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Ithaca Tompkins Airport

When Governor Andrew Cuomo came to Lansing in May of 2018 to announce that New York State would be contributing $14.25 million, the airport was looking at a $24.7 million expansion and modernization project.  Early this year U.S. Senator Charles Schumer secured a $10 million grant, which seemed to fully fund the project.  Today the total stands at about $34 million, which means the airport has to come up with another $10 million.  Airport Manager Mike Hall says that none of the project cost will come from local (County) taxes.  Instead, a fee charged to the people who fly commercially will pay the additional money.

"We are allowed under a program called Passenger Facility Charges to charge the traveling public $4 a person," Hall says. "Not a huge amount of money in the grand scheme of things, but it adds up every hundred thousand people. The good news about this is it's a fee. A fee is a sort of a tax, but it's a tax on the people that are using the facility. It's a user fee, which is easier to justify than a County tax, countywide general income tax. I don't know how many people in the County travel by air, but it's no majority of them."

Why has the project cost gotten so high?  Hall says that it is not because of cost overruns, but because the scope of the project has grown.  He points out that the airport enterprise unit is responsible for all the costs, not Tompkins County tax dollars.  And he notes that the money is being spent in Tompkins County, which is a boost to the local economy, as will be the expanded airport when the expanded sections officially open after Thanksgiving.

Hall explains that the project originally came about four years ago when it became apparent that  having the TSA checked baggage screening device on the passenger side of the airline counter instead of behind of the ticket counter wall was awkward, given the new post 9/11 security regulations.

"While we were compliant with security requirements throughout this period, that was very awkward," Hall explains. "It's not the way it was intended to be laid out. So we had a project early on to fix that. And at first it was five or six million to fix it.  And then it got up to around $8 million to fix it."

The project could have been bonded, but then Governor Cuomo announced that five upstate airports would share $200,000 -- $40,000 each -- to be expanded and updated.  Rochester, Syracuse, Albany, and Elmira were chosen.  Ithaca's proposal justified the airport expansion because of an economic development expansion. Hall and former Chamber of Commerce President Jean McPheeters  had been working on a plan that would accomplish both with the airport expansion as one of two major elements.  The second was to move the New York State DOT facility away from prime commercial land on the lakefront.  So when the Ithaca-Tompkins Airport was chosen to be the fifth recipient, the larger chunk went to move the DOT facility, leaving $14.25 million for what was expected to be a $24.7 million airport project. 

Ithaca-Tompkins AirportThe new translucent arched canopy is under construction. When completed it will need very little maintenance -- none on the steel structure, and a possible fabric replacement cost after many years.

Hall says part of the plan was to bond $3 million, bringing the total up to $27 million.  That would have been enough, but in the rush to meet a deadline the Governor had set as a condition of receiving the $14.25 million that the whole project must be completed by the end of 2019, the project kept growing.  At this point the project was a finite number of changes and expansions to the terminal, a new customs facility that would turn the regional airport into an international airport, and the new DOT facility across Warren Road from the airport.  But other changes were made.

"One thing that changed was we had a legacy canopy out front, which architecturally matched the terminal," Hall says.  But it had sheet rock outside and it had been around for 25 years. And the Governor's office said that they would like to see it replaced with a translucent arched canopy. And we said, okay, you gotta give a little bit in order to get.  Two and a half, three million. And, frankly, this new canopy will be brighter.  Now 27 becomes 30."

Airport Project Cost Timeline

Project Scope   Total Cost
Four years ago   $8 million
Upstate competition to receive $40 million for airports and Ithaca-Tompkins puts in for $34 million.  Ithaca-Tompkins is the fifth of five airports to receive the funding, but about $20 million of that is earmarked for moving the DOT off the waterfront, leaving $14 million for the airport.   $14.2 million
The airport needs about $24 million.  The federal government awards $10 million   $24 million
Part of the plan was to bond $3 million   $27 Million
The state grant is announced, and now estimates have to be adjusted to real pricing in order to make the December 31 deadline.  The Governor's Office wants a translucent arched canopy, which will cost $3 million   $30 million
With the gas moratorium, ground source heat pumps are needed.  That's another $3 million.  Phase 3 raises the cost for two major reasons.  First, federal tariffs on importing building materials significantly impacts the cost of materials needed.  And because the project must be finished before the end of 2019, the airport is now in competition with other projects in the area, which raises contractor prices.   $34 million

While it has been Hall's goal to make the airport a green energy facility, the natural gas moratorium on Lansing has somewhat forced the issue.  The cost of ground source heat pumps that would replace most of the gas heating brought the total up, and getting Phase 3 of the project done in time meant higher contractor costs, because there are more projects county-wide at this time, so competition for obtaining contractors raises their price.  And then there are the tariffs Washington has been imposing on China's and other nations' imports to try to force them to make the trade balance more favorable to the United States.

"The international trade war has not favored us at all," Hall says. "The steel and other sorts of things. If you'd budgeted a year ago, it would have been this big (makes a small distance between his hands) and now it's this big (a much larger distance). So, so I think overall it's about where we want to be or where we planned to be. When we're done and we're in good shape for another couple of decades."

Ithaca Tompkins Airport Expansion

The Passenger Facility Charge (PFC) has been one of the fees attached to airline tickets for years.  Currently it is $4 per ticket.  The airport typically sees 100,000 commercial passengers coming through the airport, which would generate $400,000 per year.  Hall says that there is a chance that it will be raised to as much as $10, which would bring in about $1 million a year, which would pay off the project much faster.

"So that's part of the calculation of, 'gee, we're right up against our bonding limit'. We don't want to be paying for this forever, because the, one of the things you look at when you're running a business is return on investment. And the return on investment of 20 plus years is not where you're normally want to be on a facility. You want to be down closer to 10 years. So that will happen if the PFCs are raised and our traffic continues and we have no reason to think -- being in the one economic hotspot in all of upstate New York growing 2% a year -- that we will see other than greater PFC revenue in the future."

The PFC is only one of the ways the airport bring in revenue.  Both commercial and general aviation planes are subject to landing fees, for example, and the airport makes some money on fuel sales.

When the customs facility opens next year there may be a need for a foreign trade zone warehouse, which could also be a source of income.  The way that works is that a company such as Borg Warner may need to have parts on hand to meet orders they can't predict.  But they don't want to pay import fees until they know they will be using the parts.  They order the parts, but they are stored in a foreign trade zone warehouse on the airport property.  The customs agent can clear this inventory when he has free time from incoming international flights so it is ready to go when the company needs it, at which time they pay the fee.

Hall says that the project is on schedule, and while the new concourse may not open right on Thanksgiving, it will be very soon after.  He says the contractors have been doing excellent work, with construction workers who show up on time, ready to work with a smile on their faces.

"All, all the money's being spent in Tompkins County or the six surrounding counties from which 15,000 people drive to Tompkins County everyday to go to work," Hall says. "The last thing is, look, we're not taking any taxpayer money from Tompkins County. Yes, it's taxpayer money from the feds that comes back and, and yes, it's taxpayer money from the state that comes back to the County. The $10 million bond is being paid for by the business unit of the airport, not by the taxpayers from Tompkins County."

Hall insists that the cost of the expansion is not due to project overruns.  If the original project had been realized, Hall points out that it would have been $8 million spent on a terminal that would have been been security compliant, but would have still been a 25 year old terminal with all the things that needed to be updated, which were right at the limit of their useful lifetime.  Instead the county has a much larger and up to date facility that will bring a better experience to air travelers, make the airport a true international airport that will boost the local economy, and facilitate business growth in a county that boasts a good number of high-tech startups, many of them stemming from research at Cornell University.

"We're pretty much in a larger scoped project," Hall says. "We're pretty much right on budget. However, when you're not fully informed about what (actually expanded the scope of the project) you can say, 'Oh gee, you know, they're way over on the budget'. Well, no, we changed the requirements significantly from what we proposed four years ago."

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