HomeMy WebLinkAbout2017-056 Airport Budget OverviewDate: August 11, 2017
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Overview of Airport Budget
Report No. 2017-056
BACKGROUND:
During the Airport budget presentation on June 27, the City Council requested information on a
number of items relating to the Airport budget. This report provides information on Airport
revenues and expenses, property tax revenues, use of gas well funds for capital projects, a hangar
pro forma, and US Aviation's revenues.
DISCUSSION:
Airport 10 .��pro forma:
Two (2) Airport pro formas have been provided in your backup. Airport's financial outlook with
the current practice of having the general fund pay the Airport's debt service (Attachment 1).
The Airport debt service began being paid from the debt portion tax rate in fiscal year 2016-17 as
a way to help the Airport become financially self-sufficient. In this scenario the Airport has
average net revenues of $308,635 over the next ten (10) years.
Attachment 2 is the ten (10) year Airport outlook with the inclusion of debt service. This
demonstrates the Airport averaging a$326,998 annual operating loss and the fund balance would
be expended by fiscal year 2025-26.
The use of gas well revenues for capital:
The City began receiving royalties from gas wells at the Denton Airport in 2004. A separate gas
well fund was created in 2005 with the purpose of supporting capital projects at the Airport.
Since 2004, the gas wells generated $16.8 million in revenues with expenditures of $12.9 million
through fiscal year 2015-16. As shown in attachment 3.
Pro forma on hangar:
The attached hangar pro forma (Attachment 4) shows a total net revenue after 30 years of $2.4
million with debt service included. The debt service is currently being funded by the general
fund, so the Airport fund will receive $4.9 million in revenue from the hangars over the 30 year
expected life.
Date: August 11, 2017
Property taxes generated on Airport propert�
Report No. 2017-056
The property taxes generated from the Airport are $293,960 for this year. This information was
provided to the City by the Denton Central Appraisal District. The total property value has been
applied to the proposed tax rate.
Real Property $ 21,267,232
Aircraft $ 14,744,769
Business Personal Property $ 10,073,674
Tota I $ 46, 085, 675
Tax Rate
0.637856
Total Airport Ad Valorem $ 293,960
US Aviation Group revenues:
The US Aviation Group (USAG) is a fixed based operator (FBO) at the Airport. Denton
Enterprise Airport receives revenues from fixed based operators through land leases, hangar
rental and aircraft tie down fees, and fuel commissions. In fiscal year 2015-16, the Airport
received $192,674 in revenue through USAG.
US Aviation Group Revenue
Category FY1516
Land Lease $ 101,017
Hangar/Tiedown Fee $ 11,678
Fuel Commision $ 79,979
Total $ 192,674
Financial Solvencv
The Airport is exploring additional methods of cost recovery such as a Solid Waste fee for
certain leaseholds and an adjustment to the calculation of FBO fuel commission fees. A primary
initiative of new Airport administration is the review of airport ground leases, revenue streams,
and cost centers. Preliminary indications are that additional revenue from existing leaseholds will
be available. There may also be an opportunity to revise the calculations for fuel commissions
which would increase revenues by $40,000 annually. This will improve stability in the revenue
stream while also helping USAG reduce variation in planned expenses for fuel commissions.
This would be achieved by reformatting the current formula based on percent of wholesale cost
of fuel to a speciiic fee such as $.15 per gallon. This change has been included in the revenue
calculations for the Airport pro formas (Attachment 1 and 2).
Date: August 11, 2017
ATTACHMENT(S):
1. Ten Year Pro Forma with Debt Service
2. Ten Year Pro Forma without Debt Service
3. Gas Well Fund Schedule of Revenues and Expenses
4. Hangar Pro Forma
STAFF CONTACT:
Mark Nelson
Report No. 2017-056
Director of Transportation
Mark.Nelson(cr��youfdenton.com
940-349-7702
Airport l0yr Financial Pro Forma
Without Debt Service
Revised Estimate Revised Estimate Projected Projected Projected Projected Projected Projected Projected Projected Projected
FY l fi-17 FY 17-18 FY 15-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-2fi FY 26-27
Beginuiug Fund Balance $2,452,155 $2,536,469 $2,fi2Q310 $2,937,892 $3,293,145 $3,640,100 $3,979,950 $4,314,006 $4,fi43,fi93 $4,970,566 $5,29fi,321
AIRPORT QUEBEC HANGARS
AIRPORT GROUND LEASES - NEW ACREAGE
AIRPORT FUEL FLOWAGE
AIRPORT FBO RENTAL COMMISSION
AIRPORT GAS ROYALTIES
INTEREST INCOME
Total Revenues
1
2s,000 � zs,uuu � 2s,000 � zs,uuu � 2s,000 � zs,uuu � 2s,000 � zs,uuu � 2s,000 � zs,000 � 2s,000
$ 1,491,410 $ 1,689,541 $ 1,709,OOS $ 1,780,236 $ 1,SOfi,332 $ 1,834,500 $ l,Sfi4,SfiS $ 1,897,577 $ 1,932,750 $ 1,970,646 $ 2,011,357
7R4 I 264.979
2R1.19R
Expenditures
Personnel Services $ 576,417 $ 53Q482 $ 546,396 $ 562,788 $ 579,672 $ 597,062 $ 614,974 $ 633,423 $ 652,426 $ 671,999 $ 692,L59
Materials&Supplies 44,211 46,700 48,101 49,544 51,030 52,561 54,138 55,762 57,435 59,15R 6Q933
Maintenance & Repair 93,7�0 105,193 84,857 86,554 88,285 9Q051 91,852 93,689 95,563 97,474 99,423
Franchise Fees
Insurance 21,604 21,823 22,041 22,262 22,484 22,7U9 22,936 23,166 23,397 23,631 23,867
Board Expenses 630 1,200 1,224 1,24R 1,273 1,299 1,325 1,351 1,378 1,406 1,434
Operations 224,9�9 238,160 242,923 247,782 252,737 257,792 262,948 268,207 273,571 279,042 284,623
CostofServices-Other 94,187 R6,4RR 88,218 R9,9R2 91,782 93,617 95,490 97,400 99,348 101,334 103,361
Debt Service
Debt Service - New ($3.56MM) - Wes[ Side Runway Construc[io
and North Taxiway & Existing Runway Repair Q,000 ft) - FY
17/18
Debt Service - New ($435K) - Taxiway Bravo Realignment &
Connecting Taxiway Approaches (3) - FY 19/2U
CostofService-GeneralFund 381,338 35Q653 357,666 364,819 372,116 379,558 387,149 394,892 402,790 41Q846 4L9,063
Transfer m Capi[al Projecis 225,000
Total Expenditures $ 1,437,096 $ 1,605,699 $ 1,391,427 $ 1,424,980 $ 1,459,380 $ 1,494,650 $ 1,530,812 $ 1,567,890 $ 1,605,908 $ 1,644,891 $ 1,684,864
Net Revenue/Expense
Ending Fund Balance
Notes:
L CPI readjushnents -$70,000 increase FY77/18
2. New acreage does not include West side development
3. Gas well revenue decrease of 2%
4. Fuel flowage to $0.15/gal -$4Q000 increase FYl7/18
$ 54,314 $ 83,842 $ 317,581 $ 355,257 $ 346,952 $ 339,850 $ 334,056 $ 329,687 $ 326,872 $ 325,755 $ 326,493
$ 2,536,469 $ 2,620,310 $ 2,937,892 $ 3,293,148 $ 3,64Q100 $ 3,979,950 $ 4,314,006 $ 4,643,693 $ 4,97Q566 $ 5,296,321 $ 5,622,814
Airport l0yr Financial Pro Forma
With Debt Service
Revised Estimate Revised Estimate Projected Projected Projected Projected Projected Projected Projected Projected Projected
FY 1fi-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 2fi-27
Beginuiug Fund Balance $2,452,155 $2,537,4fi1 $2,146,302 $1,774,900 $1,442,082 $1,07fi,fi55 $705,457 $3fi9,479 $63,657 -$243,7fi7 -$490,350
AIRPORT QUEBEC HANGARS
AIRPORT GROUND LEASES-NEW ACREAGE
AIRPORT FUEL FLOWAGE
AIRPORT FBO RENTAL COMMISSION
AIRPORT GAS ROYALTIES
INTBREST WCOME
Total Revenues
195,A91
2a,96a � 2s,000 � 2s,uuu � 2s,000 � 2s,uuu � 2s,000 � 2s,uuu � 2s,000 � 2s,uuo � 2s,000 � 2s,uoo
$ 1,491,374 $ 1,fiR9,541 $ 1,709,008 $ 1,7RQ23fi $ 1,806,332 $ 1,R34,500 $ 1,864,868 $ 1,R97,577 $ 1,932,780 $ 1,97Qfi4fi $ 2,011,357
19A
Expendi[ures
Personnel Services $ 576,417 $ 53Q482 $ 546,396 $ 562,788 $ 579,672 $ 597,062 $ 614,974 $ 633,423 $ 652,426 $ 67L,999 $ 692,159
Materials & Supplies 44,21I 46,700 4R,707 49,544 57,030 52,561 54,73R 55,762 57,435 59,158 6Q933
Maintenance & Repair 93,7�0 105,193 84,857 86,554 88,285 9Q051 91,852 93,689 95,563 97,474 99,423
Franchise Fees
Insurance 21,604 21,823 22,041 22,262 22,484 22,709 22,936 23,166 23,397 23,631 23,867
Board Expenses 630 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434
Operations 224,9�9 238,160 242,923 247,782 252,737 ti7,792 262,948 268,207 273,571 279,042 284,623
CostofServices-Other 93,159 86,488 RR,21R 89,982 91,7R2 93,617 95,490 97,400 99,34R 101,334 103,361
Debt Service 47�,000 456,984 4�6,074 43Q379 429,048 388,034 353,509 352,297 290,338 286,663
Debt Service - New ($3.56MM) - Wes[ Side Runway Construc[io
and North Taxiway & Existing Runway Repair Q,000 ft) - FY
17/18 232,000 232,000 232,000 232,000 232,000 232,000 232,000 232,000 232,000
Debt Service - New ($435K) - Taxiway Bravo Realignment &
Connecting Taxiway Approaches (3) - FY 19/2U SQ000 SQ000 SQ000 SQ000 SQ000 SQ000 SQ000
CostofService-GeneralFund 381,338 350,653 357,666 364,819 372,116 379,558 387,149 394,892 402,790 4LQ846 419,063
Transfer m Capi[al Projecis 225,000
Total Expenditures $ 1,436,068 $ 2,08Q699 $ 2,080,411 $ 2,113,054 $ 2,171,759 $ 2,205,698 $ 2,200,846 $ 2,203,399 $ 2,240,205 $ 2,217,229 $ 2,253,527
Net Revenue/Expense
Ending Fund Balance
Notes:
L CPI readjushnents -$70,000 increase FY77/18
2. New acreage does not include West side development
3. Gas well revenue decrease of 2%
4. Fuel flowage to $0.15/gal -$4Q000 increase FYl7/18
$ 55,306 $ (391,158) $ (371,403) $ (332,817) $ (365,427) $ (371,198) $ (335,978) $ (305,822) $ (307,425) $ (246,583) $ (242,170)
$ 2,537,461 $ 2,146,302 $ 1,774,900 $ 1,442,082 $ 1,076,655 $ 705,457 $ 369,479 $ 63,657 $ (243,767) $ (490,350) $ (732,520)
City of Denton
Airport Gas Well Fund�
Schedule of Revenues & Expenditures
For the Period Ended June 30, 2017
DESCRIPTION
REVENUES:
RoyaltiesZ
Sarface Agreements
Interest Income
Total Revenues
EXPENDITURES:
Return on Investment - General Fund
Franchise Fees - General Fund
Grant - City Match
Professional Services
Marketing
Debt Service
Transfer to General Fand (Indirect Costs)
Transfer to Capital Projects
Transfer to Other Funds (Indirect Costs)
Total Expenditures
Net Income (Loss)
FY 2004-OS FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
619,841 1,323,993 1,233,849 1,108,335 807,847 4,124,918 2,389,035 1,216,740 1,162,508 1,023,526 581,848 478,310 16,07Q750
25,057 43,299 25,559 13,952 48,526 15,152 15,152 9,152 13,952 13,952 - - 223,753
- 17,517 108,150 90,718 110,827 32,050 28,879 34,336 23,150 26,153 27,708 26,225 525,713
644,898 1,384,809 1,367,558 1,213,005 967,200 4,172,120 2,433,066 1,260,228 1,199,610 1,063,631 609,556 504,535 16,820,216
- - - - - - 27,973 15,239 - - - - 43,212
- - - - - - 39,962 34,800 36,022 37,553 34,778 35,268 21S,6S3
- - - - - 49,836 62,674 61,718 56,006 49,891 50,000 55,900 386,025
- - 39,905 17,692 SQ996 65,607 60,778 5,327 - - - - 27Q305
- - - - - - - 30,082 - - - - 30,082
- 206,777 255,437 228,750 221,993 216,987 224,815 219,455 77,605 151,753 204,776 475,790 2,484,138
51,038 - - - - 973,582 178,124 178,124 294,997 381,338 - 367,890 2,425,093
- 185,000 - - 1,300,000 1,210,900 654,125 479,160 1,000,000 516,636 1,204,276 169,835 7,019,932
- - - - - - - - 16,030 29,340 - - 45,370
51,038 391,777 295,342 246,442 1,602,989 2,516,912 1,248,451 1,023,905 1,480,660 1,466,511 1,493,830 1,104,683 12,922,540
593,860 993,032 1,072,216 966,563 (635,789) 1,655,208 1,184,615 236,323 (281,050) (403,180) (884,274) (600,148) 3,897,376
Beginning Unreserved Fund Balance - 593,860 1,586,892 2,659,108 3,625,671 2,989,882 4,645,090 5,829,705 6,066,028 5,784,978 5,381,798 4,497,524
Ending Unreserved Fand Balance 593,860 1,586,892 2,659,108 3,625,671 2,989,882 4,645,090 5,829,705 6,066,028 5,784,978 5,381,798 4,497,524 3,897,376 3,897,376
�Federallaw restrictsthe use ofthese revenuesfor Airportexpenses only. Total Airport Appropriable Fund Balance 2,482,155
2Royalties from 10 gas wells located on Airport property and 1 gas pooling agreement. Airport Operating Fund Appropriable Fund Balance (1,415,221)
Debt Service - Principal Correction Total
Debt Service Principal Payments Recorded Against Airport Operating F 148,847 205,388 269,677 623,912
(Reccomendation to reclassify the $623,912 in cash/eqaity from the
Airport Gas Well Fund to the Airport Operating Fund)
Taxilane Quebec Hangar Financial Summary
Assumptions
1. Funding for debt service will be covered from General Fund;
2. Based on 95% occupancy rate, the full developed annual revenue is $146,700;
3. Lease rate projected to increase 3% annually;
4. Fuel flowage revenue is estimated using consumption profiles for new aircraft;
5. Wholesale fuel revenue is projected to increase 1.0% annually;
6. Operations cost projected to increase 1% annually;
7. Maintenance contract cost with 2% annual increase.
Financial Pro Forma
Revenue
Fiscal Annual Annual Fuel Total Annual Initial Annual
Year Lease Revenue Flowage Revenue Revenue Capital (Cash) Debt Service
HangarCost
Cash
Debt Service
$ 3,244,051
$ 833,804
$ 2,410,247
Expenses
Annual
Operations
Annual
Maintenance
Net Annual
Revenue
2015 - - - $ 833,804 $ 126,078 - - $ (959,882) •
2016 - - - - 125,363 - - (125,363)
2017 105,196 7,730 112,926 - 123,263 8,000 6,000 (24,337)
2018 143,546 7,807 151,353 - 125,438 8,080 6,120 11,716
2019 147,852 7,885 155,738 - 122,188 8,161 6,242 19,147
2020 152,288 7,964 160,252 - 118,938 8,242 6,367 26,705
2021 156,857 8,044 164,900 - 120,563 8,325 6,495 29,518
2022 161,562 8,124 169,687 - 121,938 8,408 6,624 32,716
2023 166,409 8,206 174,615 - 118,188 8,492 6,757 41,178
2024 171,401 8,288 179,689 - 119,313 8,577 6,892 44,907
2025 176,543 8,370 184,914 - 115,313 8,663 7,030 53,909
2026 181,840 8,454 190,294 - 117,038 8,749 7,171 57,336
2027 187,295 8,539 195,834 - 118,963 8,837 7,314 60,720
2028 192,914 8,624 201,538 • 115,700 8,925 7,460 69,452
2029 198,701 8,710 207,412 - 117,575 9,015 7,609 73,212
2030 204,662 8,797 213,460 - 119,163 9,105 7,762 77,431
2031 210,802 8,885 219,688 • 120,313 9,196 7,917 82,262
2032 217,126 8,974 226,100 - 121,013 9,288 8,075 87,725
2033 223,640 9,064 232,704 - 121,656 9,381 8,237 93,430
2034 230,349 9,155 239,504 - 122,250 9,474 8,401 99,378
2035 237,260 9,246 246,506 - - 9,569 8,569 228,367 * cost recovery
2036 244,377 9,339 253,716 - - 9,665 8,741 235,310
2037 251,709 9,432 261,141 - - 9,762 8,916 242,464
2038 259,260 9,526 268,786 - - 9,859 9,094 249,833 -
2039 267,038 9,622 276,659 - - 9,958 9,276 257,426
2040 275,049 9,718 284,767 - - 10,057 9,461 265,248
2041 283,300 9,815 293,115 - - 10,158 9,651 273,307
2042 291,799 9,913 301,713 - - 10,259 9,844 281,609
2043 300,553 10,012 310,566 - - 10,362 10,041 290,163
2044 309,570 10,112 319,682 - - 10,466 10,241 298,975
Total $ 5,948,899 $ 248,358 $ 6,197,257 $ 833,804 $ 2,410,247 $ 257,033 $ 222,307 $ 2,473,866