Recent increases in hangar rental fees at the Ashland Municipal Airport have not been enough to put the airport in the black — on paper — and have raised the question of whether the city is subsidizing airplane owners.

Recent increases in hangar rental fees at the Ashland Municipal Airport have not been enough to put the airport in the black — on paper — and have raised the question of whether the city is subsidizing airplane owners.

The City Council voted unanimously in July to increase the monthly rent on many hangars by $5 a month. The rent for an older T-hangar with doors, for example, will go from $195 per month to $200.

But even with the rent increases, the airport's budget is showing a $7,976 deficit for this fiscal year.

The City Council agreed with an Ashland Airport Commission recommendation to keep the rent increases modest so the airport would remain competitive with Medford's airport.

Critics of that proposal note the Ashland airport has 56 hangars and a waiting list of 20 to 25 people hoping to get hangar space.

City Councilor Eric Navickas said he believes it's inappropriate to subsidize the airport when the city faces shortfalls throughout its budget.

"I see the airport as somewhat of a luxury amenity to our city," he said. "I see no reason why we should be taking on a deficit for that luxury amenity."

Navickas has proposed that the Airport Commission return to the City Council in six months with a plan for addressing the deficit. He wasn't able to get enough support from fellow councilors for that idea.

"You can try and raise your rates to meet the deficit and end up losing more business than you gain," City Councilor Russ Silbiger countered at the time.

In a later interview, Ashland Finance Director Lee Tuneberg said the airport shows a deficit on paper because city policy requires it to keep 16 percent of its annual revenues in reserves.

When revenues are compared with expenditures, however, the airport will be $9,024 in the black for 2009-10. But since the airport is required by city policy to have $17,000 in reserves, it falls short by $7,976, according to this fiscal year's city budget document.

Long-term budget projections show the airport will fall short of having enough reserves on hand at least until 2015. The shortfall will go as high as $20,487 in 2013 when the ending fund policy will call for $20,000 in reserves and the airport will also be $487 in the red on its operations.

Tuneberg said the city is not subsidizing the airport. But he said he has suggested to the Airport Commission that it charge rental rates that will allow the airport to earn enough money to meet the policy on reserve amounts.

"We're not taking money and plunking it into the airport, but we're not putting away money to keep it financially viable for the long-term," Tuneberg said. "I believe they should charge market rates. If there's a waiting list, that says to me they could raise rates to create a better reserve.

"Others say, 'No. The waiting list will disappear. People will go to Medford.'"

Airport Commission member Alan DeBoer, a former Ashland mayor, said the city could raise hangar rents more, but added he believes the current rates have created stable, loyal customers, while charging higher rates would lead to turnover.

"Do you kick out a loyal customer to make room for a person with a lot of money? he asked. "We don't want empty hangars. We want a bit of a waiting list."

DeBoer has a plane but doesn't rent a city hangar.

The Airport Commission has taken steps to improve the airport's financial health, DeBoer said.

In years past, the airport allowed private construction of hangars with the understanding that those hangars would eventually be owned by the city. The first of 11 privately built hangars is coming into city ownership in August and the city can begin collecting rent off the hangar, according to a city staff memo to the City Council.

Vickie Aldous is a reporter for the Ashland Daily Tidings. She can be reached at 479-8199 or vlaldous@yahoo.com.