High Cost of Free Money
Silver Bay can’t afford to maintain its humble airport. But closing it could require the city to repay $765,000 in government grants.
The city of Silver Bay can no longer afford the luxury of spending $35,000 a year to maintain a municipal airport.
“I’ve got 20 some miles of 50-yearold road,” Silver Bay Mayor Scott Johnson said. “Don’t you think I should spend some maintenance on that instead of the airport?”
But neither can the small northeastern Minnesota city afford to close the deteriorating airfield, faced with the threat of $10,000 a day in fines by the Federal Aviation Administration (FAA) and a bill for $760,000 in repaying “free” government grants the feds and state want to claw back.
“I think they (the FAA) are going to have to take the position to put the hammer on us,” Johnson said. “Because if we succeed, how many other little airports are going to do what we’re doing?”
Silver Bay’s airport may be small, but the ramifications of the city’s attempt to quit the state and federal aviation system could be much larger. It’s among 135 Minnesota airports, mostly rural airstrips, in the National Plan of Integrated Airport Systems (NPIAS), comprised of thousands of airfields nationwide.
“The reality is there’s no such thing as a free lunch, right?” said Cassandra Isackson, director of the Office of Aeronautics at MnDOT. “Whenever you take a grant from the state or federal government, there are strings attached. Those strings we call grant assurances, and we have certain expectations.”
The state calculates the annual local economic impact of the airfield at $96,000, based on an estimated 60 visitors a year. Yet MnDOT concludes closing the facility “will have a significant impact on the State Airport System,” which depends on a network of airstrips for emergency purposes. The closest airport is 21 miles away by air in Two Harbors.
The small airport has been in decline for years, as the city cut back on maintenance. But it wasn’t until June 2018 that MnDOT safety inspectors revoked the airport’s license and shut it down, declaring the runway unsafe.
“A key reason for the airport closure was the sizable cracks that have opened up,” a 17-page MnDOT report states. “They are large enough to cause significant shock to an aircraft, and a small aircraft could become lodged creating a hazard to aircraft.”
The city points out that it did not close the airport in hopes of avoiding liability. But MnDOT officials contend Silver Bay owes the government bigtime anyway.
“Whether they make a decision (to close) or not, they’re in violation of their grant assurances,” Isackson said. “Because part of their grant assurance is that they keep the airport open and available to the public and in safe condition. And today the airport is not open or available to the public and is not in a safe condition.”
State and federal grants provide most funding for small airports through taxes on fuel, planes and other aviation related sources. Local governments typically cover five or ten percent of a project’s cost with local matching funds.
Silver Bay has refused to accept airport funding since 2010. But government grants come with a 20-year obligation, leaving Silver Bay on the hook to repay $761,609.05 on a prorated basis for previous grants, almost all of it to the feds.
“The Legislature and Congress expect when we’re taking tax money and saying what it’s going to be spent on, they want to be sure that it’s actually spent on those things,” Isackson said. “And that it’s for the long term and not just wasteful spending.”
“We and FAA are both prepared to give them state and federal grants to do that work, but they would have to have some money in order to do that themselves,” Isackson said.
Mayor Johnson realizes David probably stood better odds against Goliath than Silver Bay against the FAA and MnDOT.
“We got to the point where we realized the FAA basically is a bureaucratic beast that exists to perpetuate itself,” Johnson said. “They are not designed to help somebody in our situation. They have no capacity to help us.”
Johnson still holds out hope of persuading state and federal lawmakers to designate a new classification of safe harbor airports without strings attached. But it’s a long shot.