Airport concourse project hangs in the balance as funding flails

A project to add more gates to the Sioux Falls Regional Airport is in flux after state and federal funding failed to materialize as hoped.

The concourse expansion would bring at least four additional gates to the airport plus a hallway and restrooms, with an option to add expanded seating with space for more concessions and retail.

A design team and construction manager at risk had been hired for the project, which is estimated at $108 million.

“Everybody needs to know, are we moving forward or not?” executive director Dan Letellier said.

The airport was hoping to be included as part of a $30 million appropriation for airports statewide that failed to gain approval in the most recent legislative session.

“You hear behind the scenes everybody says airport funding is a top capital priority and economic development, and then it comes time to vote, and they vote no,” Letellier said. “Even people who support it last year all of a sudden voted no, and nobody really has a good explanation. I think people should question in your district, why did you vote against the airport?”

Mayor Paul TenHaken said he has asked the same question.

“It’s ludicrous that our state, including our own Sioux Falls legislators, are not supportive of this,” he said. “That to me is an incredible head-scratcher. I still have yet to get answers from some of our own legislators I’ve directly asked about this.”

Compounding the challenge, the most recent congressional continuing resolution for federal funding cut an expected $20 million “that we were really kind of banking on for our project,” Letellier said.

At the same time, the airport does have more than $8 million awarded from federal airport funding that must be bid and awarded by July, “and if it’s not, we lose it,” he continued.

“So it puts us in a tough position because there’s one more year left of an airport terminal funding infrastructure program, and if we get started … I think we have a good chance of getting additional funding from that last year. But if we turn it back, it’s going to be really hard to convince anyone at the FAA to give us more money after we turn some back.”

Meanwhile, the airport set monthly records in January and February. Its new parking ramp has seen multiple days at capacity in its long-term levels.

The existing gates were designed for aircraft seating 50 to 70 people, but as aircraft size has grown in response to a shortage of pilots, the planes currently serving Sioux Falls range from 72 to 114 seats. Additional gates are needed in order to expand service.

At peak times, seating areas are overwhelmed to the point of standing room only, the airport has reported. Projections show that the city should be at 11 gates and more than 32,000 square feet of space for passengers by 2026, compared with the seven gates and 10,000 square feet available today.

TenHaken calls the concourse expansion necessary and said some city funding could be involved, though none is proposed at this point.

“Without it, we’re going to stymie growth,” he said. “I think it’s very necessary, but to me the Legislature absolutely has to be a partner in this thing financially. If the city is going to be a financial partner, the state has to step up too. You show me a state that’s not a partner in their state’s largest airport and it’s unheard of.”

In order to move forward, the airport could opt to scale down the project, building only the four gates, hallway and restrooms for an estimated $85 million. That would require bonding for about $50 million, Letellier said. It would eliminate the additional seating and also would not include a future phase for one additional gate plus a servicing area to allow for U.S. Customs and Border Protection to service future international flights.

“It’s not an easy decision,” Letellier said. “Nobody wants to take on that much debt, especially from an organization that has very little debt, and the reality is we’re very close to certainly going the other way if all of a sudden estimates come in a lot higher than what we’ve been working with.”

There is a role for debt in funding the project, TenHaken said.

“We want to see it move forward. The city wants to be at the table as a partner, whatever that looks like, but they have to be realistic about financing versus cash as well,” he said. “We’re not going to give them money until they’re willing to put some skin in the game and take on some debt.”

The city utilizes bonding for major projects, from the Denny Sanford Premier Center to new indoor pools, he added.

“All projections show our population is going to keep growing at 2.5 to 3 percent. I have no fear the airport is going to start seeing negative growth,” TenHaken said.

“They should have a lot of confidence in their ability to service the debt. And I think we would kick ourselves if we only went 70 percent on this thing and five or 10 years down the road we’re asking why we didn’t take a bigger bite out of this apple when we had the chance because now the project is twice as much.”

The design and construction teams currently are updating estimates to ensure they’re still valid and likely will have that done in a couple of weeks, Letellier said.

The Sioux Falls Airport Authority likely will consider a next step at its April meeting, he said.

“Even as we sit here today, by the time they get bids out and get a contractor on board to start some underground foundations, it’s July at the best start date,” Letellier said.

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