Amid NEK Airport Expansion, A Question Of Funding And Timeline
State officials today will celebrate a Northeast Kingdom airport’s new and improved runway — a project several years and many million dollars in the making. Now, private developers are on the hook to deliver other improvements. And there’s some concern about delays in the developer’s timetable.
Dan Gauvin radios from his four-seat Cessna, and aims for the sky. Gauvin lifts off almost every day. He had been running the Newport State Airport for almost decade when, in 2012, developers from Jay Peak ski resort took over management of the facility.
Jay Peak’s parent company, Q Resorts, kept Gauvin on to run airport operations. He’s seen a lot of changes since then. From 1,000 feet above ground, he points out some big ones.
“You can see the black part at the other end, that’s all new,” he says.
A thousand feet of fresh black-top caps the base of the airport’s north-south runway. Between it and a tiny white terminal building, construction vehicles criss-cross a new area for planes to park. Beyond that lies a massive new stormwater retention pond.
“The base of that’s the size of a football field, believe it or not. It’s 27 feet deep,” Gauvin says.
These and other infrastructure improvements were mostly paid for by federal grant money — a lot of it.
“$2.1 million is our usual program funding from the feds every year, and we brought in excess of $60 million in two years,” according to Guy Rouelle, who heads up Vermont’s Aviation Program.
Almost half that has gone to the Newport airport, for upgrades designed in conjunction Q Resorts’ plan to put the airport on the map: They’d build a new and improved terminal with customs service for international cargo and passengers, bonded warehouses for use by import-export businesses, an assembly plant for small aircraft and more hangars for private plane owners.
This year, the Legislature even renamed the airport the Northeast Kingdom International Airport.
To date, though, it’s mostly the publicly-funded projects that have come through. Q Resorts, which also has projects in limbo in nearby Newport and East Burke, hasn’t yet delivered its end of the bargain.
Rouelle acknowledges this has caused some nervousness.
"I also have not only the concerns of the relationships that I've built and the expectations to follow through, but I also have people that I report to." - Guy Rouelle, Vermont Aviation Program
“Because I also have not only the concerns of the relationships that I’ve built and the expectations to follow through, but I also have people that I report to,” he said. “And they’re like, ‘Wow, Guy. Why did we give all of the transportation funding match for this to a dead-end project?’”
Rouelle says he relayed that concern to the developers, and he understands their strategy, which Jay Peak president and CEO Bill Stenger sums up this way:
“Why would I ever build a terminal before I had a runway that could service the aircraft? It would be a waste of time and money. Now that the runway is complete, we are now ready to pull the trigger on these other things,” Stenger says.
Rouelle says he’s “cautiously optimistic” that Q Resorts will deliver: They’ve built a new hangar, initiated plans for a new fueling station, and nearly finished designs for the new terminal.
Now, all Q Resorts needs is money — anywhere from $5 million to $20 million, depending on the source. But, it’s not clear where that’s going to come from.
At a meeting in late July, Stenger surprised Rouelle and others by mentioning the EB-5 Immigrant Investor program as a possible source of funds. With EB-5, foreign investors receive legal residency in exchange for $500,000 in qualified investments. It’s how Q Resorts has financed major buildouts at Jay Peak. But especially with increased state and federal oversight, EB-5 — which can be unpredictable on a good day — doesn’t work for Rouelle’s timeline.
“It, in my eyes, was going to push that terminal out another possibly 18 months to two years, and we would have an apron sitting there with, you know, we’re here at the prom but I’m not dressed up,” he says, laughing.
Jay Peak CEO Bill Stenger denied that anyone from the state has steered him away from EB-5 for the terminal. He says he’s not pulled it off the table entirely, though he says it’s not his first choice.
“If we can incorporate it into a logical EB-5 project, we may pursue that. But right now we’re looking at other alternatives,” Stenger says.
"Now that the runway is complete, we are now ready to pull the trigger on these other things." - Bill Stenger, Jay Peak president and CEO
He says promising options abound: “We can do it with a mixture of private, commercial lending and then other financial devices that are available such as issuing bonds or doing a VEDA loan or combination of things.”
However it’s paid for, Rouelle expects terminal construction to start in April. Stenger gives more leeway for potential permitting delays. He says once it’s started, terminal construction should take six to eight months, and will occur alongside construction of the bonded warehouse and deployment of the airplane assembly plant, all of which he expects to complete by the end of 2017.