Airport looks to city council to help fund expansion

LACONIA — The Laconia Airport Authority is requesting city help pay for construction of additional hangers at the municipal airport. 

Airport Manager Marv Everson told councilors at their regular meeting last week that a closed runway at the airport cannot be reopened and demand for hangar space among commercial aviation entities and private pilots is high, both in the Lakes Region and around the country. The airport authority is developing a plan to allow construction and lease of additional hangars.

“It isn’t anything new now, our closed runway at the airport cannot be reopened,” Everson said, noting he frequently receives inquiries regarding additional hangar space. “We have a plan to develop the entire area of the closed runway for further development of hangars.”

The city is eligible to receive funding for much of the project through a combination of federal and Department of Transportation grants.

“The $2.3 million is the grant portion,” Finance Director Glenn Smith said during the meeting on June 10. “The overall cost of the project is $3.4 million, the difference being the local match, locally provided funding through the airport, which is, of course, the rental fees and fuel fees.”

The airport authority intends to subdivide nine lots along the area that is now an abandoned runway and Everson said all lots have been committed to customers. The city owns the land but not the hangars, and can collect land lease fees. Property taxes on the land are paid to the Town of Gilford.

“What if we want to build a hangar, is there anyplace to do that?” Everson wondered. “Yes, along our closed runways we’ve subdivided nine lots and all of those lots, we put out a request for proposal a couple of months back, and all of those lots have been committed, I would say. I have a list of developers for all nine lots to build their own hangars.”

But the airport authority doesn’t have the cash to pay for the development, which could greatly improve services provided by the airport. Everson noted that as the airport grows, their clientele shifts increasingly from small, recreational airplanes toward larger jets, which spend much more on a pricier fuel when they use the airport. 

At the core of the issue is the need to construct an access road. The airport authority is eligible for several high-value grants that, if passed through budget appropriations at the federal level, would fund the construction of nine lots along the abandoned runway. The road, however, would need additional funding in order to be completed. 

“We are at a point where we need to come up with the funding to be able to pay for this. Most of it is covered by grant funding, the Bipartisan Infrastructure Law that was put in place included all airports all across the country,” Everson said. 

Everson and Smith discussed the possibility of issuing a grant anticipation note, whereby a city bond could be taken out to fill the funding gap for the project at no cost to the city if the airport were to pay the annual note on its behalf through 2027.

“Glenn and I have been working with the bond attorney and now a local banker is involved in it, trying to work out the way to get this done, ultimately costing the city nothing,” Everson said. “But we need to front the money — we have a cash flow issue. We don’t have that much money to be able to just pay for it ourselves.”

Smith said initial considerations included issuing a bond outright, but in this specific case a grant anticipation note may be more appropriate.

“We initially started out talking about a bond, but of course, the structure of a bond is fixed payments over a fixed period,” Smith said. “The discussions have moved in the direction of what’s called a grant anticipation note, meaning that we’re borrowing in anticipation of a grant and we’re looking at being able to pay that note between now and 2027, as grant monies come in from the federal government and also through the state [Department of Transportation].”

Initial payments due in 2025 would likely be in the neighborhood of $50,000.

“The interest costs in 2025 would probably be somewhere in the vicinity of $50,000,” Smith said. “I would hope that our friends at the airport could cover that to keep the cost to the city at zero.”

Mayor Andrew Hosmer said finding a way to fund the project without impacting the city financially would be the primary objective.

“It seems to me that’s the goal,” Hosmer said. “To work as a conduit to leverage the funds but ultimately to cost the city zero, I would think.”

There was no action taken on this matter at the meeting and Hosmer, who is also chair of the Laconia Airport Authority, asked Everson to bring forward additional information.

“I would like, at the next airport authority meeting, a projection as to anticipated increased revenues from fuel flowage, a smaller amount on the rentals,” Hosmer said. “We’re going to have to know how much money we’re taking in in order to satisfy a $1 million debt that’s not covered by a grant. I don’t want to see the airport get put in a position where we’re overextended.”