Oct. 24—The Lincoln Airport is moving forward with a terminal renovation and expansion project despite a sharp drop in air travel because of the coronavirus pandemic, and it plans to resurrect a funding source it hasn't used in more than 30 years.

Airport officials told the Journal Star that they plan to levy a property tax on Lancaster County residents to pay for the project, which is estimated to cost $44 million.

The Airport Authority is a separate political subdivision with its own elected board, and it has the authority to levy a property tax of up to 3.5 cents per $100 of valuation. However, it has not done so since 1986.

Airport officials said they believe now is the time to use that taxing authority to pay for what they consider to be much-needed upgrades to the 46-year-old terminal.

The main goal of the project, which the airport first unveiled last year, and which they have dubbed LNK Next, is to modernize areas used by passengers. The terminal, which was built in 1974 for less than $4 million, has two gates on each end, with two security checkpoints. That's not practical, and it has led to Transportation Safety Administration staffing issues and passenger delays, especially when multiple flights leave at once.

Executive Director David Haring said that over the past couple of years, as passenger numbers grew, the airport was "starting to run into some actual, tangible problems in the terminal," especially in the early morning.

That included passengers missing flights because of backups in the security lines and planes showing up and having to wait for gates to open.

Other facets of the project include moving food and beverage services to the secure side of the passenger area, consolidating airline ticket counters on the first floor and adding gates.

The project includes a physical expansion of the north side of the terminal, which is where all the gates would be. It would add about 35,000 square feet to the existing 58,000-square-foot building.

The airport has hired Sampson Construction as construction manager-at-risk for the project. Once design is substantially complete, Sampson, which is partnering with Christman, a Michigan-based construction company with experience in airport projects, will guarantee a maximum price, something that's likely to happen sometime in the first quarter of 2021.

Chad Lay, the airport's director of planning and development, said the current estimate is $43.7 million. Earlier estimates had been about half that much, but costs grew once the plan moved into the design phase.

Construction on the project would start next year, likely in April or May, Lay said, and take approximately 14-18 months to complete. The board would institute the property tax beginning in 2022.

Nick Cusick, chairman of the Airport Authority, said it's likely the board would use about half its available levy, which would be 1.75 cents. At that rate, the owner of a home valued at $200,000 would pay an extra $35 a year.

The tax would be set up to end as soon as bonds for the project are paid off, which Cusick estimated at 10-12 years.

The airport has issued bonds for large projects in the past, usually for buildings in its LNK Enterprise industrial park, and has always been able to pay them off using its operational revenues.

Haring said that even if it could do that in this case, it still would have to levy a property tax. That's because it already has tens of millions of dollars of bond debt on its books, and adding an additional $44 million would put its bond debt at a level that requires using its taxing authority as a backstop.

Airport officials have briefed city officials as well as some of the major business groups in Lincoln on the project and their plans to fund it with property taxes.

Lincoln Mayor Leirion Gaylor Baird said in a statement that she doesn't have enough details to comment on the plans and emphasized that the airport has the legal authority to make its own decisions.

"The decision on how to best support air travel in Lincoln is in the hands of the elected officials at the Lincoln Airport Authority," she said. "It is their charge to make decisions in the best interests of our community."

The Lincoln Chamber of Commerce, in a statement, acknowledged the need for the airport to make upgrades to its outdated terminal, calling it a "worthwhile project."

"We realize the facility has remained largely untouched for the last 45 years and will not meet the necessary standards to support future commercial air travel," the statement said.

However, the chamber did not comment on the proposed property tax, saying only, "we look forward to hearing more information regarding the timeline, financing options and other issues."

City Council President Richard Meginnis said having a strong Lincoln Airport is important for the business community, for the University of Nebraska-Lincoln and for residents.

According to a study from the Nebraska Division of Aeronautics, the airport has a nearly $1.4 billion annual economic impact and supports nearly 8,900 jobs.

Meginnis said he generally is in favor of modernizing and upgrading the terminal.

"I'm all for the airport and I'm all for the need to support our airport and keep it viable," he said.

As for paying for it with a property tax levy, however, he said now is not a good time "to put that kind of burden on our small businesses and residents."

Cusick acknowledged "it's a little bit of an awkward time" to be moving forward with the project after the sharp drop in passenger traffic because of the pandemic.

In 2019, the airport averaged more than 27,000 passengers a month, its best numbers since 2007. This year, its total number of passengers for the six-month period from April-September has been a little more than 23,000, and one of its two airlines, Delta, suspended service to Lincoln in July and has not committed to a return date.

A number of airports around the country have suspended or postponed large projects because of the passenger decline, but other airports have decided to push ahead and in some cases even speed up construction while passenger counts lag.

Cusick and Haring said there are a number of good reasons to move forward with the Lincoln project, including low interest rates, stable construction costs and less disruption to passengers.

One big unknown is what will happen to passenger traffic long-term.

The last time there was a major shock to the air travel industry, the Sept. 11 terrorist attacks in 2001, a number of airlines disappeared in the ensuing years, either through mergers or bankruptcies.

The Lincoln Airport has still not come close to reaching the passenger numbers it had before 9/11, which peaked at 550,000 in 1999.

Haring said he's confident that there won't be a "permanent reduction in the market" and the Lincoln Airport will rebound, but even if passenger numbers stay depressed for a number of years, the need to consolidate the security checkpoint is not going away.

The airport looked at various "Band-Aid" remedies, but those were going to cost several million dollars and would not provide long-term solutions, he said.

If previous administrations and board members had not "kicked the can down the road" on needed improvements, Cusick said, the airport wouldn't necessarily be in this situation now.

"As an elected official, I'm sensitive to property tax. I don't want to pay property tax any more than anyone else," he said. "But I think I'm elected — I think the other four board members feel they're elected — to do what's right for the Lincoln Airport and the community long-term.

"We're responsible for doing something," he said.

Where your property tax dollars go in Lincoln

Reach the writer at 402-473-2647 or [email protected].

On Twitter @LincolnBizBuzz.

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