MERIDEN — After bids for construction of five new aircraft hangars at Meriden Markham Airport came in over budget, the City Council is considering increasing the project’s budget by $405,000 rather than reducing the number of new hangars.
The council is weighing bonding the additional $405,000 or taking it from a roughly $1 million surplus from fiscal year 2018-19.
If the council doesn’t allocate additional funds, City Manager Tim Coon said the city will have to eliminate one hangar. Original plans called for construction of three brand new hangars and reconstruction of two existing, decrepit hangars at the municipal airport, which straddles the Meriden-Wallingford line on Evansville Road.
Last month, Coon recommended one hangar be eliminated.
Some councilors, however, have expressed an interest in paying the additional money for all five hangars, saying they will generate revenue through rent pilots will pay to store aircraft.
The city’s Finance Department has projected the hangars will produce enough revenue to pay for themselves in about 20 years.
“It’s an investment opportunity for the city,” Democratic Councilor Miguel Castro said during a recent discussion among the council’s Finance Committee. “... It’s an investment into a jewel in our city that should have been done a long time ago.”
Other councilors have raised concerns about the community’s ability to pay for the additional bonding, given the amount of large capital projects the council has recently bonded, including $7.8 million for library renovations. To date, the council has authorized just over $3 million in bonding for the airport improvements.
“We’ve allocated $3 million for this project, and we should do what we can afford,” Council Minority Leader Dan Brunet said during the recent Finance Committee meeting. “... I have to sit here and listen about airports and golf courses like we’re some big, affluent community. You don’t see Wallingford or Southington (approving money for airports and golf courses).”
The city this week published a notice for a public hearing scheduled for Monday on bonding $405,000 for the additional hangar, however, the hearing will only be necessary if the council votes to bond the money, Coon said. The council is required to provide five days’ notice for a public hearing, so the public notice was sent out just in case, he added.
While the city hasn’t completed its audit for 2018-19, staff projects a roughly $1.6 million surplus. The council voted earlier this year to use $632,000 to replenish the city’s rainy day fund, leaving about $1 million.
A number of various capital projects have been suggested in discussions, however, some councilors are leaning toward allocating the money to the city’s health insurance fund, according to Brian Daniels, chairman of the council’s Finance Committee.
Finance Director Michael Lupkas estimated the city’s health insurance fund had a deficit of roughly $1.4 million at the start of the current fiscal year, though Lupkas added that figure won’t be final until the city completes its audit later this year.
Using the surplus to replenish the health insurance fund could allow the city to lower its allocation to the fund in the 2020-21 budget, effectively lowering the tax rate, Lupkas said.
Generally speaking, Lupkas said the city ideally would maintain a positive balance of about $5 million to $10 million in the health insurance fund.
At the end of fiscal year 2017-18, the fund had a negative balance of just under $2 million because of a couple of “bad years” of insurance costs, Lupkas said. The city was able to reduce that deficit this past fiscal year by allocating $800,000 of the $3.4 million in unanticipated revenue received from Eversource Energy as a result of past under-assessments of the utility’s personal property. The city also allocated $1.2 million of the Eversource funds into the health insurance fund to “prepay” for insurance costs for the 2019-20 budget, which helped the city reduce the tax rate in this year’s budget.
For the past several years, Lupkas said the city has traditionally put any surplus funds leftover at the end of a fiscal year into the insurance fund.