Editorial | Cleared for Takeoff: Horry County airport purchase looks savvy
03/21/2013 8:13 PM
03/21/2013 8:15 PM
When you weren’t looking, Horry County bought an airport.
Or, to be more accurate, the county took back management of one it already owned. In February, County Council signed off on a plan to buy back the last seven years of the lease on Grand Strand Regional Airport in North Myrtle Beach. It wasn’t clear exactly what the purchase price was (county staff were still looking that up for us at press time), but the number floated in previous meetings was $800,000. Good move? We won’t know for sure until a few years from now, but at least on paper it seems so.
The owners of Ramp 66, which has run the small airport since 1978, have been looking for a few years to retire and get out of the business, but hadn’t been able to find any buyers. Why? Primarily, county Airports Director Mike LaPier said, because the FAA wouldn’t allow the county to extend their lease. And nobody was interested in putting in the effort to take over a business that was only going to last another seven or eight years. “It really isn’t a marketable commodity,” LaPier said at an August meeting of County Council. So Ramp 66 turned to the county for help.
If they can’t find a private buyer, what makes it a good deal for the county? An independent assessment of the business’s financials and a going-over by county staff attempted to answer that question. So how does the county benefit? Economies of scale, for the most part.
The county Department of Airports already has contracts in place for fuel and hangar services, for instance, and will be able to add this airport to those contracts at a lower price than the current owners were paying. The county will also be able to take advantage of “much reduced liability insurance” offered to governments by the state. Other changes, such as jettisoning the money-losing car rental service, would also save money, LaPier said. The net result? Instead of receiving about $140,000 a year from the current lease, the Airports Department expects to make about $409,000 a year maintaining almost exactly the same operation that’s already in place today.
It’s important to note that none of the purchase price is coming from Horry County taxpayers. Whether the takeover is a success or not – and a success seems more likely – taxpayers won’t be out any money. The Airports Department, while a county agency, is entirely self sufficient and relies on user fees and state and federal grants for funding. The money to buy back the lease, for instance, is coming from the recent $2 million sale of some airport land.
The expected boost in revenue once the county takes over – about $270,000 more a year – will be used to upgrade the airport, whose facilities are beginning to show their age, LaPier said, as well as perhaps develop a new marketing plan to attract new users. Combined with the rest of the money from the land sale and a $3.2 million federal grant, LaPier expects to put almost $5 million into the airport in the coming years. And all without borrowing a dime.
The infrastructure improvements need to be made if the facility wants to remain viable and marketable, airport officials have said. The only question was how to pay for them. “The real beauty of this deal,” LaPier told County Council, “is that it gives us the opportunity to address the infrastructure needs of the airport, particularly the hangars, and do so without impacting the debt capacity of the airport, which then translates to the debt capacity of the county. If we were not to do this, we’d have about $2 million of investment that needs to be done on that airport to bring it back up to a good level of condition. Without doing this, we’d have to be looking for that $2 million somewhere else.”
But by taking over the airport, for at least the next seven years, those improvements can be paid for through the increased revenue the county expects. And when 2020 comes around, the county can then decide whether it wants to keep operating the airport or lease it out to another operator. At least that’s the plan.
Will things turn out quite so rosy as LaPier and the county are hoping? Only time will tell. But it seems a workable proposal on paper, and we certainly wish them the best.
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