By Associated Press - Wednesday, October 12, 2016

AMES, Iowa (AP) - The presidents of Iowa State University and the Iowa Board of Regents supported a plan to use school funding for up to 20 years to help pay for improvements at a small city-owned airport where their business planes are housed.

A plan backed Tuesday by the Ames city council would require Iowa State to make annual payments of up to $74,000 to the city through 2035 - a potential exposure of $1.3 million. The university will pay an additional $250,000 upfront.

The financing agreement comes as Iowa State faces a scandal involving President Steven Leath’s use of university-owned planes for a mixture of official and personal business. The airport improvements have been a priority for Leath, a pilot and flight enthusiast.

ISU’s funding is part of a $4.4 million plan that would build a larger terminal at the Ames airport to offer nicer amenities, including better waiting rooms and bathrooms. Business leaders raised $1 million to build a new hangar to provide for more plane storage and committed an additional $250,000 for the terminal; the city and university will pay the rest. The plan will bring in a new contractor to run the airport in hopes of improving service and generating more revenue.

Supporters say the improvements would create a more appealing door to the city for corporate executives, university employees and others who use private planes at the airport, which doesn’t have service for the general public. But two city councilors said Tuesday the project is a major risk, noting that revenue projections have been reduced, costs have spiked and more overruns are possible.

“It makes me really nervous,” said councilor Bronwyn Beatty-Hansen.

Iowa State has long used the airport to house its planes, which are used in fundraising and athletics. Leath spent nearly $3 million in donations to buy newer planes and has used them frequently. He has faced scrutiny after admitting that he damaged one plane in a hard landing while returning from vacation in North Carolina last year, and has made mistakes in his use of both planes. The Board of Regents is reviewing Leath’s compliance with university policies.

In a speech last month before the scandal broke, Leath said the airport improvements would “offer more inviting, convenient access to our university and community.” The school is expanding its nearby research park and hopes the airport will make a good impression on business leaders considering locating there.

Board policy says regents are responsible for approving financing for capital projects. But Board spokesman Josh Lehman said Wednesday the plan didn’t need approval since the airport is owned by the city and therefore not under the regents’ jurisdiction.

Board President Bruce Rastetter has praised Leath for working with the city to improve the airport, saying the project would encourage economic growth. Rastetter, an agribusinessman and Republican Party powerbroker, stores his business plane at the airport.

Then-university vice president Warren Madden signed the arrangement with Ames last year, agreeing ISU would cover any shortfall between the airport’s operating revenue and expenses for 20 years. Annual payments would be capped at the amount the city owed on $943,000 it planned to borrow for the terminal. The hope was that the airport would eventually turn a profit and that a portion would return to ISU.

But that idea suffered a blow when contractors’ proposals included far less revenue than projected. Under the amendment supported Tuesday, Iowa State won’t have to make payments in the first two years since it took longer than expected to find a new contractor. But it raised annual payments the school would face over the next 18 years to a high of $74,874 in 2020.

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