Wednesday, July 25, 2012

County leaders ponder LOT plan

Money would be used to fund airline revenue guarantees

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By KATHERINE WUTZ
Express Staff Writer

County support for public funds going to minimum revenue guarantees for airlines is still uncertain, but the county commissioners said Tuesday that they would be willing to explore an agreement with Ketchum, Sun Valley and Hailey that could help raise more funds for commercial air service.

"This does not reflect any decisions by the board except that we're willing to look at a joint powers agreement," Commissioner Angenie McCleary said.

Eric Seder, president of the Fly Sun Valley Alliance came before the commissioners Tuesday, asking them to support a joint powers agreement that would direct funding—in this case, an additional 1 percent local-option tax—to minimum revenue guarantees.

Minimum revenue guarantees are payments made to airlines to ensure that they will make a certain amount of money in risky markets. Currently, flights between Friedman and Los Angeles conducted by Horizon Air are secured by these payments. An Idaho Attorney General's opinion issued in March paved the way for use of local-option tax funds by resort cities to supplement the minimum revenue guarantees.

Authority for raising local-option taxes resides with each city. However, Seder said the county's support would help smooth the way, as it's a joint owner of Friedman Memorial Airport along with the city of Hailey.

Referring to the organization that would collect and allocate the funding, Seder said, "It works best if you are an airport owner."

"Given that nothing is certain until it's done, and that Hailey's participation would depend on a vote, we ask that you consider participating," he said.

The additional local-option tax would be levied on all items currently taxed by the LOT, which vary among cities. The supplemental 1 percent would be levied on retail sales in Ketchum and Sun Valley, but not in Hailey, where the tax is collected on hotel rooms, liquor by the glass and rental cars.

The funds would be used to secure nonstop flights from San Francisco as of the end of 2013, as well as to market those flights and gain two more nonstop flights by the end of 2015. Seder said that if all cities approve the tax, the additional 1 percent would bring in $2 million per year.

Airport Manager Rick Baird said more funding for minimum revenue guarantees could help reach areas where there is demand that the airlines are ignoring.

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"There could be pent-up demand that is profitable, but the air carrier is not going to take the risk," Baird said.

Seder said a joint powers agreement for allocating the funds is currently ready in draft form and will be ready for the county's attorney to view by the end of the day Wednesday.

"We think [it] meets most of the demands of the cities," he said.

Seder said that most likely, the parties involved in a joint powers agreement would have different proportions of voting power, though he said he wasn't sure to what degree. However, he said he didn't anticipate there being any disagreement within the organization as to how the money should be used—whether for marketing or for minimum revenue guarantees.

"We have such a common goal, and there will be no basis for argument," he said. "I don't think a consensus will be difficult."

The commissioners said that while they were willing to look at the agreement, they were not making a decision on whether to support it or sign it.

Commissioner Larry Schoen said he thought there was a need for more public outreach to inform voters about the benefits of the potential agreement and supplemental tax.

"I can't [as a voter] avoid the idea of two questions that have to be answered," he said. "Do I want to tax myself more, and do I value an air service program such as this? They are related, but they need to be answered separately."

The joint powers agreement will need to be finished and a ballot question submitted by the end of August for the question to be placed on the November ballot.

Seder said Fly Sun Valley Alliance has been working with attorneys from Ketchum, Sun Valley and Hailey to form the agreement, which he said should be ready in time.

The issue will be discussed at a meeting of the Wood River Economic Partnership tonight, July 25, at 5:30 p.m. in the Limelight Room at the Sun Valley Inn.

Kate Wutz: kwutz@mtexpress.com

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