The city commission accepted Federal Aviation Administration (FAA) grant funds Tuesday for the next phase of the Manhattan Regional Airport project.
Once the first phase is completed in October, the second phase of the two-phase passenger terminal expansion will start late October or early November.
Phase 2 would be completed by the end of summer 2015.
The FAA grant of $5.36 million for Phase 2 will go toward work on the baggage claim, car rental, and meet-and-greet areas. The city will fund $1.9 million for Phase 2.
The cost of both phases is about $17.06 million with the FAA funding $13.17 million and the city funding around $3.9 million.
Airport Director Peter Van Kuren said the annual debt service for both phases will overlap. The first full year of debt payments will be in 2018 for Phase 1 and 2019 for Phase 2.
The average annual debt service for both phases would be $579,066, a cost that the passenger facility charges (PFC) could partially cover.
“Unfortunately, the pace of those collections is a lot slower than the debt service on a 15-year note, so there’s going to be that deficit over time,” Van Kuren said.
Currently, the airport gets $268,000 from the passenger charge, which would mean an average annual deficit of $311,066.
If handled through a property tax increase, the mill levy impact would be 0.412 mill.
A mill is $1 in tax for every $1,000 in assessed, taxable property value.
The passenger charge is $4.50, but the airport industry has lobbied Congress to raise the fee to $8.50.
Van Kuren said the increase in the charge would mean $525,000 annually, which leaves only $54,066 left to make up.
“We really should be pushing to increase that PFC amount,” he said.
Commissioner John Matta said the commission took on the project knowing the financial situation.
“When we did the first phase, completing the second phase is something that we wanted to do,” he said.
“We knew we would have a deficit then.”
Mayor Wynn Butler said his preference would be using economic development funds rather than a property tax increase.
“That’s the reason I supported the project all along because I saw it as being an economic development issue and not a property-tax or sales-tax issue,” he said.
When completed, the passenger terminal building will grow from 12,500 square feet to approximately 42,000 square feet.
The expansion will include increased floor space for airline check-in, a larger baggage claim area, and increased screening and secure holding space.
With the expansion, commissioner Usha Reddi said she wanted to see larger planes than the current 50-seat regional jets, which she thought would lead to smoother travel.
“Everytime I’ve gone to the airport, there’s always been some sort of maintenance issues with the planes,” she said. “I was thinking because they’re smaller, maybe that’s one of the reasons.”
Commissioner Rich Jankovich said American Eagle officials informed city officials that the current planes will be retired over the next few years.
“They agree we are a larger than 50-seat market going forward,” he said. “No matter what, you’ll see a change in capacity, but it won’t be tomorrow.”
Commissioner Karen McCulloh said the city has to continue stressing the cost savings such as free parking.
“If you’re going for 10 days from Kansas City, you can add another chunk on,” she said.