City Council adopts $516,830 airport supplemental budget to cover Avelo minimum revenue guarantee

The Salem City Council voted Feb. 24 to adopt Resolution 2025-5, a supplemental FY2025 budget action increasing Airport Fund appropriation authority by $516,830 to cover the Avelo Airlines minimum revenue guarantee.

Management analyst Kelly Blake Schmidt explained the airport's agreement with Avelo includes a minimum revenue guarantee that covers shortfalls when ticketing and ancillary revenue fall below a contracted floor. Staff did not anticipate the need for additional appropriation authority during the initial budget and is proposing a supplemental budget. Kelly Blake Schmidt said the additional authority would be offset primarily by a U.S. Department of Transportation grant and a commitment from Travel Salem; the grant requires drawdown documentation and was described as still in process.

City Attorney Dan Atchison and public works director Brian Martin told council that, if federal and Travel Salem funding prove insufficient, the city would be responsible for remaining obligations under the guarantee. Council members pressed staff on how much revenue the airport had generated and the economic impact of the new routes; staff said a previous consultant report estimated roughly $18 million in local economic activity associated with the service and agreed to provide a precise ledger of amounts paid or drawn under the guarantee.

After public hearing and Q&A, Councilor Nishioka moved adoption of Resolution 2025-5; the motion carried on a roll call vote.

Votes at a glance: - Resolution 2025-5 (FY2025 Supplemental Budget 2, Airport Fund): Motion: adopt; Mover: Councilor Nishioka; Second: Councilor Teigen; Vote: unanimous (all present voted Aye).

Next steps: staff will draw down federal grant funds as eligible, track Travel Salem commitments, and report back to council with a detailed accounting of past draws and any remaining city exposure.