Airport asks county for loanSeptember 23, 2020
By CANDY NEAL
Dubois County Airport Authority officials asked county officials to consider loaning the authority up to $1.5 million.
Authority Attorney Phil Schneider talked to the Dubois County Council and Dubois County Commissioners at the boards' Monday meetings about the cash flow problem the airport will have with its runway extension project. Jim Hunsicker, president of the authority board, and Travis McQueen, airport manager, also attended the meetings.
“We’re not asking for a grant. We’re not asking for a gift,” Schneider said at the council’s meeting. “The airport authority is asking for a short-term loan. And it will be repaid from the grant funds.”
The $13.1 million project includes expanding the runway 500 feet and widening it to 75 feet, lowering County Road 200 West and installing a tunnel over the road, dirt work and electrical work. The tunnel and road lowering has been completed and opened to the public last week.
The Federal Aviation Administration is covering 90 percent of the project costs; the airport and the Indiana Department of Transportation are also contributing about 5 percent each.
The project is being done in two phases, each with its own grant. The first phase was the tunnel and dirt work; the second phase will be electrical work and the runway extension and widening.
But an unforseen problem came in July, Schneider said, when workers discovered poor soil that had to be removed and replaced; that cost an additional $1 million. The FAA has directed the airport to proceed with the work and has said that it will process the change order, Schneider said. However the funding for the change order will not be sent to the airport until the FAA closes out the grant.
Also, the FAA holds the last 5 percent of the funding it provides as a retainage, until it closes out the grant.
But the bills from contractor Weddle Brothers, including the work to remove and replace the poor soils, will be due before the money arrives, Schneider explained.
The cash flow shortage could total up to $1.5 million. And it could late 2021 or early 2022 before that funding is received from the FAA, Schneider said.
Therefore, Schneider said, the airport authority wanted to request a short-term loan or line of credit for up to $1.5 million to cover the upcoming shortage.
Councilman Craig Greulich asked about other options. Schneider said he has researched bonds, but they would take a longer period of time to process. The authority could possibly pursue a loan with a bank or financial institution, but the interest on the loan would likely be high.
Also, a financial institution may be reluctant to give the loan because the authority does not have a written grant agreement with the FAA for the change order.
The commissioners said at their meeting that they were fine with the request, so long as the council approved. The council is the fiscal body that would have to give the final approval.
Council members seemed to also be supportive, but wanted to take some time to consider the request. They will discuss it at their Oct. 26 meeting.
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