This loan is for real
Council taps Measure U for air subsidy
The definition of bankruptcy found on the Investopedia website is as follows: A legal proceeding involving a person or business that is unable to repay outstanding debts.
Apparently, however, bankruptcy can’t prevent the Town of Mammoth Lakes from incurring new debt.
Mammoth’s Town Council voted unanimously at a special meeting Wednesday night to borrow money in order to pay for this year’s summer/fall air service subsidy to Alaska Airlines.
Who will lend the Town the money for this purpose?
Well, um, we’re gonna loan ourselves the money. Out of Measure U funds we’re gonna collect between now and the time the payment’s due to Alaska in February. Then we’re gonna pay ourselves back sometime next summer once the 2013-2014 budget cycle begins.
But as Councilman Rick Wood said Wednesday, this isn’t another one of those phony loans of the past (see the Town’s history of General Fund loans to the Airport Enterprise Fund), but rather, a real loan.
Really.
And, he insisted, this is a “non precedent-setting action.”
Hey bartender, how about a sudsiby?
The traditional partners in the summer/fall air subsidy program have been the Town, Mono County and Mammoth Mountain.
Mammoth Mountain has been solely responsible for the winter subsidy.
The following represent the shares each partner paid in 2010 and 2011, according to Mammoth Lakes Tourism Executive Director John Urdi:
2010 2011
Town $272K $340K
MMSA $274K $424K
County $45K $85K
This year, the proposed dollar amounts Urdi had listed for each partner were as follows:
Town: $475,000
MMSA $300,000
County Zilch
Obviously, the numbers seemed a bit incongruent to your average layman (or Lehman).
The bankrupt folks are going to pay approximately 40% more (than last year) while Mammoth Mountain pays 40% less and the County pays nothing at all?
Now the Town tried to claim that it was actually only covering $325,000 while Mammoth Lakes Tourism would cover $150,000, but as Mammoth Lakes Tourism is funded by the Town of Mammoth Lakes …
By way of explanation for MMSA’s decreased share, MMSA CEO Rusty Gregory said that the Mountain, in supporting an increased number of flights during the 2011-2012 ski season, essentially took a gamble that backfired. The more seats you subsidize, the more money you can lose during a poor winter when those seats don’t get filled.
The Mountain paid a reported $3.5 million in winter air subsidies. Which clearly left MMSA feeling subsi-diced.
Gregory also pointed out that as part of the deal, the Mountain carries liability insurance for the commercial air service and also provides the letter of credit to Alaska Airlines guaranteeing payment. The insurance costs MMSA approx. $157,000 annually according to MMSA Vice-President Jim Smith.
As for the County, well, Mono County Supervisor Byng Hunt was summoned to the podium with a little prodding to explain the County’s goose egg.
While Hunt said he was not opposed to a subsidy and supports air service, that those who receive the benefit should pay the cost – indicating that the Mammoth Lakes business community needs to pony up.
In conversations with his fellow supervisors, Hunt believes it will be “difficult getting anything” out of them this year.
He also urged the Town to “get back to basics” and focus on essential services like roads and maintenance.
To be charitable, Mammoth Lakes business owner Tom Cage thought Hunt’s testimony lame.
Actually, he characterized Hunt’s position as “appalling,” saying a Supervisor who represents a Mammoth-drawn district should be more willing to fight for something which is important to his district.
Hunt cautioned Cage to keep his fingers [and the finger pointing] to himself.
Urdi did point out in his presentation that summer/fall service, based upon an analysis of the American Express credit card usage of air travelers, showed the county reaped approximately $700,000 in economic benefit from summer/fall air service just last year.
As for Mammoth Lakes Chamber of Commerce President Brent Truax, he characterized commercial air service as a basic service for a resort community.
Does air qualify for U?
Most folks who spoke about the issue said that they didn’t believe it was the voters’ intent to use Measure U money on airline subsidies.
Yes, the language in the ballot measure mentioned “mobility,” but Recreation Commission Chairman Bill Sauser said the intent was to cover special event trolleys and bus shelters, not airline subsidies.
“Voters would say they didn’t pass U to fund an airport subsidy,” he said.
All three members of the Measure U Steering Committee (Sauser, Joyce Turner and Sandy Hogan) who addressed Council Wednesday believed there was some level of “supplanting” going on – that Measure U was being raided and funding should come from another source.
This is why Council ultimately decided to frame the raid in the form of a loan, because Councilman John Eastman said, “It doesn’t qualify for U if it’s an ongoing use.”
Councilman Rick Wood said he was not troubled by the definition of mobility in the measure, or by the supplanting argument or voter intent. “This is an extraoradinarty measure for an extraordinary time,” he said.
Mayor Matthew Lehman agreed with Wood, stating that air subisdy qualifies for U money because it enhances and augments mobility.
That said, he was careful to tell the room that “we do respect the process.”
They said it
“Measures R & U were passed by a two-thirds vote because the community did not trust the Council to keep its political commitments. If we can’t handle the deficit without reneging on political commitments then we are not doing our jobs as Councilmembers.”
-Rick Wood, June 2011
