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No vote needed on $1.2M airport bond (06/16/2013)
By Chris Rogers

City of Winona officials plan to borrow $1.2 million to pay for improvements to the city airport. The city will be required to levy a new property tax to pay back the seven-digit bond. By using the Port Authority's borrowing powers, the city will not need a voter referendum for the bond.

Ninety percent of the funding for the $12 million airport project $10.8 million was expected to come from federal funding. However, whether the city will receive federal dollars for the airport, how much it might receive and when is unclear. Funding for airports across the country is tight, federal officials said, and project consultants have advised the city to lower its expectations for funding this year. According to the FAA, the city has not yet applied for grant funding. That funding is on a rolling deadline. Grants have already been given to projects that applied earlier in the year.

Despite the uncertainty, the city has already begun to spend on the project: $475,000 for engineering work was approved by council last month, staff are requesting $168,696 for wetland credits on Monday (see story page 5a). Additional preliminary work may be required, staff said.

City officials said that the initial work is needed to make the project "shovel-ready." By paying for and completing the work necessary to prepare the airport for contractors, it is more likely that the project will be selected for competitive federal funding, they noted.

No referendum

for airport debt

Last week, the city of Winona Port Authority Commission voted unanimously to approve a resolution promising to pay back the cost of such initial work and the city's share of the entire project using bonds to be sold sometime in the next year and a half. "The Port Authority is financing the project," City Manager Judy Bodway explained. The city will incur costs for the project and the Port Authority will reimburse the city for those costs once the money is borrowed.

The Port Authority will need City Council approval to sell the promised bonds approval it has yet to seek. The Port Authority will not need voter approval, however. Under state law, Port Authorities are exempt from maximum debt limits and requirements for voter approval for bonding, and have much greater freedom than other government bodies on what they can use debt to finance. If the city itself borrowed money through the sale of bonds itself, a voter referendum would be required. Bodway explained to Port Authority Commissioners that it is "easier to use the Port Authority and its powers." She added, "It makes it more efficient."

In an interview with the Winona Post prior to the Port Authority meeting in which he voted for the resolution promising to bond for the airport, City Council member Allyn Thurley one of two elected officials on the Port Authority Commission said he could not explain the details of why financing the project through the Port Authority was more efficient.

"If indeed the city would require a referendum, it's more efficient for us to do it this way," Thurley said when asked if the efficiency had to do with the fact that the city would otherwise need a voter referendum to finance the project. "It's easy for people to say 'no.' It's very hard for people to commit to something and say 'yes.' Not asking that question allows us to go forward with something that people would agree with anyway," he added.

While the Port Authority does not need voter approval to borrow for such projects, state law does require that they levy a tax every year until the bonds are paid off. That tax must be 105 percent of the bond payments due each year. For a 20-year bond, that would mean $63,000 in additional taxes each year, without accounting for the additional cost of interest. Compared to the 2012 levy, $63,000 would represent roughly a one-percent increase in property taxes.

Federal funding an uncertainty

As needy airports around the country vie for a limited amount of federal funds, how much Winona should expect to receive is entirely unknown and somewhat contentious.

Consultants for the city have advised that the city might only receive $4 million this year. City staff says the city will receive all $10.8 million within four years. FAA representatives say anything could happen.

Based on numerous conversations with FAA representatives, "we anticipate that [all of the federal funding] will materialize over the next two to four years," stated Winona Public Works Director Keith Nelson.

FAA spokesman Tony Molinaro said that Winona had not yet applied for federal grant funding for the airport. He said he could not comment on the likelihood of the Winona Airport receiving funding, but that federal funds available for projects are tighter this year and next year.

"There's always a lot of need," said Minnesota Department of Transportation Assistant Director of Aeronautics Jay Hietpas of FAA funding.

Molinaro laid out possible scenarios: the project might be fully funded; the FAA might decline to fund certain aspects of the Winona Airport project outright; it might break the project into phases and allocate funding phase by phase; or the project could join many others that are carried over from year to year, waiting to reach the top of the FAA's list. 


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