Thursday, October 5, 2006
New business plan for Palo Alto Airport doesn’t fly
Airport Commission deadlocks on vote on plan with reduced tie-down rate increases
By Mark Abramson
The Palo Alto (CA) Daily News
The new business plan proposed by Michael Murdter, county director of airports and roads, called for an 8 percent annual increase in tie-down rates and a 10-cent increase in fuel flow rates airport users pay on every gallon they use to gas up their airplanes. The new rate would have been 20 cents a gallon.
The county would examine the increases every two or three years to see if needed to be adjusted, according to the plan. The increases would have only been for the Palo Alto Airport, not the other two airports the county operates. The Palo Airport is operated by the county, but the city owns it.
The county previously proposed a 36 percent increase in monthly tie-down fees, from $111.50 to $151.50. That hike would have made Palo Alto’s fees the highest in the Bay Area.
“The real issue in my mind is they are trying to treat Palo Alto differently than the other two airports in the county airport system,” said Bob Lenox, chairman of the commission. “They want to raise fees at Palo Alto alone. Basically they got a business plan from Palo Alto that says cut and run.
He continued, “I’m in favor of treating all the airports in the airport system fairly.”
Lenox made the motion during Tuesday night’s commission meeting not to accept Murdter’s plan.
Murdter said the revised business plan is in response to the city and airport users’ opposition. He reluctantly agreed to the fuel flow rate increase to spread out the costs. Rate increases are not needed at the other airports because the county’s Reid-Hillview Airport makes a profit and the construction of hangars at the South County Airport should make it financially self-sufficient, he said.
Another reason to raise fees at the Palo Alto Airport is that Federal Aviation Administration grants require each airport to be economically self-sustaining, he said.
“I think the cries of the sky is falling is overblown,” Murdter said. “Clearly every time you raise rates there is a potential for people to leave. I don’t see an exodus of owners based on these modest increases.”
Although the airport generates $725,000 in revenue a year when it does not need capital improvements, when those improvements are needed it is costly, said Murdter.
A city audit of the airport determined it has been profitable 21 out of the past 24 years.
City officials say any increase in fees should be across the board at the other two airports the county operates, the Reid-Hillview and South County airports, to keep airplane owners from leaving. They charge that the increase is a way for the county to recoup $1 million it has invested in the airport since it started a 50 year lease with the city. That lease expires in 2017.
“Basically the bottom line is they will drive business away from the airport,” Palo Alto City Manager Frank Benest said. “Whatever they are raising tie-down fees to at the other airports we would not be opposed to.”
“It’s kind of poor planning, if they knew they were in a long-term lease, they should have recouped the money early on,” said Bill Fellman, Palo Alto’s manager, real property. “We gave them 103 acres for $25 for 50 years, and they feel they should recoup this $1 million. And we feel that is part of the expense of running the airport.”