Leistiko/Financial PictureDecember 7, 2009
TO: Jane Howington, City Manager
FM: Fred Leistiko, Airport Manager
It appears Wade Elder is attempting to put together some sort of financial picture for the airport.
I am sure he is doing it under your directive. However, he is going through old files and leases
that are either void or not active trying to establish this financial structure for the airport. I know
how difficult that can be since I spent months trying to straighten out the records when I took
over the airport operations. The financial history was non-existent when I was hired to take the
airport position. If I knew what you were trying to establish, maybe I could be of assistance.
Last week Wade asked me why a certain client at the airport had not paid on his lease since 2006
and what had I done about it. I told him to show me what he was talking about. He produced a
2006 lease that was fully negotiated, however he did not read the lease to find the clause that
stated, "If a structure was not commenced on the leased premises within one year from the date of
the lease, the lease was null and void." This policy was established to stop lessees from leasing
building sites and then holding the building site for a sub -lessee to come by and pay them a higher
price for the site. We did not want people tying up all the leases at the airport with no hangars
being built. Hangars produce tax revenue for the City and lease payments for the airport.
I know it is difficult to establish accurate financials when you are not familiar with how the
establishment operates. As you know, by their nature, Enterprise Funds are basically not -for -
profit enterprises and as such, trying to establish a profit picture or a return on investment is
difficult to do and could ultimately misrepresent what the Enterprise Fund's mission is.
As you know, an airport provides a service to a community and is not designed for or expected to
be a profit generating business. The explanation to the public as to the highest and best use of the
land should be the same argument we use to explain why we have beautiful property along the
river that functions as our golf course, or well maintained property that functions as our parks, or
structures that we own that function as art museums and historical museums. Why do we give
Depot Park to the Chamber of Commerce for a dollar a year? Why do we tie up land for a skate
board park or a swimming pool, etc.
I told Wade that GPI is not a profitable airport. If it weren't for the federal funds provided by the
FAA and the funds provided by the mil levy, it couldn't make it. If Kalispell City Airport were to
receive the property taxes it generates and the fees it generates, it would be a profitable venture.
But it doesn't receive the taxes it generates, just the fees it generates and that is not enough to
make the capital improvements needed on this property. That is where the FAA comes in. True,
part of the airport managers salary comes from the property taxes that go into the Tax Increment
District, but that is in exchange for the property tax money that does not go into the airport
Enterprise Fund like the Sewer and Water Fund and the Street Funds.
Sure, the airport generates millions of dollars in economic impact, but that does not put any
money in the airport's reserve account. The City is the benefactor of all that, that's why you
have an airport.
If you would let me know what your objective is, maybe I can help achieve it. I understand why
you want me to temporarily take a back seat publicly when it comes to the airport, but I am
confused as to why I am not expected to participate as part of the team behind the scenes to
prepare the Council and the public to understand the airport operations and future development.
This is especially confusing when I am the person on the staff that is most knowledgeable in the
airport's operations and development. I do use legal, finance, planning and development in the
process of trying to build our future airport. But, independently, they don't have the big picture.
Do we need to talk about all this?
Fred