SilverWing poses airport funds dilemma

SANDPOINT — Last year, plans for an affluent fly-in residential development on city owned property adjacent to the Sandpoint Airport prompted the Federal Aviation Administration to cut off all funding for the county operated facility, costing at least $150,000 a year in entitlement funds and potentially millions more in annual grant money.

This month, the southern California developers behind SilverWing at Sandpoint — a 44-unit gated community aimed at a high-end clientele — said they are moving ahead with selling lots and finished homes at the property, despite the federal fallout.

The FAA, meanwhile, has told Bonner County officials that one way to get airport funding flowing again would be to buy the SilverWing property, which already has paved streets, sewer and cable in place for its planned upscale homes, and then make sure none of those homes ever get built.

FAA officials stop short of saying they have offered to help fund such a purchase, but that message seems to have been implicit in what the federal agency has held out as “one option” the county might pursue to get airport funds flowing again.

“It was an overture, but at this point that’s all it was,” said Bonner County Commissioner Cornell Rasor, referring to discussions between the county and the FAA.  “I haven’t seen any green flashing.”

Nor has Chris Popov, the chairman of the Sandpoint Airport Advisory Board who has been communicating with FAA officials in order to work through a corrective action plan that could get the airport back into compliance.  According to Popov, Bonner County would have to pay for “a stack of studies, environmental assessments and appraisals” even before it shelled out the money for the property itself.  Not until that point, he added, would it be able to approach the FAA for funding to buy the already improved acreage.

“The FAA didn’t say, ‘Go acquire the land,’” Popov said.  “They said, ‘Solve the problem that caused the non-compliance; one of those solutions would be to acquire the land.’

“There is a way we can do it if it’s financed by the FAA,” Popov added.  “But I don’t know if there’s the political appetite to do that.”

Bonner County Commissioner Lewis Rich, the county’s appointed representative on the airport board, was attending a conference last week and did not respond to requests for comment, but Rasor said the physical layout of the airport makes the problem more complex.  The runway at Sandpoint Airport dissects county and city property, which means that, even should Bonner County purchase SilverWing and stop residential development, it would first require buy in from the city of Sandpoint, which would have to redraft codes and ordinances to make that happen.

“Part of the issue is that the county is expected to ask the city to create a new set of rules that would not allow that,” Rasor explained.  “The whole thing is just an octopus.”

SilverWing developers John McKeown and Michael Mileski see things in simpler terms.  The initial process of gaining city approval for the residential project and a green light from the county for a runway easement moved quickly, they pointed out.

“When I purchased this property in 2006, it took 10 days from start to finish,” McKeown said.  “We built the taxiway because we thought it made sense to start it, get it done and give it to the county.

“Everyone was happy until the FAA stepped in,” he added.  “But they can’t stop us.  We have the easement, we have the planned unit development and we’re going ahead.  We’re building this.”

Although the FAA cites several areas where it has deemed the airport to be out of compliance, the SilverWing project accounts for the three biggest infractions — a residential component at close quarters to the runway; the west-side taxiway the developers built to serve its residents and the needs of neighboring Quest Aircraft; and what the federal agency calls a “through the fence” section of pavement that provides access to the middle of the runway for both west-side users.

The FAA said this week that airport funding will not be reinstated until the county limits access to the ends of the runway only, addresses what it views as a west-side taxiway that is out of accordance with the facility’s approved layout plan and takes steps “to ensure that further encroachment of residential use is managed.”

“Purchase of the Silverwings (sic) property is one option available to Bonner County to resolve the through-the-fence residential issue,” FAA officials wrote in response to an e-mail request for information.     

The developers believe that both SilverWing and the Sandpoint Airport are under the federal microscope because similar fly-in residential projects around the nation are keenly interested in how the local non-compliance case gets settled.

“There are quite a few people around the country with probably 20-25 other developments who are watching this,” said Mileski, adding that many of the people who waited in line at July’s Oshkosh Air Show to learn more about the SilverWing project were fly-in residential project developers.

“It’s a precedent issue for the FAA,” McKeown said.  “They don’t want what we’re doing to create a firestorm for them.”

According to the developers, existing fly-in neighborhoods have been built adjacent to small, private runways “in the middle of nowhere,” outside of FAA authority.

“Ninety-nine percent of them are built along 2,500-foot runways and you can only get a Cessna in there,” McKeown said.

At 5,500 feet in length, the runway at Sandpoint Airport can accommodate the kind of private jet traffic that would represent a portion of SilverWing’s affluent ownership.  To attract that kind of buyer, McKeown and Mileski have pushed to complete a 6,100-square foot model home and airplane hangar that will be used by Quest as customers for its Kodiak airplanes come to Sandpoint for training, as well as for potential SilverWing homeowners. 

Decidedly upscale, the model home features hardwood floors, vaulted ceilings, digital wiring and hydronic heating in the residence, the hangar and underneath the airplane pad in front of the building itself. 

In July, the developers ramped up their sales efforts and currently have six lots and an unfinished, 6,100-square-foot home “shell” under contract.

According to the FAA, however, it is inaction by the county, not the actions of the developers, that has caused federal funding to dry up.

“The precedent setting aspect is not an issue,” FAA officials said.  “The fact of the matter is that the county has acted contrary to their grant assurances and has permitted and supported residential use adjacent to their airport.  If the county is not able to resolve this issue by preventing the further residential development of this property, they will continue to remain in non-compliance indefinitely.”

That is costing Sandpoint Airport dearly, according to Dave Schuck, who manages the facility.

“Every year, we’re eligible for $150,000 in what’s called entitlement funds and there are literally millions of dollars in federal funds and grants,” he said.  “From an operations standpoint, we’re proceeding as best we can without federal funding.”

Long-term capital improvements such as runway repaving, though, can’t be completed without financial support from the FAA.

“All of those projects have been put on hold,” the airport manager said.

“It’s a circular problem,” said Popov.  “You’re not eligible for grants until you’re in compliance and we can’t get into compliance without resolving these issues, one of which is SilverWing.”

Lack of improvements could prove to be a concern for large, airport-dependent employers like Quest Aircraft, as well as corporate users, which Popov said includes Litehouse Foods and Coldwater Creek.

“There’s a lot going on at that airport that people don’t even see,” the airport advisory board chairman said.  “The preliminary numbers show that the economic impact of the airport is huge.”

Estimates have placed that impact as high as $33 million.  The SilverWing developers argue that, between property taxes and regional purchases for things like home furnishings, accessories and electronics — not to mention other discretionary spending at shops and restaurants — the moneyed residents who fly in to visit their second or third homes at the airport would help boost the local economy.

The argument for affluence has gained steam as McKeown and Mileski continue to fund improvements to the airport in what they see as a necessary step toward closing deals on the high-end properties they have for sale.  Now operating as SilverWing Flight Services, the facility has added a de-icing machine, a tug for larger aircraft, latrine service and catering for private jet passengers and crews.

SilverWing’s plat map shows plans for a larger, more modern “FBO” and fueling station on the west side of the airport, located close to Quest in order to serve those properties and other airport users.

This summer, the developers revised their disclosure statements to include the FAA’s non-compliance concerns related to the project.

“We’re listening to everyone and we’re working with the county, but we’re continuing on the path of selling these,” Mileski said. 

“We did our site plan, we put in the infrastructure, we built the units – we did everything we set out to do so far,” McKeown added.  “There’s more we want to do on things like the FBO, but that assumes we’re still here.”

McKeown and Mileski aren’t the only ones facing questions when it comes to the future of the Sandpoint Airport. 

While there have been no discussions about actually buying the property, Rasor said there are no assurances the FAA would release discretionary funds if the county decided to go that route.

“We can’t even get them to give us the $150,000 we’re supposed to be guaranteed every year,” the commissioner said.

And Popov, who has worked directly with FAA officials on the matter, questions whether any decision would be premature until new leadership at the federal agency settles in and signals its direction on a variety of issues.

“We’re waiting for policy to be made,” Popov said.  “Funding follows policy and at this point, we have no idea what the feds plan to do.

“Until they come out with a clear statement of their policy, do you even want to do anything?” he asked.  “Maybe the best thing to do is wait.”