The Fort Smith Regional Airport will face a $450,000 deficit in its operating fund for fiscal year 2015 and the blame can rest with the new mission of the 188th Wing, according to airport Executive Director John Parker.
Parker said with the new unmanned mission at the 188th, the airport's revenues and expenditures have taken a hit.
"It's the guard's change of mission, which resulted in the termination of the joint use agreement," he said. "The joint use agreement provided a payment to the airport for those services that we did to maintain the runways and taxiways so the guard could utilize our airport. At the same time, that document provided the ARFF (Aircraft Rescue and Fire Fighting) services through the National Guard. So that agreement entailed a payment for services we provided and also a document for services from the guard in lieu of other payments.”
In recent months, the airport has had to approve a $251,000 contract through fiscal year 2014 with Pro-Tec Fire Services to provide FAA-mandated firefighting protection at the airport using equipment and facilities through an agreement with the National Guard Bureau in Washington, D.C. The contract for the company's second full year of operations will total $258,000.
Parker said with the costs due to having to pay for firefighting protection once provided by the 188th, as well as the loss in revenues for services provided by the airport in maintaining the runways for the Guard, the airport will post a loss of $450,500 for fiscal year 2015 based on expenses of $2.972 million and revenues of only $2.522 million.
To cover the losses, which could run close to $500,000 when factoring in deficit spending from fiscal year 2014, Parker said the airport commission will have to dip into about $1.4 million in reserves to keep the airport operating at capacity. The decision to dip into reserves, he said, was not unexpected, noting that the commission was building the airport's savings in anticipation of a change in the Air National Guard's mission at the airport.
But the airport cannot operate in the red for too many years, Parker explained, due to FAA regulations tied to grants the airport has received in recent years and for that reason, the agency has granted permission for the airport to renegotiate its $1 per year lease with the National Guard Bureau for the 142 acres of land its base occupies at the Fort Smith Regional Airport.
"If we don't successfully get a negotiation with the Air National Guard or the National Guard Bureau by 1 October 2016, we will not be eligible for future (FAA) grants, so that's a big deal," he said. "And it's all tied together. The FAA didn't require us to have more money against that lease because of realized value of services provided, AARF (firefighting) services. Now with all that going away, they're requiring us to negotiate for a more fair market value on the properties they have under lease.”
Letters, he said, had already been sent to the Guard Bureau in Washington to negotiate a fair market value for the lease, adding that "the FAA has stated their position from the associate administration level. That's as high as it goes in airport compliance terms to the Guard Bureau that this is the position.”
As for what that fair market value could be for 142 acres on airport land, Parker said it was an unknown at this time, pointing out that the military would have to go through a valuation process to determine what price it should pay the Fort Smith Regional Airport.
Should the airport and the Guard Bureau come to an agreement on a ground lease, Parker said there was an expectation that the Guard would also refund monies the commission is taking from reserves to pay the bills for the next two years.
And with any agreement that may result in additional revenues for the airport, Parker said he hoped to return the airport to profitability. Fort Smith Regional Airport posted profits of $262,567 in 2011, $251,363 in 2012 and $135,477 in 2013.
The proposed budget was presented to the airport commission in October, with a vote expected at the commission's Nov. 25 meeting, Parker said.