Friday, March 11, 2016

Pittsfield Municipal Airport (KPSF) study group likely to urge review of business park lease origins

PITTSFIELD — The study group assessing the cost-effectiveness of the city managing Pittsfield Municipal Airport will likely recommend a review of the agreements that led to creation of the Westwood Business Center Park on airport land.

At issue is whether all lease revenue from the 30-acre business park should properly go toward improvements at the airport, rather than be split with the Pittsfield Economic Revitalization Corp., which oversees the seven-lot park.

The study group, which was appointed by Mayor Linda M. Tyer at the request of the City Council, heard Wednesday from officials with PERC, the city Community Development office and airport officials, who described what has been confirmed about the history of the park's development in the mid-1980s.

"Clearly, there are conflicts [in the written record], and clearly it was set up a long time ago," group Chairman Thomas Sakshaug said at one point.

But Sakshaug added later in the meeting that "our charge is to make recommendations to the mayor and City Council, not to solve problems." He said he expects the group will recommend that the leases and other aspects of the park management relative to the airport be re-examined by the agencies or departments involved.

The committee on Wednesday also received a breakdown of airport expenses and revenue from former Ward 5 Councilor Jonathan Lothrop, which also estimated the amounts the city has contributed annually to the airport operation.

Ann Dobrowolski, a community development specialist with city Community Development Department, who also serves as clerk for PERC, said the Westwood park was carved out of airport land and developed by the city and PERC using federal Community Development Block Grant funding. The intention, she said, was to sell the lots to businesses locating there, but the Massachusetts Aeronautics Division objected to selling the land.

Therefore, she said, the idea of long-term leases was proposed and allowed through special state legislation in an effort to make the agreements attractive to potential business tenants. In addition, the first two leases were set at $1 per year for 40 years as an incentive to spur activity at the park.

"There were a lot of meetings," she said, and state aviation and Federal Aviation Administration officials were involved, but Dobrowolski and other local officials said an agreement showing that all the parties had signed off on the lease agreements has not yet been located.

One problem, according to Community Development Director Janis Akerstrom, is that because federal CDBG funds were used to develop the park lots, the revenue derived was required to go back into community development programs, such as a small business revolving loan programs. The federal Department of Housing and Urban Development restrictions on use of revenue derived from those funds would continue "in perpetuity," she said.

Dobrowolski said an agreement was reached that provides 85 of the lease revenue to PERC, a community development corporation with general membership, and 15 percent to the city Airport Commission.

Meanwhile, according to airport Manager Robert Snuck, the FAA specifically requires that all revenue derived from airport property should go toward airport improvements. He said that his research into the history of the park's creation found no document that shows state or federal aviation officials signed off on the lease agreements and dispersal of the revenue.

"It might take a court decision to straighten it out," he said.

Lothrop pointed out, however, that although different federal and state agencies apparently have different priorities for the lease revenue, without the initial $450,000 investment in the park initiated by the city and PERC "there would be no lease revenue."

He added, "You have to look at the balance sheet."

Even without significant lease revenue for the airport, Lothrop said, the city is gaining approximately $129,522 in property tax revenue annually on buildings in the park and $30,568 in personal property tax revenue related to the businesses there.

Airport Commission Chairman Christopher Pedersen, also a member of the study group, said the commission has long been aware of the FAA requirement that revenue from airport lands go toward airport improvements and has unsuccessfully tried to get to the bottom of the issue.

"The paperwork may be there," he said, but definitive agreements and sign-offs by all parties have not yet surfaced.

Regardless, Pedersen has pointed out that the total lease amount is not high. Annually it is just over $20,000, with 85 percent going to PERC and 15 percent to the commission.

Lothrop produced a basic expense/revenue sheet Wednesday for the airport that showed that from 2010 through 2015, the city was required to provide from $66,880 to $98,303 per year toward the operation, after total airport revenue and expenses were compared.

Ward 4 Councilor Christopher Connell, one of those who originally called for the study, said there is a need to increase revenue at the airport, seek support from the other Berkshire communities that benefit from the facility or look at other management formats, such as privatization.

Group member C. Jeffrey Cook agreed about the need to look at revenue sources but noted that many city facilities, such as schools, libraries and parks are supported regardless of their ability to generate revenue.

Pedersen said he feels "we're under pressure" to generate more revenue when other city facilities are not. He added that a report estimated the total economic impact on the area from activity at the city airport is more than $30 million annually in terms of business generated and employment in the Berkshires.

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