Civil Grand Jury report takes issue with Monterey Regional Airport expansion plans.

The 2019-20 Monterey County Civil Grand Jury set its sights on the Monterey Peninsula Airport District and its plans for building a proposed new terminal at Monterey Regional Airport, in a new report released on June 3.

“The Airport Master Plan — a Well-Conceived Flight Plan, but Indications of Financial Turbulence Ahead,” dings the special district for how it estimated the number of future travelers in a 2015 master plan that maps out major improvements through the year 2035.

Since each traveler translates into dollars thanks to a fee tacked onto each plane ticket—currently set at $4.50—the less travelers using the airport means less money to pay for improvements. The Civil Grand Jury estimates the airport district numbers were short by 8 percent per year over the span of the master plan.

The district used the protected number of travelers in explaining how it would finance revamping the airport over the next 15 years. In addition to the fees, much of the work would be paid for through FAA grants and other sources, for an estimated total of $212.5 million according to the 2015 capital improvement plan.

Work to be done includes: fixing a safety issue with the proximity of runways to the current terminal flagged by the Federal Aviation Administration; moving some of the airport facilities to other locations on airport property; building a state-of-the-art terminal to replace the current one built in 1950 and remodeled over the years that the district says is becoming functionally obsolete.

FAA grants will not cover the total cost of the building which the 2015 report estimates could run between $60 to $76 million. The remaining money would have to come from other sources, which include leaseholder agreements with airport tenants and customer facility charges—like the fees attached to tickets or, for example, a charge added to a customer’s rental car lease—as potential candidates.

The Civil Grand Jury report questions those sources and expresses concern that taxpayers that live in the special district comprising Carmel, Del Rey Oaks, Monterey, Pacific Grove, Sand City and portions of Seaside, as well as unincorporated areas of Monterey County near MRY, will be called on to pay the cost.

The report recommends that the district “communicate immediately with the residents of the district about the potential implications of the shortfall in grant funding available for the Terminal Building Project.” It fails to specify exactly how taxpayers in the district will be impacted, however.

Airport district taxpayers typically don’t finance capital improvement projects like new terminals. Instead of parcel taxes or government obligation bonds, districts use revenue bonds to finance large construction projects. Revenue bonds are based on future revenues and paid off over time. They do not require voter approval.

District Board President Mary Ann Leffel says it was never the district’s intent to use taxpayer money to cover the cost of a new terminal.

“If you look at the history of that airport we have never gone out and taxed the people or asked anyone to do a property assessment to pay for anything at that airport,” says Leffel. She believes the jurors are misinterpreting legislation surrounding how airport projects are financed.

As for the discrepancy in the number of travelers, Leffel says it has to do with a timing issue between when the district reports its numbers at the end of its fiscal year in June and the FAA reporting period for tabulating travelers which ends in September. She says district staff have been aware of the discrepancy since before the jury report and have been working on aligning the reports.

Even with a shortfall in traveler numbers—especially in the wake of Covid-19—the airport district remains one of the most well-heeled agencies in Monterey County, with total assets listed in the most recent audited report at $79.6 million at the end of fiscal year 2019.

Recently the airport received $12.66 million in CARES grant monies, which Leffel says it is using over time to make up for shortfalls caused by shelter-in-place orders.