Report finds under the City’s governance the Airport has continued to thrive, and the overall value of the Airport estimated at $1.04 billion. VBM 2019 file photo of BTV.
Vermont Business Magazine Monday night, the Burlington City Council voted unanimously to affirm the current ownership structure of the Burlington International Airport (BTV), which is a municipal department of the City operating as a separately reported enterprise fund. The vote followed a presentation by Burlington City Attorney Eileen Blackwood of a report produced by her office in January of 2020, which lays out the history of the Burlington International Airport and addresses questions of regional governance.
The full report 40-page report including an executive summary (see below) can be found here.
Mayor Miro Weinberger, who prior to his election served on the Burlington Airport Commission for 9 years, directed the City Attorney’s Office to write the report in 2019, and emphatically supports the City Council’s actions, releasing this statement:
“The City Attorney’s report is a comprehensive and well-written document that should be seen as the definitive answer to the questions about airport ownership and governance. As a result of the investment by the people of Burlington and strong governance by the City, the Burlington International Airport has grown and thrived for 100 years, and is well-positioned to continue to be a driver of regional prosperity and innovation for decades to come.”
The report’s key findings include:
- The study documents that "substantial investment into and support of the airport by Burlington taxpayers over the ninety-nine years since it was dedicated. While much of Burlington’s investment occurred in the first 30 years of the Airport’s history, indirect support continues to this day.” (p.1)
- “Under Burlington’s governance and operational support, the Airport has continued to thrive, serving more than 1.3 million passengers in 2018 and contributing more than $480,000,000 to the regional economy. From its initial 72 acres, it has increased in size to almost 942 acres. Including its current asset value, the Airport is estimated to have a value to the region of $1.04 billion.” (p. 2; Note: Even during the pandemic, the Airport has continued to grow. The report was completed before the recent announcement that BETA Technologies, an electric aircraft manufacturer, wishes to build a 270,000 square-foot facility at the Airport that would provide hundreds of more high-quality jobs for Burlington residents.)
- “While the details of governance models vary, BIA’s current governance structure—a municipal department within a general government entity operating as a separately-reported enterprise fund--is a widely accepted and reasonable governance model, squarely within the range of the municipally owned models adopted by about half of the airports in the country. Almost all of these municipally owned and operated airports were founded by the municipality and have remained in municipal ownership throughout their history (excluding during wartime when federal authorities may have taken them over).” (p. 2)
- Issues and concerns that have been raised by elected officials from municipalities that neighbor the airport could be addressed “without risking the disruption and cost of complete restructuring, [through] more targeted changes within the current structure.” (p.3)
Executive Summary
A. The history of the Burlington International Airport reveals substantial investment into and support of the airport by Burlington taxpayers over the ninety-nine years since it was dedicated (The Airport celebrated its 100th birthday in August 2020.)
While much of Burlington’s investment occurred in the first 30 years of the Airport’s history, indirect support continues to this day, as the city supports long-term debt of the Airport with pledges of the full faith and credit of the city, and the Airport continues to receive value from the support and cooperation of other city departments and elected officials. The City of Burlington’s investments over the years include work by the Burlington streets department to construct and maintain the runways, acquisition of property and later additional property on which the airport lies, purchase of a hangar, construction of the initial administration building, involvement of the Burlington city engineer and city attorney in the acquisition of property and construction of buildings, maintenance of employee benefits, maintenance of the citywide employee pension plan, human resources support, union contract bargaining and management, snow removal by the streets department, city administrative and financial management support, oversight by the mayor and city council, improvements to parking facilities, investments by the Burlington Community Development Corporation, and pledges of Burlington’s full faith and credit to secure debt obligations.
B. Under Burlington’s governance and operational support, the Airport has continued to thrive, serving more than 1.3 million passengers in 2018 and contributing more than $480,000,000 to the regional economy. From its initial 72 acres, it has increased in size to almost 942 acres. Including its current asset value, the Airport is estimated to have a value to the region of $1.04 billion.
C. While the details of governance models vary, BIA’s current governance structure—a municipal department within a general government entity operating as a separately-reported enterprise fund--is a widely accepted and reasonable governance model, squarely within the range of the municipally owned models adopted by about half of the airports in the country. Almost all of these municipally owned and operated airports were founded by the municipality and have remained in municipal ownership throughout their history (excluding during wartime when federal authorities may have taken them over).
Other types of ownership include regional airport authorities (which often operate multiple airports), port authorities (which may govern several types of transportation), individual airport authorities (which operate a single airport), or private ownership. These authorities are governed by boards whose members may be appointed in a number of different ways—for example, by the mayor of one or several cities, by the legislative body of a single or multiple municipalities or counties, or by the governor of a state.
D. All airport governance models have strengths and weaknesses, and studies of their effectiveness generally have not suggested that one model of airport governance constitutes the “best practice.” There are too many differences among airports to generalize a single best model. How successful an airport is depends on many factors outside the control of the airport from economic climate to geography to airline operations.
Typically, airports have maintained the ownership and operational governance with which they were founded, as the costs of change are high. Transferring ownership, governance, or operations away from the current municipal structure would entail significant transition issues, including transition of staffing, assumption of current debt (including employee pension obligations), ownership of assets, and Federal Aviation Administration authority questions. Changes of ownership and operational governance occur for compelling reasons, usually because an airport is failing or in need of considerable improvement that the current owner cannot provide. Proponents of authority, as opposed to municipal, structures have generally maintained that the authority can operate at a lower cost by reducing political involvement and running the airport more like a business, but these concerns can be addressed within the existing structure.
E. As sponsor of the Airport and holder of the airport certificate from the FAA, Burlington is responsible for determining the airport’s appropriate governance and operation and for the content of all grant applications. Millions of dollars of capital expenditures in recent years have come from federal grants by the Federal Aviation Administration, which issues the operating certificates to airports in the US and sets certain requirements for airport sponsors and certificate holders. Given the decades of unreimbursed investment by Burlington taxpayers during the first half of its history and the continued pledge of Burlington’s full faith and credit for tens of millions of dollars of debt during the modern era, Burlington would have ample justification to seek millions of dollars of reimbursement in the event of a transfer of ownership to another entity. As the example of Charlotte-Douglas airport has shown, without the concurrence of Burlington, a transfer of actual airport operations to a regional authority would be difficult, as Burlington is the FAA sponsor and certificate holder.
F. To address concerns raised by South Burlington and Winooski representatives without risking the disruption and cost of complete restructuring, the City of Burlington could explore more targeted changes within the current structure. For example, the addition of a Winooski representative to the Airport Commission could be considered. This would be accomplished by a change to the Burlington City Charter, which establishes the Airport Commission and details its makeup. Airport staff recommend not changing the current governance structure of the Airport and encourage substantial exploration before making changes that may disrupt the Airport’s current successful trends.
Source: Office of Mayor Miro Weinberger Burlington, VT – 6.15.2021