The Helena Regional Airport Authority's executive committee believes the airport was within its rights to negotiate a contract to lease land to Blue Cross Blue Shield of Montana, which plans to build a new facility on nine acres there for more than 500 employees.

The committee is wrapping up an investigation, prompted by a letter from two city commissioners, into the negotiation process.

Pending the completion of a legal opinion from the board's attorney and the receipt of information from the Federal Aviation Administration, the committee will complete its report in coming weeks and forward it to the full airport board for consideration.

At a work session Tuesday, the committee agreed with Airport Manager Ron Mercer's assessment that the authority is allowed by federal regulations, state law and its own rules to lease land to outside businesses and entities.

He noted the land in question was purchased decades ago with federal money, and FAA rules say airport authorities must lease, not sell, those properties. If the airport's lease with Costco wasn't considered a disposal of property, the Blue Cross deal should be no different, Mercer said.

City Commissioners Alan Peura and Paul Cartwright contended, in a letter last month, that the Blue Cross deal was of enough "magnitude" to require the approval of the City Commission. A majority of the commission declined to sign their letter.

Mercer and committee members disagreed with Peura and Cartwright's opinion and said the city has already approved zoning regulations that govern the property, and the Blue Cross facility would comply with those rules.

Peura and Cartwright did not attend Tuesday's work session.

Committee members also agreed the airport is in sound fiscal shape and noted the deal with Blue Cross is important to the airport's long-term financial planning. With uncertainty in the airline industry, it's important that the airport diversify its income, Mercer said.

He said the airport could lose half its air service and stay afloat, though times would still be difficult.

"That's exactly why we're looking for new revenues," Mercer said.

"We don't intend to become a land-holding entity," he added. Mercer has maintained the airport chooses property deals carefully and has declined several inquiries recently.

Reporter Larry Kline: 447-4075 or larry.kline@helenair.com