Colby council backs airport hangar project after reduced meeting

The Colby City Council approved the first major step toward issuing up to $1.75 million in industrial revenue bonds for a new airplane hangar during a condensed meeting Tuesday, Aug. 18.

Several council members had obligations connected to activities at the school, and two members participating by telephone were available for only about 10 minutes. City officials reduced the agenda accordingly, leaving no old business or departmental reports and moving quickly through the remaining items.

The council opened a public hearing on the proposed industrial revenue bonds, commonly called IRBs, for the High Plains Aviation LLC airport project. No members of the public were present to speak.

Dustin Stephenson, the owner of the company told the council High Plains Aviation was excited to expand its business and continue developing operations at Colby Regional Airport.

“This is going to be crucial to that next step,” the Stephenson said.

The council then unanimously approved Resolution 1246, determining that issuing the bonds would be advisable.

Although the term “industrial revenue bond” can sound as if the city is borrowing money for a private company, the city is not responsible for repaying the proposed bonds. Under the resolution, the bonds would be purchased and repaid by High Plains Aviation or another private purchaser. Both the bond principal and the project’s expenses are to be paid from project revenue rather than the city’s general funds.

If the bonds are not issued, the resolution states that the city will have no financial liability to High Plains Aviation.

The proposed financing would cover the acquisition, construction and equipping of an airplane hangar on city-owned property at the airport. The resolution allows bonds totaling no more than $1.75 million.

The incentive for the company comes primarily through tax exemptions. Property financed through the bonds would be eligible for a 10-year exemption from ad valorem property taxes, subject to the required application and review. Qualifying construction materials, equipment and services purchased for the project would also be eligible for a sales-tax exemption.

City Manager Ron Alexander said in a follow-up interview that the city evaluates proposed IRB projects using a cost-benefit analysis and does not recommend approval unless a project produces a benefit-to-cost ratio of at least 1.1.

Alexander said the airport land involved in the High Plains Aviation project has historically generated no property-tax revenue. Once the exemption expires, the completed project is projected to produce approximately $60,000 per year in property taxes divided among the local taxing entities.

Alexander said the hangar will also generate economic activity during the exemption period through aircraft sales and maintenance, insurance, flight training and additional fuel sales. Airport fuel sales are a direct source of revenue for the city, he said, producing approximately $72,000 in 2025 — roughly the equivalent of one city mill.

Alexander also credited High Plains Aviation’s expansion with helping attract Apollo MedFlight service to Colby.

From the city’s perspective, Alexander said, the question is not simply how much tax would be collected from the finished hangar during its first 10 years. Officials also consider what the undeveloped property is producing now and whether the project and its related economic activity would occur without the incentive.

Thomas County Commissioner Brian Luedke disagrees with that approach.

Luedke, who teaches in Brewster and commutes from Colby, arrived intending to oppose the IRB but reached City Hall after the hearing and council vote had concluded. With no one present to comment, the public hearing lasted only a few minutes.

Speaking after the meeting, Luedke expressed frustration with the continued use of tax abatements for private developments. He has raised similar objections during Thomas County Commission meetings and argues that waiving taxes shifts the burden away from the benefiting business and is not in taxpayers’ best interest.

Luedke cited previous incentive arrangements that he believes failed to return enough value to local government. He also questioned whether public entities should give tax benefits to a private company for facilities needed to conduct its business.

The disagreement illustrates the central debate surrounding IRBs. Supporters view the exemption as a temporary incentive that can turn vacant or lightly taxed property into a productive development, create business activity and eventually expand the tax base. Opponents focus on the taxes forgone during the exemption and question whether projects receiving public incentives would have proceeded without them.

Alexander pointed to Park Place Townhomes as another example of the city’s approach. The development was built on former city property that had generated no property taxes for decades. Although the development is receiving a 10-year exemption, Alexander said it is expected to generate about $94,000 annually in property taxes beginning in its 11th year. He said 13 of the 15 occupied units were rented to people who moved into the community from outside the county.

He also cited the Comfort Inn & Suites development, constructed on land that had generated less than $4,000 annually in property taxes. Alexander said the hotel is projected to produce approximately $355,000 in annual property taxes after its exemption expires, while generating guest-tax and sales-tax revenue during the exemption period.

In other business Tuesday, the council scheduled a public hearing for 5:30 p.m. Sept. 1 at City Hall, 585 N. Franklin Ave. The hearing will allow taxpayers to comment on the city’s proposed 2027 budget and its intent to levy a property-tax rate exceeding the revenue-neutral rate.

The council also approved a $259,892 payment to Sporer Land Development for the Country Club Drive improvement project. City officials said the work was progressing well and remained on pace for completion within the project’s approximately 110-day schedule.