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Paying their way

Dear Editor,

letter to the editor

I write regarding your report on the Town of Gander’s requirement to pay back $500,000 which it had been advanced by Public Works Canada during a dispute over taxes with the Gander International Airport Authority (Payback time for Gander, The Beacon, Aug. 18).

Since the article appeared, there has been a renewed discussion on the airport’s contribution to tax revenues. Basically, there are two prevailing sentiments among many citizens on the matter. The first is that the airport gets a free ride from taxes and doesn’t pay its way. This is incorrect. The opposite view is that the Town of Gander is charging the airport to death under some punitive taxation regime. This is not true, either.

Many of your readers will know that the Town of Gander and the Gander International Airport Authority went to court to settle a dispute about the amount of tax the airport – which is operated by the authority, but owned by the Crown – should pay. I won’t address the complex circumstances that lead the issue to court, assuming your readers aren’t deeply interested in matters of tax and constitutional law. Essentially, two courts and a subsequent court of appeal ruled in the airport’s favor. The court case represented a difficult situation for all involved, but it was largely unavoidable. The Town of Gander has an obligation to protect the interest of taxpayers and the airport has to guard its commercial interests.

To be clear, the airport never said it should not pay property tax or that it did not want to pay its fair share for the municipal services it receives. At issue was the valuation which was used to set the amount.

Not long after the appeal ruling, the town and airport sat down and voluntarily negotiated a 10-year tax agreement. I stress this was completely voluntary – the airport could well have abided by the court ruling and proceeded accordingly.

The airport made lump sum payment of $1.1 M for the disputed period in addition to negotiating an agreement which will see the airport contribute roughly $170,000 in taxes this year. This agreement is good until 2024 and includes a clause tied to changes in assessed values for non-residential properties from one year to the next. Considering both parties negotiated and signed off on the deal, we can safely assume it satisfied the interests of both.

Again, the airport pays its way; as do all airport tenants – combined, the airport generates $1 million in municipal tax revenue annually.

The signing of the agreement reinforces that the airport authority understands its obligation to pay its fair share, even if the airport and its tenants do not require the same level of municipal services as a business located on Elizabeth Drive. As an example, the Town of Gander does not provide garbage collection at the airport and the airport is a self-maintained asset – the town has no obligation to repave airport streets, for example.

Even as the legal proceeding wound its way through court, the Town and airport maintained a good working relationship, especially on issues of operations and economic development. Yes, these disputes do have a way of widening a chasm between two parties, but the reality is the relationship was and remains a productive one. Last year, the airport and town signed off on a Shared Services Agreement, which provides a framework for collaboration and the sharing of resources. As an example, the Town of Gander has an outstanding Water and Sewer Department – it’s a crucial function of running a municipality, and those professionals can provide small services and counsel to the airport as resources permit. The airport has a deep and talented operational team, but it does not have this specific capacity in on staff.

The airports supports town projects as well. As an example, many of you are enjoying the town’s new dog park at Cobb’s Pond – which is a great place for dogs and their owners to socialize. The airport provided labour and aggregate for the park, which saved Gander taxpayers upwards of $50,000 on project costs. The shared services agreement’s specific covenants will change over time – some areas of cooperation will work, some will not – but it’s the enduring spirit of the collaboration that counts most of all.

While Gander Town Council comprises seven independent individuals, I will say that both council and senior leadership at the town are quick to provide the airport the support and assistance it requires when it matters most. It’s a good relationship and one we aim to foster and strengthen.

The airport does not exist as a sheltered republic standing on its own with Cooper Blvd an arbitrary border between the town and airport. The airport pre-dates the Town of Gander, with the aerodrome here as a foundational rebar the town poured itself around. It is run for and by the citizens of Gander and central Newfoundlanders for the benefit of the town and region.

The economic benefit, outside of the taxes generated, is sizable.

An independent economic impact study identified direct impacts of the airport included 1,260 full-time jobs, $90 million in wages, $140 million in gross domestic product (GDP) and $240 million in economic impact. When you include downstream industries such as suppliers and contractors, as well as employment generated by employee spending, the total economic impacts is 1,940 full time jobs, $210 million in GDP and $360 million in economic output.

Over the last 10 years, employment related to airport activity has grown over 10 per cent, with most new jobs in the airport support and airline services sectors. There were 35 new jobs created at the airport in 2015 alone, which is significant for a community of this size. In fact, 20 per cent of the total labour force in the Town of Gander can be attributed to direct airport activity.

If these numbers make you glaze over, consider more practical interpretations. Ask a hotelier if rooms booked by flights crews and passengers contribute to their bottom line. Ask a taxi driver if airport pick-ups are an important part of their business. Ask any downtown entrepreneur whether people employed by the airport and aviation in this community form an important part of their clientele. As hard as it can be to imagine, consider a Gander without an airport and ask yourself which of our businesses, services and government agencies would remain were there not.

This much we know – every municipality that does not have the privilege of an international airport in their backyard would desperately love to have one. The reason, beyond the jobs and ancillary spending, is that aviation infrastructure is enabling infrastructure. It makes a major contribution to any community’s attractiveness as a place to live, work, invest, retire or raise a family. If a community is prospecting for a new physician, or negotiating with a business to set up shop, or trying to attract people to retire, an international airport, right in your backyard, from which you can fly anywhere in the world on any given day, is a major selling point. If Gander had not been established as the location of an airport, if it were still an untouched plateau of coniferous trees and bog, it would take about $1 Billion to recreate the airport and its tenant infrastructure from scratch. The airport is an asset worth coveting, supporting and protecting.

The relationship between city councils and their airports differs across Canada. The prevailing model is generally supportive – councils recognize that airports are crucial economic engines for their community. However, some cities view an airport as a tax tollbooth and seek to extract the maximum tax revenue. In Canada, airports are operated under a user pay principle. That means when tax schemes are punitive or onerous, passengers or airlines absorb the bill. Airports, unlike other enterprises, are immobile. A hotel or business operating under a severe taxation regime can shutter its doors, or locate to a city with a more supportive tax environment. Airports do not have the luxury. They have to eat that cost by passing it along to users and citizens.

There is an ongoing lobbying among Newfoundland and Labrador municipalities to see legislative change which would instill greater taxing power among councils, especially with regard to special purpose properties like an airport.

If that lobby effort is successful, those councils blessed to have an airport will be confronted with a major question: is our airport a tax tollbooth or an economic sparkplug?


Reg Wright,

President and CEO

Gander International Airport

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