Alamogordo Airport Ordinance Revision Sparks Controversy, Airport Operates at a Loss Annually

Alamogordo airport operates at a 100k deficit, city staff tackles deficit mitigationPhoto byAlamogordoTownNews.org 2nd Life Media

The Alamogordo Airport operates at a near $100k deficit every year and the city has suggest upgrades are needed and for economic development has wanted to bring air service to the city. One of the concerns that staff has brought to the commission is the airport loses money every year and does not have the funds for matching grants to even do basic airport maintenance. As a result the city manager has tasked staff with a review of ordinances and fees to address the budget shortfall.

The airport has parking fees as low as $20 a month for an aircraft and fees lower than most area airports. The airport hosts 38 leases owned or controlled by 31 families . The airport lost $86,000 last year.

The most recent commission meeting on 5-28-24 addressed the issue with a large group of airport tenants in the audience concerned about the process and potential rate increases. Staff pointed out that 31 families are being subsidized by the 31,000 taxpayers of Alamogordo. The discussion and dialogue lasted for an hour and a half and was testy at times.

The city manager spoke to concerns with a 2022 audit that pointed out that several leases and property values tied to those leases was a significant issue. There were significant concerns around airport leases of which historically undercharged and are now passing along increases that align with an increase in property values which are stirring controversy and concerns with tenants of the airport properties.

A preliminary discussion was held justifying a move to review rate increases at the airport and across other areas of the city to align billable dollars with city needs. Aircraft parking fees, landing fees etc are established by ordinance.

Historically building rental fees were established by the airport manager. That is a flawed model of which the city manager had concerns and creates an opportunity for fraud and or political interference and legally there is no definition of the airport manager having that authority per city ordinance.

An existing ordinance says the city commissioners will establish rental rates per square foot but in practice that has not been the case for several years. The new airport manager is asking the city commission to approve and revise rates and to bring the position back into compliance with city regulations. The Airport Manager said the airport at present and under the prior management does not have a required rates and fees document. The new airport manager has created a rates and fees schedule as a starting point for consideration to publish and standardize fees. On the 25th of June a final proposal of rates and fees for the airport will be presented.

Commissioner Rardin was an antagonist against consideration of rate increases. City staff expressed that there is a significant need to align fees with other regional airports in order to afford economic development and airport improvements which are greatly needed. City staff explained, “everyone wants development but they don’t want to pay or invest in that development, and just maintain the status quo which favors a few locals and has for years. Rates have to increase from land rates to air nautical rates if the city is serious about economic development and impact,” staff explained

The airport at present operates at a $200,000 a year annual loss or deficit thus resulting in the need for increases. No business can operate year after year with a $200,000 plus deficit. City staff conveyed on Riodan that it makes no sense for the 31, 000 citizens of Alamogordo who pay taxes to subsidize the 31 leases at the Alamogordo Airport. City staff asked Riodan to consider, “we have a citizenship of 31,000 people and yet 31 people are benefiting from the existing fees on 38 leases, resulting in a loss at the airport via this taxpayer subsidy.”

An area of contention is that per FAA standard on a 20 year lease a leaseholder that built a hanger looses the hanger as title at the end of the lease for improvements to the buildings revert to the city airport commission at the end of the lease. This is no different then any land lease agreement with a traditional business as the land is leased and land holder owns improvements made to that land at the end of the lease agreement. Staff is not recommending reversions back to the city but legally that is the option for the city unless a lease is not renewed.

Airport leases operate similar to commercial net, net, net leases and lease holders should have understood those terms upon signing the leases 20 plus years ago according to staff.

Significant public comment was held driven primarily by airport tenants opposing any increases.

Jackie Diehl-Alexander spoke and explained that she is the lease holder with an expired lease. She explained she has been seeking an extension since March and was told no she was being evicted. She escalated to the city attorney which said she may stay till June 30th as she prepaid for a year ending June 30th, 2024. She opposed any changes to fees or ordinances related to the airport. Mrs Diehl-Alexander’s comments were echoed by several individuals opposed to any changes or increases.

The state of New Mexico State auditors office directed the city of Alamogordo in 2022 to do an assessment of city owned property values and align leases to include airport leases to those assessments. The 15 cent rate that the city is considering is the result of a 2023 property assessment of value.

The airport on basic direct operations not counting runway maintenance or major capital expenditure takes spends about $250,000 per year and collects only $164,000 per year operating at a direct loss of a minimum of $86,000 per year loss. Add other indirect expenses and the airport loss per year increases.

The city pays for two leases at $130,000. Grants are not included in operating budgets as they are specific and typically for FAA mandated improvements.

State grants are competitive and require local matching funds of which the city doesn’t have due to the airport operating in a deficit, per staff.

Staff further explained that areas of the airport such as the apron of which the city is required to maintain is not being maintained properly and is cracking and sinking due to a lack of funds and the deficit in budget. Staff explained they are trying to make do using a 5 year plan that is outdated and 10 years old, “with little progress made.”

The agenda was a bit fuzzy on what was being voted on. The agenda item for May 28th was a technical vote on ordinance language and mechanics. The technical motion passed 5 to 2 with Rardin and Burnett opposed.

A June 25th meeting of the commission will host a fee schedule discussion and debate.