PRESQUE ISLE, Maine – Presque Isle City Council on Tuesday unanimously approved a $3 million dollar increase to a USDA loan that will help the city pay for a multimillion-dollar airport terminal project, bringing the total loan amount up to $15 million. The term of the loan was also changed from 40 to 30 years.
Interim City Manager Sonja Eyler introduced the item to council during a special meeting, acknowledging the project’s magnitude and concerns that community members have about its cost. She explained that the city was only recently notified that the USDA would be adding the $3 million dollar contingency to the $12 million loan that the city already authorized.
“While this news is unexpected and understandably frustrating, I want to be clear, this additional contingency is not an expansion of the project,” Eyler said. “It’s a financial safeguard the USDA requires to protect against market volatility, and it is now a condition of moving forward with their participation.”.
Eyler said that with over $40 million in committed federal and grant funding already secured for the project, stepping back and renegotiating the project at this stage could put all of that funding at risk.
The airport terminal project has been in the works since June of 2023, and is now costing roughly $55 million. The price of the terminal alone was initially valued at $30 million, but recently increased to $38 million due to security requirements.
The city has already secured roughly $40.5 million in grants. Of that amount, $38.6 million is from the Federal Aviation Administration, including $20.46 million in congressionally directed spending. The remainder of this is covered via grants from the Northern Border Regional Commission and Maine Department of Transportation, each worth roughly $1 million.
Aside from the $38.5 million building, the total project also includes costs for an aircraft parking apron, site and utilities work, and project design and engineering.
But with about 21 percent of the project not eligible for FAA funding, the city originally sought a USDA loan on behalf of the airport for $12.1 million. The loan would be repaid entirely through rental income from tenants that include JetBlue, the TSA and car rental companies.
Airport Director Scott Wardwell said that no portion of the loan would come from taxpayers. But due to the term of the loan changing from 40 to 30 years, he said the airport will need to increase its rental fees.
The council on Tuesday asked Wardwell to speak about the increase. He began by saying that essentially nothing in the project has changed from when the $12 million loan was approved in November. He said the USDA procedures are to build in a contingency, but that the FAA typically completes the design and bid before grants are ever written, resulting in few change orders.
“That’s one of the reasons why we just really didn’t build a lot of extra in for contingency, and it’s typical of FAA not to allow contingency,” he said.
Council Chair Jeffery Willette asked if Wardwell could clarify for anyone listening what a contingency is. Wardwell explained that while a contingency does not increase the size or scope of the project, it is there to address unforeseen expenses or occurrences.
If there are no contingencies and the $3 million is not used, the unspent amount could go toward reducing the total loan balance.
The council unanimously voted in favor of both rescinding a motion made last year to finance up to $12 million for the loan and on a new motion for the finance director to secure financing of up to $15 million for the project.
