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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 11/02/2021 - FIRST READING OF ORDINANCE NO. 142, 2021, ADOPTING Agenda Item 10 Item # 10 Page 1 AGENDA ITEM SUMMARY November 2, 2021 City Council STAFF Jason Licon, Airport Director Judy Schmidt, Legal SUBJECT First Reading of Ordinance No. 142, 2021, Adopting the 2022 Budget and Appropriating the Fort Collins Share of the 2022 Fiscal Year Operating and Capital Improvements Funds for the Northern Colorado Regional Airport. EXECUTIVE SUMMARY The purpose of this item is to adopt the 2022 budget for the Northern Colorado Regional Airport and appropriate Fort Collins’ share of the 2022 fiscal year operating and capital funds for the Airport. Under the Amended and Restated Intergovernmental Agreement for the Joint Operation of the Airport between Fort Collins and Loveland (the “IGA”), the Airport is operated as a joint venture with each City owning 50% of the assets and revenues and responsible for 50% of the operating and capital costs. The proposed budget does not include any financial contributions from the City’s General Fund. Because each City has an ownership interest in 50% of the Airport revenues, each City must appropriate its 50% share of the annual operating and capital budget for the Airport under the IGA. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION In 1963, the City of Fort Collins and the City of Loveland agreed to the establishment of a regional aviation facility and became owners and operators of the Northern Colorado Regional Airport, located ten miles southeast of downtown Fort Collins, just west of Interstate 25. The Airport is operated as a joint venture between the City of Fort Collins and the City of Loveland, with each city retaining a 50% ownership interest, sharing equally in policy-making and management, and with each assuming responsibility for 50% of the capital and operating costs associated with the Airport. Airport governance and management is set forth in the IGA. The Airport’s mission is: Serving the region, we are a catalyst for innovation in all modes of transportation, a driving force for innovation in business and training, and a global gateway to a magnificent Colorado. According to a 2020 State of Colorado study, the Northern Colorado Airport provides a regional economic impact of approximately $295.97 million annually and supports 1,072 area jobs. All revenues derived from the Airport are applied to both operating and capital expenditures. Each City contributes equal funding, when necessary, for Airport operating and capital needs as defined in the IGA. External funding is also received through grants that are applied for and received by the Airport for eligible projects from the Federal Aviation Administration and the Colorado Department of Transportation Division of Aeronautics. This Ordinance appropriates the City’s 50% share ($787,213) of the 2022 Airport operating budget Agenda Item 10 Item # 10 Page 2 ($1,574,426) and 50% share ($8,750,000) of the 2022 capital budget ($17,500,000), for a total appropriation of $9,537,213 by the City. The City of Loveland will be appropriating the other 50% of the total 2 020 Airport budget ($9,537,213). The Airport’s operating budget is used to maintain and operate the facility in compliance with all regulatory standards for safety and security and to achieve goals set by the Northern Colorado Regional Airport Commission on behalf of the Cities. The Airport’s capital budget will be used to complete improvement projects, including the design of a new commercial terminal building and associated support infrastructure, and the repaving of an existing aircraft taxiway. Financial resources for 2022 are expected from the sources listed below. These include external sources, such as federal and state grants and required grant matches, as well as airport revenues and reserves. These resources will provide the necessary funding for the 2022 operating and capital budgets: FAA Grants $16,500,000 State Grants $0 Airport Revenues $1,552,187 Airport Reserves $1,000,000 Total $19,052,187 The $1,000,000 item is an appropriation as set forth through the IGA for use by the Northern Colorado Regional Airport Commission consistent with the approved 2022 Budget for high priority projects. This Airport Reserve appropriation does not require any additional funding from the Cities. The Northern Colorado Regional Airport Commission approved the proposed 2022 Airport Budget and recommended it for approval by the Fort Collins and Loveland Councils on September 16, 2021. Loveland’s City Council has considered the 2022 Airport budget, with First Reading on October 26, 2021 and Seco nd Reading scheduled for November 2, 2021. CITY FINANCIAL IMPACTS The proposed budget does not include any financial contributions from the City’s General Fund. This item appropriates the City’s 50% share of the annual budget for fiscal year 2022 for the Northern Colorado Regional Airport, which totals $9,537,213 and is 50% of the $19,074,426 total combined 2022 Airport operating and capital budget. The City of Loveland manages the Airport’s budget and finances under the IGA; however, each Council must approve the annual budget under the IGA and, since the City of Fort Collins owns 50% of the Airport, it is necessary for the City to appropriate its 50% portion of the total Airport budget. ATTACHMENTS 1. Airport Commission Resolution (PDF) 1 RESOLUTION # R-12-2021 A RESOLUTION APPROVING THE 2022 AIRPORT BUDGET AND RECOMMENDING APPROVAL BY THE CITY COUNCILS OF FORT COLLINS AND LOVELAND WHEREAS, the City of Fort Collins (“Fort Collins”) and the City of Loveland (“Loveland”) jointly own and operate the Northern Colorado Regional Airport (the “Airport”) pursuant to that Amended and Restated Intergovernmental Agreement for the Joint Operation of the Fort Collins-Loveland Municipal Airport (the “IGA”), dated January 22, 2015, as amended; and WHEREAS, pursuant to the IGA, the two Cities formed the Northern Colorado Regional Airport Commission (“Commission”) and granted the Commission certain authority, including the authority to develop the Airport budget; and WHEREAS, the two Cities reserved to themselves the authority to approve the annual Airport budget and the authority to approve each Cities’ annual contributions to and appropriation of the Airport budget; and WHEREAS, Airport staff has prepared the annual Airport budget for fiscal year 2022 (the “2021 Airport Budget”) and the Commission has reviewed the 2022 Airport Budget, which is attached hereto as “Exhibit A” and incorporated herein; and WHEREAS, after such review, the Commission approves the 2022 Airport Budget, and recommends approval by the two City Councils along with appropriation of the necessary funds for such 2022 Airport Budget. NOW THEREFORE BE IT RESOLVED BY THE NORTHERN COLORADO REGIONAL AIRPORT COMMISSION AS FOLLOWS: Section 1. That the 2022 Airport Budget attached hereto as “Exhibit A” is hereby approved. Section 2. That the Commission recommends that the Fort Collins City Council and the Loveland City Council each approve the 2022 Airport Budget. The Commission further recommends that the City Councils approve each City’s annual contributions to and appropriation of the 2022 Airport Budget. Section 3. That this Resolution shall be effective as of the date and time of its adoption. -1- ORDINANCE NO. 142, 2021 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING THE 2022 BUDGET AND APPROPRIATING THE FORT COLLINS SHARE OF THE 2022 FISCAL YEAR OPERATING AND CAPITAL IMPROVEMENT FUNDS FOR THE NORTHERN COLORADO REGIONAL AIRPORT WHEREAS, in 1963, the City of Fort Collins and the City of Loveland (the “Cities”) agreed to establish a regional general aviation facility and became owners and operators of the Fort Collins-Loveland Municipal Airport, now known as the Northern Colorado Regional Airport (the “Airport”); and WHEREAS, the Airport is operated as a joint venture between the Cities, with each city retaining a 50% ownership interest, sharing equally in policy-making and management, and each assuming responsibility for 50% of the Airport’s capital and operating costs; and WHEREAS, pursuant to the Amended and Restated Intergovernmental Agreement for the Joint Operation of the Fort Collins-Loveland Municipal Airport dated January 22, 2015, and the First Amendment to the Amended and Restated Intergovernmental Agreement for the Joint Operation of the Fort Collins-Loveland Municipal Airport, now known as the Northern Colorado Regional Airport dated June 7, 2016, (collectively, the “IGA”), the Airport Manager is responsible for preparing the Airport’s annual operating budget and submitting it to the Cities for their approval; and WHEREAS, under the IGA, the City’s share of existing and unanticipated Airport revenue is to be held and disbursed by the City of Loveland as an agent on behalf of the Cities, since the City of Loveland provides finance and accounting services for the Airport; and WHEREAS, under the IGA, each City’s share of the Airport’s annual operating budget and the Airport capital improvement plan shall be appropriated by each City and transferred or otherwise paid into the designated account to be used for Airport funding on an annual basis; and WHEREAS, in accordance with Article V, Section 8(b), of the City Charter, any expense or liability entered into by an agent of the City on behalf of the City, shall not be made unless an appropriation for the same has been made by the City Council; and WHEREAS, the Airport Manager has submitted for City Council consideration a 2022 Airport budget totaling $19,074,426, of which the City’s 50% share is $9,537,213 ($787,213 for operations and $8,750,000 for capital); and WHEREAS, the City Council is in the process of considering the City’s 2022 budget and Ordinance No. 144, 2021, which appropriates $247,963 in City funds to be transferred to the Airport operating fund in payment of the City’s share of the rent due under the Lease of a portion of the Airport property for construction and operation of the Northern Colorado Regional Law Enforcement Training Center, which amount is included in the Land Lease revenues set forth in the 2022 Airport Budget; and -2- WHEREAS, pursuant to the IGA, the City of Loveland holds on behalf of both Cities the revenues of, and other financial contributions to, the Airport in a fund, which includes unappropriated and unencumbered reserves (the “Airport Fund”); and WHEREAS, funding for the Airport’s 2022 operating and capital improvement budgets has been identified as follows: FAA Grant $16,500,000 State Grant 0 Airport Revenues 1,552,187 Airport Reserves 1,000,000 Total $19,052,187; and WHEREAS, the City’s 50% share of the 2022 Airport operating costs, to be held in the Airport Fund, is $787,213; and WHEREAS, the City’s 50% share of the 2022 Airport capital improvement costs, to be held in the Airport fund, is $8,750,000; and WHEREAS, the Airport Reserves item is an appropriation for use by the Northern Colorado Regional Airport Commission for discretionary Airport projects; and WHEREAS, City Finance staff has reviewed the financial statements for the Airport and determined that the requested appropriation of Airport Reserves in the 2022 Airport Budget meets the required limits set forth in the IGA; and WHEREAS, this appropriation will not require additional funding from the Cities and is consistent with the IGA. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby approves and adopts the 2022 Airport operating and capital budget totaling $19,074,426 ($1,574,426 for operations and $17,500,000 for capital), a copy of which is attached hereto as Exhibit “A” and incorporated herein by reference. Section 3. That the City Council hereby appropriates in the Airport Fund $787,213 to be expended to defray the City’s 50% share of the 2022 operating costs of the Airport. Section 4. That the City Council hereby appropriates in the Airport Fund $8,750,000 to be expended to defray the City’s 50% share of the 2022 capital costs of the Airport. -3- Introduced, considered favorably on first reading, and ordered published this 2nd day of November, A.D. 2021, and to be presented for final passage on the 16th day of November, A.D. 2021. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk Passed and adopted on final reading on the 16th day of November, A.D. 2021. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk 2018 Actual 2019 Actual 2020 Actual 2021 Budget 2022 Proposed Justification Percent Change OPERATING REVENUES Hangar Rental 117,155 131,782 224,059 215,000 225,000 Increased to account for demand and accuracy 4.7% FBO Rent 98,060 92,586 92,586 96,287 96,287 No change 0.0% Gas and Oil Commissions 199,017 190,731 111,192 165,000 180,000 This is driven by fuel price and airport activty levels 9.1% State & County Aircraft Fuel Tax 112,080 156,661 119,829 103,500 140,000 This is driven by fuel price and airport activty levels 35.3% Land Lease 232,541 650,497 694,391 670,539 749,900 Adjusted for new leases, and CPI lease escalations 11.8% Terminal Lease and Landing Fees 8,342 8,229 5,700 9,000 12,000 Tied to anticpated new airline activities 33.3% Parking 12,850 11,240 4,805 10,000 75,000 Tied to anticpated new airline activities 650.0% Miscellaneous 31,168 20,784 23,494 19,500 23,000 Tied to anticpated new airline activities 17.9% TOTAL OPERATING REVENUES 811,213 1,262,510 1,276,056 1,288,826 1,501,187 Total 16.5% OPERATING EXPENSES Personal Services 552,509 596,508 641,868 734,737 827,312 Increase attributed to insurance costs & addition of FTE 12.6% Supplies 55,943 72,675 68,129 85,000 100,000 Increase driven by service enhancements for airline 17.6% Purchased Services 1,111,515 732,671 513,984 624,699 647,114 Inflation related adjustments 3.6% TOTAL OPERATING EXPENSES 1,719,967 1,401,854 1,223,981 1,444,436 1,574,426 Total 9.0% OPERATING GAIN (LOSS)(908,754)(139,344)52,075 (155,610)(73,239) NONOPERATING REVENUES (EXPENSES) City Conributions 485,000 355,000 0 0 0 Passenger Facility Charge 0 0 0 0 65,000 Subject to obtaining approval for PFC program collections N/A Interest Income 31,930 118,764 95,157 50,000 75,000 Adjustment made based on balance and historic returns 50.0% Capital Expenditures (986,124)(989,250)(1,481,000)(5,566,000)(16,500,000)Increased for anticipated federally funded capital projects 196.4% TOTAL NONOPERATING REVENUES (EXPENSES)(469,194)(515,486)(1,385,843)(5,516,000)(16,360,000) NET INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS (1,377,948)(654,830)(1,333,768)(5,671,610)(16,433,239) Capital Contributions 986,124 892,500 922,000 6,487,000 16,581,373 Federal grant funding balance 155.6% CHANGE IN NET POSITION (391,824)237,670 (411,768)815,390 148,134 Positive end of year balance expected -81.8% Reserve Appropriation 335,000 500,000 500,000 1,000,000 1,000,000 IGA driven for NCRAC use for special projects, no change 0.0% 2022 Recommended Airport Budget EXHIBIT A