Welland will finance the construction of 10 hangars at Niagara Central Dorothy Rungeling Airport, and nine of them have tenants lined up.
The airport commission — its members include elected officials from Welland, Wainfleet, Port Colborne and Pelham — came to the city asking for $600,000 for the project.
At the recent meeting of city council, Ward 4 Coun. Bryan Green asked if the commission had approached any other municipalities that own and operate the facility.
Chief administrative officer Steve Zorbas said only Welland was approached to be the bank for the entire loan.
Zorbas, also the city’s chief financial officer, said the commission presented him with a sound business plan.
“They have a good handle on their tenants and will be able to rent out the 10 hangars. I’m comfortable with it (the loan),” he said.
Welland can finance the loan, with a 3.75 per cent interest rate, over its 15-year period. The total interest expected to be earned is $185,000.
Zorbas said it’s a competitive rate for the city and that staff look at the interest rate of the day, not what it could be years out.
He said the money, coming out of the infrastructure renewal reserve fund, is earning 0.85 per cent right now.
Council heard if the airport commission was to seek a loan from a bank or other commercial lenders the interest rate would be higher.
Zorbas said the hangars will be collateral against the loan.
Green, who was supportive of the loan, asked if there is any concern with the airport being uploaded to Niagara Region.
Several years ago, when Niagara District Airport in Niagara-on-the-Lake asked to be uploaded to the Region, a similar request was made by Niagara Central Dorothy Rungeling Airport’s owners.
“That potential no longer exists. The municipalities rescinded their motions; there will be no change to the governance model,” said Zorbas.
Ward 2 Coun. Leo Van Vliet, one of Welland’s members on the commission, said at least 17 pilots came asking for new hangars.
“Nine people pulled their chequebooks out and already have a deposit down,” said Van Vliet.
He said the influx of pilots comes as other airports close their runways to smaller planes, looking to land larger ones.
Ward 3 Coun. John Chiocchio asked if the airport is privately owned and had questions over the ownership of the hangars.
Van Vliet said the four municipalities own it and the federal government has a hand in it.
“If we shut down the airport, we’d have to sell it back to the federal government for $1,” he said.
Hangars, all of which are full, at the River Road facility are leased to pilots for 20-year periods and are in various stages of their lease.
Council heard the airport does not earn a profit and is searching for a manager to run the aerodrome.
“The aim of the commission is to turn the airport around and make a profit,” said Van Vliet.
Chiocchio asked why only Welland was approached for the loan.
“It was a decision by the commission to go to one municipality so it would be easier with payments, to simplify things,” said Van Vliet.
Chiocchio said he had an issue with becoming a bank and wouldn’t support the request.
Ward 1 Coun. Adam Moote, another of the city’s commission members, said federal funding was sought for the project, but the airport was ineligible.
Like Van Vliet, he said the goal is to make the airport, which relies on funding from each municipality, self-sustainable, and the new hangars are one way to do so.
“We’ve left no stone unturned to increase usage (of the airport),” said Moote.
The airport, opened in 1942 and operated under the British Commonwealth Air Training Plan to train Second World War pilots, has three runways, one of which is grass, and sits on 168 hectares of land.
It’s home to Niagara Skydive, St. Catharines Flying Club, 87 Eagle Squadron Air Cadets, COPA Flight 149, and Accipiter Radar and private hangars.
Though the airport is just over the border in Pelham, where it pays taxes, Welland contributes the most to its operation — 56 per cent of the budget.
Payment is based on the city’s population, and the airport act dictates what percentage each municipality pays, said Van Vliet.
Any funding changes would only come if the airport act was amended at the federal level, he added.
Ward 2 Coun. David McLeod said with additional infrastructure at the airport it will become more of a destination, and added there’s still room to build more hangars.
“This is entrepreneurial, this is clever, this is using our resources, and this ensures we get an adequate rate of return on a loan of $600,000 that is guaranteed,” said McLeod, who was in support of lending the money.
Ward 6 Coun. Jim Larouche, the third commission member from Welland, said it’s a real good opportunity for the airport.
“It allows it to be self-sufficient, and we’re getting more in interest payments than we would. I’m excited to pass this and get the shovel in the ground,” he said.
Van Vliet said the commission was approached by private individuals with the same proposal.
“There were people willing to put up the hangars and rent them out. If we allowed that, they would make a profit on it, not us. We want the profit to come back to the airport to reduce what we all pay,” Van Vliet said.
In favour of the loan were, Van Vliet, Moote, McLeod, Larouche, Green, Ward 1 Coun. Mary Ann Grimaldi, Ward 6 Coun. Bonnie Fokkens, Ward 3 Coun. John Mastroianni and Mayor Frank Campion.
Opposed were Chiocchio, Ward 4 Coun. Tony DiMarco and Ward 5 Couns. Claudette Richard and Graham Speck.
