Airport Finances Require City Subsidies

It’s time to take a close look at the current business choices at the airport today. Let’s look more closely at the Leases that have been given to the private companies now doing business at Tupelo Regional and the finances that are requiring huge City subsidies.

The Director and TAA Board are responsible for the following irregularities:
• Budgets do not reflect the more than $100K in arrears the airport is on the FBO and the Universal Asset Management (UAM) loan payments to the City. Why are the Mayor and CFO hiding these bills from the public? Are there other unpaid bills for utilities and Public Works ground work at the airport?
• There were four different airport requests for funds in less than a three month time frame. Sounds like a course on accounting manipulation 101. And there isn’t anyone on the Board with enough expertise or knowledge to ask the right questions. What did the Director tell the City Council? That “they were paying for a $1.8M facility.” That National Guard money was for a renovation/expansion of the Army Aviation Support Facility not the Fair Market Value of the entire complex. Rent should be three times what it is.
• Yet, both private operations, UAM and Airline Maintenance Services-Tupelo (AMS-Tupelo) have leases either well below Fair Market Value (FMV) or with provisions that provide tenant with direct control over public funds.
o UAM’s Lease is based on repayment of an estimated $1.5M loan balance for the National Guard building and land usage. Yet the facility was appraised at $8M in an agreement between the TAA and the FAA.
o UAM does not pay landing fees based on a notion that UAM is a non-aeronautical business. But landing fees are acknowledged as a potential fee in the Lease. Since UAM is damaging all ground structures at Tupelo Regional, including the runway, they should help pay for future repair.
o UAM is not paying rent for the space they occupy outside their leased areas.
o AMS-Tupelo will not pay a dime of rent for the first 18 months they do business at Tupelo. This was done in lieu of some $18K they were to provide for building capital improvements. Records indicate that business equipment and a $10,000 AMS company sign were used as most of their capital improvements contributions.
o Why is UAM being charged a CPI rent increase of 1.5% in their FOURTH year while AMS is being charged 2.5% in their FOURTH year? Why do they both get a three year free ride? UAM never reaches the real FMV of the calculated rent in their 20 year term.
o AMS-Tupelo has an unfair and improper clause in their Lease that gives them first choice at a “Buyout Option” without a fair bidding process. This option coincides with the time when the City Loan is almost paid for and includes terms for that buyout.
o AMS –Tupelo has control of both the Operating Revenues and ALLOWABLE Operating Expenses for the business. Who couldn’t make money on those terms when TAA is allowing the tenant to dictate the amounts?
o AMS –Tupelo’s list of “Base Rent” spaces does not include the hangar from which a Board member operates. The Ethics Commission has determined similar arrangements as a violation of the Ethics Law.
• The new Silver Lease takes the cake. The airport is down to $15K in their “Rainy Day Fund” after having $250K just a few years ago. Yet the Director wrote a Lease that reduced the TAA Board approved cost per square foot per annum as well as the normal square footage that airlines use for their operations.
o In fact, the charge for the terminal baggage claim area is only $2,000 per year or about $1.50 per square foot per year. Savings to Silver is $22.5K per year.
o For some reason, there is a reduced charge for passenger areas. Savings to Silver is about $16K.
o The strange added fee is for a Minimum Fuel Purchase Fee. They will charge the airline $20 for every time a scheduled arrival does not require fueling.
o Bottom line is that these strange anomalies in Airline Leasing reduces the public TAA revenue and increases the privatized AMS-Tupelo revenue.
A quick check of other Mississippi EAS stations indicate that Tupelo’s space rental is more than $30K below the next competitor and no one charges these Minimum Fuel Purchase Fees.

All the leases have some anomalies in their calculations. Some amounts are less than approved fees and some have excluded normally charged amounts all together. Aren’t government/public contracts supposed to be standardized?

The relationship between AMS and AMS-Tupelo is equally questionable. AMS determines the repair costs of AMS-Tupelo’s aircraft. Of course, the reason is that they are two different companies with the same owner. HUH? But TAA pays the repair costs as approved by AMS-Tupelo. It’s time to flush the leaders and renew the Public’s voice in the ownership and operation of the citizen’s asset, the Tupelo Regional Airport..

Government Knows Best

The recent announcement that the city was acquiring property in neighborhoods to reduce blight and create a park should have been a step forward. In reality it is a step back in the ability of a neighborhoods to determine their own future. The neighborhood groups can be a catalyst for the redevelopment of Tupelo. The missing ingredient is the part where the city “works” with the individual neighborhoods to determine what is needed and then to do what the neighborhood wants. The Gravlee group wants a neighborhood park. Should be about two to three ac. for playgrounds and walking tracks etc. What will they get? A five plus ac. mega park. As a neighborhood where children and young mothers would be using a park it would be real important to insure that the park not become a place where people from outside the neighborhood come. Parents should feel government trys to insure that parts of their open spaces do not become places of congregation for who knows what. My daughter recently moved to a new home in another town and found a nice neighborhood park. She went online to see if any sex offenders lived close to  the park. She is concerned about the safety of her two boys. Neighborhood parks should be small/large enough to be used by the residents of that neighborhood and not the entire city. If this was not bad enough the residents had made it clear that they did not want basketball courts. What did the city do? The plan calls for basketball courts and a park larger than what they wanted. Once again government thinks it knows what is best for its citizens. Glad elections are not far off………

Now its the roads?

Do the Mayor and City Council have a helicopter to travel to and from work daily? Or do they have some secret  travel method.  I want to know how they travel. Nobody in this  city doesn’t know the roads have been getting worse. We travel these pot holed and crumbling roads every day. We buy replacement rims for our cars and new tires that succumb to the rough payment. Just look at the railroad crossing at Crosstown. Rail plates are actually sticking up and are dangerous to traffic. Yet we will have that $13,000,ooo Aquatic Center because it is more important than taking care of the very basic things government is supposed to do. We have an ordinance that bans baggy pants instead of better roads. Yes we will have better parks in Park Heights. Yes we have a statue of Elvis in front of City Hall. Yes we will have a new travel pattern for downtown main street in spite of the fact that merchants are not in favor of it. Yes we will have a new facility for the Police Athletic Department. Yes we will now need to begin to care for the new annexed areas of Tupelo. Yes we need a new library. And I am sure each of you can add other items that the council has funded instead of roads.

Acccording to the DJ we had a $1,700,000 budget to take care of our roads just a few years ago. Each year the budget has gotten fewer dollars to take care of an expanding city due to our good fortune of having Toyota locate in the area. Where have the funds gone. The new budget is almost half of the $1.7 million. In my opinion this has happened because the Council never sits and discusses among themselves, let alone with the citizens, what are the major year, two three and four year goals/needs of Tupelo. In the case of roads it has to be every year some of our more heavily traveled roads need work. If this is a surprise to our Mayor and Council and department heads they need replacing. It is my understanding that at one time there was enough money set aside via a bond to take care of a new police building. The Mayor says part of that has been spent on other projects. He further wants the Convention and Visitors Bureau, in consult with the CDF, to spend some of their money on other projects that would free up more of the tax payer general fund monies. An adequate amount of money needs to be set aside for annual repairs. It is no different for Police and Fire protection. We know what that will take and what new equipment will be needed and when it will be needed. These costs don’t need a bond issue if proper advance planning occurs. The Council is the planning department and the Mayor should be the execute. Who is not doing the job they were elected to do. Sounds like neither.

Elections are next year and qualifying starts in January. I am for an all out change. I am tired of the lack of planning and “We have more money in the rainy day fund” so there is no problem, we won’t be raising taxes.  Way to go Mr. Pitts and Mayor Reed.

 

Potential Tax Savings

We have been spending a rather large sum of taxpayer money for a city of our size. I am rather reluctant to figure an average per tax payer. But consider a city budget of @ $37,000,000 a another $17,000,000 in bonds divided by 37,000 citizens including children, renters and business that pay no local taxes except for schools and you might get close. So maybe it is tiime to consider leases.

The first thing I would lease is the airport. There was a time when no money was required to support air transportation in Tupelo. However even then there were always 200 to 400 cars monthly in the Memphis Airport parking lots from Lee, Itawamba, Pontotoc and Union counties. Sometimes Tupelo city employees even used the Memphis Airport for city travel. There is a state statute requiring “all” Mississippi government employees to travel from local airports if one is available. In fact at one time Ole Miss and all the SEC charters for inbound opponents flew out of Tupelo. How things have changed. Now they travel out of Memphis and it is not because of runway length. At one time we had two fixed base operators. Then none and the airport took them over because they thought they could show a bigger profit. Now the TAA pays for a group to operate the FBO as a service and the TAA will get a share of any profit. If I were managing that FBO let me assure there would not be much profit to The TAA. We lease space to several operations and rent/lease hangers.
Why don’t we complete the circle and lease the whole darn place for a fee and a percent of profits.It would save tupelo $300,000 in subsidy.  I am willing to bet the Airport Manager, if he were to be kept, could in two or three years to show a profit or perish.

The BCS center is not showing a profit if the CVB has to contribute $100,000 per year. Another good potential is the naming rights to the baseball complexes and the soccer complex or lease them. Think of all the tax money that could be saved. How about the new “Pool”.  If it is going to be such a going concern it should not be difficult to lease or at least sell the naming for the $60,000-80,000 anticipated annual loss. As Mr. Pitts said about the UAM lease that is not at fair market value, something is better than nothing.

Other cities/states are leasing toll roads, bridges and buildings, requiring the normal maintenance, and turning a liability into a profit. Why not us on a long term basis?  We lease a hanger to UAM, baseball and soccer fields for tournaments  and the BCS for an event. Why don’t  just really do it big time for Tupelo. Even the local golf courses have sold signs for every hole on an annual basis. But that is private ingenuity. Shame on me for expecting that from our leaders. Or is the Council’s  goal, spend as much of the taxpayers money as they can.

Better Off?

The question that will be asked thousands of times between now and the November elections is “Are you better off today than you were four years ago?”  What is the real question is as a result of local policies are you better off. None of us really can affect national issues but local issues can be helping or hurting your life or the life of Tupelo. So the question I ask is are you better off in Tupelo because of what this administration has done and if not why not. Each of us has an opportunity to be involved to an extent that can bring change to Tupelo. What has helped or hurt you and why?

I am going to get the title of this site changed to Tupelo Talks. It should become a forum for free speech and ideas. I know of the changes at the DJ and I hope to offer an alternative.  I will try to publish a pertinent comment each Tuesday and Thursday. The purpose is to encourage discussion as well as educate. Don’t be shy, your name is unknown to me and as long as we don’t pursue vindictive posts or use profanity your comments will be posted. I look forward to hearing from you. Suggestions for discussions are encouraged. I would like for posts to somehow indicate the city or county they live in. It will make no difference to me except that one of the DJ complaints is no one knows if the comments are from Lee county or Lexington KY.  Ed.

Dansette