The Hermiston Airport and its finances were the topic of a Hermiston City Council work session Monday night.
The question posed at the end of the session was whether to raise the city’s transient room tax in order to keep the airport from losing money.
The airport currently operates at a loss of around $71,000 a year. By raising the transient room tax from its current rate of 8 percent to 9 percent, the city could raise an additional $100,000 – more than enough to cover the deficit. Raising it to 10 percent would bring in an additional $200,000.
The actual net loss of income the airport incurs varies from year to year, said Hermiston Assistant City Manager Mark Morgan.
“It’s important to look at profit and loss over a period of time because we have some pretty extreme volatility on our expenses, particularly related to fuel expenses,” Morgan said. Morgan said the average annual subsidy by Hermiston taxpayers is around $40,000 a year over the past eight years. That does not include any type of overhead which includes time spent by city employees on airport issues which comes to about $30,000 per year or a total of $71,000.
Just for some background, the airport was paid for by the Hermiston Chamber of Commerce in 1945 for $3 per acre in 1945. Back then, it was a dirt runway. It was graveled in 1950 and paved in 1959. The runway was extended to 4,000 feet in 1976 and extended again to 4,500 feet in 1991.
The airport currently has 18 enclosed T hangars that it rents, 10 covered shelters, one box hangar and one house, which was formerly the caretaker’s residence and is now leased out to Life Flight Network.
In terms of fuel sales, the airport makes an average profit of $30,000 per year, with annual sales of 20,000-25,000 gallons of fuel sold each year.
The biggest expense at the airport is wholesale fuel purchases which accounts for about 50 percent of expenses. Airport management comes in at $85,000 and is 34 percent of expenses. Liability insurance is $18,789 and is 8 percent of expenses. Power, gas and internet costs $15,413 and is 6 percent of total expenses. Weeding and general maintenance is $4,798 or around 2 percent of expenses.
The airport also incurs about $15,000 to $25,000 in day-to-day capital expenses.
Morgan said the airport typically puts $15,000 to $100,000 per year into a reserve fund that it then leverages against its FFA grant fund. In recent years it has received grant funding from the state and has used that money to rebuild the taxi runway at a cost of $4 million and rebuilt the apron at a cost of $3 million. Only 10 percent of those costs come from the city with the rest coming from the Federal Aviation Administration.
“We’ve been really lucky the past couple years to access those funds,” Morgan said.
Future plans call for the replacement of open T Hangars with enclosed hangars.
Morgan said the open hangars are “very unpopular with the pilots. We have anywhere from 50-60 percent vacancy in those spaces.” But there is a waiting list for the airport’s enclosed hangars.
The Hermiston Airport is considered a regional airport, or Category 3 airport which supports most twin- and single-engine aircraft and may accommodate occasional business jet operations. By contrast, the Pendleton Airport is a Category 1 airport. Other cities with Category 3 airports are Ashland, Baker City, Burns, Grans Pass, John Day, Ontario, Roseburg, The Dalles, Tillamook.
No decisions were made at Monday’s work session.
