Fernandina Beach is Still Subsidizing its Airport

"We're at the 'What-do-we-want-to-be-when-we-grow-up' stage," City Manager Michael Czymbor said. "We have to decide if we want to pay to play."

FERNANDINA BEACH, Fla. - For the city's enterprise funds, the past few years have been rough going.

While all the funds cover their operating expenses through revenue coming in, the city still subsidizes them because they don't generate enough money to pay for big-ticket costs, such as capital improvements, and unforeseen expenses, such as legal fees.

Fernandina Beach has five operations budgeted as enterprise funds - the Municipal Airport, the Harbor Marina, the Golf Club and the city's water and sewer utilities.

The original intent of the funds, begun during the mid-1990s, was for those operations to be self-supporting, requiring no general-revenue funds, which largely come from property taxes.

However, the funds have not worked out as planned.

"We're at the 'What-do-we-want-to-be-when-we-grow-up' stage," City Manager Michael Czymbor said. "We have to decide if we want to pay to play."

He said there are definite intangible benefits to the city having the amenities like a marina and airport and golf course.

"But, if we have to be able to budget for capital improvements at the golf course, for example, green fees may have to go up from $50 to $55," he said. "But we have to realize that these amenities is also what makes Fernandina Beach and Amelia Island tourist destinations for people who will spend money in our community. And we have to find a way to measure that."

City commissioners held a work session Tuesday to examine the enterprise funds and asked city staff to come back to them next month with recommendations on how to restructure the funds to account for costs that benefit city residents and those that benefit visitors.

"We have to delineate what we want the enterprise funds to do for us. The original idea of enterprise funds was to make enough money for the city of Fernandina Beach to reduce property taxes," Sapp said. "If it provides recreation for all residents, you're going to expect something different."

Sapp was perhaps most concerned with the airport and asked why the city had to own it because it is used mainly by county residents living at the south end of Amelia Island.

The airport was built on city land by the Navy during World War II. Because it technically belongs to the federal government, the Federal Aviation Administration requires revenue produced by the airport go into a fund used exclusively to pay airport maintenance and expenses.

"Somebody give me the rationale of why this is an asset to me when 75 percent of the people who use the airport are not city residents," Sapp said. "If all the money generated out there has to stay out there, what's the asset?"

If it were not for ongoing arbitration with the McGill Aviation, the airport's fixed-base operator, Airport Director Richard Johnson said the airport would have made a profit. The city has spent about $500,000 in legal fees on the dispute, including $322,113 last year. Without that expenditure, the airport would have made a $192,089 profit instead of a $130,024 loss.

Critics argued that because the previous city commission and attorney made decisions that led to the dispute, general revenues should pay all the legal fees. General-fund money had to supplement the cost of legal fees by 2006.

Johnson said the airport will be more profitable when grant-funded improvements are completed and the litigation resolved.

Sapp asked whether the county might like to own the airport. City Attorney Debra Braga said she could look into setting up an airport authority, similar to Jacksonville's. The authority would be an independent special district created by Legislature that would have limited taxing authorization. The city land on which the airport sits, however, would have to be ceded to the authority.

Commissioner Joe Gerrity didn't like that.

"Our asset is 600 acres on Amelia Island," he said. "And I would not feel comfortable signing over that asset."

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