Airport manager Ed Wallis called Stafford’s decision earlier this week “a major milestone and another step in our development, closer towards financial independence.”
Wallis said construction of the just-over $1 million T-hangar will begin shortly after Jan. 1. The hangar will occupy a vacant lot that lies northwest of the airport’s terminal, where three similar hangars currently exist. The construction project is expected to be completed by the summer of 2021.
The new hangar will provide indoor storage for 10 aircraft. Wallis said with 12 people on the waiting list for available hangar space, the new building will immediately begin generating $4,725 in total rent revenue per month after its completion.
“They have all paid deposits and are looking for a place to get their aircraft out of the weather” said Wallis. “We will immediately fill this, and immediately start collecting rent, which will cover the debt service for this hangar, plus some extra.”
Wallis said the airport authority must rely on its supporting municipality members for moral obligations because the airport cannot leverage its existing buildings as equity due to its “authority” status, in which regional airports across the country rely on municipal partners for financial support.
“We have nothing that we can give the loan organization in the event we default,” said Wallis. “What [the lender] requires is, we go to our supporting municipalities and get them to provide a moral obligation, so they are morally obligated to cover our note should we not be able to pay it. They are not financially obligated to do that.”
Wallis said all members of the authority support the airport through quarterly payments and the mutual agreement between the localities calls for a total of $200,000 in annual payments from its three members.
But Wallis said that number was reduced to $150,000 annually in 2009, due to the downturn in the economy. As a result, Fredericksburg pays $21,428 annually, while Prince William pays $42,857 and Stafford pays $85,714.
The three localities make up the seven-member regional airport authority. Fredericksburg has one member, Prince William County has two and Stafford County has four.
Wallis said the moral obligation by the partners is simply a guarantee to lenders in the event the airport cannot meet its financial obligation for the new hangar. In the event funds are ever needed, the airport would tap into the remaining municipality support money still owed to cover the debt. He added that the authority will put $30,000 in escrow to cover any shortage rather than calling in the localities’ obligations.
“They’re not financially obligated to take money out of their operating funds to pay this,” said Wallis. “Any funds that are used to pay a debt service that we can’t pay would come out of municipality support funds that would eventually be coming to the airport.”
Airport officials will formally ask Fredericksburg and Prince William County officials to commitment to the same agreement as Stafford County did on Tuesday. Fredericksburg City Council members are expected to vote on the measure at their meeting Tuesday, and Prince William will vote on Dec. 1.
At a Fredericksburg City Council meeting earlier this month, Councilman Matt Kelly wondered how much the city has benefited much from its involvement in the regional airport. He told the city’s airport authority member, Chris Hornung, that it has been “a long, long time” since the city has received any sort of update about airport operations and future plans.
“I understand [a fifth hangar] will generate money for the authority and keep paying the bills for the authority and the airport,” Kelly said. “But the City of Fredericksburg has partnered with this because of the economic impact for the city.”
Hornung agreed to provide a presentation before the council votes next week. Wallis said he is optimistic that Fredericksburg and Prince William will support the project.
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