When an airport goes debt-free, its board holds a ceremonial burning of the bonds. That’s what happened at Cherry Capital Airport in Traverse City on Tuesday night.
Cherry Capital took on almost $4 (M) million dollars as they built their brand new terminal building in the early 2000’s. Director Kevin Klein says “those bids came in on September 7, 2001. Just before 9/11. The commission made a bold move to continue forward with that project.” But Klein says federal funding came to a halt after 9/11.
Fortunately, he says, TVC was “able to build the majority of this terminal, the ramps, the taxiways, the fire station, the maintenance building, all with discretionary funds.” But by 2004, leadership decided to bond $3.9 (M) million to support cash reserves. “That was a bond that was over 20 years, due in 2025. But due to the fact that the CARES Act, the ARP (American Rescue Plan) Act all came through (this year from COVID Relief funding), we were able to use some of that money to pay off the remainder of those bonds early,” Klein says.
“The final payment was just over $1.1 (M) million dollars,” Klein says. “It relieves a lot of stress.” It also means Cherry Capital is debt-free, which puts it in a strong financial position for their next big project: expanding the terminal building from 5 to 14 gates. “To be able to go into a brand new project without any debt allows financial planning to go forward. Going for any additional grant dollars that (are) out there, we would rise to the top being debt-free.”
Klein says being debt-free is also good news for travelers. “Really what it translates into is we’re able to keep our costs low for tenants, operators, and airlines here at the airport. That in turn translates into lower fares and more seats in the market.”
Most airports across the country have some type of debt based on capital improvement projects, according to Klein. He says burning the bonds is not only symbolic, but it also makes Cherry Capital Airport fairly unique with its debt-free status.
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