HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/20/2003 - FIRST READING OF ORDINANCE NO. 086, 2003, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER: 30
FORT COLLINS CITY COUNCIL DATE: May 20, 2003
STAFF: Dave Gordon
Ron Phillips
;SUBJECT:
First Reading of Ordinance No. 086, 2003, Authorizing the Appropriation of Funds for
Expenditures for Capital Improvements and Operating Expenses to Improve the Fort Collins-
Loveland Airport Terminal Building Facilities and for Funds to Promote Scheduled Service into
the Airport.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on First Reading.
FINANCIAL IMPACT:
Funding to make the improvements and operating expenses will come from revenues generated
last year from the air show last year and from operating revenues generated from the new air
service.
EXECUTIVE SUMMARY:
The Fort Collins-Loveland Municipal Airport has been approached by Allegiant Air to start
scheduled service into the Airport. Negotiations with the Allegiant have been successfully
completed as described below. The Cities have signed a letter of intent to provide certain funds
and facilities to accommodate the service by Allegiant Air, upon the terms and conditions stated
below. These conditions will also be part of a formal, written agreement with Allegiant Air.
1. Starting no later than July 31, 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.
2. The Cities will reimburse Allegiant for up to $30,000 of the costs Allegiant incurs
before the first scheduled flights to advertise and promote the proposed flights from
the Airport. If Allegiant does not begin its flights at the Airport on or before July
31, 2003, Allegiant will repay to the Cities one-half of all advertising reimbursement
monies previously paid to Allegiant by the Cities.
DATE: y ITEM NUMBER: JU
3. 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.
4. 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 two portable restrooms.
5. Allegiant will reimburse the Cities for all direct costs the Cities incur for law
enforcement personnel required by the Transportation Safety Agency ("I'SA") to
provide security screening for Allegiant's flights except to the extent that any such
costs are reimbursed to the Cities by TSA.
6. Allegiant will 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.
Funds that will be appropriated are as follows:
$15,000 for reimbursement to Allegiant for advertising
$16,750 for one-time capital expenses for 2003
6,650 for operating expenditures for 2003
$38,400 total expenses
Anticipated revenues from the new service are estimated at $5,000 per month for the first six
months of service and then $6,600 per month thereafter. Operating expenses are estimated at
$1,900 per month and initial capital costs are estimated at $33,500 (see attached Pro Forma
budget).
The sources of funds for this appropriation are:
$24,650 in Airport reserve funds
13 750 for revenues for 2003
$38,400 total revenue
The improvements to the terminal building will allow other scheduled and private charter flights
that are required under new Transportation Security Administration regulations to screen
passengers and baggage. The result of the new federal requirements is that the terminal building
is too small to handle these flights in the future. Without making these improvements the
Airport will lose charter flights such as those bringing in college sport teams and professional
teams anticipated from the County's Event Center. The ability to make these improvements with
revenues from Allegiant flights will solve the problem of finding revenue sources in the future.
DATE: may ITEM NUMBER:
The benefits to the Airport and communities from this service are as follows.
• The communities will once again have scheduled jet service to a major city as either
a destination or for continuing on to other locations. The ticket prices are forecasted
by Allegiant to be at very competitive levels.
• The costs to make these improvements will be recoverable much sooner with the
anticipate revenues generated from Allegiant Air. Without revenues from
Allegiants' flights, the Airport's fund balance or contributions from the Cities will
have to be used to make these improvements.
• Making the improvements will accommodate other private and public charter flights
that currently use the Airport. Those flights, and revenues, will be lost if the
screening requirements cannot be met in an efficient manner. These flights are
expected to increase with more university athletic flights and with the opening of the
new County Event Center.
• Federal FAA Entitlement funds of 1 million dollars per fiscal year will be available
to the Cities once the Airport reaches 10,000 enplaned passengers. (It is anticipated
the enplanements will be 20,000 passengers per year.) These funds will be used for
making Airport improvements to the runways, taxiways, and ramp areas and can be
used for permanent terminal building expansion. In addition, passenger facility
charges (PFCs), in the amount of$4.50 maximum per passenger can be applied for.
It is estimated that this will generate $80,000 per year; again these funds are
restricted to Airport improvements.
• The revenues generated from scheduled service will increase Airport operating
revenues and will be a major step in getting the Airport to a self-sufficient status.
• This type of activity is consistent with the Airport's current Master Plan which
forecasted continued commercial service from the early 1990s and well into the
future. The Master Plan forecasted that by the year 2003, the Airport would have
15,808 commercial service operations and 120,718 annual passengers. Since
commercial and passenger loads currently well below these levels, the impact of this
new service on the environment, communities and roads is well within the
guidelines adopted in the current Master Plan.
• The availability of the temporary building will potentially provide a facility for
Airport tenants and businesses to rent when not being used by Allegiant. This type
of facility is badly needed at the Airport.
This Ordinance will appropriate Fort Collins' share of the funds needed to meet the City's
obligations under the proposed agreement. The risk of appropriating the funds is that, if the
proposed service is not successful, the airport will lose anticipated revenues to offset the capital
and operating expenses. In that case, some revenues from the other charter flights will still be
generated, but not as much from the scheduled service.
• Fort Collins/Loveland Municipal Airport
Financial Pro Forma Associated with Allegiant Air Scheduled Passenger Service
May 12, 2003
ASSUMPTIONS:
• 4 flights per week,Thursday, Friday, Sunday and Monday
• Aircraft — 140,000 pounds max takeoff weight, 150 seats max, 130,000 pounds landing
weight
• 1,000 gallons of jet fuel sold for each flight
• Terminal use fee of$50.00 per flight and ARFF fee of $50.00 per flight will be charged
after the initial six months
• Auto parking charged a$3.00 per day per car, estimate 50 cars per day for 5 days/week
• A 2,000 square foot temporary building will be leased for secure passenger space
REVENUES FOR FIRST 5.5 MONTHS (2003)
TOTAL $5,000/month $27,500/5.5-months
REVENUES FOR THE NEXT 12 MONTHS (2004)
TOTAL $6,600/month $79,200/year
•
OPERATING EXPENSES FOR FIRST 7 MONTHS (2003)
Operating $ 1,900/month $13,300/7 months
Advertising $30.000/7 months
TOTAL $1,900/month $43,300/7 months
OPERATING EXPENSES FOR THE NEXT 12 MONTHS (2004)
TOTAL $1,900/month $22,800/ ear
CAPITAL EXPENDITURES (2003 ONLY)
Portable building $29,500 $29,500
Auto parking equipment $4,000 $ 4,000
TOTAL CAPTI'AL COSTS (2003) $33,500
Capital costs will come from the airports air show revenues from last year and capital funds in
this year's budget that will not be spent this year.
MAY-12-2003 MON 02:43 PM FAX NO. P. 02/03
•
�rC, FORT COLLINS • LOVELAND MUNICIPAL AIRPORT
May 12, 2003
LETTER OF INTENT
SLNT BY FAX TO 702,-��0"9759
Mr. Andrew Levy
Secretatyffreasurer
Allegiant Air, Inc.
3291 North Buffalo Drive, Suite 7
Las Vegas, NV 89129
Itr: Proposed Scheduled Air Carricr Service at the Fort Collins-Loveland Municipal Airport
Dear Mr. levy:
The purpose of this letter is to set forth the intent and understanding of the City of Tort Collins and the
City of Loveland Qointly "the Cities") and of Allugiant Air, Inc. ("Allegiant") concerning Allegiant beginning
sclicduled air carrier service no later than July 31, 2003, from the Fort Collins-Loveland Municipal Airport
("the Airport"). The Cities and Allegiant acknowledge and agree that this letter is not a contract but is intended
only as a non-binding expression of the terms and conditions under which Allegiant would provide its proposed
scheduled air carrier service at the Airport. These terms and conditions arc as follows:
I. Starting no later than July 31, 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.
2. The Cities will reimburse Allegiant for up to S30,000 of the costs Allegiant incurs before the first
scheduled flights to advertise and promote the proposed flights from the Airport. if Allegiant does not begin its
flights at the Airport on or before July 31, 2003, Allegiant will repay to the Cities one-half of all advertising
reimbursement monies previously paid to Allegiant by the Cities.
3. During the first six months of Allegiant's proposed service from the Airport, the Cities will
wiivc 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.
4. 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 two portable restrooms.
5. Allegiant will reimburse the Cities for all direct costs the Cities incur for law enforcement
personnel required by the '1'ransportation Safety Agency ("TSA') to ptrovide security screening for giant15
. flights except to the extent that any such costs are reimbursed to the Cities by TSA.
4900 Cdrlun Kn.rd•Lmai.lnd,Colrvndo 110535 •(971n 962-2050• TAX'142-21455
MAY-12-2003 MON 02:43 PM FAX NO. P. 03/03
6. Allegiant will 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 S.58 per thousand pounds of
aircraft certified gross landing weight and the current royally fee collected by the Cities on fuel sold at the
Airport.
By the Cities and Allegiant signing this Letter of Intent as provided below, the parties are indicating
their desire to proceed to prepare and enter into a written and binding contract concerning the terms and
conditions described above. By signing below, Allegiant also acknowledges that it understands that the monies
needed by the Cities to meet their financial obligations under the binding contract will need to be appropriated
by the respective city councils of each of the Cities and appropriated in the manner required by their respective
charters aid codes. If either of the city councils chooses not to appropriate these monies, the contract between
the Cities and Allegiant will be null and void.
If Allegiant accepts this Letter of Intent,please have it signed below and faxed to John Duval, Loveland
City Attorney, at 970-962-2900, by tomorrow, Tuesday, May 13, 2003, at 5:00 p.m. mountain daylight savings
time. Once faxed, the Cities will instruct their Airport legal counsel to prepare for Atlegiant's review a draft of
the needed con(racl. Meanwhile, should you have any questions about this proposal, please contact the Cities'
Airport Manager, Dave Gordon, at 970-962-2852.
Sincerely, Sincerely,
9oeFisclibach Michael J.Hart
Port Collins City Manager Loveland Deputy City Manager
Allegiant Air, Inc. accepts this Leiter of Intent this day of May, 2003.
ALLEGIANT ATR, INC.
By:
Andrew Levy,Secretary/Treasurer
ORDINANCE NO. 086, 2003
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE APPROPRIATION OF FUNDS FOR EXPENDITURES FOR CAPITAL
IMPROVEMENTS AND OPERATING EXPENSES TO IMPROVE THE FORT COLLINS-
LOVELAND AIRPORT TERMINAL BUILDING FACILITIES AND FOR FUNDS TO
PROMOTE SCHEDULED SERVICE INTO THE AIRPORT
WHEREAS, in 1963, the City of Fort Collins (the "City") and the City of Loveland
agreed to the establishment of a regional general aviation facility and became owners and
operators of the Fort Collins-Loveland Municipal Airport (the "Airport"); and
WHEREAS, the Airport is operated as a joint venture between the City and the City of
Loveland (the "Cities"), 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; and
WHEREAS, the Airport has been approached by Allegiant Air to start scheduled service
into the Airport; and
WHEREAS, the City Managers of the Cities have signed a letter of intent to provide
certain funds and facilities to accommodate the services to be provided by Allegiant Air, subject
• to the city councils of the Cities appropriating the funds to meet the Cities' obligations under the
agreement; and
WHEREAS, the letter of intent outlines the service to be provided and the financial
responsibilities of Allegiant Air to the Airport; and
WHEREAS, the Cities have agreed to provide Allegiant Air with funds totaling $30,000
for advertising costs in advance of Allegiant's first flight, and to provide an enclosed structure at
the Airport to accommodate passengers on Allegiant's flights, at an estimated additional cost of
$33,500; and
WHEREAS, in addition, the estimated operating costs to the Airport associated with
Allegiant's services will be approximately $13,300 ($1,900 per month), assuming that Allegiant
Air operated at the Airport from July 1, 2003 through December 31, 2003; and
WHEREAS, the City's share of the 2003 Airport costs associated with the Allegiant Air
service will be as follows:
Advance advertising costs $ 15,000
One-time capital expense -new passenger structure 16,750
Operating costs for six months in 2003 6,650
Total $ 38,400
WHEREAS, the current balance in the Airport's operating fund, which consists partially
of revenues earned from the air show held at the Airport in July, 2002, is more than adequate to
cover the foregoing costs; and
WHEREAS, under the intergovernmental agreement between the Cities, the City's share
of the Airport revenue is being held by the City of Loveland, as an agent on behalf of the City,
since the City of Loveland is providing finance and accounting services for the Airport; and
WHEREAS, in accordance with Article V, Section 8(b), of the Charter of the City of Fort
Collins (the "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 therefor shall have been made by the City
Council; and
WHEREAS, it is the desire of the City Council to authorize the appropriation of$38,400,
of the revenues held by the City of Loveland, as agent and partner of the Fort Collins-Loveland
Airport, to be used for capital improvements and operating expenses to improve the Airport's
terminal building facilities and to promote scheduled service into the Airport.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that the City Council hereby authorizes the appropriation of THIRTY EIGHT
THOUSAND FOUR HUNDRED DOLLARS ($38,400) to be used for capital improvements and
operating expenses to improve the Airport's terminal building facilities and to promote
scheduled service into the Airport.
Introduced, considered favorably on first reading, this 20th day of May, A.D. 2003, and
to be presented for final passage on the 3rd day of June, A.D. 2003.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading this 3rd day of June, A.D. 2003.
Mayor
ATTEST:
City Clerk
STATUS REPORT ON CITY COUNCIL REQUESTS
Requested Date
By Request Requested Completed Status/Comments
1 Hamrick When will HOA restrictions be coming forward? 03/18/03 d City Manager advised recommendation
(03/18/03) would be on April 30 Water Board agenda,
May 1 P&Z agenda, and to Council on May
20
S
2 Martinez Question regarding benefits/pay for employees 04/15/03 d City Manager will have report by 05/09/03
called to active duty (05/09/03)
3 Tharp Would like progress report on Platte Valley 04/15/03 d City Manager provided report
Pipeline project (04/16/03)
4 Tharp Would like update on how expensive it is for the 04/15/03 d City Manager provided report
City to rent water (04/16/03)
5 Bertschy Would like information on budget available to 04/15/03 d City Manager provided information
maintain historic nature of trolley tracks on East (04/16/03)
Mountain
6 Martinez PVH—Committee with PFA to plan 05/06/03 PVH sent email on 05/07/03 reminding them.
transportation/ambulance service for new
hospital
7 Council Send out helmet law memo from December 05/06/03 d City Manager to send to Lew Lachman and
(05/08/03) in Council Packet of 05/08/03
8 Roy Do other communities have helmet laws? 05/06/03 d Included as part of memo
(05/08/03) O
9 Roy Jet Center—does it have a$5 million insurance 05/06/03 City Manager to check
policy? t
bd
H
10 Martinez Put"time limits"on agenda for each item 05/06/03 City Manager to try for several months 5
rn
11 Council Revisit Resolution on meeting limits in three 05/06/03 Revisit in September 2003 H
months. Deal with Pulled Consent items
Updated: May 14, 2003 (1:38pm)