The city of Belgrade and Bozeman Yellowstone International Airport began negotiating a new lease and utility contract, but the document won’t be finalized until after bids for expansion of the city’s sewer treatment plant come in later this spring, officials for both entities agree.
“We met with the airport last week,” said City Manager Ted Barkley on Tuesday. “We pledged to each other early on that whatever the new agreement is, it will be fair to city ratepayers and the airport.”
It’s been 18 years since the city and the airport negotiated their current contract, which expires in 2022. Both Barkley and airport Director Brian Sprenger agree that it’s likely a new contract will be implemented before the current one runs out, but exact terms can’t be hammered out without additional information.
Barkley said meters were installed a few years ago to measure exactly how much load the airport puts on the city water and sewer systems. That means the next contract will stipulate that the airport compensate the city for its percentage of actual, metered use.
Metered data also will make it possible for the city to assess the airport for its share – approximately 7 percent – of capitalization costs for the sewer plant expansion. The airport already has paid for pipes on airport property, and has agreed to pay its proportional share of operations and maintenance costs, Barkley said.
While the percentages for capitalization are fairly easy to figure out, the actual dollar amounts aren’t. Belgrade officials learned in December that the cost of its planned sewer system expansion is likely to be several million dollars higher than originally estimated, partly due to increasing costs of concrete and labor. The city must wait for contractor bids in April before it will know exactly what the cost will be.
The main reason to forge a new contract before the current one expires is that both the city and the airport have grown significantly since 2002, and there are no signs that growth will slow down anytime soon.
“A lot has changed,” Barkley said, pointing to the rapidly rising number of residential units in the city in recent years.
During the same period, the airport has become the busiest in the state of Montana, with the number of passengers passing annually through the facility doubling over the past 10 years to 1.5 million in 2019.
Barkley acknowledged that there has been some “mistrust” expressed by Belgrade residents about the business relationship between the airport and city. He attributes citizen concerns to a lack of communication, and wants to ensure residents that all the complex factors figuring into the negotiations are being considered.
“This council is not gong to enter into any contract unfair to the city or the airport,” he said.
The parties agree that all the factors to be considered in the contract aren’t simple
to sort or explain, and some go back several decades. For example, the city and the airport erected the city water tower on airport land in 1976, because both needed water. In 1973, the airport obtained right-of-way from the state where the city’s sewage lagoons are located today. The airport also granted an easement to Belgrade for its sewer line, and installed a well on the east end of the airport at its own expense in 2001 to augment the water supply for the city and the airport.
Regarding mistrust, Sprenger said the public may not be aware of the nature of the contract, which is a lease governing the terms of the city’s rental of portions of airport land for city shop and utility facilities.
“Within that agreement are (provisions related to) water and sewer,” including compensation to the airport for utility services in lieu of rent, Sprenger said.
“There are a lot of pieces to it, both historical and going forward.”
Sprenger said it is possible that the airport and Belgrade could build terms into their contract to help the city with the cost overage.
“I think there’s a number of factors in fees that may be offset by land rent,” he said. “We may be able to prepay some of those fees, and then Belgrade would be able to save on interest.”
Barkley and Sprenger agreed that entering in a new agreement as soon as possible makes sense, as long as it includes a provision for early revisions.
“If the next five years looks like the last five years, the future is going to be a lot different,” Barkley predicted.