By Vicki Hillhouse, April 24, 2015, Walla Walla Union Bulletin
Air travel may be soaring at the Walla Walla Regional Airport, but when it comes to revenue and margins the operation could use a little more stability, officials say.
Although the facility isn’t in financial trouble it doesn’t generate enough revenue to build a sizable reserve and also have the excess funds on hand for all of the basic projects, Port Executive Director Jim Kuntz said Thursday.
So to build both, everything from rental rates at the Airport Industrial Park to fees for making copies could be on the rise.
Port commissioners on Thursday examined a draft proposal from Port and airport administrative staff that would raise most rental rates and fees for the first time since 2013.
Initial increases of 5 percent for building leases, plus jumps in water and sewer rates, storage leases, conference room rates, hangar leases and terminal building leases are part of the proposal. Even Alaska Airlines, whose fees were cut in 2012 as a retention measure, would see a restoration of some of its landing fees and rental rates under the draft.
No official decision was made Thursday. But in the roughly hour and 40 minutes or so that commissioners discussed the draft proposal covered what they want to have in reserves — at least $500,000 — and an operating margin target of an eventual 20 percent.
With margins hovering closer to 5 or 6 percent annually, commissioners and staff acknowledged the process will take time.
Tenants will be notified of the draft. Port commissioners expect a May 12 public hearing on the matter, followed by a vote to take place May 28.
Kuntz said examples of projects the agency didn’t have extra funds for this year included replacement of carpet in the terminal building and painting the incubator facilities.
“We need to grow our margins, and it’s going to take time,” he said.
Commissioners generally agreed with an initial 5 percent increase for building leases and some of the other rates. However, they disagreed with the idea of continuing 5 percent increases annually over the next five years.
That rate would generally be more than the Consumer Price Index, Commission President Ron Dunning pointed out. Instead, commissioners favored annual increases over the next five years of 3 percent.
The actual costs vary greatly because the Port leases out everything from buildings with concrete floors to wood floors and with varying amenities from loading docks to air conditioning.
Commissioner Mike Fredrickson said the increases could be looked upon favorably by Port critics as costs move more in line with the private sector and reduce the perception of government competition. However, it could also upset tenants who could potentially see spikes in leases, water and sewer rates all at once.
“This doesn’t come without its challenges,” Fredrickson noted.
At the same time, he said part of the focus is to be the first step for many businesses getting started before they’re able to grow and either buy or build on their own.
Dunning pointed out that another way to reach the goal of building reserves and revenues would be to cut back on the spending side.
Lease and fee increases were frozen by the Port in 2013 during the economic downturn, Kuntz pointed out. With economic recovery and more needs at the property, it’s time to set larger quantifiable goals for the airport.