Holding pattern: UAM, Tupelo at standstill over runway issue

Thomas Wells | Daily Journal Universal Asset Management leases aircraft, but it also buys retired aircraft and disassembles them in Tupelo. The company sells parts from the planes and recycles most of the rest of the planes.

Thomas Wells | Daily Journal
Universal Asset Management leases aircraft, but it also buys retired aircraft and disassembles them in Tupelo. The company sells parts from the planes and recycles most of the rest of the planes.

By Dennis Seid

Daily Journal

TUPELO – In March 2011, Universal Asset Management landed its first airplane at the Tupelo Regional Airport to much celebration and fanfare.

But there are few cheers and happy faces today, as UAM, airport officials and the city square off over a proposed $1.2 million repair to the old runway.

“There’s been a feeling of distrust and uneasiness between the city, the airport and UAM, and that’s not the way it should be,” said Josh Abramson, the airport’s executive director.

So how, and why, did the relationship sour? There seems to be no clear reason or singular event. But what is clear is several discussions over the past few weeks have done little to improve the situation.

UAM buys retired aircraft – mostly passenger jets – from around the world and takes them apart. The company sells salvageable but still usable and valuable parts, like the engines. Most of the rest of each plane, the 20-year-old Memphis-based company says, is recycled.

UAM promised 100 jobs within three years, and it now employs about 75 people. It leases the former Army Aviation Support Facility at the airport and a 453,000-square-foot warehouse in Verona.

It also pledges to spend $29 million in salaries and benefits, supplies, other purchases and utility payments in the next three years.

But landing larger planes like the 747 has been problematic at the airport from the start. The old taxiway and runway weren’t built to support a nearly 400,000-pound plane, and airport personnel have used steel plates on the pavement in several areas to help move the planes. The stop-gap measures didn’t stop the deterioration of the old pavement, which hasn’t been fixed in 50 years. Planes also have gotten stuck, an embarrassing – and aggravating – problem.

Taxiway Bravo has been the worse for wear, and earlier this summer, Abramson said a $700,000 fix was necessary. The price was for raw materials only. With labor and engineering work, the price settled closer to $1.145 million.

Tupelo Mayor Jason Shelton and then Chief Operating Officer Darrell Smith came up with an alternative solution: They brought out engineers to look at the most critical portion of the taxiway that needed repair and said it could be fixed for no more than $107,625.

Airport officials say the work is needed not only for UAM, but also for another tenant that also uses the taxiway, Webb’s Agricultural Flying Service. In addition, the airport also needs access to nearby fuel tanks and use of the taxiway.

UAM Chief Operating Officer Keri Wright said there are some misconceptions and misinformation about her company’s role in the taxiway and runway repair request.

“This is not a request from us, but it is about something outside our lease-hold area and it’s about the infrastructure of the airport,” she said. “We’re a tenant that needs access to the area we lease, but we have difficulty with that access.”

The airport authority says the work is needed regardless of who the tenant is, but some city leaders don’t think it’s the city’s responsibility to pay for it. Some blame UAM for the damage done to the taxiway and runway, but airport officials insist everyone knew repairs had to be made when UAM was recruited.

Wright said the company has been standing with the airport authority in its request to make the repairs, and in doing so, has been unfairly targeted by critics.

“Yes, we’ll benefit from the improvements, but this is also about the long-term economic development of the airport and the city,” Wright said. “It’s more than UAM.”

More meetings

More than a dozen closed-door meetings have been held over the past few weeks involving UAM, the airport and the city, but nothing substantive has emerged about the requested repairs.

Wright has repeatedly said the company wants to work with the city and airport to come up with a solution.

“I want to emphasize again that we see this as a partnership,” she said. “We don’t want this to be adversarial.”

Three weeks ago, Wright gave a presentation to the airport authority as well as the City Council, explaining what the company does and what it would like to do.

“The presentation was meant to show that this is a very technical and global business, and that we create a lot of awareness for the city,” she said.

There was no demand by Wright or any other UAM official to make the repairs. But the presentation clearly was meant to send a message that the company was doing what it promised it would do, with expectations that the city and airport would do the same.

The presentation also included a long-term plan that showed anywhere from $6 million to $8 million in future development and investment at the airport, depending on the growth of UAM’s business.

Wright said the multimillion-dollar figures were the original projected costs of using concrete on all of UAM’s lease area, based on expected grants and federal funding.

“But I also made it clear that we’ve tossed out that plan because it’s no longer valid,” Wright said. “We know that funding is no longer there. … it’s the new reality.”

Wright said she presented UAM’s plan to revamp its operations to deal with that new reality, including alternative materials to use other than concrete on its lease-hold areas. Those solutions are far less expensive, she said.

But the immediate need is the $1.2 million repair request.

Abramson last week asked for the repair of a 50-foot-wide section of the old runway used by UAM. Concrete, up to 15 inches thick, would be laid for the project.

The airport would borrow the money from the Mississippi Development Authority through a low-interest loan program. The city would repay the loan over 10 years, paying $140,000 annually.

But city leaders have balked at the idea, hesitant to loan money to an airport straining to pay for what it has now.

“We can’t pay for it ourselves,” Abramson said. “That’s why we’re asking the city to help.”

The airport already is saddled with a $125,000 annual debt now brought on by an ill-advised purchase of the airport’s formerly private fixed-base operators and the move of the Army Aviation Support Facility several years ago.

Shelton has promised no new taxes, but the money would have to either come from the city’s contingency fund or a tax increase. The new mayor and City Council aren’t amenable to either.

Airport authority members insist it was them, not UAM, that made the $1.2 million request. Granted, the move was made to ensure UAM sticks around.

“This was presented on behalf of the Tupelo Airport Authority,” Abramson said of the repair proposal. The project would include the taxiway work that had to be stopped as officials hash out their differences.

The airport authority is staunchly defending a project it, the Community Development Foundation and the city touted three years ago.

“If a tenant in one of our industrial parks got their trucks stuck in the road in the industrial park, would we make them pay to repave it?” one member said. “I don’t believe so. It’s a similar situation here.”

UAM said it was recruited to the airport with everyone’s understanding that runway and taxiway repairs had to be made.

“This is a 20-year lease we’ve signed,” Wright said. “We haven’t missed a payment and we’ve continued to make them. We’ve done everything we’ve said we would do.”

She also said the company has spent an additional $500,000 on concrete within its lease-hold area, “something we weren’t asked to do, but did on our own. … we’ve gone above and beyond what our lease calls for.”

Wright also said UAM has spent additional money to help moving the large planes it lands at the airport.

And more are on the way.

UAM plans to bring in some three dozen planes over the next few months, including six Airbus A340s, which are roughly the size of 747s.

Junkyard label

Even before UAM arrived in Tupelo, critics said the company would turn the airport into a junkyard.

And it wasn’t soon after the hoopla of big planes landing in Tupelo that the grumbling began about UAM’s operations.

The planes were unsightly, some said, and the airport was looking like a junkyard. It was an airplane graveyard.

UAM said it had no choice but to run a clean operation, or else the FAA wouldn’t certify its parts to sell, which generate millions of dollars for the company. The airport spent $50,000 for trees to help create a screen from the road, but that did little to assuage the complaints. Besides, there isn’t a tree big enough in this area of the country to hide a four-story-tall tail of a 747.

Certainly, there were those who liked seeing the big planes at the airport. For the first few arrivals, many people would line up and watch them arrive.

Still, the grumbling continued about the appearance of the operations at the airport. UAM and the airport have since built additional berms to help hide more of the planes

Don House, the mayor of Walnut Ridge, Ark., knows UAM well.

The company disassembled planes in Walnut Ridge for nearly seven years before it moved to Tupelo.

The details vary about why UAM left Walnut Ridge. But it boils down to UAM wanting to bring in additional 747s to the airport, but the airport commission saying it could not.

“It was a learning situation for all of us because this was something new,” House said. “Looking back, we would have done something different. We have no hard feelings. We’d invite another business like them – we’d invite them back – as long as they don’t bring in the 747s and other big planes like that.”

House said UAM has cleared its former space at the airport, and still makes timely payments on a building whose lease runs out in December.

“They cleaned everything up like they said they would,” House said. “There aren’t any planes left.”

And House said he understands UAM had to make a business decision to move to Tupelo.

“They wanted to land 747s, and we said we couldn’t let that happen anymore,” he said.

House added, “And let me make it clear UAM did a lot of good things in the community. They made a lot of contributions to organizations, supported a lot of causes. But yes, the relationship did get strained over the planes.”

House said he’s spoken to officials from Tupelo about UAM and the talks about the runway repairs. He offered only this: “Good luck.”

Next steps

Some council members want UAM to contribute to the $1.2 million project, as much as half, or else they won’t support the effort.

UAM doesn’t think it should pay for something for which it believes the city and airport are responsible. It also cites the investments it has made and has pledged to make over the next three years. The plan includes boosting employment to 105 workers, a $750,000 capital investment and the recruitment of an FAA-certified parts station that would employ 25 people paying an average of $40,000 a year.

“We’ve bought as much as we can locally and will continue to buy local as much as we can,” Wright added.

This, airport officials say, shows UAM’s commitment to the community and why the city should pay for the runway repair.

“We’ve introduced aviation to a lot of people, we’ve partnered with schools, we contribute to local nonprofits and other groups, we support numerous sports teams. … we wouldn’t do this if we weren’t committed to the community,” Wright said. “We want to be here. You asked us to be here. And we want to stay here.”

UAM has 75 workers now. Granted, some transferred from Walnut Ridge along with UAM, but most now live in Lee County.

They live here, they eat here, they spend the money here, they pay their taxes here, airport leaders say.

If UAM, the airport and the city can’t come up with a mutual agreement for the runway work, they could leave.

And, it should be noted, UAM now pays $105,000 a year on its lease. It increases next year to $110,000.

That doesn’t fully cover the $125,000 yearly debt service of the airport, which in fact is being paid by the city. If UAM leaves, the debt payment has to be made, and one large source of revenue disappears, unless another tenant can fill the void.

The airport has 22 acres adjacent to the old runway it still can develop, but if it’s to be used, the runway will have to be repaired anyway.

That may be the case, city officials say, but it doesn’t have to cost $1.2 million.

Abramson knows he’s taken heat for bringing in UAM but defends the decision.

“At the time we signed the lease with UAM, we had 10 consecutive months of boarding increases,” he said. “We had a $1,728,354 bill from the Guard and a company coming in willing to make payments that covered most of it. But it so happened that passenger boardings just started dropping soon after that. But I still believe that it was the right decision.”

When boardings dipped below 10,000 last year, that meant federal funding to the airport was cut from $1 million to $150,000, starting this fiscal year. That was money meant to help with airport projects like the one that needs to be done. Boardings will fall even more this year, which means at least another year with less money.

With less money to work with, the airport has little choice but to ask for the city to help.

Even UAM has acknowledged the vast drop in funding has not helped.

The airport has spent $1,372,871 to replace the apron in front of UAM’s facilities.

But whether city officials agree another $1.2 million is worth spending on the old runway remains to be seen.

Another meeting may provide a long-awaited breakthrough. And as City Councilman Lynn Bryan said, the parties will “either leave happy or leave sad.”

Wright said UAM prefers staying.

She doesn’t deny it has put out RFPs – requests for proposals – to find alternative locations for its business in the event it can no longer land aircraft in Tupelo.

“If the city tells UAM they don’t want us, we can’t wait to get that information; it would irresponsible for us not to look,” she said.

“But I want it made clear – and I told this to the airport authority and the City Council – we are not looking to go elsewhere. … I’m not fighting this battle for UAM, I’m fighting this battle for all the employees and their families who work here. If the city wants us to leave, they’ll have to tell them.”

dennis.seid@journalinc.com

  • barney fife

    Do the resistant politicians have replacement jobs in mind for those who will be hunting employment should the city not fund its’ airport properly?
    The ability to accommodate the largest aircraft could be an extra incentive to attract other business here.

  • Kevin

    I don’t even know why Tupelo has an airport–that only serves Atlanta and Greenville. That doesn’t make much sense when GTR is an hour drive to the South and Memphis International is an hour and half drive to the North. Unless the Tupelo airport can service a different major hub, there’s really no reason to have the airport for commercial flights. I think Tupelo should rethink the whole airport thing and come to terms with the fact that this town is merely a hick town in bfe and as my grandpa says, you can’t polish doo-doo.

  • JMES

    Where does UAM plan to park the three dozen planes they plan to bring in? They are already parking in spaces not included in their rental agreement, including the airline ramp.

  • tupelobeware

    A long article like this should have been vetted with fact and accuracy not hyperbole and misinformation. The citizens appreciate this revelation but it doesn’t get to the root of the issue.
    ·
    Misinformation and disinformation:
    o The payment of the $120,000 a year Guard loan payment (renovation and expansion of
    the facility in 1997) represents less than 1/4th of the fair rent value of the 27,000 square foot hangar and offices.
    o The Guard loan was triggered when the airport management, without warning, forced
    the Guard to move out completely. It’s very possible that the Guard would have remained.
    o The amount of the “ill-advised purchase of the airport’s formerly private fixed base operators” is $133,500 a year and was a result of Mayor Neelly’s pressure on the TAA Board to buy out the owners.
    o An additional loan for renovation of the FBO facility amounts to another $24,000 a year
    o Now a $1.2M loan for old runway repair (where did taxiway B come from) for a yearly price tag of $140,000.
    o Loss of commercial passengers is a result of airport management choices. Destination was one of them. MEM serves all the top-10 destinations for Tupelo. Using Atlanta’s multiple flights to those destinations is meaningless when there are limited number of flights from Tupelo.
    o Repair of Universal Asset Management’s leased property and even some of the taxi-lanes to the leased areas are not and were not eligible for FAA and MDOT funding sources regardless of the enplanements.
    ·
    More Promises and Broken Promises
    o TAA is expressing the promises of UAM regarding a hugely inflated economic benefits over the next three years, 105 jobs, movement of the UAM Headquarters to Tupelo, an FAA-certified parts station yet UAM’s COO says, “This is not a request from us.”
    o Has a real legal scrutiny been placed on the cause of the damage and who’s responsible? This needs to be answered since the old runway damage is minor compared to the destruction occurring in the lease hold areas.
    o “The airport has 22 acres adjacent to the old runway it can still develop.” But who would take the chance of locating next to a junking operation?
    o “UAM plans to bring in some three dozen planes over the next few months, including six Airbus 340s, which are roughly the size of 747s.” 36 aircraft in three months and they haven’t been bringing in that many in a year.
    ·
    City Council should consider:
    o Limit aircraft weights at Tupelo like Walnut Ridge did for the safety and protection of the airport
    o Demand a full accounting of the airport’s financial records, the operating records and the record of airport accidents and V/PDs. (Vehicle/Pedestrian Deviations). Maybe all of this is why the airport is failing.
    o If UAM leaves, millions in discretionary funds become eligible if the right tenant moves in to the vacated area.

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