Castlegar city council has approved spending $25,000 to study alternative models of funding and governing the airport amid lower passenger numbers in the years since COVID.
It comes as council also approved borrowing up to $5 million to expand the airport terminal. Finance director Steffan Klassen explained the project is budgeted at $10 million, of which $6 million will be covered by a grant the city received in 2023.
“To live up to the terms of the agreement for the grant, we need to also undertake a number of parts of that project,” he said. “In order to do that, we need to borrow.”
Klassen said while the city hopes to spend less than $5 million, that number provides a contingency so they don’t have to return to council to approve another loan.
Klassen said the city’s borrowing capacity was doubled last year, so the project will easily fit beneath the ceiling, and further borrowing for upgrades to the south sewage treatment plant might fit as well, although combined the two projects will put the city close to its limit. Any further borrowing would require approval from taxpayers.
Councillor Sue Heaton-Sherstobitoff noted the airport will require increased revenue to cover loan repayments starting in the fall of 2027 or spring 2028 and asked if that will draw its reserve fund down completely.
Klassen replied the airport has been dipping into reserves because of a drop in ridership and reduced number of flights since COVID, but those numbers are expected to turn around.
“We are anticipating receiving approval for the new RNP system, which will bring in more flights,” he said. “So there’s an assumption that revenues will increase [to levels] similar to prior to COVID. And even if it’s not fully, it will cover the cost of the borrowing as well as operational challenges.”
Heaton-Sherstobitoff said she was “very leery” because the city has been waiting on approval for the RNP system for nearly five years.
“We don’t tax for the airport at this moment, but that’s something that we may have to think about in the future if we don’t get the ridership that we need,” she said.
“That’s what I’m worried about. I know the [terminal expansion] project has to go ahead because we’re all hoping RNP goes ahead, but there’s that potential something will happen.”
According to Klassen’s report to council, the terminal expansion will expand and improve passenger spaces, including the concourse, arrivals and baggage claim area, and the holding room. It will also improve offices for staff and airlines.
A 2019 airport master plan said the terminal expansion was critical if airlines began using 78-seat Q400 aircraft, which Air Canada did in 2021.
A contract for the architectural work was awarded last June and work is entering the concept design stage. Construction is expected to start by 2027.
Meanwhile, the study by a consultant that will look at finding new operating and financial models is expected to be completed by July. The $25,000 cost will itself will be paid for through a reserve fund.
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