JULIA ROBERTS GOAD

Staff Writer

PIKEVILLE, Ky. — In a heavily debated decision, the Pike County Fiscal Court agreed to support request a to use multi-county coal severance funds to fund efforts to bring commercial air service to the Pikeville/Pike County Airport.

In a courtroom filled to near capacity with people involved in the debate, the Court approved the resolution 5 – 2. Judge Executive Wayne T. Rutherford reversed his previous position and voted to throw his support behind the request currently pending before the Kentucky Department of Local Government of an appropriation of $1 million from the multi-county coal severance tax fund to the City of Pikeville, to be used to support the initial profitability and long-term sustainability of an airline.

The money is part of a proposed revenue guarantee package that would be used to recruit a major airline to service the airport (whose code letters are PBX). That package has been a point of contention at Fiscal Court. The Floyd County Fiscal Court has already passed a resolution supporting the use of the tax money to attract an airline to PBX.

The concept is that some money is set aside in as the revenue guarantee fund.

An airline doing business in the county would set a financial goal for each month. If the company falls short, money from the revenue guarantee package would be used to bring the amount of money the airline makes up to the monthly goal. The money would be given to the airline on a monthly basis so the company would not incur financial losses during the first two years of operation.

The Airport Authority has already secured a $650,000 grant from the Department of Transportation which would be part of the $2.5 million package, along with money from counties in West Virginia and Virginia that would be serviced by the airline, and funds from a travel bank.

Luke Schmidt of L.B. Schmidt and Associates, a consulting company, hired by the City of Pikeville and the Eastern Kentucky Chamber of Commerce to study bringing commercial air service to Pike County, gave a snapshot of the project so far, calling the project He said commercial air service is vital to supporting existing businesses as well as recruiting new ones to Pike County.

Two court members, District One Magistrate Jeff Anderson and District Six Magistrate Chris Harris, were the only “no” votes when the court voted to support the request.

“Until now, in the public eye, but it has been a one-sided conversation in favor of the project,” Magistrate Harris said.”That is due, in large part to a publicity campaign by the Chamber of Commerce, the newspaper … you have done a good job at getting the word out for your side of the story. But there is the rest of the story.”

“My opinion of what we are looking at is corporate welfare,” Harris said. “We are making sure that airlines will make a profit.”

He added that, if PBX has such potential for profit, he did not understand why the Airport Authority was having to work so hard to bring their service to PBX.

“I am surprised that only two airlines are interested if we are guaranteeing these folks that they’re going to make money,” Harris said.

“You can characterize it as corporate welfare, but I think it is a job creator,” Luke Schmidt said. “The money is there, communities apply for it every year, if the money is available, doesn’t it make sense to try to get your fair share it?”

“No,” Magistrate Harris said. “I don’t subscribe to that theory, that there is this money out there, and we need to waste it before somebody else does. That’s a different philosophy maybe than a lot of other politicians have, I don’t think just because the money is there that we need to go waste that money. I think we, as elected officials, have a duty to the public to protect their tax dollars, to only use their tax dollars on projects that have a good likelihood of success.”

Harris said that with the bleak financial outlook the county is facing caused by the decrease in coal severance funds, he felt government should be spending less money, not investing in the airport project.

“The coal industry is cutting back,” he said. “The airlines are cutting back because less people are flying. Our population in this area is declining. Those are facts.”

He said he thought the project was trying to attract airlines “by throwing tax dollars at them.”.

“We’re saying, ‘Here, look at all this money you can have if you come here and operate,’” Harris said. “If our area was a good candidate for commercial air service, it wouldn’t be much of a sale. I’m not convinced that this project will continue after the subsidy ends.”

Harris said people in his district do not see the project as a benefit to the county.

District One Magistrate said that while he appreciates that the Airport Authority is operating in a more transparent and communicative manner, he still does not think the commercial air service is a viable project for Pike County.

“We want the area to progress,” Anderson said. “But we have had layoffs, it’s like the industry has taken a tremendous gut-punch. We need to manage our money efficiently and effectively. Will it succeed? I don’t think so, I hope I’m wrong.”

Judge Executive Wayne T. Rutherford has had a position that the Fiscal Court was left out of much of the latest airport business by the City of Pikeville and the Airport Authority. He has publicly opposed the use of multi-county money to support the revenue guarantee, but changed his position – with reservations.

“No one worked harder to build this airport than I did,” Rutherford said. “The city needs to sit down with us, and not go off on your own with projects we have worked on. I have had serious doubts, but we are a progressive community and we need to stay that way. I am willing to take a chance, we need to move on.”

Staff photo/JULIA R GOAD Business leaders and elected representatives supported the airport Monday night at the East Kentucky Expo Center. L-R Rep. W. Keith Hall, Sen. Ray Jones, Jared Arnett with the East Ky. Chamber of Commerce, Pikeville City Manger Donovan Blackburn, Rep. Leslie Combs, Luke Schmidt and Bill Hickman, Airport Authority Chairman.

Julia Roberts Goad

Staff Writer

PIKEVILLE, Ky. — Members of the community, business leaders and elected representatives met at a forum at the East Kentucky Expo Center to discuss plans for the Pike County Airport.

Those who spoke included Sen. Ray Jones, Reps. Leslie Combs and W. Keith Hall and Bill Hickman, Chairman of the Airport Authority.

Luke Schmidt of L.B. Schmidt and Associates, a consulting company, addressed forum to outline the project. L.B. Schmidt was hired by the City of Pikeville and the Eastern Kentucky Chamber of Commerce to study bringing commercial air service to Pike County.

“There have been many twists and turns along the way,” Schmidt said. “But there clearly is a market for scheduled air service here. It would service 13 counties, in Kentucky, Virginia and West Virginia.”

Schmidt said there were two goals needed to provide that service. The first is to recruit a regional airline that is linked to a major airline, and secondly to connect service in Pike County to a major hub such as Charlotte, N.C. or Atlanta.

Schmidt told the Court the best tool for recruiting an airline to Pike County would be a revenue guarantee package.

The concept is that some money is set aside in as the revenue guarantee fund.

An airline doing business in the county would set a financial goal for each month. If the company falls short, money from the revenue guarantee package would be used to bring the amount of money the airline makes up to the monthly goal. The money would be given to the airline on a monthly basis so the company would not incur financial losses during the first two years of operation.

Schmidt said the Airport Authority is in negotiations with two well known airlines, who decline to be named due to confidentiality agreements.

At Monday evening’s forum in Pikeville, those present showed overwhelming support for a regional airport.

Jared Arnett, Vice President of Operations at the East Kentucky Chamber of Commerce, said transportation is key to business.

“We started this because our members identified the lack of air service as a barrier to growth or recruiting businesses,” Arnett said. “A hundred years ago, the C&O Railroad came to Pikeville, and we have the Mountain Parkway, which opened us up to external markets in Pennsylvania, West Virginia and Tennessee. But now things have changed, we need to appeal to a global economy.”

He said the region is losing business to other markets.

“We have the infrastructure, the industrial parks,” he said. “But we have no commercial air service, and without it, businesses will not come.”

Donovan Blackburn, Pikeville City Manager, said that according to studies done there are enough passengers to support the airport.

“In the counties we would serve in Kentucky, Virginia and West Virginia, there are 333 flying each day,” Blackburn said. “That’s 17 flights a day, the opportunity is here.”

Members of the community spoke at the forum about the difficulties of both personal and business travel.

Joel Thornbury owns a chain of pharmacies in the area and travels frequently for business.

“I spend about $15,000 or $20,000 a year in hotels and fees because I have to go to other airports,” Thornbury said. “That is money lost to our community. How many hotel stays are lost because we don’t have an airport?”

Danny Vanhoose with Appalachian Wireless said other companies’ executives have to drive from other airports, and it is an inconvenience.

“It’s a disconnect,” he said. “It’s like our representatives don’t understand what business needs.”

Rep. W. Keith Hall shared the frustration of doing business without commercial air service.

“I have been working with an Indian company,” Hall said. “We signed a 25-year contract with them, and I had to apologize to them for having to drive from Lexington. It is a deterrent to progress. This is a win-win for Pike County. We need to have vision, without vision, we perish.”

Dr. Samuel King is a Pike County native, a graduate of Belfry High School, Pikeville College and the UK School of Medicine, he has practiced in Pikeville for 29 years.

“The people we have here are visionaries,” he said, speaking to the panel at the forum. “We need to make things better. Apathy is an attitude, not an action. We need to continue to have vision, we need to be pro-active.

By JULIA ROBERTS GOAD

Staff Writer

PIKEVILLE, Ky. – The Pikeville/Pike County Airport Authority asked the Fiscal Court for its support to secure funds to recruit an airline to service commercial flights to the county.

Luke Schmidt, with L. B. Schmidt and Associates, a consulting firm, outlined the plan to bring commercial air service to the airport, located near Harmon’s Branch.

Judge Executive Wayne T. Rutherford gave a brief history of the airport.

He said the property was jointly purchased years ago by the City of Pikeville and the Fiscal Court, including the mineral rights to coal on the property. The money from the sale of the coal that was mined as part of construction at the site was was put into an account for development of the airport.

Then, Rutherford said, the “government withdrew from the project. We looked at three locations to put the airport, but the one we have now was determined to be the best one.”

The location the airport is now, near Harmon’s Branch, was purchased by the County, Rutherford said.

“Then the City became part of the Airport Authority again,” Rutherford said. “That airport is there because of the Pike County Fiscal Court.”

He said last year, the Airport Authority asked the Fiscal Court to fund a feasibility study, a request the Fiscal Court denied. Then, Rutherford said, the study was done with money from the Pikeville/Pike County Chamber of Commerce.

“We have worked to bring commercial air service here,” Rutherford said. “Then along the way we, as a body, were left out. We heard about commercial air service in the paper.”

“I have always been for the airport,” Rutherford said. “All of the magistrates have said they were in favor of this service in the county.”

Schmidt addressed the Fiscal Court at their regular meeting. L.B. Schmidt was hired by the City of Pikeville and the Eastern Kentucky Chamber of Commerce to study bringing commercial air service to Pike County.

“There have been many twists and turns along the way,” Schmidt said. “But there clearly is a market for scheduled air service here. It would service 13 counties, in Kentucky, Virginia and West Virginia.”

Schmidt said there were two goals needed to provide that service. The first is to recruit a regional airline that is linked to a major airline, and secondly to connect service in Pike County to a major hub such as Charlotte, N.C. or Atlanta.

Schmidt told the Court the best tool for recruiting an airline to Pike County would be a revenue guarantee package.

The concept is that some money is set aside in as the revenue guarantee fund.

An airline doing business in the county would set a financial goal for each month. If the company falls short, money from the revenue guarantee package would be used to bring the amount of money the airline makes up to the monthly goal. The money would be given to the airline on a monthly basis so the company would not incur financial losses during the first two years of operation.

Schmidt said the Airport Authority has already secured a $750,000 from a Small Community Air Service to provide money for that revenue guarantee. He said the Authority, along with the Eastern Kentucky Chamber of Commerce and the City of Pikeville, is asking the Kentucky Legislature for $1 million in multi-county coal severance tax funds for that guarantee.

Schmidt asked the Pike County Fiscal to agree to support that request.

But the Court had reservations in asking for coal severance tax money for the revenue guarantee package.

“Pike County supplies 32 percent of the coal severance money in Kentucky,” Rutherford said. “This Court was not asked to be included in applying for the $750,000 grant, we have not been included even in news releases about the airport. I am disappointed that we are left and then brought back in when they need money.”

Rutherford said he has asked how much money the Airport Authority has, and found out that amount is $6 million.

District One Magistrate Jeff Anderson asked Schmidt why the Airport Authority was asking for $1 million in coal severance funds if they had $6 million.

Schmidt said there were restrictions on the money the Airport Authority has, although he was not certain what those restrictions were.

“I am not the person to ask,” Schmidt said. He said coal severance money was to be used for economic development, which the airport would be.

Members of the Fiscal Court said they had doubts to the feasibility of a regional airport. Schmidt used an example of a small airport in Manhattan, Kansas, to show how a revenue revenue guarantee package could work to establish air service in a small airport.

But PCFC Deputy Judge Executive John Doug Hayes pointed out that he Manhattan Kansas area has a much larger population, more college students and a more stable tax base.

“They don’t rely on coal,” Hayes said.

Magistrates on the Court said they felt there were more pressing matters coal severance funds could be used for. DIstrict Three Magistrate Leo Murphy said the county’s citizens have more basic needs than air service.

“I want air service too, but let them use their $6 million,” Murphy said. “We have needs in the county, There are people in my district without drinking water, we have to truck water to them. There are more needs for coal severance money.”

Another concern of the Court was that although Schmidt said there were two major airlines who are interested in providing service in Pike County, neither of those companies wanted their identities to be disclosed.

“I have great reservations,” District One Magistrate Jeff Anderson told Schmidt. “It is not transparent.” He said that the City and the Airport Authority know who those companies are, but that the Court did not. Schmidt explained that the City of Pikeville and the Airport Authority were his clients, and as such he could not disclose any confidential information that might hinder the project.

“It is a competitive issue,” he said. “If carriers see their name in the paper, it will blow our chance out of the water.”

But the PCFC was not convinced that an airport was a worthy project in such financially challenging times.

“My objection is that it isn’t a smart use of our tax dollars,” District Six Magistrate Chris Harris said. “If we supplement their income now, where will be in two years? If a was self-supporting, then an airline would want to come in.”

“The Airport board should come and talk to us,” District Two Magistrate “Chick” Johnson said. “They act like they are hiding something. We have never seen letters, or anything about this. They need to come to us; coal severance money is all we’ve got.”

In the end, Rutherford put a motion on the floor to support the request for $1 million in coal severance funds for the revenue guarantee, but none of the Magistrates seconded the motion, and it died without a vote. It will be carried over to the next Fiscal Court meeting.