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Economics


1. Have you seen the recent engineering study that everyone refers to that says 200 jobs will be created with the runway extension? I have not. When I attended the information study at the airport that was organized last month, I was given an old engineering study and I was quite surprised to see that the study was carried out by an engineering firm in Port Elgin Ontario. Interesting to be concerned about jobs in Oshawa and outsource and engineering study by Oshawa tax payers to some company from Port Elgin.

In January of 2007 an Economic Impact Study was performed by RP ERICKSON & ASSOCIATES AVIATION CONSULTANTS based on 2005 data. This study was included as an attachment to the Airport Business Plan (2008-2012) that can be found here: http://www.oshawa.ca/agendas/Development_Services/2008/02-25/DS-08-069-2008_Airport_Business_Plan.pdf, and is also talked about as being in contradiction to the ambition of an expansion here: http://oshawaairportexpansion.ca/contradictions.html

This Study is obviously subjective and based on surveys from the surrounding business community, tax records, etc. This assessment claims that the airport contributes directly to (in 2005) the existence of 215 Full-time jobs and indirectly to 438 Full-time jobs.
However, the Genivar Report uses this 2007 Economic Impact Study as a basis for their assumptions of new job creation if the airport runway is expanded by using "multipliers".

What the Genivar Report is claiming is the following:

Additional Corporate Activity includes 42 direct Full-time jobs (Table 5-1)
Additional traffic from Buttonville includes 65 direct Full-time jobs (Table 5-3)
Other Impacts from new business includes 6 direct Full-time jobs (Table 5-5)
Total Direct speculated possibility of Full-time jobs = 113

Then they try to lump in the Full-time employment from the Seneca Flight School (which doesn't require a runway expansion and should have nothing to do with the expansion issue).
They also try to include the "one time" construction impacts within their Full-time job numbers. A "one time" temporary construction job is no good for any of us seeking or paying a mortgage. The "one time" construction mainly benefits the contractors and suppliers and the City's "numbers" related to Gross Domestic Product.

The "job creation" issue is further clouded by the simple fact that, most of these businesses will be relocating their employees also. How many actual existing Oshawa citizens will benefit from any direct employment associated with the expansion? How many existing Oshawa citizens are licensed to repair/maintain/control aircraft?
If direct jobs are created, it would stand to reason that they would be few and in the line of custodial or clerical work.

2. Is it possible to secure detailed financials about the operations at the airport? I would like to find out how much the Oshawa taxpayer is paying the airport so the individuals who have the resources to own a plane can land and take off in their recreation vehicle. It would be nice to see what the fees are for having a plane at the airport. If the facility has been operating in the red have steps been taken to increase the user fees or have the user fees been subsidized by the Oshawa Taxpayer.

The Airport Business Plan (2008-2012) included as an attachment, a 25 Year Capital Plan as prepared by Pryde Schropp McComb, Inc. (who just happen to be called Genivar now and are responsible for the report recommending a runaway expansion).
Within this 25 Year Capital Plan (created in October 2007) there is a 5 YEAR INCOME AND EXPENSE FORECAST (see attached document). This shows the 'forecasted' cost vs. income of the airport as understood in 2007. However, we don't know what the real numbers are.
Members of C.O.R.E. have requested these details from Mayor John Henry himself, but no appropriate response has been provided to date.

On May 3, 2011 the Airport Manager provided a memorandum advising of the new fees (
see attached PDF file 63KB). If we are reading this correctly, a private pilot with a plane that is under 4000 kg is not charged any landing fee!




1. Question: Does the Airport run at a deficit?

Please read the quote below taken directly from the Airport Business Plan (2008-2012):

"The Financial Plan which forms part of the Business Plan illustrates that there will continue to be a deficit associated with operating the airport. The income and expense forecast illustrates that the deficit will be in the order of $159,000 to $241,000 between 2008 and 2012 without a life cycle infrastructure contribution and an annual deficit of up to $394,000 with such a contribution. The life cycle and infrastructure contribution is necessary to maintain the Airport in an appropriate and safe manner. This is based on the Airport’s first 25 Year Capital Plan.
Independent from the broader airport GDP and employment, it should be noted that the annual City and Regional taxation from just the aviation related lots almost matches and at times, exceeds the deficit. As such, the airport budget should be considered to be in balance when these incremental taxes meet or exceed the operating deficit."

This statement clearly indicates that it is not necessary for the Airport to run in a deficit and has the means of staying within their operating budgets when all sources of its income are received and appropriately distributed.

2. Question: Won't my property taxes decrease if the airport can get more business?

Consider the following:

In 2005, the Oshawa Municipal Airport generated $12.299 million in taxes.
This total is divided, as follows :
  • Federal Government $5.792 million
  • Province of Ontario $4.501 million
  • Oshawa Area Municipal Gov’ts $2.006 million

Please read the following information provided by the durhamregion.com website:

The City's debt sits at $89.4 million (2010) with an annual repayment of $10.1 million required in 2011 and $8.9 million in 2012.

The Mayor states "You have to look at how we got in this situation, the money that was borrowed starting in 2005 is a lot. Council in its attempt to play catch-up went crazy. They didn't have any money in the bank when they did all these projects so they borrowed and now it's all coming due. We're in a stranglehold."

City Staff want the Council to approve further debt of $8.1-million to fund outstanding costs of remediating the downtown courthouse property and a $6.2-million to cover outstanding costs for the Amazing Spaces program.

A new report says many of Oshawa's reserve accounts are "critically" underfunded.

It is naive to think that when a city is in such debt, they will actually decrease taxes. It would be naive to think that any portion of tax allocation related to the operating cost of the airport would not just be diverted to another area of the city budget. It would be irresponsible to think that the minimal amount we pay on our property taxes right now that is directly related to the $0 to $394,000 per year operating deficit (as detailed in the above item) is worth keeping at the risk of having to live with all the negative impacts we will experience as a community.

The fact is that Airport Management, the Airport Advisory Committee, the Development Services Department, Councillor Bruce Wood, and other proponents of the expansion are using the carrot of future possible economic benefits that are being dangled in the Genivar report to get Council to approve spending over $4.5 million dollars we don't have. The simple fact of the matter is that the Airport is capable of procuring more clientele without unnecessarily expanding the runway. This is substantiated by Section 11 of the Airport Business Plan and indirectly by Councillor Bruce Wood himself. The Oshawa Express (December 14, page 7) states that Councillor Bruce Wood says that the expansion needs to be pushed through quickly because there is a possibility that Pickering will be opening up an Airpark with a 4000 ft runway and it would steal Oshawa Airport's potential business.
Well, Oshawa already has a 4000 ft runway, so why do we have to hurry up with an expansion to get this business? According to Councillor Wood, we could be getting this business now. This would help keep our property taxes that are related to the airport in check.

3. Question: Isn't there a way to increase the airport income without spending so much extra money?

Of course there is. The marketing strategies are listed in Section 11 of the Airport Business Plan (2008-2012) and it is reported that the airport has worked on some of these initiatives and has increased business since the Business Plan was developed (see report document DS-09-275 for example at www.oshawa.ca). The airport's potential to pay for itself is not the main issue here. The issue is that there is a potential that there would be a lot of economic spin-offs related to the possible increase in business at the airport and this is a tempting prospect for the Airport, special interests groups, the commercial sector, and the local politicians. Many politician would see this as an easy way to get them out of a jamb and would let them claim that they helped create a "vibrant" and "healthy" city economy. They do this, however, at the expense of the surrounding neighbourhoods, schools, and environment.

4. Question: Some proponents of the expansion are stating that my property value will increase if an expansion occurs. Is this true?

We are aware that Gord Mahaffy (captain of the local division of COPA-Canadian Owners and Pilots Association) stood up at the June 23, 2011 public meeting and stated that property values would not decrease but would increase. He noted a trend in the United States where homes were being built on airport lands as aviation enthusiast want to live near their aircraft.
It is an understatement to say how out of place this comment is with the current issue at hand. We are not talking about a new community of avian enthusiast who are choosing to buy new homes on airport lands. We are dealing with a residential community of all types of regular people who knew they were living next to a small airport in a small city. The community has continued to accept increasing airport activity, however, the potential huge impact of increased activity that would occur as a result of an expansion is an unacceptable shock to so many of the members of the community.

A Property Value Study performed by Ronald W. Crowley stated that the mean value of land decreased surrounding an airport that expanded. This is especially so during the initial "shock" period. The "shock" period is the period approximately from the point that an expansion is announced through to the period when the expansion is in full use.

Simply put, even the fact that this expansion has been proposed, could have already decreased the surrounding property values. Contributing to the cause of the property value decrease is when local residents, who don't think they will be able to tolerate the additional noise and pollution or stick around until they actually experience the additional noise and pollution and find it unacceptable, put their house up for sale. Then, new buyers come around, experience the noise from the airport and realize that, although the neighbourhood was desirable at one point in time, the now busy airport makes it undesirable. All it takes then is the laws of supply and demand to kick in and you've got your property value decrease.

Another neighbour has pointed out that the sum of the individual property value decrease amounts (based on 1500 homes) would potentially be $20 million. That is quite a financial burden to put on the shoulders of so few working class citizens.

Therefore, it cannot be true that property values would increase if the expansion occurs.



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