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Council agrees to spend $600,000 for East Coast flights

The city of Fort Wayne will kick in up to $600,000 to help induce an airline to offer daily flights to an East Coast travel hub.

Just a few weeks after the proposal failed to get off the ground, Mayor Tom Henry’s administration brought the idea back, this time with a proposed compromise and Airport Authority Executive Director Scott Hinderman and Deputy Mayor Karl Bandemer to lobby for it.

The $600,000 over two years is to help create a minimum revenue guarantee for whichever airline begins operating daily flights to an East Coast hub where passengers could connect to almost anywhere in the world. If the route was at first unprofitable, the minimum revenue guarantee would ensure the airline did not lose money. The minimum revenue guarantee is part of a $2.5.million incentive package built around a $600,000 federal grant.

Hinderman said the airport is negotiating with United and American for twice-daily flights to either Newark or Philadelphia, and if flights are full, the minimum revenue guarantee will not be needed.

“If people get on the planes and use the service – if there’s butts in the seats – there won’t be a need to pay,” Hinderman said.

Greater Fort Wayne Inc. and the Airport Authority are contributing $500,000 toward the package, Allen County is contributing $150,000, the Indiana Economic Development Corp. has offered $100,000 and the Regional Opportunities Council $50,000.

“All indications are this flight should work without any funds,” Hinderman told council members. “But without the tool of MRG, we will not receive this flight.”

A few weeks ago, the administration asked to hold the bill because it was clear it didn’t have the votes. Members voted 8-0 to hold it, then spent a half-hour criticizing the idea. Their biggest complaint was that it called for using Legacy Fund money to pay for it, which is money from the lease and sale of the city’s old electric utility and is meant for transformative projects. This time, Bandemer offered to use only half from Legacy and half from county economic development income Taxes.

“Legacy money is viewed by the citizens as a community treasure, and its use has to be very, very carefully explained,” said Tom Smith, R-1st. “But this has truly been a long-standing need, so I will swallow hard and vote for the 50-50 split with CEDIT.”

Russ Jehl, R-2nd, was the lone vote against the measure, after he pointed out that the Airport Authority has a healthy cash balance of about $9.5.million for a $26.million annual budget and a robust capital spending plan.

“I’m uncomfortable subsidizing a co-equal taxing body that has more cash on hand than we do,” Jehl said.

Utility purchase

Council members also heard an update from City Utilities Director Kumar Menon and Aqua Indiana President Tom Bruns on the city’s purchase of the company’s southwest water utility.

Both said work on the agreement – a $67.million purchase of the southwest system and settlement of the dispute over the purchase price for the company’s former north system – is progressing smoothly.

Officials expect to have a final agreement for the council to vote on in late April or the beginning of May, and Aqua customers could start transitioning to city water in the fall, a process that will take about five months to complete.