previously that we were not going to be able to pursue other cooperative ventures with Burlington — such as the Aviation Tech Center,” Miller wrote in an e-mail. “We are submitting and administering the grants for that. We had to stop work on an agreement with VTANG for a short while, but were able to work out surety with them to enable them to proceed with their road relocation.”
The airport is a Burlington “enterprise” operation, expected, like Burlington Telecom or Burlington Electric Department, to run its operations as a business. However, airport officials say its job is being complicated by South Burlington’s demands and by Burlington’s stance on who should operate the airport parking garage.
“People think they can keep their hands out, and we’ll give them money,” said Richards, the airport commission chairman. “This is an enterprise zone. Money should be invested back into the airport. We should take care of this asset first. We need more airlines, more seats flying in and out.”
City Manager Miller, with the support of council chair Dooley and Vice Chairwoman Meaghan Emery, has been engaged in similarly contentious negotiations with the Dorset Park Skating Association, which manages Cairns Arena.
The city, which sees the 16-year-old arena as a source of revenue for the city, withheld approval last spring for a $1.5 million entryway and lobby for the arena. It also threatened to sue and invoke eminent domain to end the 30-year lease agreement between the city and the association unless the association agreed to pay an annual rent to the city.
As has been the case with the airport, the Association has resisted the city’s demands.
Managing the garage
Another large issue for airport managers is the cost of running the parking garage — a job that has been done by Burlington’s Department of Public Works.
Airport Finance Director Tamara Gagne said DPW charged the airport a total of $902,000 in fiscal year 2011 and budgeted $984,000 this year for parking garage management and operation.
As they looked for overall savings earlier this year, airport managers solicited outside bids (which DPW did not participate in) to run the garage and found that an outside contractor could do the work for about $600,000.
Gagne said the management component of the bid also showed savings were possible with an outside contractor. DPW’s management fees are calculated as 5 percent of the garage’s gross revenues — $246,000 for fiscal year 2011 — but outside bids came in at about $50,000.
Mayor Kiss, however, wants DPW to continue to run the garage.
“From an administration perspective,” Kiss told the Free Press in an email message, “we’re working with the airport and DPW to move forward with a good city solution that’s also a good airport and DPW solution regarding parking and related services. This is still a work in progress, but there is progress. In general,” he continued, “I do not favor solutions that propose work to be contracted out when that work can be accomplished successfully by city employees.”
“We’re working with DPW,” Gagne said, “to minimize that fee.”
Richards, the airport commission chairman, said he is frustrated with Kiss’ approach but is not looking for a fight. “We’re doing this not to argue with the administration but to develop (an airport) management strong on its own,” he said.
The issue had been scheduled to go to the City Council in August, he said, but didn’t make it.
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