Oct. 15—TRAVERSE CITY — Commissioners from Grand Traverse and Leelanau counties approved the initial step for a nearly $60 million bond sale to help fund a major terminal expansion at Cherry Capital Airport.
The Northwest Regional Airport Authority board hosted a joint meeting Monday afternoon with Grand Traverse and Leelanau county commissioners to outline the estimated $112.8 million expansion project, which is scheduled to begin in 2026 and be completed by 2028.
The meeting included a tour of the development site for the new project, and a financial overview of the proposed financing from Sean Wahl of PFM Financial Advisors which is assisting the airport with the project, along with bond counsel Patrick McGaw of the Michigan-based Miller Canfield law firm. All three boards voted in favor of proceeding with financing for the project.
"This is a milestone for us," Authority Board Chairman Steve Plamondon said. "This is something we've been working on for a long time."
Plans call for an 80,000-square foot terminal expansion — the existing 20-year-old terminal is 121,000 square feet — which would include five additional jet bridges in addition to the five existing bridges, along with construction of a second concourse and a connector building between the existing and new structures.
The project will be paid for with funds from the Michigan Department of Transportation and the Federal Aviation Administration, along with bond funds repaid with a $4.50-per-passenger facility charge levied on airport travelers. The airport's long-range capital plans include another 80,000-square-foot terminal addition and a total of 15 jet bridges by 2038.
Airport CEO Kevin Klein presented officials with a brief history of the airport, which dates to the 1930s from its original location off Veteran's Drive in Garfield Township. It moved to its present location in 1936 and was used for training by the U.S. Navy during World War II. Traverse City took over the airport's operation after the war, and four new runways were added in 1960. The airport's first jet service arrived in 1963 with a flight between Traverse City and Detroit through North Central Airlines.
Cherry Capital cracked the 100,000 annual passenger counts in the mid-1970s, a number that has steadily surged to more than 700,000 passengers recorded last year through six airlines that serve the airport to 20 non-stop seasonal and year-round destinations around the country. It's currently the third-busiest airport in Michigan.
The existing terminal opened in 2004, but was designed to handle 250,000 to 300,000 customers per year, Klein said, which is less than half of the facility's current travel load. The airport's current capacity limit is about 1,125 patrons, so the facility "is knocking on the door" of its fire code limits, he said.
"We're building this for the capacity that we currently have," Klein said.
But most of the meeting centered on financial projections for the proposed expansion, which generated most of the questions from county officials. Wahl's estimates included a project cost of just over $112.8 million for the expanded terminal. Almost $51.8 million is expected to come from grant funds from the Federal Aviation Administration, leaving a necessary bond amount of just over $59.7 million in fixed rate bonds for up to 30 years, a figure that would increase to about $70 million in total bonding costs for expenses associated with the sale and interest costs until the funds are used.
Officials said the bonds would be repaid through various airport operational funds and that no local tax dollars are needed to finance the project. But the airport wants Grand Traverse County to pledge its full faith and credit to back the bonds to save on financing costs, which officials estimate will save the airport more than $17 million in financing for the project.
The Airport Authority's bylaws also require Leelanau County to support the bond sale, although only Grand Traverse County's full faith and credit is required under state law because the airport is located with the county's boundaries.
The financing plan spurred questions from commissioners during the meeting — including several from Grand Traverse Commissioner TJ Andrews. She asked whether the county's support resolution would commit the county to bonding the project — airport officials said it would not at this point — and also questioned whether airport had exhausted available grant funds that could be used for the project.
Andrews, who cast the lone "no" vote to the action approved by the two county boards, also questioned some of the other revenue projections used by the airport, including potential parking income, and some "peak hour" airport activity numbers that dated to 2019.
Grand Traverse County Administrator Nate Alger said county officials haven't discussed the airport expansion with the county's bond counsel nor its financial adviser, which they want to consult before formally signing off on the project.
County Finance Director Dean Bott said he wanted to ensure that taking on the airport's debt wouldn't have an impact on the county's existing credit rating. That will be part of their due diligence in the coming weeks and months before the county formally commits to the project.
"We've worked very hard, and we want to maintain our credit rating," Bott said.
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