Larry Bailey’s Financial Restructuring Plan

Lopez Port Real Estate Investments (as of June 2017)

The Port of Lopez currently owns two properties adjacent to the airport: the former Gunn residence at the south end of the runway, and the former Crawford property at the north end of the runway. Currently, the rent being received on these properties is insufficient to satisfy the debt obligations: current annual bond payments total $70,703 per year, and net cash flow from the renting the Gunn property is $20,160 per year. Present negative cash flow on these investments is $50,543 per year.

Former Gunn residence:

  1. The house and 5.66 acres was purchased January 15, 2015 for $620,000, plus costs ($16,750) with sellers receiving six month’s free rent; assessed valuation was $564,000.
  2. The Property was split into two parcels:
    1. Parcel A: 2.66 acres is in the Runway Protection Zone. It has been clear-cut and annexed to Airport property. A shed has been rented for a net $350 per month.
    2. Parcel B: The residence and 2.38 acres is outside the RPZ and leased for a net $1329/month. Present value is estimated by Port realtor to be $450,000 to $525,000.
    3. Current financing: The Port issued Lopez Bond A for $650,000 at 4.35% per year, payable over twenty years. Principal balance is $597,033. Annual payments are $54,000.

Former Crawford property:

  1. Thirteen acres was purchased April 11, 2016 for $195,000, plus costs ($7,020) It was clear-cut and annexed to Airport property.
  2. Current financing: the Port issued Lopez Bond B for $200,000 at 4.35% per year, payable over twenty years. Principal balance is $183,702. Annual payments are $16,703.

Bailey repayment plan

  • The Port is applying for an FAA Grant to repay the Port for the Crawford property and pay off Lopez Bond B in full. This should occur in 2018.
  • Parcel A also qualifies for an FAA grant to pay for its purchase. After finding suitable replacement space for the current tenant, I will ask the Port to apply for the Grant and apply the proceeds to repayment of Lopez Bond A. This could occur in 2018.
  • After finding replacement living accommodations for tenants, I will ask the Port to sell Parcel B (Gunn residence), which is outside the RPZ and non-essential to the Airport, and apply the proceeds to pay off Lopez Bond A in full. This could occur in 2018.

Summary

Under the Bailey Repayment Plan, the Port would have a minimum of $70,000 per year to invest in Community Economic Development Projects, or the Port could issue new Port Bonds and have access to cash of $750,000-$1,000.000 to invest. I have discussed this with the Port’s Bond attorney and this is all very doable, without increasing taxes.