At the end of Montgomery Aviation's 40-year contract with Hamilton County, which runs out in 2043, the county is required to purchase the buildings at their appraised value. In addition to the 40-year contract, the county has allowed Dan and Andrea Montgomery, the owners of Montgomery Aviation, to build the home in which they live on the airport's grounds. The county also has a contract with Dan Montgomery to serve as the airport's manager. If the county replaces Dan as the airport manager, it is required to purchase the Montgomery's house. In addition the maintenance and fuel operations, Montgomery Aviation also operates a flight school at the airport. Montgomery Aviation has a couple dozen full-time employees and about a dozen part-time employees.
Montgomery Aviation now has another proposition for the Hamilton County Council. It wants the county to pay nearly double to purchase the airport hangar and terminal buildings out of which it operates what the county paid to purchase the entire airport 10 years ago. That's right. They are asking Hamilton County taxpayers to pay them now $8.4 million to purchase buildings it agreed to maintain and improve under its 40-year contract with the county, which is already kicking in an additional $300,000 annually to Montgomery to subsidize maintenance of the airport.
Dan and Andrea Montgomery complain that they can't afford the interest rates banks are charging them on the money they've borrowed for their operations at the airport. In other words, they are going broke and want a bailout from the taxpayers in neighboring county. According to the Star's Dan McFeely, there are more than enough fools on the Hamilton County Council to go along with their proposition to fleece the county's taxpayers. The argument is that Hamilton County can float a bond to pay the obviously inflated price for the buildings to bail out Montgomery Aviation and make what was already a sweetheart deal with the company even sweeter.
McFeely feeds us the typical made-up dribble about economic impact that makes the additional investment critical. The Aviation Association of Indiana produced a bogus report claiming the small airport has an annual economic impact of $430 million and supports nearly 2,400 jobs. In 2009, the same association produced a report that claimed the airport had an annual economic impact of $88 million. Yes, during the worst economic downtown since the Great Depression this airport's economic impact we are led to believe grew from $88 million to $430 million. The airport's primary benefactors are a handful of wealthy corporate executives who live in Zionsville or Carmel and don't want to bother with the hassle of parking their corporate jets and commuting twenty miles to and from the Indianapolis International Airport.
The airport's other primary benefit during the past several years came when the city of Indianapolis hosted the Super Bowl. Everything is about the Super Bowl, right? Hamilton County used a $3.4 million grant from the federal government intended to help the national economy recover from the Great Recession to rebuild and extend its runways in preparation for the 2012 Super Bowl. "During the 2012 Super Bowl, it had nearly 60 aircraft on the ground at game time and another 80-plus drop-offs and pick-ups over the course of the weekend," McFeely writes. He also says that it was the primary airport used by PGA golfers when they flew in on their private jets to play in the 2012 BMW Championship at Crooked Stick golf course in Carmel. Hamilton County plans to spend more money in the future to extend the runways even further so it can reclaim the longest runway honors from competing Mount Comfort Airport in Hancock County.
There is only one council member who apparently is thinking with his head or at least looking out for the taxpayers. Rich McKinney appears to be making a losing argument that Montgomery Aviation still has 30 years left on its contract with the county. The proponents of the deal naturally point to the investments made by the Montgomerys, which have made it a "world-class facility." There's that favorite buzzword that always appears whenever there is a discussion in Indiana about tapping taxpayers to subsidize the businesses of favored private business owners.
McKinney has the right idea. If the Montgomerys are truly having problems repaying their lender for the money they've borrowed, then the county should simply let the bank foreclose on the buildings and buy the buildings up on the cheap instead of paying a grossly inflated price to the Montgomerys to purchase them now. “I’m not wishing the Montgomerys to go under, but this is business,” said McKinney. “I am trying to be a good steward of the taxpayer’s money. It just doesn’t seem right, doesn’t feel right.” Andrea Montgomery tells McFeely their motivation in selling the buildings to the county now is to take advantage of lower interest rates in the bond market and "the uncertain future value of the buildings." Obviously, the latter is a greater concern. Who else is going to be in the market to buy the buildings at the end of their 40-year contract besides the county?
So what happens if Hamilton County is dumb enough to pay this inflated price of $8.4 million for the buildings? Montgomery Aviation will pay $420,000 annually to the county to lease the buildings, but that's at least $100,000 less than what annual bond payments will run. To make up the difference, the county says it will reduce the annual subsidies it offers to Montgomery Aviation to operate the airport, which are currently running at about $300,000. If you do the math, Hamilton County will wind up paying out at least $12.5 million to purchase the buildings after factoring in interest payments on the bonds. Presumably, the buildings will probably require substantial improvements before the bonds are paid off.
UPDATE: An alert reader spotted the fact that the economic impact estimates put out by the Aviation Association of Indiana for the airport comes close to matching the economic impact tourists to the Grand Canyon have annually according to the National Parks Service:
“In a report earlier this year, the National Parks Service said the canyon’s 4.3 million visitors a year spent more than $467 million and supported 7,361 jobs in Arizona in 2011, the most recent figures available.”The reader writes: "So you see the Boone County Airport is very similar to the Grand Canyon in terms of economic impact. It seems the Hamilton County Council just wants to make it a 'deep hole' also."