Jackson Hole Airport’s planned purchase of Jackson Hole Aviation could be back on the table now that the Wyoming Supreme Court has ruled for the airport, deeming the acquisition legal.
Several local pilots — Greg Herrick, Richard Sugden and Brent Blue — challenged the 2018 purchase, arguing that the airport’s use of revenue bonds to purchase the nontangible assets and goodwill of a private business clashed with state statute. Teton County District Court Judge Timothy Day disagreed in February, and on Tuesday the state’s highest court affirmed that determination.
“The district court correctly interpreted Wyo. Stat. 10-5-101(a) when it held the term ‘other property’ authorized the use of revenue bonds for purchases of both tangible and intangible property,” Justice Kari Gray wrote in the opinion.
Jackson Hole Airport Director Jim Elwood said he was “certainly pleased” with the ruling, which supported the airport board’s decision “on all counts.”
The decision opens the door to again bringing the airport’s lone fixed-based operator in-house, which the Jackson Hole Airport’s town and county-appointed board unanimously agreed to do in 2017. A purchase agreement, at the time for $26 million, was primed to close in May 2018, but has been delayed since then due to the pilots’ financing complaint and a number of other legal disputes that have since been settled.
“We’ll see where the conversation takes us moving forward,” Elwood said. “One of the amendments to the asset purchase agreement allowed for further discussions pending the outcome of the litigation. Now that that’s been resolved, I suspect we’ll have some follow-up discussions with Jackson Hole Aviation after the first of the year to see whether there’s an opportunity to move forward.”
The sale price of Jackson Hole Aviation, which provides services like hangaring, fueling and complementary lemonade, was determined based on a five-year lease that the airport was in essence buying out. The airport owns almost all of businesses’ physical assets, except for $330,000 — just 1.3% of the sale price.
Elwood declined to speculate about how the price could be adjusted, although presumably it would be adjusted downward because the airport would be buying the rights to closer to three years of operations and profits, instead of five years.
“We don’t have any insight into how to determine the current value of Jackson Hole Aviation, given the fact that we haven’t had any discussions with them for going on two years,” the airport director said. “The valuation of that business will need to take place under current conditions.”
It was a bid from the pilot appellate Herrick to start a competing fixed-based operator that set the airport on the path of buying Jackson Hole Aviation. Under federal regulation the airport had to accommodate the competition or own and run the operation itself. Reached Tuesday, Herrick said his options for slowing the acquisition are not exhausted. An informal complaint about the purchase to the Federal Aviation Administration has also failed, though he said could elevate the opposition with a formal complaint.
“I’ll have to decide if that’s worth doing,” Herrick said.
“At the end of the day, fundamentally this is an issue of whether a public airport board should pay $26 million for $330,000 in hard assets,” he said. “If the Wyoming Supreme Court says it’s OK, then it is. It doesn’t mean it’s right, it just means it’s what the statute says.”
Herrick, Sugden and Blue’s attorney, Bruce Moats, argued that revenue bonds weren’t a legal means for financing the acquisition because of the non-tangible property being purchased. Revenue bonds are a type of municipal bond used by public institutions, and the Wyoming Legislature determines how they can be used. Moats has likened the situation to a city using revenue bonds to buy a restaurant. He also contended the airport was also buying Jackson Hole Aviation’s goodwill, which was allegedly separate from the non-tangible assets and also illegal.
The Supreme Court didn’t buy any of the arguments.
“Appellants’ argument is unpersuasive,” Gray wrote in the opinion. “Moreover, goodwill has been recognized as property for over a century.”
Jackson Hole Airport Board President Rick Braun also lauded the court’s decision.
“Today’s ruling shows that these lawsuits have been without merit,” Braun said in a statement, “and the airport board was operating within its authority.”
Elwood didn’t anticipate that the legal victory or steps to buy Jackson Hole Aviation would be discussed at his board’s next meeting, scheduled for Dec. 18.
“We don’t see this conversation moving forward until next year,” he said.