Chattanooga Airport on Wednesday lurched closer to a buyout of general aviation competitor TAC Air.
The Airport Authority agreed to an initial resolution for the issuance of up to $10 million in revenue bonds, which is expected to help finance the purchase of privately held TAC Air's extensive hangar and office space.
Airport officials declined to immediately talk about the resolution after a short called meeting of the airport board. But sources said the deal could cost about $12.3 million.
Airport spokesman Albert Waterhouse said the board "has put additional financing in place so the airport can continue to strategically meet the future needs of all our customers."
The airport panel is slated to meet Friday to approve another resolution related to the issuance of the bonds and potentially finalize the transaction with the Texarkana, Texas-based company that primarily provides fuel and other services for small aircraft.
Airport attorney Hugh Moore said the city of Chattanooga is not obligated by the issuance of the bonds. He also said the city is not guaranteeing repayment of the bonds, nor do the bonds affect the city's credit.
April Eidson, a member of a Chattanooga watchdog group, said she's disturbed by the potential purchase of TAC Air's facilities at the airport.
"It's a misuse and waste of money," she said.
Pam McAllister, who heads TAC Air's operations at the airport, declined comment Wednesday on the action by the Airport Authority. But a TAC Air official at the company's corporate office said last week that there was "a pending agreement" between the parties.
The airport and TAC Air have been in a long-running dispute related to general aviation services at the airport. Nearly four years ago, airport officials agreed to spend about $10 million to construct their own general aviation terminal and hangar space on the airport's west side.
Those facilities, which compete with TAC Air, are managed by Wilson Air Service of Memphis.
Moore said the revenue bonds will have a maximum interest rate of 4.99 percent. Upon questioning by airport board member Mike Mallen, Moore said the bonds would be "solely paid back by revenues of the Airport Authority."
Lovell Field does not receive tax dollars from the city or Hamilton County for its operations, but the facility depends on revenues generated on site along with state and federal grants.
In 2010, when airport officials announced plans for the new general aviation terminal operated by Wilson Air, it cited questions and complaints about service by TAC Air. But the private company cried foul, claiming the airport was trying to drive the business off the air field.
The airport's terminal has been a money loser. Projected losses this year will put the total amount of red ink since opening at about $1.31 million. Airport officials said the losses are narrowing and that it takes time for a startup to become fiscally viable.
Eidson said, however, that if the airport buys out TAC Air, the move will leave just one fixed base operator at Lovell Field.
She said airport officials had argued in 2010 that it needed to have competition, "now it's systematically taking TAC Air out."
Contact Mike Pare at email@example.com or 423-757-6318.