HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/17/2010 - RESOLUTION 2010-053 AUTHORIZING THE CITY MANAGER T DATE: August 17, 2010 AGENDA ITEM SUMMARY
STAFF: Mike Freeman FORT COLLINSCOUNCIL
Resolution 2010-053 Authorizing the City Manager to Execute an Agreement Regarding Allegiant Air, LLC Service
from Fort Collins-Loveland Municipal Airport to Mesa, Arizona.
EXECUTIVE SUMMARY
The purpose of this contract is to provide a financial and marketing boost to support the addition of new commercial
air service at Fort Collins Loveland Airport(FNL). The contract waives 2 of 4 Airport related service fees for six months
(Terminal Usage Fee and ARF — Fire Rescue Fee) - $50/each per landing. The contract also supports Allegiant
marketing efforts by supplying a $30,000 reimbursable that Allegiant can utilize to buy marketing in the Northern
Colorado and Arizona markets. The reimbursable is dependent upon the service commencing and operating 2 flights
per week beginning October 2010. Due to the 50/50 ownership structure with the City of Loveland this contract will
be considered by the Loveland City Council as well.
BACKGROUND / DISCUSSION
The purpose of this contract is to support marketing efforts during the start-up phase of new route service from the
FNL Airport to Phoenix, Arizona. The two components of the package include a fee waiver amounting to$100/flight
for the first six months of operations, while the second is a directly billed marketing reimbursable. As Allegiant
purchases advertising for this route launch FNL will review and reimburse bills up to $30,000. If the service is not
operated 2 days per week to Phoenix the obligation for this reimbursement diminishes based in parallel with the
service actually provided.
As a result, of this additional service, the Airport will realize an annual increase in new revenues of approximately
$160,000; a comparative analysis to the existing flight schedule and revenue is attached for informational purposes
(Attachment 2).
The package is in parallel with the package offered to Allegiant in 2003 when it began service; at that time the Airport
also invested in additional Airport infrastructure to accommodate new commercial service; notably, the modular
terminal building. Allegiant brought commercial back to FNL in 2003 after a hiatus of 5 years, in 1998 United Express
and Continental Express abandon service at FNL.
Based on a recent market analysis completed for FNL by Sabre Airlines Solutions, Phoenix is the 4th largest market
from Northern Colorado. Staff has also provided an attached background memo that describes the contract and
background in greater detail.
This contract is consistent with the Business Plan developed by the Airport. The Business Plan
(http://www.fortloveair.com/general-information/guiding-documents)was developed as a companion document to the
Airport Master Plan which focuses exclusively on future capital projects for the Airport and some funding options.
The Airport Steering Committee made up of the two Mayors and City Managers directed staff to develop the business
plan with an overarching goal of identifying options for improving Airport revenue with the goal of eliminating the direct
city investments(currently$85,000). By executing this contract with Allegiant, additional revenues are generated for
FNL.
August 17, 2010 -2- ITEM 16
FINANCIAL/ ECONOMIC IMPACTS
The net revenue generated for the Airport from the new service to Mesa,AZ is approximately$125,000. The$30,000
in support for Allegiant Airlines will be drawn from the budget Airport Fund Balance. The Airport Fund Balance
currently has $1.02 million. An additional $5,200 in fees would be waived under this contractual arrangement.
Therefore, the total incentive contract totals $35,200.
Through other fees and revenue (Passenger Facility Charges, Parking Revenue, and Landing Fees)the Airport will
realize an annual revenue increase of approximately$160,000 per year.
ENVIRONMENTAL IMPACTS
There will be additional emissions from the two additional flights per week to Mesa,AZ. Staff was not able to quantify
the amount of these emissions at this time.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
ATTACHMENTS
1. Prior Agreement dated June 13, 2003
2. Information Memo re: Background information for new commercial airline service
ATTACHMENT 1
AGREEMENT
;i 9
THIS AGREEMENT, made and entered into this day of <,�r�, ,2003, is by and
between the CITY OF LOVELAND, COLORADO,a home rule municipality,the CITY OF FORT
COLLINS, COLORADO, a home rile municipality, hereinafter collectively referred to as "the
Cities," and ALLEGIANT AIR, INC., hereinafter referred to as "Allegiant," WITNESSETH:
WHEREAS,the Cities jointly own and manage certain real property in Larimer County that
is the site of the Fort Collins-Loveland Municipal Airport(the "Airport"); and
WHEREAS,the Cities have been approached by Allegiant to start scheduled service into and
out of the Airport; and
WHEREAS,the Cities acknowledge that certain benefits to the Airport and the communities
will result from such service; and
WHEREAS,the proposed scheduled service is consistent with the Airport's current Master
Plan which forecasted continued commercial service from the early 1990s and well into the future;
and
WHEREAS,the Cities and Allegiant desire to enter into a formal agreement setting forth the
terms and conditions previously addressed in the parties' Letter of Intent,dated May 12, 2003.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the parties hereto agree as follows:
1. Commencement of Scheduled Air Service. Starting no later than August 14, 2003,
Allegiant will begin providing no less than four scheduled flights per week of commercial passenger
service from the Airport using MD 83 and/or MD 87 aircraft. Once commercial passenger service
from the Airport has begun, Allegiant may discontinue such service at any time. A reduction in
scheduled flights per week from the above minimum or a discontinuance of service shall, at the
Cities' option,relieve the Cities of their obligations under this Agreement.
2. Advertising Costs.The Cities shall reimburse Allegiant for up to$30,000 of the direct
costs Allegiant incurs to third party advertisers before the first scheduled flights to advertise and
promote the proposed flights from the Airport.Prior to starting advertising,Allegiant shall advise the
Cities of Allegiant's general advertising plan,and the anticipated budget for the period of time from
the start of advertising to the first scheduled flight.The Cities shall make payment to Allegiant for
the amounts provided herein within thirty(30)days of receipt and approval of invoices submitted by
Allegiant,which invoices shall be submitted to Cities not more frequently than monthly and which
shall identify the specific advertising costs for which reimbursement is requested.
3. Reimbursement of Advertising Costs. If Allegiant does not begin its flights at the
Airport on or before August 14, 2003, Allegiant shall repay to the Cities one-half of all advertising
reimbursement monies previously paid to Allegiant by the Cities. Such repayment shall be made by
Allegiant to the Cities no later than September 15,2003.If Allegiant begins its flights as required in
paragraph one above,and maintains a minimum of four flights per week,Allegiant's reimbursement
obligation to the Cities shall be reduced in accordance with the following schedule: for each month
of operations, the reimbursement obligation shall be reduced by one sixth(1/61h)of the total amount
owed to the Cities by Allegiant with no reimbursement obligation following six months of continued
operations.
4. Temporary Fee Waivers. During the first six months of Allegiant's proposed service
from the Airport,the Cities will waive for each flight the Airport's$50.00 fee for aircraft rescue and
firefighting services and its $50.00 fee for use of the Airport's terminal. The six-month period
identified herein shall commence on the day of the first scheduled flight and end 180 days thereafter,
5. Passenger Waiting Area.The Cities will provide at the Airport an enclosed structure
suitable for holding passengers once the passengers are through security screening and the structure
will be heated, air-conditioned and lighted. It will also have adequate seating, a podium for
passenger services, a telephone and restroom facilities.
6. Law Enforcement Costs. Allegiant shall reimburse the Cities for all direct costs the
Cities incur for law enforcement and security personnel required, now and in the future, by the
Transportation Safety Agency ("TSA") to provide security screening for Allegiant's flights, law
enforcement officers in and around the terminal building,and security required on the aircraft ramp
area and parking lots including random vehicle inspections,except to the extent that any such costs
are reimbursed to the Cities by TSA.Payments shall be made to the Cities by Allegiant within thirty
(30) days of receipt of invoices submitted by the Cities, which invoices shall be submitted to
Allegiant not more frequently than monthly and which shall identify the specific law enforcement
and security costs for which reimbursement is requested.
7. Airport Fees.Allegiant shall pay all applicable airport fees as they currently exist and
as they may hereafter be increased or decreased by the Cities. These current fees include a landing
fee of$.58 per thousand pounds of aircraft certified gross landing weight and the current royalty fee
collected by the Cities on fuel sold at the Airport.
8. Jet fuel. Allegiant shall purchase a minimum of 1,000 gallons of jet fuel per flight
from the Airport's Fixed Base Operator. This amount may be averaged over the total number of
flights on a quarterly basis. The quarterly period(twelve weeks) set forth herein shall begin on the
first day scheduled flights depart from the Airport. If Allegiant does not purchase the minimum
number of gallons of jet fuel as set forth herein,Allegiant agrees to pay the Cities five cents($.05)
per gallon of fuel for the remaining_purchase obligation. Such payment shall be made within thirty
(30) days from the end of the quarter for which the payment is owed. Allegiant shall provide
documentation to the Cities on a monthly basis showing the amount of fuel purchased by Allegiant
from the Airport's Fixed Base Operator.
9. Compliance with applicable laws.At all times during its operations in and out of the
Airport Allegiant shall comply with all applicable federal, state and local laws.
10. Execution Date. The execution date of this Agreement will be the date that this
Agreement is signed by the last of the parties to sign this Agreement.
11. Remedies.In the event that a party breaches its obligations under this Agreement,as
2
determined by a court of competent jurisdiction, the injured party shall be entitled to monetary
damages, equitable relief, including specific performance, and such other remedies at law or in
equity as may be available under applicable law. In the event of litigation relating to or arising out of
this Agreement,the prevailing party,whether plaintiff or defendant,shall be entitled to recover costs
and reasonable attorneys' fees.
12. No Waiver. Notwithstanding anything to the contrary, no term or covenant herein
shall be construed or interpreted as a waiver, either express or implied, of any of the immunities,
rights, benefits or protection provided to either of the Cities under the Colorado Governmental
Immunity Act, including, without limitation,any amendments to such statute, or Linder any similar
statute which is subsequently enacted.
13. No Multiple-Fiscal Year Debt. The parties intend that this Agreement comply with
the provisions of Article X,Section 20 of the Constitution of the State of Colorado,and acknowledge
that neither of them will have any obligation to fund the financial obligations under this Agreement
other than for the current fiscal year.No provision of this Agreement shall be construed as creating
indebtedness or any multiple-fiscal year direct or indirect debt or other financial obligation
whatsoever by the parties within the meaning of any constitutional or statutory debt limitation.
14. Assignment of Benefit. Allegiant may not assign this Agreement to any person
without the express written consent of the Cities.
15, Severability. If any provision in this Agreement or the application of such provision to
any person or circumstance shall be invalid, illegal, or. unenforceable, the remainder of this
Agreement of the application of such provision to persons or circumstances other than those to which
it is invalid, illegal, or unenforceable shall not be affected thereby.
16. Governing Law and Venue. This Agreement shall be governed by the laws of the
State of Colorado,and venue for any legal action arising under this Agreement shall be in the County
of Larimer, State of Colorado.
17. Entire Agreement. This Agreement contains the entire agreement of the patties
relating to the subject matter hereof.The Cities shall not be obligated to pay any costs not identified
in this Agreement.Any unforeseen costs required to provide Allegiant's flight operations from the
Airport shall be paid for by Allegiant. Except as provided herein, the Agreement may not be
modified or amended except by written agreement of the parties.
18. Headings.. Paragraph headings used in this Agreement are for convenience of
reference and shall in no way control or affect the meaning or interpretation of any provision of this
Agreement.
19. Notices. All correspondence between the parties shall be directed to the following
and shall be deemed received when hand-delivered or three (3) days after being sent by certified
mail,return receipt requested:
If to Loveland: Name: �
Title: C �� ya!o x C c�.cz�
Address: Q� F_ . i-iFSi- S-�17PP,�-
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Loveland, CO 80537
If to Fort Collins: Name:
Title: 1 z r
Address: l _cam. Ov- p
Fort Collins, CO 805:�j
V If to Allegiant: Name: �' • G
Title: S 4 o s
Address: q ti, �y Ndd Z)r, R
20. Binding Agreement.This Agreement shall be binding upon and inure to the benefit of
the parties' respective successors and assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year
following their signatures.
CITY OF LOVELAND, COLORADO
By:
�� OF LOVF�gtiOo Title:
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City lerk
APPROVED AS TO FORM:
Assistant City Attorney
CITY OF FORT COLLINS, COLORADO
By:
Title: nom
Date: )
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tCiClerk
APPROVED AS TO FORM:
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Assistant City ttomey
ALLEGIANT AIR, INC.
By: A�
Title: % cc�o✓
Date:
ATT ST:
, 50 retary /
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FIRST AMENDMENT
THIS AMENDMENT,made and entered into this. day of ahua,' ,2005 is by
and between the CITY OF LOVELAND, COLORADO, a home rule municipality, the
CITY OF FORT COLLINS, COLORADO, a home rule municipality,hereinafter
collectively referred to as "the Cities," and Allegiant Air,LLC,hereinafter referred to as
"Allegiant,"WITNESSETH:
WHEREAS the parties entered into an Agreement dated June 13,2003 where Allegiant
agreed to provide air services at the Fort Collins-Loveland Municipal Airport("Airport")
in exchange for certain incentives provided by the Cities(the"AGREEMENT");
WHEREAS all parties agree that Allegiant has not exercised its rights or privileges and
that the Cities have not discharged its obligations under section 2 of the original
AGREEMENT relating to marketing incentives;
I
NOW,THEREFORE,in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration,the parties hereto agree as follows:
Allegiant agrees to not request for reimbursement monies as described in section 2 in the
aforementioned AGREEMENT and instead agrees to permit the Cities to use such funds
for the construction costs of a bag claim area(hereafter"bag claim project") at the i
Airport. The costs of the bag claim project shall be home solely and exclusively by the
Cities. If the bag claim project costs less than$30,000, then Allegiant shall have the right
to request that the difference between$30,000 and the actual project costs be used for i
other airport improvements to be specified by Allegiant.
All other terms and conditions of the AGREEMENT shall remain in full force and effect.
IN WITNESS WHEREOF,the parties have hereunto set their hands the day and year
following their signatures.
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CITY OF LOVELAND, COLORADO
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ATTACHMENT 2
✓ FORT COLLINS ^ LOVELAND
AIRPORT
TO: CITY COUNCIL - FORT COLLINS & LOVELAND
THROUGH: DON WILLIAMS, CITY MANAGER
DARIN ATTEBERRY, CITY MANAGER
MIKE FREEMAN, FORT COLLINS FNL LIAISON
FROM: KEITH REESTER, INTERIM FNL AIRPORT DIRECTOR
SUBJECT: BACKGROUND INFORMATION FOR NEW COMMERICAL AIRLINE SERVICE
DATE: AUGUST 4, 2010
As you are aware FNL currently handles traffic 4 days per week to Las Vegas via
Allegiant Airlines. As recently as 18 months ago, Allegiant served FNL with six flights
per week. The airport also hosts some intermittent commercial traffic through Sun
Country Airlines, which primarily serves Reno, NV; but on a very limited basis. In
2009, FNL hosted a total of just over 31,000 commercial passengers.
Executive Summary .
Allegiant Airlines is very interested in additional service to Fort Collins Loveland
Airport. The service will add twice-weekly flights to Phoenix, Arizona beginning in
October 2010. Under FAA regulations a local airport owner cannot deny an airline or
other public user of the airport service options, or dictate the frequency or number of
flights. If the airport owner did deny this access they would be in violation of
previously agreed to FAA Grant Assurances, and would put the airport in a position of
not being eligible to receive federal dollars. Over the course of FNL's history beginning
in 1963 the cities have accepted tens of millions of dollars in FAA funding.
As part of the service growth agreement FNL staff is proposing waiving $5,200 fees
over the first six months, and providing $30,000 for Allegiant to support their
marketing launch in Northern Colorado and Arizona. The package is consistent with
what was provided when service began in 2003 and is very important to a successful
outcome. This marketing package is reimbursable based solely on actual dollars spent
by Allegiant. The net revenue gain in the first year of operations will allow the airport
to realize approximately $125,000 in additional revenue. It is also expected that a
significant portion of the $30,000 marketing supplement will be utilized for media
buying in Northern Colorado.
The Airport Steering Committee reviewed and offered direction to staff to proceed with
the package and service growth in Executive Session on July 15.
The effort to add additional service is part of the larger goals outlined in the Council
approved Airport Business Plan, which seeks to move the airport to greater financial
self-sufficiency and to do so through the growth of existing and new revenue streams.
1
The two additional flights per week are similar to what Allegiant provided in service
until early-2009; prior to this time Allegiant flew six flights per week to Las Vegas.
Currently, Allegiant operates four flights per week to Las Vegas, if service was added
to Phoenix, the total flights per week would return to six.
Background
In 2003, Allegiant began service from FNL to Las Vegas; at that time the Cities
approved a package to support the commencement of service. This package included
the waiver of two of the four fees charged to the airline and the provision of a
reimbursable $30,000 marketing package. Additionally, the cities invested in the
addition of a modular terminal building, which provides not only services for Allegiant
but also the airport as a whole. This is critical to the airline on two fronts, first the
marketing reimbursement provides key support to attract critical traction in the
market to attract passengers. The fee waivers allow the airline to operate in a more
lean cost mode during the early months of a new service launch, when passenger seat
loads are lower as the market grows.
The Market
In 2009 staff completed, with Sabre Airline Solutions, a full blown market analysis for
the catchment area that surrounds FNL; this work has allowed FNL to better discuss
with airline partners what are the primary markets served by customers in our region,
as well as how many of those customers are routinely driving to DIA for services. The
market information is contained in the Small Community Air Service Grant Application
FNL submitted in 2009, that report can be found at
httr)://www.fortloveair.com/general-information/development-opportunities
Current Situation
Over the past several months staff has worked with Allegiant, as well as other
carriers, to pursue additional service options at FNL. The negotiations with Allegiant
Air recently reached a critical point and staff briefed the Airport Steering Committee in
executive session on July 15, 2010. The Steering Committee voiced support for the
proposed changes and incentive package.
Under the current negotiated package, Allegiant Air would begin new service 2 days
per week from FNL to Phoenix (Mesa), Arizona. Mesa (IWA) is an Allegiant hub in the
Phoenix metro area; service would fly Thursday and Monday.
Marketing/Start-up Package
Staff has negotiated a package that is beneficial to both FNL and Allegiant. The
financial details are outlined in attachment A. The package replicates the 2003
package, including a 6-month fee waiver and $30,000 marketing reimbursable. The
$30,000 will be covered from airport fund balance, which is currently $1,062,681.
In simple terms, the current service provided by Allegiant, through fees charged
directly to the airline, as well as Passenger Facility Charges (PFC) collected on our
behalf, and parking; generates over $335,000 annually for the airport.
The new service to IWA is anticipated to generate $160,000 annually in additional
revenue for FNL. The proposed package, waives two fees, the Terminal fee and Fire
(ARF) fee for the first 6-months of operations. This totals $100 per flight. As you will
see in attachment A after the fee waiver and the $30,000 marketing reimbursable,
2
FNL is still anticipated to net $125,000 in new revenue in the next 12 months. In the
event that service does not proceed as planned, the marketing dollars would not be
paid, since they are paid only on actual funds spent to purchase advertising here and
in Arizona.
How does this package compare to the industry? In looking at two recent incentive
packages in the region, FNL's is a significant accomplishment. Allegiant is slated to
begin service to Las Vegas from Pueblo later this year; the package negotiated for
that service start includes a 100% fee waiver for 12 months, free parking to all
passengers, and a reported $50,000 marketing package. This would equate to a dollar
value of $264,000 based our experience. Recently service was also launched to Dallas
from Cheyenne, via Great Lakes Aviation. The package reported for this service,
primarily paid by the State of Wyoming and a private business coalition is $1.2
million.
Economic Impact
In 2003, the Colorado State Division of Aeronautics completed a statewide
assessment report of the impact of aviation on Colorado communities. In the 2003
report, FNL showed a regional economic impact of $37 million annually, and 619 jobs.
In 2008, the State prepared an update to this report, with FNL now showing the
results of added commercial air service; the results jumped to $56 million, and 749
jobs. Staff believes the addition of new commercial markets will only enhance this
economic growth.
Recent market research also shows that nearly 40% of the traffic to and from the
Mesa location is "outbound" to other cities, so we anticipate additional tourist and
business traffic into FNL. The Las Vegas service is primarily "outbound" travel for
Northern Colorado, so the growth of service bringing business to our region is a strong
move forward.
As for Allegiant, you can find their most recent quarterly financials and traffic figures
at http://ir.allegiantair.com/releasedetaii.cfm?ReleaseID=485489
Additionally, in 2009 Allegiant was one of only a handful of airlines throughout the
world that posted profits in every quarter. On a more recent note in just the last
month, Allegiant was named by Aviation Week Magazine as the Top Performing Low
Cost Airline in the world.
Information
Feel free to contact Darin Atteberry, Don Williams, or Rod Wensing with additional
questions or clarification Keith Reester can be reached at 970-962-2520 or
reestk(&ci.loveland.co.us.
3
Allegiant Fee Structure (7/13/2010) Attachment A
Cu rcnt ROM fxt In 2W3 Cmtro )
Las Vegas Current Service Revenue
Per Flight Annual
Landing Fee $0.58/1,000lbs landing weight $80.91 $ 16,829.28
Terminal Fee $50/Flight $50.00 $ 10,400.00
ARRF fee $50/Flight $50.00 $ 10,400.00
Fuel Flowage $0.05/gallon-1,000 gallon minimum purchase/flight $50.00 $ 10,400.00
Average total cost to Allegiant per flight $230
Other Revenues
Parking Average$800/Flight $800.00 $ 166,400.00
PFCs Winter: 150 seats @ 90%load (35 weeks) $607.50 $ 85,050.00
$4.50 Summer: 135 seats @ 90%load (17 weeks) $531.00 $ 36,108.00
Total AVG Annual Flights Las Vegas 208
Total AVG Airport Revenue Per Flight(Las Vegas) $1,613.40
Total Annual Revenue Las Vegas Service $335,587.29
MESA Service Projection
Per Flight Annual
Landing Fee $0.58/1,000lbs landing weight $80.91 $ 8,414.64
Terminal Fee $50/Flight $50.00 $ 5,200.00
ARRF Fee $50/Flight $50.00 $ 5,200.00
Fuel Flowage $0.05/gallon-1,000 gallon minimum purchase/flight $50.00 $ 5,200.00
Average total cost to Allegiant per flight $230 (First 6 months:$50)
Other Revenues
Parking Average$800/Flight $800.00 $ 83,200.00
PFCs Winter: 150 seats @ 80%load (35 weeks) $540.00 $ 37,800.00
$4.50 Summer: 135 seats @ 80%load (17 weeks) $450.00 $ 15,300.00
Total AVG Annual Flights Las Vegas 104
Total AVG Airport Revenue Per Flight(Las Vegas) $1,541.49
Total Annual Revenue Las Vegas Service $160,314.64
Requesting 6 Month Waiver (2 flights/week z 26 weeks) -$5,200.00
Requesting Marketing Reimbursable -$30,000.00
Total Estimated year 1 Revenue FNL at 2 Flights/week MESA $125,114.64
Service: 2 flights per week Monday and Friday 10: 30 AM Arrival/11:10 AM Departure
Destination: I WA
RESOLUTION 2010-053
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT
REGARDING ALLEGIANT AIR, LLC SERVICE FROM
FORT COLLINS-LOVELAND MUNICIPAL AIRPORT TO MESA, ARIZONA
WHEREAS,the Cities of Fort Collins and Loveland(the"Cities")jointly own and manage
certain real property in Larimer County that is the site of the Fort Collins-Loveland Municipal
Airport (the "Airport"); and
WHEREAS, Allegiant Air, LLC ("Allegiant") and the Cities are parties to an Agreement
dated June 16, 2003, as amended by a First Amendment dated January 19, 2005 (collectively, the
"2003 Agreement")pertaining to Allegiant's current scheduled airline service to Las Vegas,Nevada
(the "Existing Service"); and
WHEREAS,the Cities have been approached by Allegiant to expand scheduled service into
and out of the Airport beyond the Existing Service currently provided to include two scheduled
flights per week of commercial passenger service from the Airport to Mesa,Arizona(the"Additional
Service")on the terms and conditions set forth in a proposed"Agreement Regarding Allegiant Air,
LLC Service from Fort Collins-Loveland Municipal Airport to Mesa,Arizona"(the"Agreement"),
a copy of which is attached hereto as Exhibit "A" and incorporated herein by this reference; and
WHEREAS,the proposed Additional Service is consistent with the Airport's current Master
Plan which forecasted continued commercial service from the early 1990s and well into the future;
and
WHEREAS, the City Council believes that the Additional Service will serve the public
purposes of providing significant social and economic benefits to the citizens of the City,primarily
in the form of increased access to airline services,jobs,economic development,and increased airport
revenues and,therefore,the monetary incentives included in the Agreement are in the best interests
of the public and the City.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS, as follows:
Section 1. That the City Council believes that the Additional Service will serve the
public purposes of providing significant social and economic benefits to the citizens of the City,
primarily in the form of increased access to airline services, jobs, economic development, and
increased airport revenues and,therefore,the monetary incentives included in the Agreement are in
the best interests of the public and the City.
Section 2. That the City Manager is hereby authorized and directed to execute the
Agreement on behalf of the City in substantially the form shown on Exhibit "A", along with such
additional terms and conditions as the City Manager, in consultation with the City Attorney,deems
necessary and appropriate to protect the interests of the City.
Section 3. That the City Council hereby ratifies and confirms the 2003 Agreement.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 17th
day of August A.D. 2010.
Mayor
ATTEST:
City Clerk
EXHIBIT A
AGREEMENT REGARDING ALLEGIANT AIR, LLC SERVICE FROM FORT COLLINS-
LOVELAND MUNICIPAL AIRPORT TO MESA, ARIZONA
This agreement, made and entered into this day of , 2010, is by and between the CITY OF
LOVELAND, COLORADO, a municipal corporation, the CITY OF FORT COLLINS, COLORADO, a
municipal corporation, hereinafter collectively referred to as "the Cities," and ALLEGIANT AIR, LLC, a
Nevada limited liability company, hereinafter referred to as "Allegiant";
WITNESSETH:
WHEREAS, the Cities jointly own and manage certain real property in Larimer County that is the site of
the Fort Collins-Loveland Municipal Airport (the "Airport"); and
WHEREAS, Allegiant and the Cities are parties to an Agreement dated June 16, 2003, as amended by a
First Amendment dated January 19, 2005, both of which are attached hereto as Exhibit A (collectively, the
"2003 Agreement") pertaining to Allegiant's current scheduled airline service to Las Vegas, Nevada (the
"Existing Service"); and
WHEREAS, the Cities have been approached by Allegiant to expand scheduled service into and out of the
Airport beyond the Existing Service currently provided to include two scheduled flights per week of
commercial passenger service from the Airport to Mesa, Arizona (the "Additional Service"); and
WHEREAS, the Cities acknowledge that certain benefits to the Airport and the communities will result
from such Additional Service; and
WHEREAS, the proposed Additional Service is consistent with the Airport's current Master Plan which
forecasted continued commercial service from the early 1990s and well into the future.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and
other good and valuable consideration, the parties hereto agree as follows:
1. Commencement of Scheduled Air Service. Starting no later than Allegiant will begin
providing the Additional Service, to include no less than two scheduled flights per week of commercial
passenger service from the Airport to Mesa, Arizona using MD 80, 83 and MD 87 aircraft. The Additional
Service shall be provided in addition to the Existing Service currently provided by Allegiant from the Airport to
Las Vegas, Nevada. Once the Additional Service from the Airport has begun, Allegiant may discontinue the
Additional Service at any time. A reduction in the minimum of two flights per week included in the Additional
Service or a discontinuance of the Additional Service within 6 months following commencement shall, at the
Cities' option, relieve the Cities of their obligations under this Agreement.
2. Advertising Costs. The Cities shall reimburse Allegiant for up to $30,000 of the direct costs
Allegiant incurs to third party advertisers before the first scheduled flights included in the Additional Service to
advertise and promote the Additional Service from the Airport. Prior to starting advertising, Allegiant shall
advise the Cities of Allegiant's general advertising plan and the anticipated budget for the period of time from
the start of advertising to the first scheduled flight. The Cities prefer that a portion of the funds be spent with a
third party firm in Northern Colorado. The Cities shall make payment to Allegiant for the amounts provided
herein within thirty (30) days after receipt and approval of invoices submitted by Allegiant, which invoices shall
be submitted to Cities not more frequently than monthly and which shall identify the specific advertising costs
for which reimbursement is requested.
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3. Reimbursement of Advertising Costs. If Allegiant does not begin its Additional Service at the
Airport on or before , Allegiant shall repay to the Cities one-half of all advertising reimbursement
monies previously paid to Allegiant by the Cities (the "Repayment"). Such Repayment shall be made by
Allegiant to the Cities no later than . If Allegiant begins its Additional Service as required in
paragraph one above, and maintains a minimum of two flights per week for the following six months, Allegiant
shall have no further obligation for the Repayment to the Cities. For each full month after Allegiant begins the
Additional Service as required in paragraph one above, and maintains a minimum of two flights per week, the
Repayment shall be reduced by 1/6`h. For example, if the Cities reimburse Allegiant for $28,000.00 in direct
costs of third party advertising in accordance with Paragraph 2 above and Allegiant does not begin the
Additional Service at the Airport on or before the required date, it shall pay to the Cities the Repayment in the
entire amount of$28,000.00. If Allegiant begins the Additional Service as required in paragraph one above,
and maintains a minimum of two flights per week for a period of three full months before discontinuing or
reducing the Additional Service, then the Repayment will be reduced by 3/61hs and Allegiant shall pay to the
Cities an amount equal to $14,000
4. Temporary Fee Waivers. During the first six months of Allegiant's Additional Service from the
Airport, the Cities will waive for each flight to Mesa, Arizona (but not for the Existing Service to Las Vegas,
Nevada) the Airport's $50.00 fee for the aircraft rescue and firefighting services and its $50.00 fee for use of the
Airport's terminal. The six-month period identified herein shall commence on the day the first scheduled flight
to Mesa, Arizona departs and end 180 days thereafter.
5. Passenger Waiting Area. The Cities will continue to provide at the Airport the existing enclosed
structure suitable for holding passengers once the passengers are through security screening, which structure is
heated, air-conditioned and lighted, and has adequate seating, a podium for passenger services, a telephone and
restroom facilities.
6. Law Enforcement Costs. Allegiant shall reimburse the Cities for all direct costs the Cities incur
for law enforcement and security personnel required, now and in the future, by the Transportation Safety
Agency ("TSA") to provide security screening for Allegiant's Additional Service, law enforcement officers in
and around the terminal building and security required on the aircraft ramp area and parking lots including
random vehicle inspections, except to the extent that any such costs are reimbursed to the Cities by TSA.
Payments shall be made to the Cities by Allegiant within thirty (30) days of receipt of invoices submitted by the
Cities, which invoices shall be submitted to Allegiant not more frequently than monthly and which shall
identify the specific law enforcement and security costs for which reimbursement is requested.
7. Airport Fees. Allegiant shall pay all applicable airport fees with respect to the Additional
Service as they currently exist and as they may hereafter be increased or decreased by the Cities. These current
fees include a landing fee of$.58 per thousand pounds of aircraft certified gross landing weight and the current
royalty fee collected by the Cities on fuel sold at the Airport.
8. Jet Fuel. Allegiant shall purchase a minimum of 1,000 gallons of jet fuel per flight included in
the Additional Service from the Airport's Fixed Base Operator. This amount may be averaged over the total
number of additional flights included in the Additional Service on a quarterly basis. The quarterly period
(twelve weeks) set forth herein shall being on the first day scheduled flight included in the Additional Service to
Mesa, Arizona departs from the Airport. If Allegiant does not purchase the minimum number of gallons of jet
fuel as set forth herein, Allegiant agrees to pay the Cities five cents ($.05) per gallon of fuel for the remaining
purchase obligation. Such payment shall be made within thirty (30) days from the end of the quarter for which
the payment is owed. Allegiant shall provide documentation to the Cities on a monthly basis showing the
amount of fuel purchased by Allegiant from the Airport's Fixed Base Operator for the Additional Service.
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9. Compliance with applicable laws. At all times during its operations in and out of the Airport
Allegiant shall comply with all applicable federal, state and local laws.
10. Execution Date. The execution date of the Agreement will be the date that this Agreement is
signed by the last of the parties to sign this Agreement.
11. Remedies. In the event that a party breaches its obligations under this Agreement, as determined
by a court of competent jurisdiction, the injured party shall be entitled to monetary damages, equitable relief,
including specific performance, and such other remedies at law or in equity as may be available under
applicable law. In the event of litigation relating to or arising out of the Agreement, the prevailing party,
whether plaintiff or defendant shall be entitled to recover costs and reasonable attorneys' fees.
12. No Waiver. Notwithstanding anything to the contrary, no term or covenant herein shall be
construed or interpreted as a waiver, either express or implied, of any of the immunities, rights, benefits or
protection provided to either of the Cities under the Colorado Governmental Immunity Act, including, without
limitation, any amendments to such statute, or under any similar statute which is subsequently enacted.
13. No Multiple-Fiscal Year Debt. The parties intend that this Agreement comply with the
provisions of Article X, Section 20 of the Constitution of the State of Colorado, and acknowledge that neither of
them will have any obligation to fund the financial obligations under this Agreement other than for the current
fiscal year. No provision of this Agreement shall be construed as creating indebtedness or any multiple-fiscal
year direct or indirect debt or other financial obligation whatsoever by the parties within the meaning of any
constitutional or statutory debt limitation.
14. Assignment of Benefit. Allegiant shall not assign this Agreement to any person without the prior
written consent of the Cities.
15. Severability. If any provision in this Agreement or the application of such provision to any
person or circumstance shall be invalid, illegal or unenforceable, the remainder of this Agreement of the
application of such provision to persons or circumstances other than those to which it is invalid, illegal or
unenforceable shall not be affected thereby.
16. Governing Law and Venue. This Agreement shall be governed by and enforced in accordance
with the laws of the State of Colorado. In addition, the parties hereto acknowledge that there are legal
constraints imposed upon the Cities by the constitutions, statutes, and rules and regulations of the State of
Colorado and of the United States, and imposed upon the Cities by their Charters and Codes, and that, subject to
such constraints, the parties intend to carry out the terms and conditions of this Agreement. Notwithstanding
any other provisions of this Agreement to the contrary, in no event shall the parties hereto exercise any power or
take any action which shall be prohibited by applicable law. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner so as to be effective and valid under applicable law. Venue for
any judicial proceeding concerning this Agreement shall be in the District Court for Larimer County, Colorado.
17. Entire Agreement. This Agreement contains the entire agreement of the parties relating to the
Additional Service. The Cities shall not be obligated to pay any costs not identified in this Agreement. Any
unforeseen costs required to provide Allegiant's flight operations from the Airport for the Additional Service
shall be paid for by Allegiant. Except as provided herein, the Agreement may not be modified or amended
except by written agreement of the parties.
18. Headings. Paragraph headings used in the Agreement are for convenience of reference and shall
in no way control or affect the meaning or interpretation of any provision of this Agreement.
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19. Notices. All correspondence between the parties shall be directed to the following and shall be
deemed received when hand-delivered or three (3) days after being sent by certified mail, return receipt
requested:
If to Loveland:
Name:
Title:
Address:
If to Fort Collins:
Name:
Title:
Address:
If to Allegiant:
Name:
Title:
Address:
20. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties' respective successors and assigns.
21. 2003 Agreement. This Agreement sets forth the independent obligations and agreements between
the parties with respect to Allegiant's Additional Service to Mesa, Arizona and shall not be deemed to
terminate, modify or otherwise amend the 2003 Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year following their
signatures.
CITY OF LOVELAND, COLORADO
By:
Title:
Date:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Deputy City Attorney
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CITY OF FORT COLLINS, COLORADO
By:
Title:
Date:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Deputy City Attorney
ALLEGIANT AIR, LLC
By:
Title:
Date:
ATTEST:
Secretary
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2003 AGREEMENT
(7 pages)
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