City Now Expected to Pitch in Stimulus Money to Help Lure Air Service to Lincoln

Jan. 6—The mayor's office is reconsidering whether to earmark a portion of its $46 million in federal stimulus money to the Lincoln Airport to help lure new air service to the city.

Last month, Mayor Leirion Gaylor Baird said the city would not earmark additional federal stimulus money over the $1.5 million the Lancaster County board committed to the Lincoln Airport Authority to use as incentives to encourage more airline service.

City Council members have contacted the mayor's office encouraging the mayor to change her mind — and had planned to introduce a resolution encouraging the mayor's office to contribute money to the airport authority.

"Council members have communicated with the mayor's office that they are very interested in having American Rescue dollars allocated to the airport," said Chief of Staff Jennifer Brinkman. "And we appreciate their point of view and work in partnership with them to allocate city resources."

She said they are considering contributing money, but have to go through a process set in place when officials jointly announced how more than $100 million in federal stimulus money coming to the city and county would be used.

But Councilwoman Tammy Ward said the mayor's office called her Friday to tell her the city would commit $1.5 million, something she strongly supports. She said she'd called the mayor's office to ask them to reconsider before the council introduced a resolution.

"I am relieved and, of course, elated that (the mayor) chose to use (American Rescue Plan Act) money at the $1.5 million level ... otherwise we would have pursued a resolution that I'm confident would have passed to encourage money to be found for this," Ward said.

In August, the city and county made a joint announcement about how the city's $46 million and the county's $62 million in federal stimulus funds would be used.

As part of that, the city is managing three grant programs: $12 million in grants for workforce development programs to help workers hard hit by the pandemic; a $17 million grant program to bolster tourism-related businesses and attractions; and $7 million in grants for small businesses and another $3 million for yet-to-be determined business assistance. There are other funds, including a contingency fund, that city officials could consider.

Brinkman said the airport authority did not participate in the grant process, and the city needs to work through the administration of the grant programs so the mayor has all the information before her to make decisions about final allocations of the money.

If the mayor's office allocates $1.5 million, it would mean the Lincoln Airport Authority will have $3 million at its disposal to use as minimum revenue guarantees — a risk-sharing incentive airports of Lincoln's size routinely use to encourage airlines to start service.

Lincoln Airport Authority member Nick Cusick, who appealed to both the city and county for a portion of the stimulus money once he learned it could be used for the risk-sharing incentive, said he has not heard from city officials but learned from Ward the city had changed its mind.

That, he said, would be great news.

"Having $3 million puts way more tools in our toolbox," he said.

There are about 140 airports in cities about Lincoln's size competing for air service, and Lincoln has the disadvantage of being just an hour away from Omaha's larger airport, Cusick said.

Federal Aviation Administration restrictions prohibit airlines from using any airport-generated revenue for minimum revenue guarantees, and the state's constitution prohibits the airport authority from levying property taxes for them. Airports in other states don't face the same taxing prohibition, Cusick said.

The guarantees are a one-year agreement that typically range from $500,000 to $2 million depending on the airline and the route, he said.

The Lincoln Airport got a $750,000 grant that it used — with private matching funds — to offer minimum revenue guarantees for Delta's Atlanta flights, which stopped during the pandemic.

It has another federal grant to use to establish service to a Texas hub, Cusick said.

But stimulus funds will offer more flexibility.

The problem with the federal grants is that if the whole grant award isn't needed, it goes away. With stimulus money, if all the money isn't used, airport officials can use it for another incentive.

The airport was recently dealt an unexpected blow when Delta announced it would end service in Lincoln this month, eliminating twice-daily flights to and from Minneapolis.

Ward, who represents the city's northwest district where the airport is located, said air service is an economic driver for the community and supporting it is vital to Lincoln's economic health.

"We can't risk losing another airline," she said. "Our workforce development and business recruitment hinges on a healthy airport and it's at the center of our business community. ... That's just a given that we have to do everything we can to help it stay active and healthy."

Reach the writer at 402-473-7226 or [email protected].

On Twitter @LJSreist

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