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Alpena County Regional Airport working toward self-sufficiency

ALPENA — Each year, the Alpena County Board of Commissioners allocates approximately $300,000 to the Alpena County Regional Airport.

This year, it only budgeted a touch over $167,000.

If things go according to plan, that money could remain in the county’s general fund and help reduce a projected $1.2 million budget shortfall the county is facing now.

That’s because, last year, the airport was awarded nearly $18 million from the federal government’s first coronavirus relief package, which officials hope will cover the cost of operations, projects, and the payment of bond debt taken on to help pay for the construction of a new terminal at the airport.

The catch is the county must pay for those expenses up front, then wait for the feds to reimburse the expense.

Often, that takes a significant amount of time.

The county hopes the grant will help the airport become self-sustaining and not have to depend on money from the county’s general fund in years to come, so the county can use that money to address other county needs.

It could help prevent large deficits in the future, also.

Airport Manager Steve Smigelski said the airport has already received about $323,000 for money spent on general operations from January to Sept. 1 last year. He said the feds should also pay for the balance of 2020 bills, money he expects soon.

The turnaround time for the first round of reimbursement was not short. Smigelski said it took several attempts to get the government to sign off on the payment, which finally arrived last week.

“There is a certain way you have to fill out the requests, and a certain format you have to use, so things got delayed,” Smigelski said. “Now that we know what we need to do, I don’t think it will be an issue, anymore.”

That money will remain in the county’s Airport Fund, to be used for other expenditures, which will eventually be reimbursed, too.

That cycle will continue until the funding is exhausted over the next four years. By the time the federal grant’s depleted, Smigelski and the commissioners believe, the airport should be able to stay afloat using its own revenues.

“We’re going to use a majority of the … money to create revenue generators,” Smigelski said. “We are going to build the new hangars, storage facilities, a restaurant, and other things.”

Part of the reason the county’s budget is so far in the red is because it did not budget $500,000 in expected revenue from the state’s portion of the terminal project. The state can’t pay the county until the federal government closes out its part of the grant process.

When the state does the same, it will pay the county the funds.

County Treasurer Kim Ludlow said that, once the money is deposited into the airport’s terminal construction fund, it could be moved back into the county’s general fund. If that happens, it would cut the county’s deficit to about $700,000.

Ludlow said that money may not arrive until late this year or even into 2022.

Ludlow said the budget could also see expenses shrink if the federal government allows the airport to use the grant to make its bond payments.

“The commissioners are counting on that,” Ludlow said. “We are hoping the airport will be self-sustaining in the next five years and won’t have to depend on allocations from the general fund.”

The first bond payment is due in April and will cost $23,523. That total climbs to $83,523 in October, when the second payment is due.

The county sold $1.5 million in bonds to help pay its portion of the terminal project, and bond-buyers have to be paid back over the next several years.

Steve Schulwitz can be reached at 989-358-5689 at sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpenanews.com.

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