Airport sale agreement appears uncertain

Published on Thu, Mar 19, 2009 by Tara Nelson

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Facing a state requirement to pay back grants due on the closure of the municipal airport, the city of Blaine is facing the quandary of how to repay nearly $400,000 to the Washington State Department of Transportation’s aviation division (DOT).

John Sibold, director of aviation with the aviation division said in a letter dated July 31, 2008, that the city of Blaine will be required to repay six grants totaling $388,349 which were used between 1991 and 2003 to purchase new equipment, runway improvements, tree removal and property acquisition.

Sibold said because the city opted to close the airport before the 20-year life cycle of the grants, it will be required to repay that amount to the DOT’s aviation division.

“There are certain assurances we have if you accept money from the state, in that you have to repay the money if you close the airport or you have to keep the airport open for the life of the project, which we say is 20 years,” he said.

Blaine city manager Gary Tomsic said the city had originally intended to repay the grants from a $5.4 million pending sale between two local developers and the city for 34 acres of prime industrial land in east Blaine. But as the nation’s economy tumbles and the credit market tightens, some worry the likelihood of a sale is increasingly uncertain.

“I think the way the economy is right now it’s really difficult because credit markets are tight and people aren’t looking to invest,” Tomsic said. “We couldn’t have done this at a worse time.”

The airport’s potential buyers – Gateway LLC, a joint venture between TC Trading owner Tom Hayes and Blaine dentist Patrick Rooney – have already asked the city for an extension on the deadline for their sale agreement in December last year.

At that time Gateway representative Blaine Hardy said they needed more time to secure funding for the project although he said he had a few investors at the table and remained “optimistic” about the year ahead.

The deal cost Gateway an additional $25,000 non-refundable deposit on top of the $100,000 in earnest money they had already given to the city.

Gateway LLC originally made an offer of $5,976,500 in March, 2008 but that amount was later amended to $5.4 million after the city excluded a small parcel of land currently leased by Yorky’s gas station owner Barney Yorkston.

As of Tuesday, however, Hardy declined to answer questions and neither Rooney nor Hayes could be reached for comment. Tomsic said Gateway is expected to make a decision by March 31, the deadline given by city council.

In the meantime, Tomsic said the city is continuing discussions with Gateway and will look at different options for repaying DOT improvement grants if the sale falls through.

“We have already identified a number of different non-earmarked funds that could be used that are non-general fund revenues, meaning if they are used there won’t be something else that won’t be funded,” he said. “In the meantime, we’re still continuing discussions with Gateway. We’re not dealing with anyone else but them at this point.”

Additional expenses

According to the projected 2009 city budget, closing the Blaine airport could cost as much as $3 million in lease termination settlements, state grant repayments and reimbursements to the city’s general fund.
If the pending sale between the city and two Blaine developers goes through, the money will be used to pay approximately $390,000 in state grant repayments, approximately $1.2 million in lease terminations and settlements, $750,000 in loans paid through the city’s general fund, and nearly $500,000 to the city’s street improvement fund.

The remaining would be transferred to the city’s general fund reserve account, which was established to serve as a rainy-day fund in tough economic times.