Airport Authority Secures $1 Million Loan Guarantee From The City

By Robert Thomas

Touted during its formation as being a financially independent authority the new Moose Jaw Municipal Airport Authority (MJMAA) has asked the City to be the guarantor of a private $1,000,000 loan to give it a line of credit to provide bridge funding during upgrades to the Moose Jaw Municipal Airport.

The guarantee to back up to a $1 million loan in bridge funding is due to the duration it takes for senior governments to pay for invoices received and the lack of funds in the MJMAA’s bank account.

The contractor W.E.Botkin Construction requires invoices to be paid within 30 days but the MJMAA cannot invoice for funding from the Investing in Canada Infrastructure Program (ICIP) until the payment(s) have cleared the bank.

Because MJMAA does not have $1 million in their operational accounts to cover the cash flow needed for expansion the MJMAA had to secure outside funding or a bridge loan until ICIP funds are issued . As a condition of the loan from Jameson Gilroy & B & L Livestock Limited (JGL) the City’s guarantee or co-signing for the loan is necessary.

JGL will provide the loan to the MJMAA at the prime interest rate plus one percent.

The City will not be responsible for any interest payments on the bridge funding. The only cost to the City will be administrative costs to negotiate and draw up the agreement between the parties. The loan guarantee will add $1 million to the City’s debt limit. At present the City has utilized $70.2 million of their provincially approved $90 million debt limit.

The MJMAA through the City successfully received $2,199,990 through the Investing In Canada Infrastructure Program (ICIP). Additionally the City provided $500.000 as a one-time grant and a $500,000 loan was secured from stakeholders by the MJMAA.

It needs to be noted one of JGL’s owners Bill Jamieson is a major supporter of the MJMAA and uses the facility.

Speaking before Executive Committee, Greg Simpson chair of the MJMAA, said the authority had made great strides towards its goals of a regional airport that is an asset to the City.

He listed those strides as completing the transference of governance of the municipal airport from the City to the Airport Authority, new washroom facilities in the executive lounge, an upgraded pilot’s lounge and how a change in maintenance has meant that no air ambulance flights have had to be cancelled since the MJMAA took over the facility from the City.

Additionally Simpson noted a new business - mechanical in nature - has moved to the municipal airport.

Four new hangars approved for the airport when completed are set to bring in more revenue and business for MJMAA.

“The airport maintenance was a big issue especially when it came to the airport ambulance coming safely into Moose Jaw,” Simpson said. “Since we instituted the policy of removing snow within 24 hours the air ambulance has never missed a mission.”

When asking Council for the loan guarantee MJMAA board member Jarrett Johnson said the lack of sufficient funds in the MJMAA operational account combined with the conditions to pay for the work means short-term bridge funding is needed to finish the project.

“What is we have to pay an invoice within 30 days (to the contractor) and then they (senior government) take 30 days to return the money (from the approved ICIP funding),” Johnson said. “What we are asking you today and what we have come to talk to you about is the revolving or bridge funding that is required as that money turns over.”

Johnson said that the MJMAA has established through their cash flow analysis there are a “couple of months where we are approaching $900,000 so just not having these kind of funds in the operational funds at the airport we went out to a private company and talked to them about securing a bridge loan for that 45 - 60 days.”

If the full $1 million was utilized throughout the entire three months to complete the paving and line painting the cost would be $7,000 but the MJMAA estimates since the full bridge funding will never be utilized throughout the project that the actual interest costs to the MJMAA will be in the $2,000 - $3,000 range. The City is not responsible for the interest costs.

“That has saved us from going to the banks. Banks we have gone to have wanted security on the property and a bunch of complicating parts and the rates weren’t (as good),” he said.

EXECUTIVE COMMITTEE QUESTIONS

Councillor Doug Blanc asked about 15 Wing making use of the municipal airport once the expansion was finished.

“I just had a question and I heard CFB Moose Jaw may use it occasionally,” Councill Blanc asked.

Johnson said MJMAA had spoken “informally” to the base but due to their regulations they cannot commit to using the facility. There was talk about using the facility for the first flight of the day instead of the airport used in Regina.

“Because they are a federal entity they won’t promise or pledge anything to it…it might be an opportunity to do the first flight of the day out of that airport …but there never has been a pledge or a promise to do that,” he said.

During its formation proponents of the Airport Authority stated the military had expressed interest in using the municipal airport and that support helped show the viability of the project.

After media requests to Ottawa from MJ Independent the military denied they had any part in the formation of the MJMAA and that they had explicitly told the Airport Authority proponents the municipal airport did not figure into their training plans during those discussions. The Canadian Armed Forces has a strict policy of not interfering into local or other politics.

A call to a source at National Defense Headquarters in Ottawa on Tuesday - who asked to be anonymous as they had not been authorized to speak on the issue - said nothing had changed regarding the military’s not needing to use the municipal airport and they still maintain a policy of non-interference into civic and other politics.

Asked about the bridge funding requirements Executive Committee was told the need for bridge funding was variable. Johnson said the project would need $100,000 in June increasing to $450,000 in August then up to $900,000 before coming back down to $800,000 as the work proceeded.

Councillor Crystal Froese said she was a supporter of the project from the beginning but would have liked to seen more financial details with the request.

“I have been a supporter from the start, but I would have appreciated having a financial report just to have a better feeling of where you are on this project,” Councillor Froese said.

Simpson said the MJMAA had not presented a financial report with the request because they had already presented in December during budget deliberations and they are in the process of having an audited statement and cash flow analysis completed and wanted to come back later with those reports when they are completed.

“My intent here is to build a strong relationship to ensure you are successful…the municipal airport has been a contentious issue for a number of years and I just want to make sure we are continuing to work together,” Councillor Froese said.

Simpson said the MJMAA had one, two and three year plans and in the past year they have “hit all of those (performance) marks.”

He went on to speak about the benefits of upgrading the municipal airport during the pandemic because there had been a major shift in aviation.

“Chartering is actually going through the roof in North America. I have checked with people in Saskatoon and Regina and charters are going full-time,” he said, adding “they (charter companies) can certainly fly to regional areas as those airlines have quit flying to those areas.”

“There is a shift in aviation. We built this airport at the opportune time,” Simpson said.

At the present time 85 - 90 percent of the landings and take-offs at the municipal airport are business related something Simpson said Moose Jaw and area can build on through such avenues as the Economic Development Committee.

“We would like to be on the Economic Committee to actually drive the economy here. We have some ideas we can partner with and we would like to sit on that,” he said.

It should be noted that in late November 2019 the Economic Development Committee was disbanded in an 5 - 2 vote with former Councillors Brian Swanson and Scott McMann voting against the move.

MOTION MADE TO APPROVE LOAN GUARANTEE

In making the motion to co-sign or guarantee the bridge funding loan Mayor Fraser Tolmie said the MJMAA had come a long way since its formation.

“It’s taking time but this board has been really good at stepping up to the plate and achievement,” Mayor Tolmie, who sits as vice-chair on the MJMAA said. “We have to remember this is a gateway into our community. We always think about highway access and rail and this is just another gateway.”

The Mayor said the upgraded municipal airport would be welcomed by military pilots in an emergency.

“I think about the opportunity for the military providing an alternate (runway) in case of emergency…what their plans are in the future no one knows but when you are a pilot in the need of a landing spot that is going to provide landing spot.”

Councillor Blanc gave an anecdotal story about people who before the municipal airport’s upgrades had flown into the airport for a weekend and then once seeing the facilities cancelled their hotel reservations and flew off to another community because of a bad first impression about the city.

“I don’t know how often that happens, we had a discussion here in some of our meetings to keep the city clean….it (the municipal airport) needs to be a vital part of our community.”

Councillor Dawn Luhning asked for a clarification what the financial impact would be against the City.

“I think we need a little bit of clarification that what negotiating any type of guarantee is going to entail,” Councillor Luhning stated.

Finance director Brian Acker replied “the way this will be structured is by the City guaranteeing this line of credit the airport (authority) will have access to it.”

“ICIP funding (re-imbursement) is anywhere from 60 - 90 days and that way the money will work its’ way back to the airport, but there is a lag,” he said.

Councilor Luhning replied “that is what I want to hear that the taxpayers are not going to be held accountable or held for any of the costs coming about…I will vote in favour of this although I do have some concerns.”

In response to a question from Councillor Jamey Logan about associated costs to Administration such as their time Acker said “any costs, my time, legal time are borne by the City.”

In a unanimous vote Executive Committee approved to co-sign or guarantee the $1 million bridge loan for the MJMAA expansion.