Friday, August 7, 2009

Ketchum mulls funding for air service

State law may prohibit using city funds for MRGs

Express Staff Writer

The city of Ketchum is hesitant to fund an account that would help ensure Horizon Air meets its revenue goals for service to Friedman Memorial Airport in Hailey. Photo by Mountain Express

The Ketchum City Council is on the fence about whether or not to contribute funds to the Fly Sun Valley Alliance for minimum revenue guarantees used to entice Horizon Air to continue service into Friedman Memorial Airport.

At a meeting Monday, Ketchum City Administrator Gary Marks said part of the hesitation over the $50,000 request from the alliance stems from the city's tough economic situation. In addition, legal uncertainty about such use of public funds poses a potential problem for the city.

Alliance President Maurice Charlat was on hand to make the request and emphasize the importance of continued air service for the economic health of the entire valley.

Council members were enthusiastic about supporting the airline service, but were leery of getting into a legal quagmire.

City Attorney Stephanie Bonney wrote in a letter to the mayor and council that sections of the Idaho Constitution restrict cities from providing assistance to a private corporation.

Specifically, Bonney said state law "prohibits direct or indirect aids from political subdivisions to corporations or other private interests through inducement or subsidy."

In her research, Bonney reviewed a past case that addressed an opportunity for local governments to assist a failing railroad company with funds. In that case, the attorney general concluded that neither the state nor a local government could give grants or loans to the private company despite the public benefit.

"This situation is completely analogous to the one of the city pledging funds or providing a guarantee of a certain level of payment to Horizon Air," Bonney wrote. "I do not believe that the city can legally donate funds to a private airline."

However, the council asked Sun Valley/Ketchum Chamber & Visitors Bureau Executive Director Carol Waller to work with the city's legal counsel to look into ways of helping the alliance.

In a later interview, Charlat said he does not think there is a legal problem, as cities regularly give money to for-profit corporations through contracts for service. Charlat said there is no reason the city cannot enter into a contractual agreement to transfer money.

Charlat said he is not allowed to disclose how much Horizon Air is asking for in revenue guarantees, or how much Sun Valley Co. is contributing. However, the alliance hopes to raise a total of $250,000 from the cities of the Wood River Valley, as well as from Blaine County. The money is used to pay down any shortfalls of set revenue figures for the airline.

Last week, the city of Sun Valley earmarked $50,000 for its requested portion, but continues to look into the legal aspect before the money is paid.

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