The installation of a new fuel system will go ahead at Kempsey Airport, but a different funding arrangement will have to be found after councillors voted against taking a loan from the Australian International Aviation College for the project.
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At Tuesday’s meeting at Smithtown, council voted in favour of awarding the tender for the $409,359.50 project to Australian Fuelling System and Equipment.
Funding for the installation of the system will consist of a partial grant of $173,000 from the State Government’s Jobs for NSW program, with council to provide the balance of $170,568.
According to the council report, Australian International Aviation College had indicated its willingness to provide an upfront loan to finance the balance of the cost of the system, which would be repaid by future rental offsets.
Council’s finance team then identified an internal property sales fund that can be used for internal borrowings of up to $170,568.
That option offered a lower rate of interest than the offer from AIAC, thereby being a better value option for council.
In the time since the original quote was provided, material and labour costs have risen and the future fuel requirements for airport users has also changed, requiring the provision of Jet A1 as well as Avgas.
On the basis that council endorsed the recommended supplier, these factors resulted in a total project shortfall of $132,359.50, which would have required council to seek the loan from AIAC in order to fund the shortfall.
However, councillors voted against the arrangement involving the AIAC loan.
Councillors were divided during debate on the item.
“It is a cut and dry motion that we should be supporting, as it represents investment in our airport for all users,” Cr Sue McGinn said of the fuel system.
Cr Bruce Morris said “it would be wrong to take a loan from AIAC while a development proposal is with them”. An amendment was then moved that the installation of the fuelling system be done without taking a loan from AIAC, with a separate report to be returned to council detailing the actual costs of the civil and electrical works undertaken as part of this project.
Councillors voted in favour of the amended motion.
The existing fuel system at Kempsey Airport was installed to support passenger services in the 1960s.