Two private companies at the East Hampton Airport may see a 100-percent increase in fuel fees paid to the town, if the East Hampton Town Board votes to approve the hike.
The idea is on hold for the moment, however, as town officials discuss its feasibility.
The East Hampton Town Budget and Financial Advisory Committee this month recommended raising the “fuel flowage fee” for airport-based businesses that buy fuel from the town to sell to pilots. Under the proposal, the town fee would go from 15 cents to 30 cents per gallon, which would mean an extra $115,245 in annual revenue for the town.
Cindy Herbst of Sound Aircraft Services spoke at Tuesday’s East Hampton Town Board work session, asking that the town reconsider, saying such a hike would be devastating for her firm: “This will surely close our small business in the next few years.”
But committee member Peter Wadsworth said the price the town charges fixed-base operators, as the airport-based businesses are called, has not increased since the early 1990s. Meanwhile, he said, the town’s wholesale provider of fuel has increased prices seven times since 1999.
According to the budget committee, the fixed-base operators, Sound Aircraft Services and Meyers Jet Fuel, sold an estimated $4.7 million worth of fuel in 2013, and 93 percent was sold for jets and helicopters.
At 15 cents per gallon, the town collected $115,245 in fuel flowage fees in 2013. The airport that year brought in $625,549 in rental income and almost $1 million in landing fees, in addition to the fuel flowage fee revenue.
Mr. Wadsworth said not only does the town buy the fuel from a wholesaler, which is selected by the fixed-base operators, but it also maintains the fuel farm, which has two storage tanks to hold the fuel. The town assumes all liability for the storage facility.
Airport Manager Jim Brundige said the town spent almost $10,000 in repair and maintenance at the fuel farm this year already and budgets $3.5 million for the fuel farm.
Suffolk County inspected the fuel farm this year and recommended a project to keep barrels in an enclosure and on a concrete pad, which would cost about $3,000, Mr. Brundige said.
Raising the flowage fees would help cover that cost as well as the cost of updating the farm, about $600,000, after about five years, according to Mr. Wadsworth.
All of this comes down to finding ways to increase revenue at the airport so it can pay for the necessary capital improvements without relying on the Federal Aviation Administration for funding, Mr. Wadsworth said on the phone earlier this week.
Just last week, the Town Board approved the increase of fixed-wing airplane and helicopter landing fees by 10 percent.
To some, like Jeffrey Smith, vice president of the Eastern Region Helicopter Council, it may seem as if the town is trying to reduce the number of helicopters that fly in and out of the area. In a letter to the Town Board last week, Mr. Smith asked the board for transparency, saying that town officials should “acknowledge that a system is being put in place to eliminate helicopters, reduce airport traffic and put the burden of supporting the airport solely on the backs of lease holders, local general aviation tenants and enthusiasts.”
But Mr. Wadsworth said that is not the case. He said the budget committee does not intend to advocate a position, but merely present the facts.
“If you consider the cost to rent a helicopter, which is in the thousands of dollars, including substantial fuel costs, raising the fee by 10 percent is not going to impact [a pilot’s] decision” about whether to use the airport, Mr. Wadsworth said. “Bearing in mind that landing fees are scaled by weight within classes of aircraft, it is certainly not an attack on helicopters. It’s non-discriminatory. It’s across the board.”
To raise revenues from the airport, the budget committee is also considering paid parking, setting lease renewals at fair market value, building and renting out new hangars, making use of 15 vacant lots along Industrial Road and introducing a solar power farm.
But in the meantime, the Town Board has to consider raising the fuel flowage fee—a decision which has been tabled for a week.
Last week, some board members said they were sympathetic to the fixed-base operators and would consider increasing the fee incrementally instead of all at once.
This week, Town Supervisor Larry Cantwell said he was uncomfortable with the fact that the operators choose the wholesaler they want and that the town buys the fuel without publicly bidding for it. He said the town needs to reevaluate the way the fuel farm works.
Mr. Wadsworth said raising the fees is one way to start improving revenues from the airport.
“We honestly thought this was a slam dunk when recommending these,” he said. “We’re looking for opportunities all over the place for revenue enhancement. This is just one of many.”