[JYO] Airport Financials Grab Council's Attention; Budget Hearing Set For Tuesday

 
Airport Financials Grab Council's Attention; Budget Hearing Set For  Tuesday
By Molly Novotny(Created: Thursday, March 22, 2007 8:42 AM  EDT) 

    
Revising the accounting of Leesburg Executive Airport's financials was just  
one of the ideas council members touched upon during Tuesday night's budget 
work  session, the fourth in a series of meetings held in anticipation of next 
week's  public hearing.

Rather than having the airport enterprise fund's pro  forma perpetually show 
a deficit, Councilman Kevin Wright asked if the asset  depreciation could be 
offset.

Because the town owns the airport, it is  responsible for its assets, which 
measure in the millions of dollars. These  assets depreciate, and the town 
reflects this in the pro forma, which Wright  said doesn't need to be the case. 
Because depreciation does not require a cash  expenditure, Wright said it does 
not belong on the cost statement, as is  currently done, but rather on a 
balance sheet.

From a day-to-day  operating budget, the Airport Fund is making money, 
bringing in $165,416 in  FY2006. An estimated $185,262 gain is expected for FY 
2007 
and $235,425 is in  the FY 2008 proposed budget.

Noting the operational gain, Airport  Director Tim Deike said the problem is 
in non-operational costs. As the airport  builds its assets, it also builds 
its deficit, he said.

Many improvement  projects, such as the runway rehabilitation and Integrated 
Landing System, are  primarily funded through the Federal Aviation 
Administration. The entire  depreciation of the projects is assigned to the 
town, said 
Finance Director Norm  Butts. Depreciation is ongoing while the grant the town 
receives for the capital  project is one-time revenue, Wright said.

"It seems we're artificially  increasing the loss number," Wright said. In FY 
2006, the Airport Fund  depreciated $663,465; $705,463 in depreciation is 
budgeted for FY  2008.

Butts said the town was following General Accounting Principles by  counting 
the depreciation as an expense in the Airport Fund's pro  forma.

"So won't you always be in the hole then?" asked Councilwoman  Kelly Burk. 
The answer: Yes.

"You will never get out of this hole, ever,  as long as this airport exists," 
Deike said matter of factly.

A  non-operational funding shortfall that Wright said does need to be 
accounted for  is the bond payment. Unlike depreciation, which doesn't cost the 
town 
cash,  Wright said Wednesday morning, "We are writing a check for debt 
service; so we  do need to close that gap."

Town Manager John Wells told council members  he and Butts have been 
discussing whether the Airport Fund could be switched  from an enterprise fund, 
which 
is supposed to be self-sufficient, to a special  revenue fund. Depreciation is 
not counted as an expense in a special revenue  fund, Butts said. The balance 
sheet would still account for depreciation, so it  continues to affect the 
bottom line, Butts said, but it affects it differently.  

Although council members noted the airport's revenue-generating  operating 
fund, they learned it could be much more beneficial if longstanding  hangar 
contracts had been written to escalate annually.

The Condo  Association, which has a lease through 2012 with a 10-year 
renewal, pays $7,500  a year for the 50 hangars, Deike said. Former fixed-base 
operator Jim Haynes  negotiated that contract in 1982 for an annual rate of 
$4,320 
with rate  increases every five years.

For the same number of condos, Deike said,  today's market rate would 
generate $5,800 a month or nearly $70,000 a year.  After asking for Deike to 
repeat 
the discrepancy between market rate and what  the town's outdated contract is g
enerating, council members were essentially  speechless.

In other discussion about Wells' proposed $108.7 million FY  2008 budget, 
council members spent time discussing the contractual services  components and 
focus of the planning and economic development department's  budget.

Wright asked if the economic development's reach was too broad,  recognizing 
that its budget has increased about 10 percent a year while  
business-generating revenue, such as business professional and occupational  
license fees, have 
not kept pace.

"We're also being asked to do more.  Economic development as a field has 
changed in scope tremendously" in the past  decade said director Betsy Fields. 
"It 
would be really hard for us to stop doing  anything that we're doing for 
downtown" or cut back on its new initiatives, she  said.

Reid, Wright and Councilwoman Kelly Burk asked if the economic  development 
department had statistics to detail how many businesses it had  retained or 
attracted.

"I can't tell you specifically that we were the  reason that any one business 
came here," Fields said, adding that she does work  with developers and 
potential tenants as they search for space and throughout  the process. One of 
her 
biggest constraints is the town's low vacancy rate,  Fields said, which limits 
her ability to attract new businesses.

Reid  took the opportunity Tuesday to ask a series of broader policy 
questions not  just specific budget questions, asking how the town is 
implementing its 
small  business forum, whether Fields' department should become involved in 
the Board  of Architectural Review and whether it should limit its focus.

Turning to  the planning department, Reid asked whether the town really 
needed its own  zoning ordinance, suggesting it could duplicate the county's or 
at 
least some  parts of it.

Planning Director Susan Swift said the town had its own  specific goals that 
its ordinance addressed and advised against throwing out the  town's legal 
document.

On Wednesday, Wright further enumerated why the  town needed its own 
ordinance.

"The county is a much broader area; they  paint with a broader brush. The 
town is a town, it has more urban environments;  we paint with a finer brush" 
and 
the ordinance needs to be reflective of those  goals, he said.

The council meeting begins at 7:30 p.m. Tuesday. The  budget public hearing 
is one of the first items on the agenda.
 
_http://www.leesburg2day.com/articles/2007/03/23/news/fp9933lbudget032107.txt_
 
(http://www.leesburg2day.com/articles/2007/03/23/news/fp9933lbudget032107.txt) 






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