Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/23/2016 - AIRPORT WORK PLAN AND FINANCIAL PLANDATE: STAFF: February 23, 2016 Jason Licon, Airport Director Mike Beckstead, Chief Financial Officer WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Airport Work Plan and Financial Plan. EXECUTIVE SUMMARY The purpose of this item is to inform City Council about the Airport and to provide an update on the progress being made on the Airport Strategic Plan that was adopted by City Council in 2015. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED The goals of the work session:  To give a brief overview of the Airport to City Council  Provide information and accomplishment status of the adopted Airport Strategic Plan  Explore the Airport’s financial forecasting model  Answer questions BACKGROUND / DISCUSSION The Airport Strategic Plan is the product of a joint planning effort that involved regional business leaders, active Airport users and stakeholders, elected officials, and staff from the two Cities. The Airport Strategic Plan identifies action items that will help the Airport achieve a reimagined vision. The resulting strategic plan will guide airport decisions for the next five to seven years and builds upon the Airport’s existing Master Plan and Business Plan. The strategic goals that were identified are: 1. Protect against residential encroachment 2. Create a sustainable business model 3. Encourage private investment 4. Revise governance structure and authority for governing board 5. Rebrand and more productively engage the public Achievements that have been made with these goals will be shared, in addition to planned 2016 achievements. A component of the second item (Create a sustainable business model) is the need to enhance the awareness of the Airport’s financial situation. As a result staff created a financial forecast model that can be used to explore the effects of certain scenarios. The model has been used to explore scenarios involving commercial air carrier service and the addition of corporate aircraft and will be included in the presentation. ATTACHMENTS 1. Powerpoint presentation (PDF) 1 Airport Overview and Work Plan Jason Licon, Mike Beckstead February 23, 2016 ATTACHMENT 1 Study Session Goals 1. Provide an overview of the Airport 2. Review of the Airport Strategic Plan • Work completed • 2016 Strategic Plan Goals • Challenges 3. Review Airport’s financial forecasting model 4. Q & A 2 Overview • Opened in 1965 • Federally funded development • Public use • Federally & State supported • Jointly owned & supported • 1 of 14 FAA certified commercial airports in CO • User mix is very diverse 3 Airport Importance • The Airport is a public entity that provides services as a regional transportation resource and is also a business. • The Airport serves as a gateway for commerce in Northern Colorado • Is an employment hub • Supports economic health and emergency services • Creates a positive regional impact of approximately $129 million annually 4 Airport Numbers • 100,000 arrivals & departures in 2015 • 1,060 acres of property / 2 runways • 750 security badge holders • 263 based aircraft (193 single engine, 45 helicopter, 13 jet) • 209 aircraft storage hangars • 30 lane miles of pavement • 8 aviation based businesses • 7 corporate flight departments 5 Airport Strategic Plan • Adopted by Council January 2015 • Serves as the roadmap for addressing the gaps between the Airport’s current state and its vision • Identified five initiatives: 1. Protect against residential encroachment 2. Create a sustainable business model 3. Encourage private investment 4. Revise governance structure and authority for governing board 5. Rebrand and more productively engage the public 6 Strategic Plan Achievements 1. Protect against residential encroachment • Airport Commission adopted recommendations from a white paper that identifying existing land use compatibility, planning, and protections surrounding the Airport area 2. Create sustainable business model • Created a 10-year financial model • Commercial air service market assessment update completed 7 Strategic Plan Achievements 3. Encourage private investment • Review of large development proposal • Elite Airways • Virtual Air Traffic Control Tower 4. Revise governance structure and authority for governing board • Creation of Northern Colorado Regional Airport Commission • Adopted Bylaws and operating rules 5. Rebrand and more productively engage the public • Resource estimates and preliminary development of a work plan 8 Governance • Airport Commission was created in 2015 to streamline decision making and increase stakeholder involvement • IGA outlines policy issues reserved for City Councils • Airport Master Plan • Federal and State Grants • Purchase and sale of real property • Approval of annual contributions to the Airport budget 9 Governance Northern Colorado Regional Airport Commission Scope of Authority: • Airport agreement administration including standard leases and contracts • Authorize Airport activities • Adopt or revise rules and regulations including minimum standards • Develop budgets and propose capital projects • Establish rates and fees • Establish service levels • Develop and manage operating, security, & emergency plans • Direct Airport Manager in the provision of Airport services, establishing goals and objectives, and performance evaluation recommendation to the Loveland City Manager 10 2016 Strategic Plan Goals • Provide clarity for the Airport’s market and potential for General Aviation • Identify opportunities • Develop a comprehensive marketing and engagement program • Rebranding • Marketing • Communications • Create a framework for development proposal review 11 Challenges • Airport development may require additional resources • Limitations on Federal & State resources • Airport development historically has: • been constructed with just basic infrastructure support • occurred on leased property resulting in less incentive to develop high quality improvements • been influenced heavily by economic conditions • Commercial air service passenger volume has not recovered from pre- recession levels • Industry consolidation • Barriers to entry • Regulatory standards affecting supply of qualified pilots 12 Financial Forecast Model Objectives: • Enhance awareness of Airport’s financial condition • Explore base case with two examples of future scenarios - Scenarios developed from Strategic Plan - Model serves as backboard to evaluate development proposals • Assumes the following - Current operations without Commercial Service - 3% inflation for all revenues and expenses - All capital spending is based on grant revenues, not actual needs - No operational cost increases 13 Financial Model – Base Case 14 Base Case Analysis • Two primary operational revenue sources • Building and land leases • Fuel & oil commissions & taxes • Expenditures • Personnel, supplies, & purchased services • Capital expenditures • Maintenance and upkeep of existing assets • Long-term implications • City contributions needed to support operational shortfall - $345k year • Federal & State grants needed to support capital 15 Financial Model + Commercial 16 Commercial Scenario Analysis • Commercial service has low impact to operating revenue • $63k annual fuel, and airline related revenues • Low impact on operating expenditures • Commercial service has big impact on grant revenue • Increases FAA annual contributions from $150k to $1M • Long term implications • Operating losses continue at approximately $275k • Review & evaluation of landing and parking fees • Increased Federal funding supports capital investment needed for continued operation 17 Financial Model + Corporate 18 Corporate Scenario Analysis • Five new corporate aircraft - impact on operating revenue • $79k fuel and land lease • No impact on operating expenditures • Assuming to no increase in snow removal, facility maintenance • Long-Term Implications: • Operating losses continue at approximately $250k • Additional Aircraft do not improve capital grant revenue • Approximately 20 new corporate aircraft required to support operational break even 19 Financial Model Conclusions • Commercial service provides big increase in capital revenues but little increase in operating revenues • Increase in based corporate aircraft has slightly greater increase to operating revenues but has no effect to capital revenues • These scenarios reveal that a combination of commercial service mixed with approximately 20 more corporate jet aircraft would be required to support operating and capital needs 20 Q & A 21 Mark your calendars: Airport Open House and WWII Static Display July 15-18, 2016