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Financials show Air Center losses

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City Auditor Juan Fuentes is working to separate city revenues and expenses from air center income and expenses in preparation for the possible creation of a regional air authority to govern the Roswell International Air Center. (Lisa Dunlap Photo)

The Roswell International Air Center has been recording net losses most years since 2010 and the city of Roswell has been subsidizing its operations, according to information provided to the city’s Airport Advisory Commission at its Thursday meeting.

But the financial data is not exactly black and white, city staff said, because current accounting methods still mingle city and air center assets, funds and costs.

City Manager Joe Neeb and City Auditor Juan Fuentes presented an update on the financial situation of the air center, especially in the context that many questions remain about how the air center can operate independently under a regional air authority, as authorized by recently signed legislation.

“If we look seriously at an authority and we try to make that work, we need to know which chips stay with the city and which chips stay with the authority,” said Neeb, referring to assets and financial funds as well as costs and expenses. “The authority itself can work, so it really is trying to figure out how do we make it work, how do we make it function.”

A complete “separation” report is not expected to be ready for city staff and city councilors until June, with many legal and organizational issues still to be answered, such as the exact boundaries and property that would be part of the air center should it operate independently.

In his comment at the meeting, Fuentes indicated that both aeronautical revenue and non-aeronautical revenue have been increasing since 2010.

The 10-year growth has been 18 percent for aeronautical income and 21 percent for non-aeronautical. The 2019 budget, which ends in June, is expected to see total aeronautical revenues of $1,245,790 and total non-aeronautical revenues of $1,873,696. But net income, when not considering such items as grant activity, passenger facility charges, interest income and fund transfers, has been in the red all but two years since 2010. For 2019, the net loss is at estimated at $3,897,897.

“Not to be alarmed because a lot of that is capital improvements and projects … and some of the insurance projects for repairs,” Fuentes said, indicating that the city’s current accounting methods do not always separate air center project costs and insurance revenues from other city project costs and revenues.

“That’s why I say there is still more work to be done to understand what is going on here,” he said.

He also explained that understanding the financial situation is complicated by the use of different accounting requirements by the Federal Aviation Administration and the New Mexico Department of Finance and Administration.

Given current accounting methods, the city is projecting that it will provide about $1.05 million more in services and resources to the air center for fiscal year 2020, to begin in July, than the air center will pay for.

While some of those resources and costs include public safety and administrative support to the air center, the analysis also has to do with how water and sewer revenues and costs are determined.

Currently the airport does not pay the costs for improvements to the city water and sewer systems, but the city also has not been paying the air center for its water rights, either. Fuentes’ report recommended that, in the future, all water and sewer revenue would go into separate enterprise funds and that a method of compensation would be established to pay for air center water rights.

In additional topics covered during the meeting, commissioners and city staff discussed possible building projects, with further talks expected during upcoming meetings.

• Building 72, currently leased to a tenant, had about a third of its roof damaged during last week’s windstorm. City staff will do further cost and facility analysis to determine whether to repair the roof and do some other structural upgrades for about $40,000 to $50,000 so that the building can continue to serve for another 20 to 25 years, or whether to spend $200,000 to $300,000 to demolish the structure to give the air center more options for future buildings.

• The city also is considering whether to build a new tear-down pad for the dismantling of airplanes by companies at the air center involved in maintenance, repair and parts sales. City staff said a new pad away from the airport ramp is recommended both for aesthetics and for safety. The cost is estimated at about $500,000, with questions about whether the city should build the pad and rent it out or whether private companies would build it either for their own purposes or to lease.

• The air center needs new T-hangars for private planes, with possible locations identified in master plans. A couple of commission members said that they think the hangars should be privately funded and that the city’s role is to provide designs and a site for private investors to build them.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.