Revenue at center of dispute?

A quest for revenue in the face of looming property tax caps led the city of Portland to re-think its management contract at Portland Municipal Airport.

But the current airport manager and former members of the aviation board say that squeezing revenue out of the airport could chase business away.

Working on a sustainability study for the city in 2008, Financial Solutions Group Inc., Indianapolis, took a look at every aspect of city spending and every potential source of revenue in the years ahead. The extensive study, requested by Mayor Bruce Hosier, was in response to a number of changes in Indiana's property tax laws enacted by the Indiana General Assembly.

Part of that study focused on the airport, but when Greg Guerrettaz of Financial Solutions Group contacted airport manager Dave Miller of Miller Aviation, Miller refused to turn over some of the information being sought.

Specifically, Guerrettaz sought the books and records of Miller Aviation for 2006 and 2007 "so that we may determine the rate of return on the Portland Municipal Airport." Guerrettaz emphasized that the review would be confidential.

But after consulting with his attorney, Miller responded that the financial records of his company, the airport's fixed base operator, had no relevance to his airport management contract.

"The mayor was upset over that," says former aviation board president Darrell Borders.

"This (dispute) goes back to Guerrettaz who wanted Dave's books - not just Dave's but Miller Aviation's," says former aviation board member Gary Gibson.

The mayor has said his primary concern is assuring that the city does what's in the best interests of taxpayers. On more than one occasion, he has stressed that his concerns about management arrangements at the airport are not personal.

Miller and Guerrettaz continued to spar over the matter during the spring of 2008, with Guerrettaz complaining of Miller's "unacceptable responses" and threatening to refer the matter to the city's attorney.

"They didn't even ask the right questions," says Miller.

Borders and Gibson left the board last year. Borders' term had expired. Gibson says he asked to step down because "Bruce and I weren't agreeing on what he wanted to do."

"People like the mayor are looking at, can it (the airport) make more money," Gibson adds. "You have to do it in a reasonable manner. For a small town, this is an excellent airport. It's managed well."

Non-tax revenue for the airport comes from a handful of sources or potential sources.

One potential source is the sale of fuel or placing a surcharge on fuel sold at the airport.

Under the current contract, which has been extended on a month by month basis, the petroleum products concession at the airport is operated by and for the benefit of the airport manager.

Miller, for example, receives $20,000 as a direct payment to manage the airport and says he made a profit of about $4,300 last year on fuel sales to transient pilots.

That long-standing practice was originally devised as a way to supplement the income of the airport manager, who in many cases was operating hand-to-mouth while trying to run a small charter or crop-dusting business.

But Miller, who has been airport manager since the late 1980s, has established the most successful charter business in the local airport's history. With a fleet of 17 airplanes flown by 10 pilots and maintained by six mechanics, Miller Aviation is far and away the largest fuel consumer at the airport.

And that fuel consumption - which Miller says was more than 200,000 gallons last year - could become a source of revenue if the city were to establish a fuel flowage fee or if the city retained the petroleum products concession in a future contract.

"But if we charge too much, nobody's going to buy fuel here," says Gibson.

Miller says there's been no formal discussion of establishing a fuel fee. "I wouldn't necessarily be opposed to it," he says, but he adds that too high a fee could send his business elsewhere. Five of Miller Aviation's airplanes are hangared at other airports already.

Hangar rental is a second revenue stream for the airport, and Miller Aviation is the biggest tenant. The company pays about $12,000 per year to rent five hangars, including the city's steel-built hangar which rents for $500 a month and the former Portland Forge hangar which rents for $250 a month. The company also pays $200 a year to lease the ground where it built a hangar of its own.

Of the 21 hangars at the airport, eight are vacant. "There's not a waiting list," says Miller.

A third revenue stream comes from cash renting 18 acres of farm ground scattered among several adjacent fields. Miller's brother Barry rents the land for $70 per acre, and the aviation board has not put the rental up for competitive bids for a few years. That cash rent goes to the city of Portland.

Miller says the hay at the end of the runways is mown by his neighbor Kevin Degler, who gets the hay as a thank you for his help in ridding the area of Canada thistle. "I don't get a nickel off it," says Miller.

A potential fourth revenue stream could come in the form of fees for take-offs or landings or what are known as ramp fees.

But Borders noted that municipal airports usually don't charge such fees, which tend to send traffic elsewhere.

[[In-content Ad]]