WILLMAR -- The city of Willmar and the state of Minnesota have reached an agreement for the city to repay state money used to acquire about 700 acres of land for the old airport.
State law requires a municipality to repay the State Airports Fund if any airport land acquired with state money ceases to be used for aviation purposes. The city opened the new airport on Sept. 5, 2006, and the old airport was closed and is being developed by the city into an industrial park.
The agreement calls for the city to pay $824,380 to the Minnesota Department of Transportation Office of Aeronautics. The repayment amount is based on a land appraisal.
The city and MnDOT Office of Aeronautics started talking about repayment a couple of years ago. The city had counted on the ability to sell old airport land to repay the state for what it felt was its investment in the airport over the years, City Administrator Michael Schmit said.
But the city had been unable up to this point to sell any land because the city never received a land release from the Federal Aviation Administration. However, a solution to the land release issue seems to be on the horizon, said Schmit.
"We hope that maybe even (this month or next), we'll have something with regard to that,'' he said.
Discussion of the repayment agreement resumed after MnDOT Aeronautics decided a few months ago to withhold the city's $52,000 annual airport maintenance payment. The payment would be applied to what the state said was owed by the city.
"We've been in discussions with Aeronautics for a couple of months now, and they've finally agreed that that wouldn't be appropriate. So they've reinstated our maintenance payment and asked us to sign this agreement with the idea that the five-year original repayment term has been reduced to three years,'' Schmit said.
Schmit recommended the City Council's Finance Committee approve the agreement, and the committee this week voted to recommend the agreement be approved by the council, which meets again Monday.
Schmit said repayment can be accomplished by selling old airport land. The city has a purchase agreement pending with a local business to buy the old terminal site for expansion purposes.
Finance Committee Chairman Denis Anderson asked Schmit if he sees a hardship if the city couldn't sell any land.
Schmit said old airport land located east of the new County Road 5 has already been incorporated into the current industrial park site with lots platted, streets laid out and utility improvements.
He said the city will determine how many of the remaining 700 acres are needed for future city growth.
"We don't think we need all of that acreage,'' he said.
Some land west of old County Road 5 and some land south of state Highway 40 could be sold to reduce the city's obligation. The city will try to lay out a long-range plan for land west of the new County Road 5. What isn't needed could also be sold.
Also, the state has agreed that any money spent on projects such as fencing, hangar improvements, runway expansion and apron expansion at the new airport can be deducted.
Schmit agreed with a comment by committee member Rick Fagerlie that the city would be better off getting projects done at the new airport.
Schmit was optimistic that the city can either through land sales or airport improvements at least take a big bite out of the full amount -- if not eliminate it -- and then in 2012 pay off the remaining balance.
The city had thought the appraisal would be in the $200,000 to $300,000 range, Schmit said.
"In that regard, it's probably not a good deal. But what is a good deal is allowing us to make improvements at the new airport and deducting it from that amount,'' he said.