Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/03/2003 - SECOND READING OF ORDINANCE NO. 086, 2003, AUTHORI AGENDA ITEM SUMMARY ITEM NUMBER: 24 DATE: June 3, 2003 FORT COLLINS CITY COUNCIL FROM: Dave Gordon Ron Phillips SUBJECT : Second 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 Second Reading. EXECUTIVE SUMMARY: This Ordinance, which was adopted 5-2 (Nays: Councilmembers Hamrick and Roy) on First Reading on May 20, 2003, appropriates Fort Collins' share of the funds needed to meet the 411 City's obligations under the proposed agreement. 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 3ulylune 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 • FORT COLLINS/LOVELAND AIRPORT Potential for Self Sufficiency Issue: A councilmember has asked how long it will take for the airport to become self sufficient given the implementation of the Allegiant Air services. Airport Subsidy with Allegiant Air: The airport subsidy is presently $120,000 annually split between Fort Collins and Loveland. The predominant use of these funds is for operating expenses. After the first year, the net operating revenues with the Allegiant Air operation in place will increase by about $56,000, or the equivalent of nearly one half the amount of the subsidy. The minimum subsidy will likely continue to exceed$60,000. Future capital funding needs will be covered by the Federal funding (matched by the passenger facility charges or PFC's) which will be enabled through the additional use of the airport by Allegiant. This will reduce pressure to increase the subsidy for capital purposes. Self Sufficiency Scenario: For airport operations to generate new revenues equal to the present subsidy, additional income sources would need to be realized. Some are opportunities that could be facilitated to some degree by the capital improvements and exposure related to the Allegiant deal. Potential identified sources are: 1. New ground leases - $27,000 (Negotiations are underway with some prospective clients.) 2. Expanded concessions (food, etc.) - $7,000 3. Parking fee increases ($1 more per day) - $15,000 4. Increased charter flights -$3,000 5. Terminal building use fee increase - $5,000 6. Increased landing fees - $5,000 Airport management estimates that it would take at least three years for the level of operating income to meet the subsidy. The Airport Master Plan Study, beginning in the next two months, will examine much greater detail relating to the financial future of the airport. AGENDA ITEM SUMMARY ITEM NUMBER: 30 DATE: May 20, 2003 FORT COLLINS CITY COUNCIL Dave Gordon STAFF: 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: k Staff recommends adoption ofithe Ordi ce o i t Readin 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. 0 -Mr—ik -V IL AIML EXECUTIVE SUMMARY: The Fort Collins-Loveland Municipal Airport has been approached by Allegiant Air to start i scheduled service into the Airport. Negotiations with the Allegiant have been successfully completed as described below he fit' s ha sid��e lee of iintent to provide certain funds and facilities to accommodat he servif by ent�Air, upon the terms and conditions stated below. These conditions will a o be art��iio. �f a 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: ITEM NUMBER: 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 perso elftriqu ed�bL th�Ts�ans rtat n Safety Agency ("TSA") to provide security s reening r Alle ian 's flights except to the extent that any such costs are reimbursed to the ties b. " jL 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 reimburseme o lie t foradvertising $16,750 for one-time ca ital exp ses f 2 3 6,650 for operating penditu s for 0 $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 rese .e funds ' 13 750 for revenues 2003 IIUD ly $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. ivi DATE: ay 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 useitre—rairp ho htv and revenues, will be lost if the screening requirements can�ot be a in n e cient manner. These flights are expected to incre e, with m re un' r y athletic fights and with the opening of the new County Event Guenter'. • 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 i R�.r,�vem s. • The revenues ge eedlf sc d ed Brice ill increase Airport operating revenues and wille a majo step i e 'n he Armort to a self-sufficient status. • This type of acti is co iste w the Air ort'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 hetl"e'djat e Ao This Ordinance will appropriate Fort ollin s e of the unds needed to meet the City's obligations under the proposed agreemen . he sk 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.