The future Fort Smith Regional Airport Director will breathe a sigh of relief when settling into the office of Director John Parker, who announced his retirement — effective March 31, 2017 — at the Nov. 22 Airport Commission meeting.
One of the major issues Parker faced in recent years was the threat the airport would fall out of compliance on eligibility for critical FAA grant funding support. New federal legislation — H.R. 5944 — passed the U.S. House of Representatives and Senate and was signed into law on Oct. 7. The now public law (114-248), sponsored by U.S. Rep. Fred Upton, R-Mich., “took the requirement to negotiate the lease away by placing us back into compliance on that issue,” Parker told Talk Business & Politics.
The bill declares that an airport owner or operator who renews a covered lease “shall not be treated as violating that owner’s or operator’s written airport improvement project (AIP) grant assurance requirement to maintain a schedule of airport passenger user charges that will make the airport as self-sustaining as possible under existing circumstances.”
The bill defines “covered lease” to mean a lease already existing before enactment of the bill — one in which a “nominal lease rate is provided,” under which the lessee is a federal or state government entity. The covered lease would also have to support the operation of Air Force or Air National Guard aircraft at the airport or remotely from the airport.
Parker welcomed the new law, but said the change had “not come through negotiations,” referring o his pursuit of an Airport Joint Use Agreement (AJUA) that, as of April, was going nowhere.
“This was through the military’s endeavor to change the rules” to benefit airports like Fort Smith Regional, Parker said. “We got the letter in October from our ADO stating we had been removed from conditional compliance. It’s not a good thing in the sense that we’re still in deficit spending because of the issue, but it is a good thing in that we’re now eligible for federal funding.”
Still, federal funding cannot be used for operational expenses, Parker noted, only infrastructure improvement costs. The recently proposed 2017 budget reflects a deficit of $256,400 with $3.039 million in operating expenses against an estimated $2.783 million in revenues. Much of the anticipated loss comes from now having to pay for fire and rescue services.
Parker said the airport budgets as conservatively as possible for revenues and “worst case scenario” for expenses. The airport has approximately $2 million in reserves remaining to deal with deficit spending issues.
Prior to the loss of the 188th manned flying mission, the airport began preparing for deficit spending that would occur from the loss of a lease with the Air National Guard. The original lease agreement allowed the airport to lease 141 acres of airfield for $1 a year to the 188th. In turn, the 188th provided services to the facility – like aircraft rescue and firefighting assistance – and also reimbursed it for maintenance and infrastructure upgrades.
This arrangement resulted in a “cost avoidance” to the Fort Smith airport of $400,000 a year, which was significant especially in light of the facility’s small-by-comparison $2.6 million operating budget. Not coincidentally, Parker has said it was also right around the total the facility operated in the red each year after the arrangement was no longer in place.