Ketchikan International Airport - A Unique Partnership
Ketchikan International Airport (KTN) is a state-owned airport managed entirely by the Ketchikan Gateway Borough (KGB) through a unique partnership agreement. This agreement allows for operation of the airport, with the state acting as a technical advisor to the borough and as a financial partner in major maintenance projects.
Advantages of this kind of agreement
- Greater local community control over management & participation in development of the airport.
- More revenue generating opportunities on the airport that are not available to the Department of Transportation and Public Facilities (DOT&PF) under current regulations.
- Ability to provide a higher level of service to airport users and the traveling public than DOT&PF is able to provide.
Development of the airport lease agreement
When KTN was constructed in the early 1970’s, the Alaska Division of Aviation and the Ketchikan Gateway Borough (KGB) entered into two lease agreements:
- 55-year lease (ADA-01977) for the building sites (terminal, safety building, M&O equipment building & ferry terminal facility)
- 5-year lease covering the rest of the airfield property. This airfield lease included provisions for land management and operation and maintenance of the airport by the KGB..
When the airfield lease expired in 1978, DOT&PF entered into a 3-year replacement lease (ADA-03782) that expired in 1981. This replacement lease was extended month-to-month by mutual agreement, pending the negotiation of a new lease (which became the current Lease ADA-05175)
By the time the second lease (ADA-03782) expired, DOT&PF and KGB noticed that the lease agreement needed to be changed regarding airfield operation and the terminal building. The expiration of Lease ADA-03782 created an opportunity to negotiate the changes each party wanted to make to the lease.
The more significant areas of negotiation are listed in the table below.
- Short term airfield lease might place KGB in a financially compromised position if DOT&PF did not renew it.
- Lease should be long term to avoid periodic renegotiation
- DOT&PF should take responsibility for buildings, ferry and bond payments if lease terminates.
- Airfield and building sites should be bundled in single lease so KTN could be managed as a whole.
- Airfield, ferry and terminal revenue should be in single account for financial security.
- KGB should create dedicated airport revenue fund for accurate KTN only expenditure accounting
- DOT&PF should be technical advisor for operations and financial partner in maintenance projects.
- KGB and DOT&PF should conduct joint inspections to catch maintenance problems early.
- DOT&PF should retain role as federal sponsor for airport in FAA grants.
- Should include an option for title transfer to KGB within term of the lease.
- KGB should be absolved of lease if KTN became financially unviable or if DOT&PF broke the agreement.
- Ferry system should be separate from KTN operations.
After over 3 years of negotiations, Lease ADA-05175 was signed on December of 1984. All involved believed the new lease was very close to an ideal agreement, meeting most of the needs of both parties.