Vero City Council ‘blindsided’ by airport funding problem

An Elite Airways Canadair Regional Jet CRJ-200 takes off from Vero Beach Regional Airport at 7:52am on 8/12/2018.

When Elite Airways arrived in Vero four years ago, the city was so excited by the resumption of commercial air service it appears to have never considered how unlikely it was that passenger growth would offset a future loss of state funding for Vero Beach airport projects.

But city officials now belatedly say it would take at least 200,000 passengers departing from the Vero airport annually to offset the loss of $1 million a year in state airport funding that kicks in when commercial flights board more than 10,000 passengers. The number boarding Elite flights here in 2018: just over 11,000.

“From talking to the previous city manager, the understanding that I have gleaned from it was that the city anticipated that the growth from Elite – and possibly other airlines that might come in – would get to the point that would make this viable,” City Manager Monte Falls said. “It’s just unfortunate that the growth hasn’t been that dynamic.”

The Vero Beach City Council was blindsided by the news of the financial booby trap, Vice Mayor Laura Moss said. “I was surprised because you think to yourself, ‘Well, everybody must have known, including Elite.’”

A unanimous airport commission earlier this month recommended forcing out the Maine-based airline and allowing it ample time to make a final departure from the airport because of the financial strain the company will create for the city later this year.

The city council, which will make the final decision, was expected to take up the issue at its Jan. 21 meeting.

Elite has been a big hit in Vero since it launched regular passenger service to Newark, N.J., and other destinations in 2015, and the airline’s passenger count and revenue have steadily increased from year to year.

Elite boarded 11,084 passengers in Vero in 2018 – a 21.7 percent increase compared to 2017, according to city documents.

That kind of growth normally would be a good thing for the company and the city, but in this case it triggered a crisis when the city was notified by the Florida Department of Transportation in December that the airport will be reclassified from a general aviation airport to a commercial airport because it boarded more than 10,000 passengers for the first time.

If it goes into effect, the new classification will cost the city as much as $1 million per year in lost state grant revenue for airport projects included in the municipality’s five-year plan, Falls said.

When an airport is designated as general aviation, the state typically covers 80 percent of the cost for large projects, while the city is responsible for 20 percent. Under the new designation, the cost split would be 50/50.

The new designation could deplete the airport’s current fund balance of $3.5 million in a few years, city officials said.

Yet, somehow there was no plan by the city ahead of time about what to do when the passenger threshold was reached.

Airport Manager Eric Menger did reportedly reach out to Indian River County’s Legislative Affairs and Communications Manager Brian Sullivan to alert him of the impending problem late last year, but asked for no aid, Sullivan said.

“He didn’t ask for anything,” Sullivan said. “He was just kind of making me familiar with the issue.”

Talks have been swirling across the state in recent years about changing state statutes governing airport designations, Sullivan said, adding he wouldn’t be surprised if a bill is amended to increase the number of passengers allowed at general aviation airports or alter grant rules so that small airports don’t lose money. The city is monitoring the current legislative session for any such amendments that could help the municipality, Falls said.

Despite the airport commission’s recommendation and the impending financial hit to the city, there seemed to be strong sentiment on the city council ahead of Tuesday’s meeting to find a way to keep Elite in Vero.

“I want them to stay,” Moss said.

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