By Collin Brooks
The sequential funding runway is being laid for a 160-acre Aerospace Park at the Tri-Cities Regional Airport and the first draft of the financial documents were presented to the Washington County Commerce, Industrial and Agricultural Committee on Thursday, May 4.
No action was taken on the documents, besides things that commissioners and Washington County Mayor Dan Eldridge wanted changed. Most of the conversation was used to commend the entities for coming together and the airport authority for their diligence in getting the plans together.
But the document also gives the public the first look at the proposed funding strategy that was just recently made possible by the passing of legislation a couple of weeks ago that allowed the counties and cities to issue their respective general obligation financial commitments for the purpose of supporting the Airport Authority and the financing of the Aerospace Park Project.
When the 160-acre park is done, it is expected to bring 1,500 to 2,000 jobs, but it will also help in other ways, according to Mark Canty, director of trade and business development for the Tri-Cities Airport.
“It will lead to an increase in quality of life in the area; it will increase the tax base and it will be overall a great impact for the region,” he said.
Those feelings are why five local governments are taking the captain’s chair on making sure the deal can happen. The financial commitments have been relaxed a bit, after the Senate passed an amended budget from Governor Bill Halsam on Monday. It will still need the governors approval. That means that the state will contribute $8.5 million toward the project. That means the local communities contributions will be cut in half.
Before the Senate passed the budget, the proposed breakdown were divided by population, according to Eldridge, which meant that Sullivan County will contribute the most at $4.851 million and Washington County and Johnson City will each contribute $4.050 million. The city of Kingsport will contribute $3.366 million and Bristol will contribute $1.683 million. That would have made up a local contribution of $18 million, now though, the local governments will only have to contribute $8.5 million to match the state’s portion.
The FAA has already approved $3.5 million for the project.
The $20.5 million project will provide pad ready sites, including all utilities, roads and runway access ready for companies to move to and it is unlike anything in the state of Tennessee according to Washington County officials.
The CIA Committee was the first of any entity to see the documents, but Eldridge said the other bodies should be seeing it in the coming weeks. Washington County Commissioner Lynn Hodge said he hopes they will approve what they see and be as excited as he is for it.
“Hopefully all five entities will chose to participate and it will provide East Tennessee one of the greatest opportunities that we have ever had to invite business industry and manufacturing industry into the Tri-Cities area,” Hodge said. “There is no other opportunities available like this.”
He said that all of the parties have the same common barrier when attracting businesses, and that is the difficulty in trying to sell pastures to companies that are ready to move.
CIA Chairman Todd Hensley said he thinks each party will see the long range benefits of a project of this magnitude, if they already didn’t, he said, the agreement wouldn’t have even been drafted.
“This is almost a real, almost, watershed moment,” Hensley said. “Because when else in your memory have you gotten those four governments to work together on really anything.
Hensley said the airport authority is huge for this area and he commended the organization, which he has served on for three years, for their forward thinking.
The economic potential for the region just doesn’t come in job creation. Hensley said it will also drive air traffic numbers up. Hensley said the airport is on the cusp of receiving service to Houston and Chicago. And a few large companies in the area could push the number over the top to make that a reality.
“It could just snowball and effect a lot of things that we aren’t even thinking of right now,” Hensley said.
While no action was taken, Eldridge said he wanted to make sure to go ahead and get this moving, because it was only going to gather speed through the coming months.
“I wanted to go ahead and get this in front of you, because even though it has taken years to get to this point, it’s really going to pick up speed now,” Eldridge said, “with the expectation that this summer the five governments will hopefully all agree and sign off on this. So I thought it would be good to start looking at it and be familiar with it and talking about it.”
Hensley said that his guess is that once the entities have committed the funds, then the airport will look at being able to borrow the needed money and move the project.
The hope and expectation, Eldridge said, is for the five participating entities to have fully executed the agreement by August. If that were to happen, he noted the airport will issue the contract with final design and the expectations that they will be ready to bid the project by early next year.
After the bid, the bonding of the project would follow to provide the source of payment. Then the contract would be awarded with expectation to break ground in May of 2018.
The committee heard a vague funding strategy from Eldridge in which he mentioned funding the project in cash with a one-time revenue source that the county will be experiencing over the next five years. While he didn’t describe or mention what that revenue source would be, he seemed confident it would be plenty to fund Washington County’s portion.
“If Washington County were to utilize that one-time funding source that we are going to have, then we don’t have the guarantee obligation going forward,” Eldridge said.
The county could pay in annual payments for four years, Eldridge said, in order to match the one-time funding the county is receiving. He said the budget committee would hear more about the funding strategy during there meeting on Wednesday, May 10.
“We’ve got a source of revenue coming in for four years, that could be designated specifically for this purpose,” said Eldridge, confirming it would be a new source. “But it’s one-time money, it’s not recurring. It’s recurring for five years, but we would have to use four years of it to make this investment.”
That would help the county recover their investment according to language they wanted included in the final version of the Intergovernmental financing agreement.
The revenue generated from the project is supposed to go back into the development fund to retire the debt, but there is one exception, Eldridge said.
“Unless one of those entities has fully funded their contribution. In that case, that entity would receive its pro-rata share of those revenues back,” Eldridge said. “Which leads to the opportunity for Washington County to structure its investment in a different way.”