Time for Change at the Airport

The Leesburg Town Council was recently trying to get a grip on the Leesburg Airport financials as they went through the budget process. Leesburg Today reported on the struggle, Airports Financials Grab Councils Attention. It was about time. For the last five years the airport has lost a total of $2,259,734. That is an average of over $450,000 a year. Last year the loss was $525,286. The trend is not good. Taking a page from Enron’s play book, some on the Council, egged on by the airport manager and the leaders of the airport commission, are blaming the accounting system. This group, rather than trying to fix the problem, apparently would like to rewrite the book on GAAP, or Generally Accepted Accounting Principals. Another suggestion was to move the airport from being an Enterprise Fund to some other form of accounting in the Town’s financial report. I call this a cover up. By definition an Enterprise Fund should at least breakeven. The Town has two Enterprise Funds – The Airport Fund, and the Water & Sewer Fund. (I wrote earlier about the Water & Sewer Fund which has also been mismanaged – see Water Balloon.)

Instead of trying to juggle the books, the Town should do what any money losing business does – cut costs and increase revenues. Like the utilities department, which had not increased rates since 1992 the airport has not increased rates for three years. When I looked into the tie-down rates, I discovered the Town charges $100 a month and that they were 100% occupied with a waiting list. This means that sometime after 1993 the tie-down rate was decreased, because in 1993 it was $100. I managed the airport from 1981 until 1993 under a contract with the Town. The Town paid me nothing for management or anything else. I leased land and buildings from the Town. The lease terms were determined by the Town in a public RFP process. I never negotiated the rate or term. Today the cost to the Town to manage the airport is over $400,000 for both personal and contractual services.

In the last 15 years the airport has managed to chase off all but one business jet, and build a $4 million Taj Mahal terminal that caters to small recreational pilots and airplanes. Business jets visit on occasion, but seldom stay. As I write this, the Town Council, on the recommendation of the Airport Commission and the staff, is about to reject the two bids for the hangar pad that had gone vacant for over three years. One of these bids was from a very successful high tech company, EIT, founded by State Senator Joe May, and the other bid was from a large Washington DC real estate company, Advantis. Two years ago the Town accepted a bid for the adjacent hangar pad, but to date not one spade of dirt has been turned on this site and it remains vacant.

In May the last of the FAA flight service employees, once numbering over 150, will leave. With them goes the majority of the economic impact of the airport. It’s time for change.

My Kind of Mayor

A mayor who reduces taxes, increases services, has a plan to decentralize the national energy grid, and put his city in the green energy business at no cost to the tax payers, sounds like a fairy tale. Not so, George Fitch, Mayor of Warrenton, is just such a guy, and a Republican at that. The Washington Post reports how Fitch sees treasure in trash. He has a plan to build an ethanol and electric plant on the county dump. He has done more improbable things in the past like organizing the Jamaican Olympic bobsled team. He was even gutsy enough to run against Jerry Kilgore in the Republican primary.

Water Balloon

Here’s a trial balloon. It is apparent that the Town’s water and sewer department has been financially mismanaged for many years. Ten years ago the utility fund had a substantial surplus, which today has all but disappeared. Last year consultants recommended rate increases to correct the problem. Unbelievably, until last year there had been no rate increase for water and sewer since 1992. Last year (FY 2006) the utility fund had a loss of $4.1 million compared to a loss of $2.6 million the year before. Connection fees and developer donations were $5.9 million in FY2006 and $10.8 million in FY 2005. These one time fees reduced the losses but you can see the trend. With fewer homes being built this very unfavorable trend will continue.

There is now a food fight between the Town and the County over who will provide water and sewer service to Crosstrail and other proposed developments that are just outside the Town boundaries. Last year the Town Council imposed a 100% rate increase on those living outside the Town but receiving Town water and sewer. This group filed suit.

While listening to the staff discuss some of these issues at several public hearings, it became apparent that the Town and the Loudoun County Sewer Authority (LCSA) work pretty well together. I have recently discovered that there is even an agreement that either entity will provide the other service in the event mechanical or other events temporarily curtail operations. I understand that this week those of us who live in the Town were drinking and bathing in County water.

Perhaps instead of raising rates the Town should look at costs, and ask themselves, why are we in a business that loses money? Why not sell the Town sewer and water department to LCSA. The savings in overhead cost alone might put the operation in the black.

The Town could take the proceeds and return the money to the tax payers by reducing taxes. The combined Authority could charge everyone the same. Sounds fair and reasonable.

The Town has one other business or “Enterprise Fund” that needs attention - the airport. I will save that for another time. Stay tuned.