Ahead of a planned vote next week to pledge Grand Traverse County’s full faith and credit to up to $71 million in bonds for a Cherry Capital Airport expansion, county commissioners Wednesday had an in-depth study session with airport officials about the project. The discussion went so long that most of the commission’s other agenda items – including recent community survey results, the county’s capital improvement plan, and Project Alpha financing options – were bumped to the board’s November 19 meeting.

The Northwest Regional Airport Authority (NRAA) – which operates Cherry Capital Airport – is completing final steps ahead of a targeted March groundbreaking on a $120 million airport expansion. The project will allow TVC to expand to up to nine gates, adding a relocated and expanded security checkpoint area, expanded outbound baggage area, more restrooms and amenities, and new concessions area. The addition will relieve overcrowding and wait times for gates, said Cherry Capital Airport CEO Kevin Klein, noting that airport traffic (a record 787,114 passengers in 2024) is more than double what the existing terminal was built to accommodate. “We fight for every square inch of the building to be utilized at our facility,” he said.

The expansion design is 90 percent complete, Klein said, with the NRAA now finalizing bond preparations. Half of the project is being federally funded, while the other half will be covered through bonds. With financing costs included, up to $71 million could be bonded, Klein said. Because TVC has long been debt free, the airport doesn’t have a bond rating, NRAA Chair Steve Plamondon said. Therefore, the airport is seeking the county’s full faith and credit – and its AA+ bond rating – to obtain lower interest rates. That could save the airport more than $16 million over the life of the bonds, said airport financial advisor Sean Wahl of PFM.

Plamondon said if TVC had to incur those higher bonding costs, they would be passed onto airlines – which would then be passed onto customers. Klein noted many of those customers are local, with approximately half of TVC’s passenger traffic coming from a 50-mile radius. Wahl said the county’s AA+ rating would likely attract a “wide swath of investors,” driving down bond interest rates through competition. Klein said TVC’s success and growth is itself a factor in the county’s bond rating, as the local economy strength is considered in ratings. He cited a 2016 MDOT study estimating that Cherry Capital Airport contributes over $1 billion to the local economy annually. The expansion project can help strengthen the “partnership between the airport and the county,” Klein said.

Commissioners raised questions both Wednesday and at a March meeting about the potential financial risks to the county for pledging its support – from liability if TVC defaults on payments to impacts on the county’s bond rating. Steven Burke of Municipal Financial Consultants Inc. – the county’s financial advisor – noted that additional layers of protection have been built in since discussions first began. Those include a bond reserve account, in which funds equal to an annual payment will be socked away in case the airport is short on revenues. A rate covenant has also been added requiring TVC to set its fees and rates each year at a level that will cover the bond debt service, plus a surplus balance.

If TVC ever had to rely on Grand Traverse County to help cover a payment, the county would be prioritized for reimbursement from future revenues under the bond language. Klein noted the bond amount backed by the county’s pledge could also be lower than $71 million, as TVC is exploring possibilities to finance up to $30 million through the Transportation Infrastructure Finance and Innovation Act (TIFIA). That funding could come through in 2027, he said.

Grand Traverse County is eyeing several of its own major capital projects that would likely need to be bonded – potentially to the tune of close to $135 million. If the county issued all that debt today plus backed the airport’s debt, the likelihood of a bond rating downgrade “would be high,” Burke said. However, he noted the county’s plan isn’t to bond all those projects immediately, but rather to spread them out over several years. The county’s revenues are also continuing to increase, which improves its debt capacity. Roger Swets, the county’s bond counsel, said that while backing the airport project represents a “real obligation” for Grand Traverse County, the terms “have been designed in a very reasonable way” to protect the county’s interests.

Some residents raised concerns about the airport expansion in public comment, particularly its impact on nearby neighborhoods. Noise pollution, tree-clearing at sites like Oakwood Cemetery, and a potential in-town plane crash are all risks if a busy airport continues to grow within city limits, residents said. Klein addressed a recurring criticism about TVC’s location, saying that moving the airport would likely cost $5-$6 billion, require 3,000-5,000 acres of land to be cleared – a high environmental impact, he said – and would likely need to be funded locally since the federal government has already invested in the existing site.

Klein said engine technology continues to evolve toward noise reduction, adding that TVC has talked to flight schools about doing pattern work at higher altitudes to reduce neighborhood impacts. Klein also said there’s no project currently on the books to clear trees at Oakwood Cemetery. However, he acknowledged that taller trees there are typically trimmed on a cyclical basis or removed as they die and replaced with smaller vegetation. The city and airport continue to have discussions about long-term solutions for the cemetery, according to Klein, citing its importance as a community asset.

Klein said the airport construction would take two years, with completion planned by Memorial Day 2028. More growth could be coming in the future, from additional gates to the construction of a parking deck. Klein said “once an airport sees between 2,500 and 3,000 cars...that’s when you start really thinking about going up with a parking deck,” adding that TVC is currently at about 1,700 spaces. However, a deck is not part of the upcoming project, he said. After extensive discussions about the airport’s finances and projected revenues, which Klein said had been calculated conservatively, he ended TVC’s presentation by reassuring commissioners the airport is able to pay its bonds. “We’re in strong financial shape,” he said.