The GUARDIAN confirmed Tuesday that SkyWest Airline will lease a planned $23 million maintenance facility tax-free from the city of Boise. This means Boise Schools, City of Boise, Ada County, and ACHD will forego an estimated $380,000 in taxes on the city financed project EVERY YEAR!
Thanks to a constitutional amendment passed three years ago, airports are able to go into public debt through bond sales without a vote of the people. Boise will issue the bonds and depend upon rental payments from SkyWest to cover the debt. We should apparently ignore the recent bankruptcies of United, Delta, American, and most other carriers.
Despite a less than rosy financial picture for SkyWest, Boise has forged ahead courting the financially troubled carrier to locate the maintenance facility here. The WALL STREET JOURNAL reports the carrier is forecasting a full year loss, but hopes to avoid bankruptcy. The firm plans to divest itself of 156 aircraft in a cutback effort while at the same time claiming to create or bring 100 “high-paying jobs” in Boise after an initial 50 jobs are offered.
Since the city will own the facility–touted as being worth $23,000,000 by Mayor Dave Bieter earlier this year–it will be tax exempt.
Here is what we have learned:
“Although there has been significant speculation about this project, Skywest just today (recently) announced that they have selected Boise for an aircraft maintenance base. City staff are still working with Skywest to finalize a number of agreements related to this project. The following are the answers to the questions you posed.”
–The final cost the facility has not yet been determined however, Skywest will pay for the facility through a long-term lease.
–The City does intend to issue bonds to pay for a portion of this project. The bond payments will be paid by the lease revenue generated from Skywest’s lease of the facility.
–Members of the City Council were provided a general overview of the potential project. City of Boise staff were asked to negotiate an agreement that complies with policies and guidelines as set forth and approved by the City Council. Any contracts or lease agreements will be reviewed and approved by the City of Boise City Council through the normal Council process.
And if Boise’s concessions aren’t enough, the state of Idaho is offering up a 25% tax rebate as well, thanks to House Bill 546 signed into law last session. Called the “Idaho Reimbursement Incentive Act,” (I.C 67-4737) the new law is frightening in the power it vests in non-elected officials, especially the director of the Department of Commerce. For every dollar of taxes generated in wages, 25 cents is rebated. The 25 cents comes out of the pockets of all taxpayers, not just the SkyWest workers. If SkyWest were to make a profit and pay corporate taxes, they would get the same 25% rebate…again from the citizens of Idaho.
SkyWest operates various routes for the so-called “legacy carriers” such as United and Delta. Bieter said on a recent radio broadcast that in terms of numbers of aircraft, SkyWest is the largest airline in the country.
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