Other Views

Users should pay own way at Beaufort County airports

Passenger volumes at Hilton Head Island Airport are down 48 percent in the past five years.
Passenger volumes at Hilton Head Island Airport are down 48 percent in the past five years. File photo

Via speeches all over the Beaufort County, we are being led to believe that our two airports are self-sufficient, and are financed with revenue bonds. Both of these statements are incorrect and misleading.

While our airports currently are able to pay their ongoing operations bills, County Council is bailing them out with large back-door loans and contributions from the general fund to cover their capital and other costs. At the end of 2001 the airports owed the general fund only about $100,000. By Dec. 31, 2015 this has ballooned to $5 million, with possible additional growth to $10 million in coming years. Chances of repayment appear slim. Is this self-sufficiency?

There appears to be a deliberate and shabby effort to camouflage financial reality. If a corporation or stock analyst did that, they would be fined by the SEC. I think that at least an ethics complaint is in order here.

Put into perspective, the $5 million current IOU’s are equivalent to a 17-month delay in the new 2-mill property tax increase the county now wants.

County Council may feel that these loans, some of which pay no interest, will eventually be repaid via airport revenues from new passenger business. But passenger volumes at Hilton Head Island (a major revenue source) are plummeting, down 48 percent in the past five years, to an average 105 passengers per day each way in 2015. Savannah and Charleston, with more flights to more locations, had 27 and 45 times Hilton Head’s passenger volume, respectively, in 2015, and their lead is accelerating.

This is happening all over the country. Commercial service at small airports is being subsumed by nearby larger airports that can aggregate more customers to support more routes and carriers. Pinning repayment of airport loans on expanding commercial service on Hilton Head is a very high-risk venture, at best.

But our massive expenditures will likely provide two very nice private airports (without the ability to repay their back-door loans from taxpayers). Perhaps that is the goal.

In a real business, or even a Junior Achievement business, stockholders and bankers would insist on business plans to show loan needs and repayments under various customer forecast views. Why doesn’t County Council have business plans to show how it will repay our loans to these two airports? I suspect the reason is that an honest plan would expose the bleak picture for repayment of the funds silently being taken.

On March 9, I provided a 40-page report to County Council showing projections of cash removed from the general fund and repayment prospects for both airports. I hoped that this would kick-start the development of county business plans and catalyze a quantitative dialog including local experts to evaluate taxpayer costs and risks. There has been no response in two months.

If County Council really believes that these massive expenditures, including a planned new $10.75 million passenger terminal, will improve business and pay for itself, they owe us business plans to prove this. If they want to proceed on faith, council should set up funding via revenue bonds so that those who agree with their view can risk their own funds instead of forcing taxpayers to risk theirs on a poorly planned, risky long shot. That might even speed up expansion.

This can be repaired.

The airports should pay for themselves as we were told they did. Hidden bailouts from taxpayer funds should be repaid. Fees need to be raised to cover all costs. Users can afford this.

Full and honest reporting, including business plans, should be provided to taxpayers.

Revenue bonds should be used to finance airport construction so that advocates and beneficiaries can risk their own funds. Other airports use this method.

If tourism rewards are claimed, make a case to get accommodations tax, hotel or Chamber of Commerce funds.

Airport users should pay their own way, just as drivers do on the Cross Island Parkway and visitors do at the Sea Pines gate.

Steve Baer of Hilton Head Island is a former member of Beaufort County Council.

Related stories from Hilton Head Island Packet