Here's why Merrill Field users could see their first fee increase since 2012

The proposed increased fees would be as follows:

Access fees for anyone in possession of land used for aviation activities would pay a monthly fee of 33 & 1/3% of the current tie down fee for direct access to a municipal airport.

Daily transient aircraft parking would be $0 for zero to six hours, and $6 for six to 24 hours.

Tie down space fees would be $70 for a tail-end space, and $80 for a pull-through space.

Impoundment fees would be a basic fee of $75, and $10 for a 24 hour storage fee

Motor vehicle parking would be $6 a day, or $70-$80 a month depending on the size of the space.

Pilots leasing out space at Merrill Field Airport could see rate increases for the first time since 2012 – things like a lease rate increase of $.04 per square foot – to cover costs like improvements to runways, which the airport has previously absorbed.

Merrill Field Airport Manager Ralph Gibbs took over his job in September 2018. He says he inherited a four-year budget deficit of around $200,000 per year, and now he has to get creative to boost the airport’s revenue to offset that deficit while also paying off pre-existing debts.

"I’m playing the hand I was dealt,” Gibbs said. “I think we've come up with a good plan to reverse the drain on the finances of the airport."

Gibbs explained how the airport got into its present financial predicament. He says in 2012, the Merrill Field Airport sold a parcel of land to the state for $4.5 million for use on the Glenn Highway.

Since then, the airport has used that land exchange money for improvement projects on highways, runways, and compaction of the soil the airport rests upon, which at one point was a landfill.

Gibbs says they’ve made these improvements through an FAA investment program, called the Airport Improvement Program, or AIP. The program has a matching requirement, where Merrill Field pays 6.75 percent of the grant, and the FAA makes up the balance.

The $4.5 million the airport received in the land exchange dried out completely by 2018 as a result of matching the AIP contributions. Merrill still invested $670,000 in the AIP in 2018, despite running a 4-year budget deficit, and despite the fact that the airport’s expenses were higher than its revenue for that year.

In order to make airport improvements for 2019, Merrill Field would need another $610,000.

The Anchorage Assembly will weigh all of this information at its upcoming meeting on Tuesday. Included in the agenda is an ordinance that would approve an Intermediate Term Borrowing Program for $1.6 million to cover Merrill Field’s contribution to the FAA investment program for 2018 and 2019.

Merrill Field’s payment to the Municipality’s loan would be $152,000 per year. Between that and the $200,000 deficit the airport has been running, Gibbs says he’s had to get creative with finding new revenue streams.

On Tuesday, Gibbs is submitting a plan to the Anchorage Assembly to pay back the $1.6 million loan. This is where the rate increases come into play for airport users.

He has come up with a 3-part strategy to increase revenue at the airport to help offset the deficit and pay back the loans:

1. Part one requires changes to city code, which is why he needs the Assembly’s approval. It includes an increase in tie down and parking fees for aircraft and vehicles, as well as a $.02 per gallon increase in the cost of fuel;

2. Charge fees for services previously given away for free, like the operation of the airport’s security gate;

3. Increase lease rates by $.04 per square foot.

Gibbs says he’s received opposition from stakeholders at the airport who believe the present fee structure is expensive enough as it is, but he says all of this is necessary to fix the airport’s fiscal problems and continue providing exceptional services.