2010-294sAlegal\our documents\ordinances\10\ordiance airport business plan.doc
ORDINANCE NO. 2010-294
AN ORDINANCE OF THE CITY OF DENTON, TEXAS ADOPTING THE DENTON
MUNICIPAL AIRPORT BUSINESS PLAN AS AN OFFICIAL POLICY DOCUMENT
INTENDED TO GUIDE FUTURE DEVELOPMENT AND FINANCIAL PERFORMANCE OF
THE DENTON MUNICIPAL AIRPORT; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City Council of the City of Denton initiated the Airport Business Plan
process with Texas Department of Transportation, Aviation Division on June 17, 2008 by
approving Resolution 2008-024; and
WHEREAS, the City Council has determined that an Airport Business Plan is necessary
to guide future decision-making related to growth and development of the Denton Municipal
Airport; and
WHEREAS, the Denton Municipal Airport Business Plan evaluates the current financial
status of the Denton Municipal Airport;
WHEREAS, the Denton Municipal Airport Business Plan evaluates a number of potential
operational and development opportunities to improve the financial performance of the Denton
Municipal Airport; and
WHEREAS, the Denton Municipal Airport Business Plan makes certain
recommendations, based on the evaluation and analysis of the Airport operation, to improve the
long-term development and operation of the Denton Municipal Airport;
WHEREAS, the Airport Business Plan does not limit the ability of the City of Denton to
prepare other plans, policies, or strategies as required for the Airport; and
WHEREAS, input from more than fifty aircraft owners, operators and stakeholders was
received as part of a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis to
identify areas to enhance the long-term performance of the Denton Municipal Airport; and
WHEREAS, the City of Denton Council conducted two public work sessions to review
existing Airport procedures and policies as well as recommended policies, procedures and
actions included in the Denton Municipal Airport Business Plan; and it is the intent of the City
Council to adopt the Denton Municipal Airport Business Plan; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The findings set forth in the preambles to this ordinance are true and
correct and are hereby adopted.
SECTION 2. The Denton Municipal Airport Business Plan is hereby adopted as a
financial and development plan to be used as a guide for planning and land use decisions in the
manner and for the purposes stated therein until such time as it is repealed or hereafter amended.
It is the intent of the City Council to implement the management recommendations in the Plan
through the adoption of consistent regulations and policies.
SECTION 3. If any provision of this ordinance or application thereof to any person or
circumstance is held invalid by any court, such holding shall not affect the validity of the
remaining portions of this ordinance, and the City Council of the City of Denton, Texas, hereby
declares that it would have enacted the remaining portions despite any such validity.
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
,
PASSED AND APPROVED this the L~ day of &&~Vkv
MARK A. BURR-OUG14S, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
4
By:
Page 2 of 2
Denton MuHiCioal Airoorl
Business Plan
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Denton Municipal Airport
Business Plan - Executive Summary
October 2010
EXECUTIVE SUMMARY
Denton Municipal Airport Business Plan
INTRODUCTION
THE PURPOSE OF THIS BUSINESS PLAN FOR
Denton Municipal Airport (DTO) is to assess
potential means to improve the Airport's
financial performance, economic
development, and operation. The business plan
evaluates a number of potential operational and
development scenarios and provides the City of
Denton with decision-malting information. The
recommended plan of action rests on the following
four initiatives:
I
1)
Airport Brand Development: The
suggested Airport brand would target
two distinct segments of aviation
demand: corporate aviation and flight T
training. By separating traffic through
the development of a parallel runway,
the Airport could enjoy benefits
associated with both types of activity. o - _
Corporate aviation benefits bring - -
significantly higher levels of spending
and employment than recreational
general aviation activity. Training activity has also become a big business on the
Airport and is responsible for growth in activity levels, aircraft storage and
maintenance, and on-airport employment. Retaining these two segments of demand
will be important in the long term development of the Airport.
2) Enterprise Fund Transition: The Business Plan recommends the transition of the
Airport financial system from that of general fund to an enterprise fund. This
transition would involve continued management actions to make the Airport
economically self-sufficient in the future. To facilitate long-term financial self-
sufficiency, the Airport should consider a variety of revenue generating
opportunities.
3) Hangar/Rental Property Development: As discussed, the availability of the gas well
revenues to fund capital development at the Airport should not be limited to non-
revenue producing infrastructure. Rather, this Business Plan recommends that the
City develop hangars and other buildings that can be leased in support of operating
revenues. Development at the southeast taxiway site could be provided solely by the
R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. E-I
Denton Municipal Airport
Business Plan - Executive Summary October 2010
4)
City or in concert with private
development, if desired. City
ownership of rental property is
already scheduled to occur as
current leases expire and
reversion clauses transfer
ownership of existing hangars
to the City.
Long Term Development: In
the near term, the Airport has
expansion capacity on the east
side. However, for the long
term, the focus of development
should be on the west side, with
Loop 288 providing access in the future. To begin moving toward more use of the
west side, this plan recommends the development of a helipad and later, a parallel
runway for general aviation training operations. Other long-term growth involves
the potential partnership with UNT for more training and aviation education,
development/expansion of the Foreign Trade Zone, and attraction of a large aviation
industrial client (aviation manufacturing/fabricating). The City of Denton should
also consider modifying its airport governance structure to assist with vetting
financial proposals for the Airport as well as provide policy input related to targeted
marketing initiatives and development.
OVERALL AIRPORT DEVELOPMENT
Hangar and other building development is planned on the east side of the runway along the
new Southeast Taxiway. For the 2010-2018 period, an estimated need of 165,000 square feet of
additional hangar space is predicted. On the Southeast Taxiway area, it was estimated that a total
of 22 acres and 288,000 square feet of developable hangar space is available. Thus, all of the
predicted demand will fit into the land area available on the east side of the runway.
With the influx of pilot training in both helicopters and fixed wing aircraft, there is now a
significant need for a parallel runway. The future parallel runway depicted in Figure E-I is 5,000
feet by 75 feet and would be used primarily for small aircraft, to provide an alternative runway for
training aircraft. This runway could be completed in stages, with the first phase development
providing 3,200 feet in length.
In addition to a parallel runway, there is approximately 200 acres of open land on the west
side of the existing airport property. An additional 150 acres are also available for potential
acquisition for a total of 350 acres for development. However, beyond the runway, there is still
ample land available for additional development. This land could be used for both aviation and non-
aviation development as shown in Figure E-1.
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Denton Municipal Airport
Business Plan - Executive Summary October 2010
Non-aviation development at DTO must ultimately conform to the City's land use plan and be
compatible with surrounding uses and the operation of the Airport. Additionally, it is anticipated that
the proposed Loop 288 Roadway along with appropriate utilities will attract businesses to the area.
While construction of this section of Loop 288 is still five to ten years away, thoughtful planning
of the timing/phasing and financing of such development should be considered now.
BUSINESS PLAN OPTIONS AND RECOMMENDATIONS
As guidance for the City of Denton and Airport Management, the following is a proposed
timeline for implementing the recommendations presented in this section.
2010
• 1' Priority - Reversion Clauses: The City of Denton should retain its interest in
leases that specify a reversion of ownership of leasehold improvements to the City.
• 2nd Priority - Branding: The focus of Airport branding for DTO should be toward
business, education, and training.
- The City of Denton
should consider renaming the Airport, once
the branding activities have begun. .
• 3rd Priority - Existing
Clientele Feedback: The City
of Denton should meet emaquarterly with existing clients - "
and tenants to solicit feedback
on economic and service
issues facing tenants. -
• 4' Priority - Marketing: The --z
City of Denton should include
new media as part of its
growth strategy.
• 5' Priority - Revenue Producing Property: The City of Denton should consider
investing in revenue-producing development to ensure future financial self-
sufficiency.
The City of Denton should seek the development of hangar space and other
revenue producing buildings as demand warrants.
- The City of Denton should consider changing the surface gas leases from
non-operating to operating revenue designation.
2011-2012
• 1' Priority - Airport Enterprise Funcl: The City of Denton should set up an
enterprise fund accounting structure for the Airport after FY 2009-2010.
• 2"d Priority -Stuffing: The City of Denton should increase Airport staffing to
include at least one additional staff resource.
R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. E-4
Denton Municipal Airport
Business Plan - Executive Summary
October 2010
• 3"' Priority - Hangar Development: The City of Denton should seek the
development of hangar space and other revenue producing buildings as demand
warrants.
• 4' Priority -Land Acquisition: The City of Denton should acquire land for aviation
and non-aviation activities in support of the Airport mission.
• S' Priority - Marketing Program: The City of Denton should initiate a direct
marketing information campaign targeting business and corporate aviation.
• 6' Priority - Amenities and Services: The City of Denton should encourage the
provision of other amenities and services described in this Plan as demand warrants.
2013 - 2018
• 1' Priority - Hangar Development: The City of Denton should seek the
development of hangar space
and other revenue producing
buildings as demand warrants.
• 2"`' Priority - Parallel
Runway: The City of Denton
should plan for the
development of a parallel
runway on the West Side to
accommodate pilot training
activity.
• 3"' Priority - West Side
Development: The City of
Denton should plan for the
development of aviation and
non-aviation uses the west
side of the Airport as demand
warrants.
• 4' Priority - Amenities and Services: The City of Denton should encourage the
provision of other amenities and services described in this Plan as demand warrants.
IMPACTS ON REVENUES AND EXPENSES
Alternatives suggested for consideration include revenue derived from:
• Continuing the current practice of developing land for ground leases only
• Investing gas well royalty revenue in income-generating facilities on the Airport
Preliminary analysis indicates the Land Leases Only option shows a negative net operating
revenue through the year 2016. If the City desires to operate the Airport as an Enterprise Fund, it
would best be implemented using the gas well royalty investment scenario to produce revenue
sufficient to achieve financial self-sufficiency.
R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. E-S
Denton Municipal Airport
Business Plan
Final Technical Report
With Appendices
Prepared for:
City of Denton, Texas
Texas Department of Transportation
Prepared by.
1mr R.A. Wiedemann &
Associates, Inc.
in Association with
C+Yk---
P.O. Box 621 * Georgetown, KY 40324
(502) 535-6570 * FAX (502) 535-5314
TABLE OF CONTENTS
SECTION 1:
INTRODUCTION 1
1.1
Understanding and Key Issues
1
1.2
Desired End Products
4
1.3
Report Outline
............5
SECTION 2:
AIRPORT MISSION AND MANAGEMENT STRUCTURE
6
2.1
Airport Mission
6
2.2
Airport Goverance
............7
2.3
Airport Management
7
SECTION 3:
EXISTING AIRPORT CHARACTERISTICS 9
3.1
Airside Facilities
9
3.2
Landside Facilities
11
3.3
Airport Operational Characteristics
13
3.4
Airport Development Plan
14
3.4
Parallel Runway
15
3.4
West Side Development
19
3.4
Existing Tenants and Users
21
3.5
Funding Options
...........22
3.6
Market Analysis
23
3.6
Airport Market Area
24
3.6
Market Area Airport Facilities
24
SECTION 4:
BASELINE FINANCIAL AND ECONOMIC OUTLOOK 32
4.1
Historical Revenues and Expenses
32
4.2
Baseline Forecast of Revenues and Expenses
34
SECTION 5: BUSINESS PLAN ALTERNATIVES 38
5.1 Industry Trends Impacting Denton Airport Analysis 38
5.2 Area-wide Factors Supporting Growth and Development of the Airport 39
5.3 Obstacles to Airport Performance and Goal Attainment 42
5.4 Revenue Enhancement .............................................43
5.5 Impact of Revenue Enhancement Strategies on Potential Demand 47
SECTION 6: RECOMMENDED PLAN 49
6.1 Recommended Management and Policy Actions 49
6.2 Revenue Enhancement Recommendations 54
6.3 Impact on Revenues and Expenses 63
6.4 Summary of Business Plan Recommendations 64
6.5 Timetable and Trigger Points 83
TABLE OF CONTENTS (Cont.)
LIST OF FIGURES
Figure 1
Denton Airport Organization Chart
8
Figure 2
Airport Location
11
Figure 3
Existing Airport Layout Plan
14
Figure 4
Airport Development Areas
29
Figure 5
Airport Service Area
35
LIST OF TABLES
Table 1
Runway Data Summary
9
Table 2
Businesses at Denton Municipal Airport
12
Table 3
Historical Activity: FAA Tower Counts
13
Table 4
Current Denton ACID
15
Table 5
Parallel Runway Options Cost Estimates
16
Table 6
West Side Development Potential Infrastructure Cost
20
Table 7
Airport Comparison Highlights
26
Table 8
Based Aircraft Mix Comparison
26
Table 9
Airport Facility Comparison
29
Table 10
Airport Service Comparison
30
Table 11
Airport Rates and Charges Price Comparison
31
Table 12
Historical Revenues and Expenses
33
Table 13
Denton Airport Baseline Financial Pro Forma
36
Table 14
Baseline Net Operating Income/(Deficit)
37
Table 15
Total Net Income for Baseline Projections
37
Table 16
Major Employers in the Denton Area
40
Table 17
Impact of Revenue Enhancement Strategies on Potential Demand
47
Table 18
Action Plan Trigger Points
67
APPENDICES
Appendix A
Denton Airport SWOT
Appendix B
Detailed Survey Results
Appendix C
Lease Analysis
Appendix D
Local and State Incentives
Denton Municipal Airport
Business Plan October 2010
FINAL TECHNICAL REPORT
Denton Municipal Airport Business Plan
1. INTRODUCTION
THE PURPOSE OF THIS BUSINESS PLAN FOR Denton Municipal Airport (DTO) is to assess
potential means to improve the Airport's financial performance, economic development,
and operation. To do this, the business plan will evaluate a number of potential
operational and development scenarios and provide the City of Denton with decision-making
information. Our understanding of the current situation involves several components, including
the Airport's significant recent growth in operations, its competitive setting in North Central
Texas, the highest and best use of Airport property, the benefits and costs of attracting corporate
aviation, safety and noise issues in the vicinity of the Airport, the potential for hangar
development, identifying the optimum development of the Airport's west side, the desire of the
Sponsor to examine the Airport governance structure, and a number of other facility-related
issues.
1.1 Understanding & Key Issues
Our understanding of the Denton Municipal Airport involves its position as a jet-capable
facility that desires to expand its revenue base, develop a blueprint for moving into the future,
and take advantage of the growing connection between local business/industrial development
and aviation. The location of several large factories adjacent to the Airport has confirmed the
notion of a connection between the two land uses. In addition, the Airport enjoys royalties from
gas wells on the field that add significantly to the capital budget of the Airport. Planning for the
future involves diversification so that limited-term gas revenues allow the Airport to develop
long term revenue sources to support operations.
The Airport desires financial self-sufficiency in the long term and thus will need to
review its policies set for Airport development, management of hangars, and gas well revenues.
Additionally, the Airport must keep its existing clientele and provide revenue producing facilities
such as development pad sites, hangars, and aviation industry incentives for continued growth.
Finally, the Airport is expanding its runway system to 7,000 feet to attract the largest business
and corporate clients. The Denton Municipal Airport is fast becoming the northern business hub
airport for the Dallas region. Properly managing and directing that effort is essential to
successful capture of the business aviation market. Key issues that are recognized by the
business plan include the following:
• Reversion Clauses in Lease Agreements: There is significant debate about the
value or justification for including reversionary clauses in hangar leases,
especially for major investments financed by aviation industry. The business plan
will address this issue by providing information on how these lease arrangements
work at other airports. In addition, the business plan will examine the pros and
cons associated with this practice at Denton and other airports.
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Denton Municipal Airport
Business Plan
October 2010
• Parallel Runway: Recently, the need for a parallel runway has been justified from
an operational standpoint. With the influx of significant pilot training in both
helicopters and fixed wing aircraft, there is now a significant usage of current
airfield capacity. The business plan will examine the issues associated with the
development of a parallel runway, including cost, justification, access, safety,
impact to airspace, and other issues.
• Radar Displays: The FAA has plans in the summer of 2010 to provide the Tower
with radar displays to supplement the current visual traffic control.
• General Fund versus Enterprise Fund: Questions have been raised concerning
the best accounting model to use for the Airport. At stake is whether or not the
Airport should be operated under the General Fund or as an Enterprise Fund. The
business plan will present the pros and cons of either method and describe the
ideal conditions for each to be used.
• Airport Management Structure: The current airport management and advisory
board structure will be reviewed, along with alternative methods, such as Airport
Commissions, Boards, Authorities, and Departments. The ideal conditions under
which different operating structures work will be described.
• Airport Branding: The City has undertaken some significant branding efforts in
the past for Denton Municipal Electric (the City's electric utility), the City's
economic development activities, and the Airport (slogan, "North Texas Airport
of Choice"). While the Airport should conform or be complementary to the
City's branding efforts, a significant change in the operational make-up of the
Airport has occurred over the last five years. It is no longer a small airport
primarily serving a small general aviation client base. Instead, the Airport has
grown into a corporate base and training facility that can compete with any of the
general aviation airports in North Central Texas. As such, it is believed that the
Airport brand should reflect this larger role in Denton's economic development.
• West Side Development: The development of the west side of the Airport may be
highly dependent upon the ground access available to that side of the Airport. In
this regard, the proposed development of Loop 288 has been delayed for a number
of years. It is currently unknown when that important road will be constructed.
While there are interim access alternatives, the major west side development is
linked to the Loop 288 schedule. West side development could accommodate
additional airport facilities and commercial-industrial facilities. Also at issue is
the cost to extend utilities to the west side, the responsibility for that cost, the
location of existing and future gas wells, and potential property acquisition.
• City Development of Hangars or Private Enterprise: Another topic with diverse
opinions involves the political decision as to whether or not the City should be
involved in hangar development at the Airport. This topic is related to the lease
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Denton Municipal Airport
Business Plan
October 2010
reversionary clause issue in that both situations might require the City to own and
manage rental property at the Airport. The economic consequences of these
options will be identified in the business plan.
• Airport Financial Perfornutnce: A significant question about the Airport
involves whether or not it can operate without subsidy. The business plan will
examine the financial performance of the Airport and project at least two different
scenarios: the Status Quo and Revenue Enhancement Options.
• Gas Well Leases and Royalties: As mentioned, the Airport enjoys revenues from
gas wells on Airport property. These revenues have a finite timeframe due to
depletion of the gas. It has been suggested that to plan for future revenue sources
and needs, the revenues from the wells may be best used on new revenue-related
infrastructure development at the Airport. The Business Plan will suggest means
of diversifying revenue generation.
• Rates and Charges Comparison: The financial analysis will examine lease rates
and other fees and taxes paid by tenants. Typically, rates should be market based,
i.e., competitive with alternative airport facilities. Tenant comments have
indicated that lease rates are reasonable, tax rates are high, and the permitting
process cannot be completed in a reasonable timeframe.
• Future Client Base and Amenities: If the City is to take a proactive role in
securing new tenants at the Airport, a key question involves the target market for
promotional activities and resources. The business plan will help identify those
industries. As the Airport continues to grow and attract business aviation, certain
amenities are expected from the corporate users, including Airport Rescue and
Fire Fighting (ARFF), rental cars, U.S. Customs, meeting facilities, food service,
and other business-enabling services.
• University of North Texas Aviation Program: The University has just approved
an Aviation Curriculum and will start the program in the fall of 2010. While no
flight training has been proposed for the initial program, a cooperative training
program with existing airport tenant(s) is planned. It is anticipated that a formal
training program could evolve in a few years. Thus, the UNT aviation program is
expected to further stimulate airport activity - particularly pilot training.
• Flight Training Operations: Significant growth in flight training activity has
occurred in the past few years with a major fixed wing flight school and two
helicopter programs. Training activity and facilities increase airport revenues, but
also significantly increase FAA tower controller workload, traffic pattern
congestion, and may constrain corporate aviation activity and/or recruitment.
Training operations versus corporate activity can sometimes be seen as competing
for limited resources of airport operational capacity and landside space.
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Denton Municipal Airport
Business Plan
October 2010
• Linuted Development Area: Only a limited amount of development area remains
on the east side of the Airport. The highest and best use for this property should
be addressed as alternate development locations would have substantially high
costs and access issues. The Business Plan will make recommendations for
potential acquisition of property. The need and feasibility to physically segregate
light general aviation activity/facilities from corporate/business aircraft is a
related issue.
• International Activity: The City has applied for a Foreign Trade Zone (FTZ)
designation that incorporates all of the airport property. Approval of the FTZ
could stimulate the need/demand for U. S. Customs Service. The Airport currently
operates under a limited area, temporary FTZ.
• Master Plan Update: The current master plan is now dated. As such, the
Business Plan will consider options that may not have been addressed in the old
master plan. It is anticipated that the Business Plan will focus on strategic
initiatives that can be used by future master planning efforts.
1.2 Desired End Products
The desired end products produced as a result of this analysis include the following:
A well-defined mission statement for the Airport.
An identification and evaluation of strengths, weaknesses, opportunities, and
threats facing the Airport.
0 A ten-year projection of revenues and expenses at the Airport for the baseline
case and alternative scenarios.
An examination of re-branding for the Airport.
Strategic planning recommendations for the Airport, including those for capital
development, leases, operations, marketing, zoning, and management.
Recommendations for development of the West Side of the Airport.
Analysis of potential hangar development options - private versus public
ownership.
Budget pro formas showing the status quo and revenue enhancement options for
the future.
Detailed analyses of leases.
Potential impacts of the runway extension and attraction of more corporate
aviation.
Examination of the need for a parallel runway.
Identification of the need for an advertising and/or marketing strategy for the
Airport, if warranted.
Executive summaries and technical reports for the Airport and City.
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Denton Municipal Airport
Business Plan
October 2010
1.3 Report Outline
In order to address the issues described above and to produce the desired end products,
this report has been organized to include the following sections:
Section I - Introduction
Section 2 - Background and Management Structure
Section 3 - Existing Airport Characteristics
Section 4 - Baseline Financial Projection
Section S - Business Plan Alternatives
Section 6 - Findings and Recommendations
Section 7 - Economic Impact Assessment
Appendix A - SWOT Analysis
Appendix B - Detailed Survey Results
Appendix C -Lease Analysis
Appendix D - Local and State Incentives
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 5
Denton Municipal Airport
Business Plan October 2010
2. BACKGROUND AND AIRPORT MISSION
A CLEARLY ARTICULATED MISSION REFLECTS THE GOALS AND vision for the Airport. It also
empowers all Airport staff to fulfill their roles. The overall Airport mission provides a
foundation of common purpose from which decisions can be made and changes can be
pursued. The management structure and capabilities of the Sponsor must fit with the mission of
the Airport to ensure success.
Understanding the background and management structure of Denton Airport aids in
working through the key issues identified in the previous section (e.g. Enterprise Fund vs.
General Fund structure). This examination can identify whether roles and/or responsibilities are
clearly defined, or if authority in the decision-making process is granted at the proper levels. To
address these issues, this section is organized to include the following:
Airport Mission
Airport Management Structure
2.1 Airport Mission
Denton Airport's role is that of a publicly-owned, public-use airport. The Airport is
classified in the National Plan of Integrated Airports System (NPIAS) as a General Aviation
Reliever airport, providing access to the air transportation system for general aviation aircraft.
The mission statement under which the current Airport staff operates is:
It is the mission of Denton Airport to provide: operational safety; outstanding
service; and, absolute security. "
Because of the increasing role of the Airport in attracting and supporting businesses and
creating local jobs, it may be helpful to expand the mission statement to include wording about
economic development and the creation of jobs in the Denton area. As such, it is suggested that
the Airport mission statement be revised as follows:
It is the inission of Denton Airport to serve as an engine for economic
development in the Denton area, providing operational safety; outstanding
service; and, absolute security for private pilots and the aviation industry. "
Discussions with Airport Management indicate that at least two other goals and objectives for the
Airport exist:
Additional revenue generation and diversification of revenue sources.
Development of a new airport brand that recognizes its elevation as a top tier
general aviation facility in the region.
While the Airport mission statement is adequate, the challenge to achieving greater
financial performance in the future will depend on the City's ability to partner with private
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Denton Municipal Airport
Business Plan October 2010
enterprise in creating a strong brand and market niche. Subsequent sections of this Business Plan
will further examine the Airport's market potential in an effort to achieve these goals.
2.2 Airport Governance
Denton Airport is owned and operated by the City of Denton, Texas. Figure 1 presents
the organizational chart for the Airport and its management structure. As shown, the chain-of-
command authority flows from the Denton City Council through the City Manager to the
Assistant City Manager, to the Director of Strategic Services and on through the Transportation
Director to the Airport Manager. The Airport Manager has a staff of three with roles shown in
the Organization Chart.
Administratively, Denton Airport is an operating department of the City. As a Home
Rule Charter City with a Council-Manager form of government, City of Denton administration is
the responsibility of a City Manager who is appointed by the City Council. The City Council
also appoints an Airport Advisory Board which makes recommendations regarding Airport
policy directly to the City Council. The City Council reviews and approves all Airport operating
policies including rate schedules for Airport property leases and services. The daily operation of
Airport services, infrastructure and aviation business relations is the direct responsibility of the
Airport Manager. Contract service providers operate the on-Airport FBO (pilot services) and
control tower. These contractors are supervised by Airport Staff under authority of the Airport
Manager.
2.3 Airport Management
The day-to-day operation of the Airport is the responsibility of the Airport Manager. The
Airport Manager's position incorporates all facets of Airport administration including
responsibility for budget oversight, public infrastructure management, lease administration and
maintenance of grounds at the Airport. The Airport Manager must have a working knowledge of
Federal, State, and local laws and regulations relating to aviation. From an administrative
standpoint, the Airport Manager supervises Airport staff, administers Airport security and
emergencies, and coordinates the financial responsibilities of the Airport with the Transportation
Director. The Airport Manager also is responsible for the planning and environmental processes
at the Airport. The Administrative Assistant to the Airport Manager and Airport Operations
Coordinator perform the duties of the Manager when he is absent. The maintenance field service
worker supervises and performs maintenance on the Airport, mowing, repairs to equipment,
buildings etc. Large parcels of Airport land are mowed by the Parks Department personnel under
contract with the Airport. Anything beyond the City's capabilities is coordinated through other
contractors. Airport attendants are needed to staff the Airport during its working hours.
The Airport is open 24 hours per day, seven days per week. However, it is only staffed
by the City from 8:00 am to 5:00 pm, Monday through Friday. The FBO (Business Air Center)
is open from 6:00 am to 10:00 pm, Monday through Friday and from 7:00 am to 7:00 pm on the
weekends. The Airport's second FBO, U.S. Aviation Group, will begin in mid-2010 to operate
24/7 with complete line services. The Air Traffic Control Tower is operated from 6:00 a.m. to
IKr R.A. Wiedemann & Associates, Inc. in association iiith CHA, Inc. 7
Denton Municipal Airport
Business Plan
October 2010
10:00 p.m. seven days per week. The Airport Manager or his designate is on call after operating
hours for emergencies.
Figure 1 - Organization Chart
Denton Municipal Airport
Manager
Denton Municipal Airport
Administrative Assistant
Airport Operations Airport Maintenance
Coordinator Field Service Worker
IRf R.A. Wiedemann & Associates, Inc. in association iiith CHA, Inc. 8
Denton Municipal Airport
Business Plan October 2010
3. EXISTING AIRPORT CHARACTERISTICS
AIRPORT FACILITIES ARE OFTEN DESCRIBED AS AIRSIDE or landside. Airside (or airfield)
facilities include those directly used by aircraft during takeoff and landing, such as
runways, taxiways, lighting, and instrumentation. Landside facilities include support
buildings and structures, such as aircraft hangars and parking (tie-down) aprons, automobile
parking lots, and access roads.
This section presents an inventory of airside and landside facilities at Denton Municipal
Airport. However, as part of the Airport Business Plan, this inventory considers the utility of
these facilities for the Airport as a business enterprise. In this way, this section not only reports
on what facilities exist on the Airport, but also how they affect the Airport business operations.
3.1 Airside Facilities
From a business perspective, airside facilities at DTO provide an access point into the
National Airspace System (NAS) for aircraft owners, operators, and business travelers. These
facilities include one asphalt runway (Runway 17-35) which is 5,999 feet long and 150 feet wide
with a full length parallel taxiway. All primary taxiways are 50 feet wide. The runway has a
precision instrument approach which permits operation during low visibility weather conditions.
Figure 2 graphically shows these facilities while Table 1 summarizes the runway facilities and
characteristics.
Table I - Runway Data Summary
F
ilit
T
Runway 17-35
ype
ac
y
17 35
Length
5,999'
Width
150'
Pavement
Asphalt
Weight Bearing Capacity
70,000 lbs Single Wheel - 100,000 lbs Dual Wheel
Markings
Precision
Non-Precision
Runway Lighting
Medium Intensity
Approach Lighting
MALSR
None
Visual Aid
VASI
Traffic Pattern
Left
Approaches
RNAV, ILS, & NDB
RNAV
Legend: MALSR = Medium Intensity Approach Light System with Run-,ay Alignment Indicator Lights
VASI = Visual Approach Slope Indicator
RNAV = Area Navigation
ILS = Instrument Landing System
NDB = Non-Directional Beacon
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 9
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Denton Municipal Airport
Business Plan October 2010
DTO is considered a reliever to Dallas/Fort Worth International Airport (DFW) in the
FAA's National Plan of Integrated Airport Systems (NPIAS). The runway covers between 96
percent and 99 percent of all-weather wind conditions. The Airport is further equipped with the
following:
• Four Instrument Approaches, Including RNAV/GPS Approaches at Both Runway
Ends
• ILS Approach on Runway 17
• RNAV for geographic positioning
• NDB Rotating Beacon (Offers Aircraft w/o GPS to Fly Instrument Approaches)
• Segmented Circle and Lighted Wind Indicators
• Automated Surface Observance System (ASOS)
• Medium Intensity Runway Lights
FAA Airport design standards are based on the Airport's Reference Code (ARC)'. The
ARC of any airport is based on the largest aircraft category that conducts at least 500 annual
itinerant operations. DTO is classified as a D-11 airport (accommodating turboprops and jets). D-
II airport design aircraft include the Hawker 700, Learjet 35, and Gulfstream IV. In general,
DTO adequately provides for ARC D-II design standards. Additional standards may be put into
place if the Airport were to obtain a Part 139 certification for commercial operations. These
standards would include firefighting, wildlife, security, and others. In summary, the DTO airfield
offers the frill complement of infrastructure facilities and approach equipment desired by a wide
range of aircraft in the business and corporate fleet.
3.2 Landside Facilities
In terms of landside facilities, Denton Municipal Airport offers a range of buildings and
equipment that serve the business aircraft owner, operator, and traveler. These include an
administration building, many aircraft storage hangars, an aircraft museum, maintenance
facilities, and fixed base operator (FBO) hangars. Currently, there are over 30
corporate/conventional hangars and 12 T-hangar buildings, many of which are utilized by
businesses.
In addition to these facilities, there are two Fixed Based Operators (FBO) and other on-
site business operators that provide all of the traditional aviation services including aircraft rental
flight training, charter, avionics, aircraft sales, aircraft maintenance, painting and upholstery, full
and self-serve fueling, ground power units (GPU) for external power, and line service. Business
Air Center is the senior provider of these services. Table 2 displays aviation businesses at DTO;
there may be private individuals who use their aircraft for business purposes that are not included
in Table 2. Each of the businesses is housed within a structure fitted to their requirements, and
includes attached or interior offices, vehicle parking, and apron area.
1 The ARC has two components. The first component, depicted by a letter. is the Aircraft Approach Category and
refers to the aircraft approach speed during landing. The second component, depicted by a Roman numeral, is the
Airplane Design Group, and refers to the aircraft wingspan.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. II
Denton Municipal Airport
Business Plan
October 2010
The paved aircraft parking apron has approximately 75 tie-down spaces for itinerant and
based aircraft use for either overnight or monthly parking. In total, there is over 720,000 square
feet of hangar space at DTO. Other landside facilities and services available include:
• Six Fuel Tanks Offering 70,000 Gallons of Fuel;
• Two Fuel Trucks with a Combined 1,750-Gallon Capacity;
• 24-Hour Fueling Access;
• Approximately 100 Automobile Parking Spaces
• Each building also contains an apron area or taxilanes, and separate or combined auto
parking
Table 2 - Businesses at Denton Municipal Airport
Business
Function
Alan Ritchey
Postal Contractor
All American Helicopters, LLC
Flight School
Alliance Air Charter
Charter
Avionics International Supply, hic
Maintenance
Avionics Test Equipment Calibration, Inc
Maintenance
Barrett Aviation Maintenance
Maintenance
Business Air Center
Aircraft Sales. FBO, Charter, Hangar Rental
City of Denton
Air oil Management and Administration
EZ Composites
Experimental Aircraft Manufacturing
Ezell Aviation
Cormnercial Hangars
GCBSXX. LLC / Finley Ledbetter
Electric Manufacturing
Haltom Aircraft Seivice
Maintenance
Hangar 10 Flying Museum
Museum
Jet Works Air Center
Maintenance & Paint Shop
Longhorn Helicopters, hrc
Charter, Flight School
Nebri & Associates, Inc
Aircraft Sales, Hangar Rental
Owens Aviation
Aircraft Sales
Piaggio
Aircraft Interiors
Tech Aero Avionics. LLC
Avionics Maintenance
US Aviation
Aircraft Sales, FBO, Flight School Hangar Rental,
Maintenance
Used Dealer's Aircraft
Aircraft Sales
Weyer Investments
Hangar Rental
In summary, the landside facilities currently available at DTO are quite comprehensive,
and improvements are continuing. The operation of several FBO's on the Airport is evidence that
the market for corporate/business aviation services is strong, as is the list of existing business
tenants.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 12
Denton Municipal Airport
Business Plan October 2010
3.3 Airport Operational Characteristics
The primary and driving force of growth at general aviation airports involves increases in
based aircraft and operations. These two measures of activity affect not only an airport's
infrastructure requirements, but also the amount of revenues and expenses it can generate. This
market demand reflects the airport as both a product and service that consumers will buy.
Therefore, development of future airside and landside facilities at DTO, if constructed and
phased in response to market demand, can contribute significantly to the Airport's revenues
through rents paid on new leases.
In recent years, the operating environment at DTO has changed from a relatively low
activity general aviation airport to a significant business and corporation aviation oriented
facility with a growing flight training and aircraft service business component. This growth has
come primarily within the last seven years and has altered the character of the Airport to become
an economic development engine for Denton. This change, coupled with the expansion of gas
well development has created a unique nexus of both aviation and economic activity.
Since 2004, DTO has experienced a significant increase in both based aircraft and total
annual operations. (An aircraft operation is defined as either a takeoff or a landing. A takeoff and
landing are two operations.) Because of the significant growth in training operations between
2006 and 2009, official FAA Terminal Area Forecast records have not yet shown the significant
spike in operational activity. The most recent FAA TAF is shown in Table 3.
Table 3 - Historical Activity: FAA Tower Counts
Year
Total Operations
2004
57,612
2005
86.802
2006
88.832
2007
99.734
2008*
126,670
* Source: FAA Air Traffic Activity Systems (ATADS)
As indicated by the ATADS, the Airport has gained more than 69,000 annual operations
between 2004 and 2008. An annualized extrapolation of the 2009 FAA Air Traffic Control
Tower (ATCT) counts at DTO predicts approximately 150,000 annual operations for calendar
year 2009. These annual ATCT counts do not include activity that takes place when the tower is
not operational. With training operations now taking place 24 hours per day, it might be expected
that the Airport will have as much as 50,000 more actual operations than those recorded by the
ATCT. This is significantly higher than 2009 TAF forecast of 119,081 and exceeds both the
FAA forecast for 2014 and the Airport Master Plan forecast for 2011.
In an effort to improve the integrity of the FAA's based aircraft data, a new methodology
for accounting for aircraft based at an airport was implemented by the FAA in 2009 through the
FAA Order 5010.4, Airport Safety Data Program. Airports are now required to enter the tail
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 13
Denton Municipal Airport
Business Plan October 2010
numbers (also known as N-numbers) of the aircraft that are based at their airport. The FAA will
then cross reference the tail numbers between airports and in cases where an aircraft appears at
multiple airports, will reconcile the discrepancy. In some cases, this methodology significantly
changed the number of based aircraft at an airport. As this is in the first year of the new program,
its affects on forecasts and funding await to be seen. The March 2009 effort for DTO resulted in
the following aircraft fleet mix:
• 131 Single-Engine (73%)
• 29 Multi-Engine (16%)
• 10 Jets (6%)
• 7 Helicopters (4%)
• 2 Other (1
• TOTAL = 179
The mix shows DTO's activity is based mainly on flight training and corporate activity. While
some single-engine aircraft are used for the individual businesses that utilize the Airport, most
are used for recreational or flight training. Flight training also utilizes the helicopters and some
multi-engine aircraft. With almost one-quarter of the total aircraft made up of multi-engine
aircraft and jets, the Airport has a healthy level of corporate and business aviation.
It should be noted that Airport Management has a higher number of based aircraft listed
in their records. It is believed that these will eventually show up in FAA 5010 reports as new
inspections are undertaken. Importantly for this business plan, the actual number of existing
based aircraft will not impact future revenue projections because only the growth in based
aircraft is used in the projection methodology. Section 5 of this Plan addresses based aircraft
growth.
3.4 Airport Development Plan
One of the tasks of this business plan is to evaluate the existing Airport Capital
Improvement Program (ACID). This review includes suggestions for any revisions (either
specific projects or timing and phasing of projects) that may better suit the business need or
market demand for the projects. For the purpose of the business plan, review of the ACIP
considers opportunities for revenue generation. The 2003 Master Plan describes the last formal
recommended development plan - the Airport Capital Improvement Program (ACID) for DTO.
The Terminal Area Plan was revised in 2006 to reflect the buildings that had been constructed
since 2003 and any additional changes of locations or plans of buildings. The short-term projects
identified in the Master Plan have either been completed or under construction at this time. Table
4 shows the current ACID for DTO as provided by the City of Denton.
The 2010 - 2012 TxDOT Capital Improvement Program (CIP) has listed a total of
$1,146,100 in funding for DTO for 2012. There are no proj ects funded for 2010 or 2011 listed at
this time. One project previously added to the TxDOT CIP for 2010 is for security fencing,
including the engineering/design and installation of 18,000 linear feet of perimeter fencing.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 14
Denton Municipal Airport
Business Plan
October 2010
Table 4 - Current Denton ACIP
Pro'ect
Local
Federal
Total
Short Term
1. Southeast Taxiway Expansion
77,135
1,094,615
1,171,750
2. Rumvm- Extension
425,000
8,275,000
8,700,000
3. Security Fence (Perimeter-south)
57,000
570,000
627,000
4. Southeast Road Infrastructure
500,000
-
500,000
5. Air oil Entrance (Design)
50,000
-
50,000
6. Air oil Signage (On-site)
50,000
-
50,000
7. Maintenance Facility
145,000
-
145,000
Short Term Total
$1,304,135
$9,939,615
$11,243,750
Intermediate Term
1. Ramp Expansion
89,000
890,000
979,000
2. Parallel Runway / Taxi- av (5,000 ft)
761,050
6,849,450
7,610,500
3. RADAR Equipment Installation
250,000
1,025,000
1,275,000
4. Airport Entrance (construction)
150,000
1,350,000
1,500,000
Intermediate Term Total
51,250,050
510,114,450
$11,364,500
Lon Term
1. Rumvm- Overlay
240,000
2,160,000
2,400,000
2. General Aviation Parking Facilities
14,000
126,000
140,000
3. Taxiwm° A & B Rehabilitation
140,000
1,260,000
1,400,000
Long Term Total
5394,000
53,546,000
$3,940,000
Not On Current Master Plan:
1. Airport master Plan / Business Plan
285,000
-
-
2. Heliport (west side)
1,500,000
-
-
3. Public Ram / Taxiway (-vvest side)
2,500,000
-
-
Not On Master Plan Total
$4,285,000
-
-
TOTAL
57,233,185
523,600,065
526,548,250
Source: City of Denton
Parallel Runway
Until recently, the need for a parallel runway could not be justified from an operational
standpoint. With the influx of pilot training in both helicopters and fixed wing aircraft, there is
now a significant usage of current airfield capacity according to the FAA tower counts. The mix
of the slower propeller aircraft and faster jet aircraft contributes to the immediate need for a
parallel runway. The future parallel runway depicted on the ALP is 5,000 feet by 75 feet and
would be used primarily for small aircraft, to provide an alternative runway for training aircraft.
According to the 2003 Master Plan, a parallel runway would increase the Annual Service
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 15
Denton Municipal Airport
Business Plan October 2010
Volume of DTO to 300,000 operations. A second runway would also provide an alternative
should the main runway need to be closed due to maintenance or emergencies.
Figure 3 displays the 5,000-foot by 75-foot parallel runway from the Airport Layout Plan
(ALP) with a full length parallel runway. The distance between the two runways is 700 feet,
which allows for simultaneous operations of the two runways, and for aircraft to hold on the exit
taxiways. Figure 4 displays an alternative parallel runway of 3,200 feet. While this runway
would be shorter, it would be adequate for most small aircraft and flight training and is long
enough to obtain an instrument approach. The shorter length would also contain the Runway
Protection Zones mostly within the existing airport property, reducing the requirement for land
acquisition or easements. The shorter runway could be extended at a later date as necessary. In
an effort to further reduce the cost, only 35-foot wide exit taxiways are provided. Aircraft may
safely hold on the exit taxiways between the runways.
Table 5 - Parallel Runway Options Cost Estimates
Item
Amount
Units
Cost/Unit
Total Cost
O )tion #1- 5,000 ft
Run-,vav
Pavement
375,000
SF
$10.00
$3,750,000
Lighting
10,000
LF
$20.00
$200,000
Markings
375.000
SF
$1.50
$561500
Taxiivav
Pavement
252,000
SF
$10.00
$2,520,000
Lighting
10,000
LF
$20.00
$200,000
Markings
252,000
SF
$1.50
$378.000
Total
$7,610,500
O )tion #2 - 3,200 ft
RuLm aN
Pavement
232.500
SF
$10.00
$2,325,000
Lighting
6,400
LF
$20.00
$128.000
Markings
232,500
SF
$1.50
$348.750
Taxiia m
Pavement
84,000
SF
$10.00
$840,000
Lighting
6,400
LF
$20.00
$128,000
Markings
84,000
SF
$1.50
$126,000
Total
$3,895,750
Source: RAWA Consultant Team
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 16
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Business Plan October 2010
West Side Development
There is approximately 200 acres of open land on the west side of the existing airport
property, a portion of which would be reserved for the parallel runway as discussed above. An
additional 150 acres are also available for potential acquisition for a total of 350 acres for
development. However, beyond the runway, there is still ample land available for additional
development. This land could be used for both aviation and non-aviation development as shown
in Figure 5 - Potential Long-Term Development.
Non-aviation development at DTO must ultimately conform to the City's land use plan
and be compatible with surrounding uses and the operation of the Airport. Additionally, it is
anticipated that the proposed Loop 288 Roadway along with appropriate utilities will attract
businesses to the area. While construction of this section of Loop 288 is still five to ten years
away, thoughtful planning of the timing / phasing and financing of such development should be
considered now.
The development illustrated on Figure 5 includes a conceptual airport business park,
composed of two distinct sections. Immediately west of the potential parallel runway, is a 100
acres area suggested to be reserved for additional airport-related facilities. This area can
accommodate virtually any type of airport user, including major corporate flight departments,
maintenance facilities, and specialty services. The illustration depicts an assortment of large
hangars, aprons, offices, roadways, and vehicle parking along a new 5,000-foot long parallel
taxiway, sized for Airplane Design Group III (e.g., Boeing Business Jets). For comparison, this
area is similar in size and capacity to the existing development area on the east side of the
Airport.
In addition to the airport-related development, the concept also illustrates a potential 50
acre business and industrial park, with instant access to the Airport, adjacent to the Loop 288
highway corridor. With some land acquisition to the north and west, the business park could be
expanded to 100 acres, and would be bounded by the Dry Fork Creek to the north and Hickory
Creek to the south.
As the area is generally level and undeveloped, there are few impediments to future
development, with the exception of a few existing gas well locations. However, initial
development would require investment (whether public or private) to foster implementation of
the concept. Although, the actual costs cannot be projected prior to specific site planning, the
table below provides some order of magnitude costs for initial public infrastructure. Note that
concept assumes that proposed Loop 288 is constructed, and includes utility rights-of-way and
the extension of municipal sewer and water. The conceptual costs below are for public
infrastructure improvements located on Airport property. All buildings and associated facilities
would be at the expense of the developers or tenants.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 19
Denton Municipal Airport
Business Plan
October 2010
Table 6 - West Side Development Potential Infrastructure Cost
Amount
Units
Cost/Unit
Total Cost
Airside
Taxiway
Includes Pavement Lighting, and Markings
6,000
LF
$700.00
$4,200,000
Apron
Main Apron
300,000
SF
$16.00
$4,800,000
Design & Contingency
25% of cost
$2,250,000
Subtotal Estimate
$11,250,000
Landside
Access Road
Includes Pavement, & Markings
6,000
LF
$300.00
$1,800,000
Lighting
6,000
LF
$50.00
$300,000
Utilities
Sewer
6,000
LF
$110.00
$660,000
Water
6,000
LF
$110.00
$660,000
Design & Contingency
25% of cost
$855,000
Subtotal Estimate
$4,275,000
Total
515,525,000
W RA. Wiedemann & Associates, Inc. in association with CHA, Inc. 20
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3.5 Funding Options
The ACIP lists the recommended projects and associated cost estimates for the 20-year
planning period. The local, state, and federal governmental agencies utilize the ACID as a
reference document for future funding. The main source of funding for many airports is grants
through the FAA's Airport Improvement Project (AIP). Texas is designated as one of ten states
in the U. S. that serves as a "block grant state." As such, TxDOT acts, by law, as the agent for
political subdivisions for the purpose of applying for, receiving, and disbursing federal funds for
GA airports. TxDOT also funds 50 percent of non-federal airfield maintenance projects up to a
maximum participation amount of $50,000.
Improvements related to enhancing airport safety, capacity, security, and environmental
concerns are eligible through the AIP program. Typical AIP eligible projects include: airport
master plans and airport layout plans; land acquisition and site preparation; airfield pavements,
e.g. runways, taxiways, and transient aprons; lighting and navigational aids; safety, security, and
snow removal equipment; selected passenger terminal facilities; and obstruction identification
and removal. In addition, some revenue producing projects can be funded from an airport's
entitlement grants if there are no runway or safety projects at that airport. These items can
include hangars, fueling facilities, automobile parking facilities, private use areas of terminal
facilities, and other revenue generating facilities. Highest funding priority according to FAA's
rating procedure is generally offered those projects that are safety related such as obstruction
removal, runway safety area improvements, and facility improvements to meet current FAA
Airport Design Standards. There are several other requirements to obtain AIP funding and
include items such as:
• Project Must Be Reasonably Consistent With Regional Plans
• Project Is Included on the Most Current FAA Approved Airport Layout Plan
• Sufficient Funds Available to Pay the Non-Federal Share
As Texas is a block grant state, TxDOT has developed the Texas Airport System Plan
(TASP) which includes all the airports from the FAA's National Plan of Integrated Airport
Systems (NPIAS) along which a few additional airports it deems necessary for the system. There
are additional goals beyond the FAA's AIP program and include:
• Scheduled Air Carrier Service Within a 60-Minute Drive for All Residents
• Business Jet Aircraft Access Within 30-Minute Drive of Significant Population or
Mineral Resource Centers
• Light Piston-Engine Aircraft Access Within 30-Minute Drive of Agricultural Centers
The goals of the federal and state plans are combined by TxDOT in the following order
for project funding priority:
1. Safety
2. Preservation
3. Standards
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 22
Denton Municipal Airport
Business Plan October 2010
4. Upgrade
5. Capacity
6. New Access
7. New Capacity
Texas is one of only three states in the country that does not have a state tax on aviation
fuel, nor does it have any other dedicated source of funds for airport development. Historically,
state funds for matching 50 percent of the sponsor share of federal airport grants have come from
"Fund Six", the state's transportation fund which is funded primarily through an excise tax on
gasoline. For the past three years, the state's aviation funding has been $16 million annually.
There is a proposal to redirect the existing state sales tax on aviation and air transportation-
related goods and services that currently go into the state's general fund into a dedicated fund to
provide additional revenues for airport projects. The primary advantage to this proposal is
airports would receive additional funding without requiring new taxes.
The formation of public/private partnerships is another emerging trend for GA airports.
In today's economy, businesses require more than a parcel of land or a building from which to
operate in order to realize their success. Many state and local governments across the country
offer corporate incentives in an effort to attract businesses and promote economic development
within their communities. Whether they are companies just starting their business or well-
established enterprises looking to relocate, these incentives provide excellent opportunities to
evaluate and compare multiple sites and seek out the locations that offer the most benefits (see
Appendix D).
It is here that owners of GA airports may find methods in addition to traditional
incentives such as low interest loans and temporary tax abatement, to entice economic
development. Public/private partnerships are sometimes created as a means to provide a mutually
beneficial financial relationship between a private entity and a local government. The community
wins by gaining the positive (and often substantial) economic impact generated by the business.
The business wins by gaining previously inaccessible assistance, and the local government wins
by gaining additional revenues and/or reducing its cost for the project. DTO is uniquely
positioned to use gas well royalty, which must be used exclusively for on-Airport expenditures,
to fund public participation in projects that increase annual revenue for the Airport.
3.6 Market Analysis
To understand the revenue-producing potential of DTO, it is important to evaluate the
economic forces at play in the existing market. The interaction of customers in the market with
existing offerings of aviation products and services determines prices, and can guide the Airport
in finding a unique position in the market that can produce revenue. In addition to assessing the
condition of the existing market in the Dallas/Fort Worth region, there is also some
undetermined amount of potential new customers (e.g. based aircraft or itinerant users), should
the Airport find the right balance of product/service, price, and value to offer the market. The
ultimate goal of DTO is to become an economic development hub by capturing an increased
share of both the existing customer market and a share of the natural regional growth of general
aviation demand in the Dallas/Fort Worth market.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 23
Denton Municipal Airport
Business Plan October 2010
Airport Market Area
For the purpose of this Business Plan, the existing geographic market of DTO is defined
by a 30-nautical-mile ring centered on the airport, which includes the north-central portion of the
Dallas/Fort Worth Metroplex. While there is no hard rule that sets these boundaries, particularly
in a large metropolitan region, this geographic area represents the target market from which the
Airport is likely to draw users and activity that will assist in driving revenue growth. It is
unlikely that DTO would be competing with airports in the southwestern portion of the region
for based aircraft and activity due to regional factors such as vehicle congestion/travel time and
the ability for these airports to fulfill the needs of their tenants. It should be noted that transient
activity at DTO originates in many other regions of the country. Figure 6 illustrates the general
market area of the Airport and includes other nearby public-use airports.
Market Area Airport Facilities
Within the geographic service area for DTO, there are a number of other public-use
airports, which provide a range of general aviation services, and likely compete with DTO for
activity and users. While there may be other large airports in the Metro area that compete with
DTO for corporate aviation facilities and services, a 30-mile geographic area was considered
inclusive of most, since locational convenience is one factor used in selecting a home-base
airport. For this Business Plan, there were several potential airports considered as competing
facilities. These airports include, but are not limited to:
• Addison (ADS)
• Aero Country (T31)
• Airpark-Dallas (1769)
• Collin County (TKI)
• Gainesville (GLE)
• Hicks Airfield (T67)
• Lakeview (3 OF)
• North Texas Regional (GYI)
• FW Alliance (AFW)
• FW Meacham (FTW)
• Northwest Regional (52F)
The location of these facilities can be seen in Figure 6. Although general aviation airports
with smaller runways were included in the above list (52F, 30F, F69, T31, T67), airports within
the market service area with less than 59 based aircraft or without paved runways were not
included as competitors to DTO in this analysis. Tables 9 and 10 present information regarding
the facilities and services offered by these airports for comparison purposes.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 24
Denton Municipal Airport
Business Plan
October 2010
az;
Legend
T Denton Municipal Airport 77
* Public Use General Aviation Airports
C. Gainesville
Each Ring = s2
10 NM Radius
North Texas Regional
It
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Denton Municipal Airport
799'
81
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s
It
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7
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121:
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FW Alliance
y LI FW Meacham
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RA Wedema^° r Denton Municipal Airport (DTD) Business Plan FIGURE
y lrg 4 A5smidl@s. Ind.
1 1! C j IA Denton Airport Market Service Area 6i
I M r R.A. Wiedemann & Associates, Inc. in association with CHA, Inc.
25
Denton Municipal Airport
Business Plan October 2010
The majority of the airports shown on the map northwest of DTO are smaller and
privately-owned; thus, not likely competitors. A few airports to the south and east, such as Aero
Country, Lakeview and Airpark-Dallas, appear to be used mainly for recreational traffic and
offer very few services. These airports have almost no multi-engine based aircraft or jets. As
DTO is focused on providing business activity and flight training, these airports were not used as
competing facilities even though they are in proximity to DTO. As indicated, airports within the
DTO market area offer a range of options to general aviation users. Highlights of the comparison
are shown in Table 7 below.
Table 7 - Airport Comparison Highlights
Other Airports
Denton Airport
Longest Runway
Fort Worth Alliance
9,600 feet
5,999 feet
Largest Aiffield
Gainesville
1,336 acres
716 acres
Most Based Aircraft
Northwest Regional
612
179
Most Based Jets
Addison
199
10
Most Based Multi-Engine Aircraft
Addison
88
29
Least Based Aircraft
Gainesville
59
170
Comparisons to other airports must be qualified due to the specific characteristics of the
region. Addison (ADS), Fort Worth Alliance (AFW), and Fort Worth Meacham (FTW) are also
reliever airports to DFW, but are significantly closer to downtown Dallas and Fort Worth than
DTO. They have the highest levels of based aircraft and longer runways. They also have a higher
percentage of jets in their based aircraft mix. As shown in Table 10, DTO has six percent of all
based jets, while ADS has 36 percent and FTW has 32 percent. This suggests that jet aircraft
operators have a high desirability to access the central business districts of Dallas and Fort
Worth. Table 8 also shows that regionally, a tower and higher approach capabilities do not
necessarily mean a higher percentage of based jets. It should be noted, however, the airports
without these services do not have any based jets.
Table 8 - Based Aircraft Mix Comparison
Ahl)ort
Total
Based
Aircraft
Jet
Total % of
ME Tota% l of
Other % %
of Total
NAVAID
Tower
Denton Municipal (DTO)
179
6%
16%
78%
ILS
Yes
Addison (ADS)
545
37%
16%
47%
ILS
Yes
Aero Countn° (T31)
90
0%
11%
89%
-
No
Collin Counts- (TKI)
206
5%
17%
78%
ILS
Yes
Gainesville (GLE)
59
5%
20%
75%
LPV
No
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 26
Denton Municipal Airport
Business Plan October 2010
Table 8 - Based Aircraft Mix Comparison
Ahl)ort
Total
Based
Aircraft
Jet
Total % of
ME Tota% l of
Other % %
of Total
NAVAID
Tower
Hicks Ahfield (T67)
321
0%
6%
94%
-
No
North Texas Regional (GYI)
161
12%
11%
77%
ILS
Yes
Aii ark - Dallas (F69)
68
0%
1%
99%
-
No
FW Alliance (AFW)
107
23%
25%
51%
ILS
Yes
FW Meacham (FTW)
198
32%
23%
44%
ILS
Yes
Lakeview (30F)
63
0%
0%
100%
-
No
Noillm-est Regional (52F)
612
0%
10%
90%
-
No
The prices of 100LL at these airports are at the higher end of the range, but not
significantly higher for Jet-A, suggesting that these airports are attempting to promote business
activity and discourage recreational traffic. If regional growth patterns continue, it is only a
matter of time before communities in traditionally suburban areas of the region expand into
active and competitive business markets. As growth does occur, DTO will likely find itself in an
improved position to attract additional corporate market share.
There are several privately-owned airports that are open to the public. Many of these
airports operate as such in order to preserve the surrounding airspace from obstructions and
encroachment. Hicks Airfield has over 321 based aircraft and offers charter service. The fuel
rates at Hicks are at the lower end of the range, which may attribute to the large number of
aircraft. However, in terms of business activity, Hicks Airfield has a relatively short runway,
does not offer Jet-A fuel, and has zero based jets. Therefore, the likelihood that Hicks will
compete with DTO for business activity is low.
Market Area General Aviation Services
General aviation services available at area airports include airframe repairs, avionics,
power plant repairs, flight instruction, rental and sales, and charter, and were shown in Table 10.
DTO appears to offer comparable, if not better, services than other airports within the region.
Fort Worth Meacham and Addison airports are the only two other airports to provide the same
level of services recorded by the FAA's 5010 Master Record. DTO also offers a paint shop,
interior refurbishment, and a foreign trade zone (FTZ). Other FTZ's are located at Dallas/Fort
Worth International and Fort Worth Alliance.
Market Area Rates and Charges
As indicated in Table 11, prices for 100LL in August of 2009 were found to be as low as
$3.25 per gallon at North Texas Regional, and as high as $6.09 per gallon at Addison. Jet A was
$2.80 at Gainesville, and $4.95 at Addison. From this analysis, it appears that airports closer to
downtown Dallas and Fort Worth have higher fuel prices.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 27
Denton Municipal Airport
Business Plan October 2010
A telephone survey to FBOs and airport managers/owners was conducted to determine
the rates for aircraft storage, including tie-downs, T-hangars, and conventional hangars. Rates for
daily tie-downs range from no cost at DTO and Gainesville to $20 at Fort Worth Alliance (for
12,5001bs and under). Fort Worth Alliance and Fort Worth Meacham rates vary based upon
aircraft weight. At DTO the monthly tie-down fee is $40, while at Alliance it is $300. T-hangars
at DTO range from $180 to $250 depending upon the type of aircraft, size of hangar space, and
number of other aircraft in the hangar. According to the FBOs contacted, community space is
available in a conventional hangar at DTO, Fort Worth Alliance and Fort Worth Meacham, and
North Texas Regional, but individual conventional hangars are not. Gainesville offers a $0.05
discount on fuel on the weekends for basing the aircraft in one of their hangars.
Market Analysis Summary
Overall, DTO is in the mid-range for fuel prices and is on the lower end for aircraft
storage rates. DTO should market the wide variety of services and facilities it provides. It has a
business jet capable runway system with precision approach, ATCT, and highly qualified FBO
service providers. In particular, it is a key aviation provider for aviation demand in the north-
central Dallas/Fort Worth region.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 28
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Denton Municipal Airport
Business Plan October 2010
4. BASELINE FINANCIAL AND ECONOMIC OUTLOOK
THIS SECTION IDENTIFIES HISTORICAL REVENUES AND EXPENSES attributable to Denton
Municipal Airport and projects those revenues and expenses to the year 2018. This
projection only considers a baseline scenario with no revenue enhancement projects
included. In a later section, alternative projections of financial performance will be developed
based upon revenue enhancement initiatives and marketing pro-formas. In order to properly
frame these financial statements, this section is organized to present the following:
• Historical Revenues and Expenses
• Baseline Forecast of Revenues and Expenses
4.1 Historical Revenues and Expenses
Table 12 shows the historical revenues and expenses for FY 2006 through FY 2008 as
well as the budget for FY 2009. This information was taken from the statements of revenues and
expenses for Denton Airport provided by Airport management. Many of the revenue and cost
categories represent aggregated totals of several accounting sub-categories. Revenues from
Airport operations are derived from the following:
• Airport Lease Revenues: Lease revenue is earned from over 30 corporate/conventional
hangars and 12 T-hangar facilities at the Airport.
• Aircraft Storage (Tie-downs): The Airport has a paved aircraft parking apron that has
approximately 60 tie-downs for itinerant and based aircraft use.
• Airport FBO Commissions: These revenues come from a percentage of revenue from
the FBOs, as well as fuel flowage fees for fuel facilities.
• Agricultural Lease: Revenues from agricultural leases of land on the west side of the
Airport.
• Fees and Fines: Revenues include assignment fees, photo shoots, and late fees.
• Airport Miscellaneous Revenues: This category captures all revenue that is not
attributable to the other categories.
Airport Operating Expenses were made up of the following cost items:
• Personal Services: This includes salary and benefit costs of Airport workers.
• Materials and Supplies: This category includes such things as office/building supplies,
postage, and uniform expenses.
• Maintenance and Repair: Includes machinery and equipment, buildings and equipment,
radio equipment, and sidewalks and grounds maintenance and fuel.
• Insurance: Includes the commercial insurance premiums and self insurance premiums
for the Airport.
• Miscellaneous: This includes the Airport Advisory Board expenses as well as other
miscellaneous expenses.
101 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 32
Denton Municipal Airport
Business Plan October 2010
• Operations Expense: The Operations Expense category involves the cost of day-to-day
operations at the Airport, including utilities expense, training, vehicle operations, dues
and fees, office expenses, etc.
• Indirect Allocation: The Indirect Allocation includes the portion of general overhead
costs of the City of Denton that are allocated to the Airport.
• Interfund Transfers: These are transfers to other City Funds for services rendered to the
Airport.
Not included in these operating income and expense statements are the annual
contributions to the Airport from the City and State for capital development grants. Those
contributions are not considered operating revenues by this analysis. Rather, this analysis is
geared to identify the direct revenue producing ability of the Airport, along with its direct
operating costs. In this regard, revenues from gas wells are considered non-operating since they
are not generated by aviation activity. However, they do impact the total revenues generated for
the Airport. As such, any surplus revenues can be applied to non-operating costs such as capital
development, debt service, etc. Thus, for presentation purposes, the non-operating revenues and
expenses are shown at the end of Table 12 to reflect the overall financial picture of the Airport.
Table 12 - Historical Revenues and Expenses
Operating Revenue:
FY2005-2006
FY2006-2007
FY2007-2008
FY2008-2009
Airport Lease Revenues
$202318
$218325
$257,639
$292,750
Aircraft Storage (Tie-Downs)
$8.614.68
$8,702
$8,789
$8,877
Fuel Flowage Fees & FBO
Commissions
$120.426
$138,231
$222769
$176,483
Agricultural Lease
$5.072.48
$5,176
$5,280
$5385
Fines and Fees
$2.190
$3,750
$0
$1,000
Airport Miscellaneous Revenues
$166.74
$11.572.85
$10.994.76
$8,179.29
Total Operating Revenues
$338,788
$385,721
$505,470
$492,674
Operating Expenses:
FY 2005-2006
FY 2006-2007
FY 2007-2008
FY 2008-2009
Personal Seivices
$271632
$323,169
$223,118
$277,561
Materials and Supplies
$5.022
$8,212
$6,850
$8,800
Maintenance and Repair
$17,286
$21,492
$20,486
$58,533
Insurance
$25,863
$19,580
$18.011
$17350
Miscellaneous
$L156
$1345
$1,257
$1,200
Operations
$126.261
$167,947
$161,708
$142.773
Indirect Allocation
$230712
$240,325
$327,858
$340,972
101 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 33
Denton Municipal Airport
Business Plan October 2010
Table 12 - Historical Revenues and Expenses
Operating Revenue:
FY2005-2006
FY2006-2007
FY2007-2008
FY2008-2009
InteiTinnd Transfers
$44,596
$34,700
$43,901
$27,550
Total Operating Expenses
$723,528
$816,769
$803,189
$874,739
Net Operating Revenues/Expenses
($384,739)
($431,012)
($297,719)
($382,065)
Non-Operating Revenues
FY 2005-2006
FY 2006-2007
FY 2007-2008
FY 2008-2009
Gas Well Revenue
$L152,785
$817347
$1,732,414
Airport Proper- Tax Revenue
$67,586
$71,143
$74,700
Non-Operating Expenses
Cost of Debt
($204,282)
($200.992)
CIP Local Funding
($765,000)
($410,837)
Net Non-Operating
Revenues/Expenses
$1,220,371
$80,792)
$1,195,285
Total Net Revenues/Expenses
($384,739)
$789,359
($378,511)
$813,219
For purposes of the business plan, the ability of the Airport to generate revenues and
cover operating costs is the primary concern. From the historical information, Total Operating
Expenses grew by an average of 6.5 percent per year from FY 2006 to FY 2009 largely due to
increased maintenance and indirect allocation costs. The increased costs are associated in part
with the new terminal building, new taxiway, and enhanced grounds maintenance. Operating
income has increased by 13.3 percent per year. This is a due to an increase of FBO Commissions
due to increases in flight training and fuel sales. The net operating revenues and expenses deficit
has fluctuated each year but has decreased in FY 2009 by $2,000 dollars compared to FY 2006.
Of significance is the impact of gas well revenue, which can be used to fund capital and other
projects at the Airport. This revenue source has a finite lifespan and as such, should be used in a
manner that creates revenue producing facilities that diversify income production at the Airport.
It is against this historical backdrop that the baseline forecast of revenues for Denton
Municipal Airport is presented. It should be noted that most public-use general aviation airports
in the United States do not cover annual direct expenses with revenues and thus become
subsidized by their owners/sponsors. From this perspective, it appears that DTO has benefited
significantly from the increases in activity and gas well production since FY 2005-2006.
4.2 Baseline Forecast of Revenues and Expenses
This baseline forecast presents a status quo look at revenues and expenses, influenced
primarily by historical activity. It does not consider all of the potential changes at the Airport
that might occur through the implementation of this Business Plan or in the City of Denton's
economy that might change the historical trend. To determine the historical trend, the percent
101 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 34
Denton Municipal Airport
Business Plan October 2010
increase from the fiscal year 2006 to the fiscal year 2009 was examined to find the average
percent change in revenues and expenses. Thus, any major fluctuation during any one year did
not unduly affect the overall trend. The history of non-operating revenues and expenses was not
used to determine the forecast for the planning period. Airport management provided the non-
operating revenue and expense schedules anticipated for the planning period. These will be
verified to the extent possible, later in this plan.
In order to show a conservative baseline forecast, a number of assumptions were used
about the growth of individual line items in the budget. In this regard, the following growth rates
were assumed:
• The future rate of price inflation was assumed to mirror the Consumer Price Index (CPI),
and was estimated at 4 percent per year.
• Tie-down fees were grown by 1 percent per year to reflect the historically slow growth of
pricing of these services.
• Agricultural Lease was grown by 2 percent per year, also because of the history of slow
growth.
• Lease Revenues, FBO Commissions and Miscellaneous categories were grown by the
rate of CPI or 4 percent annually.
• Maintenance and Repair Expense was taken from a list of maintenance projects and costs
that Airport management submitted, which include costs associated with the new runway
and taxiway extensions.
• All other expenses were increased at the rate of CPI.
As shown, baseline operating revenues are anticipated to grow from $459,359 in FY
2009 to $644,069 by the fiscal year 2018 - an average yearly increase of 3.8 percent and an
overall increase of 40.2 percent for the period. Baseline operating expenses, on the other hand,
are expected to increase from $457,011 in FY 2009 to $843,985 by the fiscal year 2018 - an
average yearly increase of 7.1 percent and an overall increase of 84.7 percent for the period.
In addition to operating revenues and expenses, there are non-operating revenues and
expenses. These non-operating accounts include the revenues from the gas wells and the
expenses associated with debt service and capital expenditures. Any operating deficits from the
Airport are taken directly from the gas well fund. Thus, the operating pro forma for the Baseline
scenario has its primary impact on the gas well fund balance, which is anticipated to grow by
$8.7 million over the period.
101 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 35
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Denton Municipal Airport
Business Plan
October 2010
When the baseline operational costs are compared with the baseline forecasts of
operational revenues, the net operating costs for the Airport can be predicted as follows:
Table 14 - Baseline Net Operating Income/(Deficit)
Year
Operating Expense
Operating Revenues
Net Operating Income/(Deficit)
2009
$457,000
$459.400
$2,400
2010
$559,900
$473,300
($86,600)
2011
$642.600
$491.800
($150,800)
2012
$662,700
$51 L 100
($151,600)
2013
$696,800
$531,200
($165,600)
2014
$749,300
$552,000
($197,300)
2015
$890,400
$573,700
($316,700)
2016
$883.000
$596.300
($286,700)
2017
$860,800
$619,700
($241,100)
2018
$844,000
$644.100
($199,9(0)
From Table 14, the net operating deficit is anticipated to grow from -$86,600 in 2010 to -
$199,900 by the year 2018 - a 9.7 percent per year increase. Cumulative net operating revenues
for the period total -$1,793,900. However, non-operating revenues currently work to offset these
deficits. When considering both operating and non-operating income, Table 15 shows the effects
of gas well revenue and property taxes on total net revenues. Cumulative net revenues for the
forecast of total revenues and expenses (including non-operating income and costs) are
anticipated to reach +$9,869,500 through 2018. Thus, the favorable airport revenue forecast is
made possible by gas well revenue, which has a finite life.
Table 15 - Total Net Income for Baseline Projections
Year
Net Operating Income/(Deficit)
Net Non-Operating
Income/(Deficit)
Total Net Income/(Deficit)
2009
$2,400
$1,120,600
$1,123,000
2010
($86,600)
$785300
$698,700
2011
($150,800)
$2,070,900
$1,920,100
2012
($151,600)
$1,772,000
$ L620,400
2013
($165,600)
$1,434400
$ L268800
2014
($197,300)
$1,412,100
$1,214,800
2015
($316,700)
$L229,400
$912,700
2016
($286,700)
$947400
$660,700
2017
($241,100)
$589,900
$348,800
2018
($199,9(0)
$301,400
$101,500
101 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. 37
Denton Municipal Airport
Business Plan October 2010
5. BUSINESS PLAN ALTERNATIVES
SEVERAL BUSINESS PLAN ALTERNATIVES WERE IDENTIFIED, ANALYZED, and compared based
on their ability to improve the financial performance of Denton Municipal Airport. The
ultimate goal of the alternatives' analysis for the Airport is to provide the City with
sufficient information to make informed decisions concerning airport operating practices and
capital improvement spending. In addition, the long-term financial viability of the Airport is a
significant part of this analysis. Thus, any increases in operating revenues that result from a
selected plan can then be used to cover the Airport's operating expenses, pay for portions of the
local share of capital development projects, finance additional terminal services, or provide for
other needs at the Airport. In order to present these alternatives, this section is organized to
include the following:
Industry Trends Impacting Denton Airport Analysis
Area-wide Factors Supporting Growth and Development of the Airport
Obstacles to Airport Performance and Goal Attainment
Revenue Enhancement
Impact of Revenue Enhancement Strategies on Potential Demand
5.1 Industry Trends Impacting Denton Airport Analysis
There are at least three industry trends that impact the analysis and recommendations of
this business plan:
Growth in Airport Operations
Cost of New Hangar Development
Cost of Fuel
Airport Operational Count Estimates
In total, 146,000 annual aircraft operations were conducted at DTO in 2009. These
annual ATCT counts do not include activity that takes place when the tower is not operational.
With training operations now taking place 24 hours per day, it can be expected that the Airport
will have as much as 30,000 more actual operations than those recorded by the ATCT. This is
significantly higher than the 2009 TAF forecast of 119,081 and exceeds both the Airport Master
Plan forecast for 2011, and the FAA forecast for 2014.
Impacts of high operational levels to this plan are significant in that the business
strategies must be adapted to this new reality. New thinking spurred by the higher operational
estimates includes the following strategic considerations:
0 With operations approaching 200,000 annually, there is a need to consider a
parallel runway for capacity purposes and to segregate itinerant from training
operations.
0 Hours of operation for the FAA Air Traffic Control Tower were recently
expanded from the former 12-hour shift (8:00 a.m. to 8:00 p.m.) to the expanded
~Mr R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 38
Denton Municipal Airport
Business Plan October 2010
16-hour shift (6:00 a.m. to 10:00 p.m.) in the FY 2010 budget and should take
effect this year.
Cost of New Hangar Development
Between 2007 and 2009, hangar development costs have soared with increases in the
price of steel and energy. Reports of T-hangars costing as much as $100,000 per individual unit
(including site preparation) are becoming common. When these costs are translated into 20-year
payoffs toward debt service, monthly rentals of more than $650 must be charged. Such
rents/prices are approaching the market ceiling for hangar rentals. As mentioned later in this
plan, the financial feasibility of hangar construction may require the use of grant money in the
public sector or private developers using land leases and pre-engineered buildings. Options for
these development possibilities are outlined in the pro formas presented in Section 6.
Cost of Fuel
A spike in the cost of Avgas and Jet A fuel in 2008 created a significant downturn in the
use of general aviation aircraft. Avgas prices in the $5 per gallon range and Jet A prices
reaching as high as $7 per gallon at some airports were record breaking at the time. In this
regard, it was estimated that general aviation activity was down almost 30 percent in some parts
of the nation. In terms of operations, the hardest hit were the personal and training operations,
where the cost of flying typically exceeded disposable income for those activities. The least
impacted segment of aircraft operations has been corporate and business flying. Much of this
activity was maintained through the high fuel price period because businesses can typically pass
their air transportation costs along to their customers. Fuel prices per gallon have abated since
2008 and at Denton Airport are $3.68 for self-serve Avgas, $5.24 for full service Avgas, and
$4.55 for full service Jet A (October 2009). For the future, prices are likely to increase. With
those increases comes the possibility of reductions in operational demand.
5.2 Area-wide Factors Supporting Growth and Development of the Airport
There are a number of factors that now support the potential growth and development of
Denton Airport. These factors are briefly described below.
Airport Location
Regionally, Denton Airport is located north of Dallas and Fort Worth, at the intersection
of Interstate Highways 35E and 35W. From city center to city center, Denton is 39 miles from
Dallas, and 39 miles from Fort Worth. The population growth in the D/FW metro area is moving
north and will likely increase the demand for aviation services in Denton. Locally, Denton
Airport is located adjacent to a developing industrial area west of the City. The Airport's
location is considered a strength, given that it has good access to two Interstate Highways and it
is far removed from residential housing and other development encroachment. The Airport is
located close enough to both Dallas and Fort Worth to serve these communities, yet it is far
enough away from D/FW International Airport to have favorable airspace within the Class B
airspace environment.
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 39
Denton Municipal Airport
Business Plan October 2010
Gas Well Revenue Estimates
Gas well revenue estimates are subject to change, depending upon market prices and the
production life of the gas wells on the Airport property. From the Baseline Forecast, it was
projected that gas well revenue of $16.6 million would accrue between now and FY 2017.
Annual revenues are predicted to grow to a maximum of $2.6 million in 2011 and slowly decline
to $1.9 million by 2017. The production curve for these wells is said to decline throughout their
20+ year lifespan. If forecasts of revenues are accurate, the City can look to invest its gas well
revenues in capital projects that will provide future revenue streams or needed infrastructure.
This source of income is unusual at airports and will significantly benefit any projected growth at
DTO.
Growth Trends in City of Denton
Aviation industry forecasts have linked the growth in economic activity and
demographics to the demand for air transportation services. Over the course of the last 10 years,
the Dallas/Fort Worth (D/FW) Metropolitan Statistical Area (MSA) has experienced a 29 percent
growth in population. In Denton, the growth has been even more pronounced, with a positive
change in population of 48 percent since the year 2000. Similarly, employment growth in the
D/FW MSA has totaled 14 percent since 2000. In the same period, Denton area employment has
grown 42 percent. By all measures, the area is out-performing population and employment
growth statistics for the Dallas/Fort Worth MSA and State of Texas as a whole.
The growth in per capita personal income (PCPI) in the Denton area has lagged slightly
behind the D/FW MSA, growing 19 percent since the year 2000, as compared to 22 percent for
the D/FW MSA. Even so, these numbers show a significant and consistent set of growth trends
for Denton, relative to its market area. It would seem that there is linkage between the demand
for air transportation services and economic and demographic trends, as the actual growth
experienced at the Denton Airport from the year 2000 to the present has also been dramatic.
Table 16 lists the major employers in Denton, showing the spectrum of large government,
educational, and business organizations in the area.
I Table 16 - Major Employers in the Denton Area
Employer
Estimated Number of Employees
University of North Texas (Education)
7,762
Denton Independent School District (Education)
1948
Frito-Lay Inc. (Manufacturing)
2.050
Texas Woman's University. Denton (Education)
1.586
Denton State School. Denton (MHMR Facility)
1,500
Denton County (County Government)
1,458
Peterbilt Motors, Denton (Diesel Trnchs)
1,404
Centex Home Equity Phase I & II (Real Estate)
1,400
City of Denton (Municipality)
1,300
EMC Mortgage Corp. (Finance)
1,000
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 40
Denton Municipal Airport
Business Plan October 2010
Table 16 - Major Employers in the Denton Area
Employer
Estimated Number of Employees
Wal-Mart (Distribution Center)
900
Denton Regional Medical Center (Health Care)
800
Thermadyne Holding Corp. (Manufacturing)
751
Presbyterian Hospital of Denton (Health Care)
750
American Building Control (Distribution Center)
710
Trinity Medical Center (Health Care)
700
Household Automotive Finance (Finance)
680
Source: ww .dentoncounty.com/dept/main.asp
Denton Plans for Future Development
The Denton Comprehensive Plan 1999-2020 was developed in 1999 to guide the next 20
years of development in the City of Denton. It sets the framework for the organization of new
development and land uses envisioned by the residents. The Plan emphasizes essential services
such as clean water, good roads, and efficient wastewater and stormwater systems. Life issues
considered important to the residents include urban design, environmental quality, and parks.
The Plan was to be updated every five years in the form of ordinances.
The primary goal of the Plan is to "Preserve and retain the qualities that make Denton the
unique and prosperous place it is today and to help it develop into an even better city in the
future." The Plan outlines policies for public involvement, land use, urban design, street
development, historic preservation, environmental management, economic diversification,
housing, schools, and transportation, waste and water services. An implementation plan guides
the City by using tools and timeframes to implement sections of the Plan and how to track the
progress.
The Plan's goal for the Airport is to "Provide aviation facilities that will integrate with
the various coordinated transportation systems." Strategies include:
0 The Airport shall be a key component in the multi-modal transportation system.
The Airport is effectively located to optimize the movement of goods and services
throughout the Metroplex.
0 Maintain and improve Airport infrastructure to promote additional development
through high-quality service and to reduce costly reconstruction.
0 Coordinate with the FAA and State Aviation Division to determine likely funding
of proposed airport improvements. Get in queue for runway extension and
terminal expansion/reconstruction.
0 Plan active property acquisition to avoid inflated real estate costs. Investigate joint
use of low-impact land usage (open space, nature areas, maintenance depots, etc.).
0 Maintain a development pattern consistent with the airport master plan. Work
with neighboring and affected property owners to ensure airport consolidated
land-use districts (ACLUD) are effective. Maintain integrity of Airport height
hazard district and ACLUD.
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 41
Denton Municipal Airport
Business Plan October 2010
0 Investigate public-private partnership agreements to assist with infrastructure and
facility development.
0 Establish a formal western entranceway into the Airport when Loop 288 is
completed to the west side of the airport. Design transportation routes to
maximize truck, auto, and aircraft mobility.
0 Since the Airport is located in the industrial center, it will support activities in the
movement of goods and services of city businesses.
The City has implemented some of these strategies, but many are still in the works and those are
addressed in this Business Plan.
Local and State Development Incentives & Programs
There are a number of incentives for business development and expansion in the Denton
area. These incentives have been developed to spur growth by reducing the costs of expanding
or locating to Denton. In this regard, there are a number of tax abatement programs, electric
utility cost reductions, infrastructure financing, grants, reduced educational costs, and other
benefits for growing companies. The purpose of these programs is to expand economic
development in the Denton area, bringing new jobs and a higher standard of living. A side
benefit of this economic growth is greater demand for aviation services at the Airport. Appendix
D presents a more detailed listing of these state and local incentive programs.
Summary of Factors Supporting Growth and Development of the Airport
The factors discussed in this section point toward a highly positive environment for
continued growth and development in Denton which translate into opportunities for growth at
Denton Airport. In fact, growth and development trends in the Dallas/Fort Worth Region, and
Denton in particular, are encouraging, as evidenced by growth in population, employment, and
income. Additionally, the City has identified the Airport as offering excellent potential for
business development and has committed significant financial resources in recent years. All of
these factors support a future of growth and development at the Airport.
5.3 Obstacles to Airport Performance and Goal Attainment
In addition to factors that support growth and development of Denton Airport, there are a
number of factors that present challenges to such growth. The following briefly identifies these
obstacles.
Competition with Other North Central Texas Airports: The future success of
Denton Airport must be considered in light of other airports in the Dallas/Fort
Worth metro area that compete for the local market of general aviation activity.
In particular, nearby airports such as Alliance, Addison, and Collin County all are
competing for corporate and business jet aircraft. These airports alone account
for nearly 860 based aircraft, of which, 235 are jets. DTO success in competing
for based aircraft and in filling new or existing hangar space with business and
corporate client is enhanced by the Airport making a compelling value
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 42
Denton Municipal Airport
Business Plan
October 2010
proposition to the local market to capture activity that may have options at other
regional airports.
Ground Access to the West Side of the Airport: Once the runway extension is
completed, convenient ground access to the west side of the Airport will no longer
be available. Development of that Airport property and surrounding land will
require adequate access, such as the proposed Loop 288. Without this access,
significant development cannot be expected in the near term.
Land Saturation: Other development around the Airport may threaten DTO's
expansion capability or operational flexibility. There are floodplain issues around
the Airport and the east side has only about 25 percent more expansion available
on the landside area. Without adequate land for runway expansion, the Airport is
limited in what types of aircraft can be served in the future. Similarly, without
adequate landside area, the Airport's operational activity will cease to grow,
simply because users have no place to park or store their aircraft at the Airport.
Class B Airspace: Currently the Class B Airspace surrounding the Dallas/Fort
Worth area begins at 4,000 feet above DTO. (Class B airspace resembles an
upside down wedding cake.) If greater airspace restrictions are placed on the
Airport in the future, it may result in reduced activity levels.
Other Linutations: As listed in the SWOT analysis, there are a number of other
limitations or threats to the continued growth of the Airport, including, but not
limited to:
- Airport Security
- Tower Personnel Workload
- Municipal Site Plan Approval Requirements and Associated Delays
- Potential Conflict Between Training and Corporate Aircraft Operations
- Potential Future Reductions in Flight Training Contracts
- General Aviation User Fees in National Legislation
- Another Significant Downturn in the National Economy
- Airfield Capacity Constraints
- Lack of Utilities on the West Side
- Cole Ranch Residential Development South of DTO
All of these factors have the capability to constrain growth and development of
the Airport to its fullest potential.
5.4 Revenue Enhancement
Considering the positive factors and obstacles discussed in previous sections along with
current activity levels and financial conditions at Denton Airport, there are a number of ways to
increase net revenues and improve the long-term financial viability of the Airport. Generally,
such strategies can be understood as those which either increase revenues or cut costs. In this
section, revenue enhancement strategies are presented that focus on either increasing aviation
activity or increasing rental fees. Elements of these strategies include the following:
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 43
Denton Municipal Airport
Business Plan
October 2010
Extension of Runway 17-35: The extension of Runway 17-35 to a length of
7,000 feet is an ongoing project that will help the Airport accommodate regional
aviation demand. This extended runway length will provide the ability to attract
potential specialty air cargo activity, larger business jets for
Maintenance/Repair/Overhaul (MRO) activities, and more FAR Part 135 charter
activities associated with athletics or vacation travel. During hot summer days,
the added 1,000 feet of runway will extend flight stage lengths for some aircraft
and permit greater payloads for others. By increasing the size of aircraft that can
use the Airport, additional revenues can be generated.
Addition (?I 'a Parallel Runway: The potential addition of a parallel runway on the
west side of the Airport would increase the capacity for Denton Airport and
permit the separation of training activity from corporate and other aircraft
operations. By increasing the capacity, DTO would gain potential to attract more
aircraft activity. These activity gains are usually accompanied by increases in
fuel sales, aircraft maintenance work, and aircraft storage fees. There are two side
benefits of this additional runway. One is an increased margin of safety. The
other benefit is a reduction in the financial impact to tenants during scheduled
runway maintenance.
0 Attraction of Corporate Aviation: The attraction of new corporate aviation
activities, including transient operations and based corporate tenants at Denton,
can be linked to the provision of corporate and business amenities at the Airport.
This would include upscale FBO service, longer runway length, growing business
activity in the Denton area, and attractive fee schedules. When successful, new
businesses create significant revenue enhancement for airport sponsors. Possible
jet tenants could include those currently basing at other regional airports, new jet
owners, or companies that manage fractional ownership of business jets.
For an average 400-hour flight year, a medium corporate jet can consume
between 85,000 and 100,000 gallons of jet fuel (for a Learjet 60 or Citation
Excel). Large business jets can use between 180,000 and 200,000 gallons of jet
fuel (Gulfstream 550 and Global Express). If only half of this fuel is purchased at
the Denton Airport, it could still increase fuel flowage revenues significantly.
These benefits do not include the potential aircraft storage fees, maintenance
expenditures, or jobs created by new flight crews and maintenance personnel.
• Hangar Development: The attraction of new business aviation users and based
corporate flight operations to the Airport can be accelerated through the
development of aircraft storage hangars, which also provide additional sources of
revenue for the City. Currently, there are 134 T-hangar bays that encompass
155,000 square feet and 38 conventional and box hangars with a total storage
capacity of approximately 568,000 square feet. The paved aircraft parking apron
has 75 tie-downs for itinerant and based aircraft and is approximately 30,000
square yards. Because of significant recent price inflation, conventional hangars
may be more cost-effective to develop because of their flexibility to accommodate
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 44
Denton Municipal Airport
Business Plan
October 2010
small aircraft in the near term, and larger aircraft as business/corporate aviation
activity increases. Conversely, T-hangars are limited in their ability to
accommodate only smaller aircraft. Different methods of funding hangar
development are presented in Section 6 of this plan.
Airport Branding: Branding is the process of developing a unique identity for a
product or service in a given market, which can be defined as both the geographic
area and the conceptual space occupied by service providers in competition for
customers shopping for such services. In this regard, the development of a unique
selling point and identity in the market for Denton Airport can be beneficial to the
future growth of the Airport. Currently, the Airport brand is not well defined. In
the past five years, the Airport has outgrown its former image of being a relatively
inactive municipal airport. Instead, the current level of corporate aviation and
pilot training activity at the Airport indicate a change in the image and direction
of the facility. From a branding standpoint, this may include a name change for
the Airport, new logo, upgraded website, new Airport entranceway, or marketing
campaign.
New or Improved Terminal Services, Amenities, and Activities: This business
plan examined a number of existing terminal services, airport amenities, and
activities. Services and accompanying facilities that have been suggested include:
- Airport restaurant,
- Public transportation to and from the Airport and the City,
- On-Airport satellite car rental station,
- Terminal building expansion, with an Automated Teller Machine (ATM)
within the terminal building
- Convenient hotel near Airport property,
- U.S. Customs facilities and services that may attract international flights
from Mexico and other countries,
Also, if corporate activities continue to increase, greater airfield security is needed
to assure aircraft owners that their property is safe against vandalism or theft. The
Airport could also benefit from a formal entrance that uses a new branded logo,
colors, etc., to project the upscale image of the facility. It functions as the
gateway to the community for air travelers who use Denton Airport and often
helps form their first impressions of the area. As such, it conveys much about the
professionalism and image of the City itself.
Maintain/Increase Training Activity: Because the Airport may become
committed to significant training activity (increased staffing of the Tower, FBO
commitments for aircraft, hangar space, mechanics, etc.), there is a potential
downside to the Airport should future training contracts be cancelled or lost to a
competing airport. For this reason, a diversification of flight training clients may
be needed to ensure that future activity levels meet expectations. As such, the
encouragement of the North Texas University Provost and faculty to include
flight training in their new aviation program is warranted.
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 45
Denton Municipal Airport
Business Plan
October 2010
0 Attraction of Specialty FBO(s): The City should be prepared to deal with
requests and offers from large specialty FBOs that desire to locate at Denton
Municipal Airport. Such companies could include Maintenance/Repair/Overhaul
(MRO) operations, specialty engine repair, aircraft manufacturing, or other
similar types of operation. Denton is a location where unexpected business
ventures can materialize on relatively short notice. Because the Dallas/Fort
Worth area is a major economic activity center, aviation businesses desiring to
locate in the metro area have a variety of airports from which to choose. As a
result, DTO has a significant target market of aviation related business and
industry to pursue. There is no accurate method that can predict when
opportunities of any size will occur. However, the City should be prepared to
take advantage of such proposals. The Potential locations on the east and west
sides of the Airport exist for such expansion, however, west side options were not
included as near term opportunities.
Gas Well Revenues: The forecast of revenues from gas wells on the Airport will
add to the Airport's bottom line. However, the spending management for these
revenues will be important in helping the Airport to develop revenue producing
facilities or needed infrastructure. These funds can also be used strategically to
reduce debt and its associated interest expense. FAA Order 5190.613 states that
"A sponsor may use its airport revenue to repay funds it contributed to the airport
from general accounts or to repay loans from the general account to the airport
provided the sponsor makes its request for reimbursement within six (6) years of
the date on which it made the contribution (See 49 U.S.C. § 47107(1))." Thus,
historical revenue shortfalls can be recovered from gas well revenues. This may
or may not be the best use of these revenues from a strategic investment
standpoint.
Rates & Charges Analysis: One method to potentially increase revenues is to
examine rates and charges at the Airport and adjust those to be competitive with
the regional market prices. For Denton, the lease rates may be underpriced and
could over a period of years be increased to reflect market values. The schedule
of fees will be examined to see which ones are impacted by the City and which
ones are exclusively controlled by the FBOs. Those that are City controlled can
be changed as needed to increase competitiveness or improve revenues. Differing
pricing strategies will have a varying influence on overall revenues to the Airport.
West Side Aviation and Non-Aviation Property Development: At Denton
Airport, there are approximately 200 acres of open land on the west side of the
existing runway with an additional 150 acres of land that could be acquired for
development. Of these, approximately 50+ acres are available for potential non-
aviation development. Figure 5, presented in Section 3, shows an ultimate
potential development scheme for the west side. Airport property that will not be
needed for aeronautical purposes can be developed for non-aviation uses to
increase revenue production at the Airport. To obtain land releases from the
FAA, the Airport must agree to devote all revenues from that land to the operation
or capital improvement of the Airport. Significant development of the Airport's
w R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. 46
Denton Municipal Airport
Business Plan October 2010
west side was not assumed until after the 2018 timeframe. Thus, revenue
production from this source was limited to the east side development for the
planning period. For the east side, there is roughly 35 acres remaining of
undeveloped property that can be used for either aviation or non-aviation
development.
5.5 Impact of Revenue Enhancement Strategies on Potential Demand
The first step in determining the impacts of the revenue enhancement strategies is to
predict the change in aviation demand that would occur if each strategy were implemented.
Table 17 presents a listing of the potential demand changes along with the assumptions used in
estimating demand changes. As shown, if all activity-generating strategies are undertaken,
aviation demand could be anticipated to grow by 80 based aircraft and 50,400 aircraft operations
by the year 2018.
Some of the strategies listed in Table 17 work together and cannot be adequately
separated, such as the effects of branding versus other marketing efforts for the attraction of
corporate aviation or more training activity. Similarly, the addition of a parallel runway would
enhance aircraft training operations and safety by providing an alternate runway for their use.
For this reason, some categories were cross-referenced in the demand estimation process. In
addition, there are a number of activities that may impact revenues, but will not impact overall
aviation activity levels. This would include strategies such as Gas Well revenues, Non-aviation
Property Development, and the new Terminal Services and Amenities described in this Plan.
Table 17 - Impact of Revenue Enhancement Strategies on Potential Demand
Strategy-
Assumptions
Based Aircraft
Operations
Current
Source: FAA 5010, March 2009
179
180,000
Runway 17-35 Extension
Permits use by larger corporate aircraft.
Assume attraction of itinerant jets.
2
2%
New Parallel Runway
Permits up to 50,000 more operations
See Training Activit
(primarily training).
-
Attraction of Corporate Aviation
Marketing corporate sectors through
branding, added capacity. and services.
20
4%
Assume 200 operations/based business
aircraft plus itinerant operations.
Training Activity-
University flight program added to
expanded international and domestic
6
10%
student pilot training. Assume 3.000
operations per training aircraft annually.
Hangar Development
Increases based aircraft capacity in
concert w/new parallel rum-ay. Assume
35
6%
300 operations/based aircraft.
Airport Branding
Marketing efforts to promote Airport to
See Corporate Aviation and
targeted segments of demand
Training Activity
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Table 17 - Impact of Revenue Enhancement Strategies on Potential Demand
Strateg}-
Assumptions
Based Aircraft
Operations
New Terininal Seivices
U. S. Customs may attract flights from
Mexico. Other amenities may increase
N/A
<1%
value-added experience but not assumed
to increase based aircraft
Additional Specialty FBOs
For post-2018, new. large specially FBOs
were assumed to locate on the west side
N/A
N/A
of the Airport. No activity gains were
assumed for pro formas.
Gas Well Revenues
Should increase overall revenues but not
impact aviation activity.
N/A
N/A
Rates & Charges
Pricing below market may increase
activity; pricing above market may
Assume Zero Net
decrease activity.
Non-Aviation Property Development
Should increase overall revenues but not
impact aviation activity. West side
N/A
N/A
development revenues not assumed until
post-2018 period.
Additional Growth From Plan
Includes all strategies
65
22%
Total Activity - Year 2018
244 1
219,600
As mentioned in Section 3, Airport Management has a higher number of based aircraft listed in
their records. It is believed that these will eventually show up in FAA 5010 reports as new
inspections are undertaken. Importantly for this business plan, the actual number of existing
based aircraft will not impact future revenue projections because only the growth in based
aircraft (65) is used in the projection methodology.
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6. RECOMMENDED PLAN
THE RECOMMENDED BUSINESS PLAN FOR DENTON AIRPORT focuses on methods that the
City of Denton can use to maximize future growth opportunities for the Airport. As
mentioned in Section 1 of this plan, the Airport has significant opportunities to develop
future revenue. These opportunities stem from the physical expansion of the Airport, coupled
with the aviation demand growth in the greater Dallas metro area. This business plan outlines
the possible steps the City can take to improve revenues by expanding its ground leases or
developing revenue producing facilities with gas well revenue. The business plan also suggests a
future change from general fund to enterprise fund status for the Airport. The sections that
follow summarize the recommended Business Plan for the Airport.
6.1 Recommended Management and Policy Actions
The first steps toward managing the growth at the Airport may include accounting
changes for the Airport to better track revenues and expenses in the future. As the Airport moves
from a General Fund supported department in the City to a revenue producing Enterprise Fund,
the FAA will require that all revenues from the Airport be accounted-for and spent on Airport
related activities. Recommended actions to account for these net revenues include the following:
Establishment of an Enterprise Fund
Enterprise funds are used to account for the acquisition, operation and maintenance of
governmental facilities and services that are entirely or predominantly self-supporting by user
charges. The operations of enterprise funds are accounted for in such a manner as to show a
profit or loss similar to comparable private enterprises. Enterprise funds are often created as a
means to ensure that tax dollars are not required to provide annual operating cost or future capital
improvements of the airport. Communities that accept this general law statute do so with the
intent that user charges will be set at appropriate levels to cover the activity's operating cost and
capital improvements. The theory behind this practice is that the users of services should pay for
all costs, as they create the specific demand for service.
Enterprise funds are no longer solely used to account for governmental activities that are
like commercial activities. As defined by GASB 34, enterprise funds may be used to report any
activity for which a fee is charged to external users for goods and services. The need for an
enterprise fund may be triggered if any one of the following criteria is met:
• The activity is financed with debt that is secured solely by the revenues from fees,
charges or other revenue from the activity. Debt that is secured by revenues from fees,
charges and other revenue from the activity still has the full faith and credit of a related
primary government or component unit, even if that government is not expected to make
any payments. Debt service is not payable solely from fees and charges of the activity,
but should be scheduled as payable "solely" from the revenues of the activity.
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• Laws or regulations require that the activity's costs of providing services, including
capital costs (such as depreciation or debt service), be recovered with fees and charges,
rather than with taxes or similar revenues.
• The pricing policies of the activity establish fees and charges designed to recover its
costs, including capital costs.
State unemployment compensation funds, turnpike authorities, lotteries, airports, and
public colleges and universities are examples of activities that may be accounted for as enterprise
funds. Once it is determined that an activity should be accounted for in an enterprise fund, a
separate fund should be established for each distinct service provided by the governmental unit.
Separate accounting entities facilitate the measurement of costs incurred to deliver each service.
Segment information disclosure may also be required for enterprise funds.
Some communities have actually established enterprise fund operations that are not self-
supporting and are supported by taxes to a certain degree. This mainly happens when fees are set
too low and revenues taken in do not cover operating expenses and/or capital improvements.
Conversely, some communities opt not to establish enterprise funds and allow any surplus
generated to be added to its general fund surplus and used to fund other operations not associated
with the activity. This practice is not permitted at airports that have grant assurance covenants
with the FAA because of its ban on revenue diversion.
If the City decides to operate the Airport as an enterprise fund a slightly revised
accounting system would be used for Airport revenues and expenditures. By law, an
"enterprise" fund is self-sustaining, meaning that all expenditures must be directly related to the
operation, maintenance, repair, and management of the City's Airport. Revenues to the Airport
enterprise fund would be kept separate from other municipal funds and uses and cannot be co-
mingled with funds for any other activities.
FAA Policy on Revenue Diversion
An overriding concern that would cause the City of Denton to consider the establishment
of an Enterprise Fund for the Airport involves the FAA policy on revenue diversion. In this
regard, airports receiving Federal Assistance must restrict their use of airport revenue for strictly
prescribed airport purposes (Title 49 U.S. Code 47107(b), 47133). When airport revenue of a
federally assisted airport is used for other than airport capital costs and operations, with few
exceptions, it is generally considered an unlawful airport revenue diversion. The FAA issued a
policy statement on this issue, which went into effect February 16, 1999. According to the
policy, any airport that receives Federal financial assistance must sign assurances, as part of the
Grant Agreement, that the revenue generated by the operator will be used only for purposes
related to the airport. The assurance also prohibits the diversion of airport revenue to non-airport
use. The policy statement tends to offer general guidance, with only limited discussion of the
application of the airport revenue-use restriction to specific situations.
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The FAA relies upon several means for monitoring compliance with its revenue use
requirements and interpreting those requirements:
• The sponsor's annual auditing report on revenue use required by statute.
• Single audit reports as authorized.
• Investigations prompted by third-party complaints pursuant to 14 CFR, Part 16.
• Department of Transportation, Office of Inspector General Audits
• Publicly available FAA Chief Counsel and DOT General Counsel Opinions.
• Guidance letters issued by TxDOT Aviation Department Staff based on specific fact
situations presented by operators.
information on the application of the airport revenue-use requirements to a specific situation is
developed through these monitoring activities. Thus, information pertaining to revenue diversion
cannot be found at a central location, but is contained in all of the above sources. It is important
to remember that revenue diversion is typically "alleged" and not an obvious finding in most
cases. Cases such as these require in-depth investigations conducted by FAA and, when required
or requested, by the Office of Inspector General (OIG) within the Department of Transportation.
The origin of this policy was with airlines that believed it was unfair to charge them high
rates that created surplus revenues which were then spent off the airport on non-aviation projects.
A lawsuit at Los Angeles International Airport helped define cost structures that were permitted
and those that were not. For example, an airport sponsor cannot give excess land to its own
parks department for athletic fields. Rather, market rates have to be charged and applied to
airport revenues.
For Denton Airport, the concept of revenue diversion is important, since there is likely to
be a significant surplus net revenue stream for the long term future. This money can be
reinvested in the Airport's infrastructure. For example, revenue producing hangars can be
reconstructed when they reach the end of their useful life. Other projects, as needed, could be
funded from this surplus as well.
Recommended Action for Denton Airport
For Denton Airport, it is recommended that:
The City of Denton should set up an Enterprise Fund accounting
structure for the Airport after FY 2009-2010.
This accounting change will require that the City track all revenues and expenses associated with
the Airport. In this regard, the indirect allocation that the Airport pays will be augmented by the
5.0 percent Franchise Fee plus a 3.5 percent Return On Investment fee that is paid by other City
enterprise fund activities such as the Electric, Water, Waste Water, and Solid Waste funds. The
Airport would be operated the same as these enterprise funds by virtue of its ability to produce
more operating revenue than operating expenses.
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To accomplish this change, several preparatory steps must be taken. These include, but
are not limited to:
• Treating Range Resources Surface Lease Revenue as an operating revenue similar to
other on-Airport lease revenues.
• Identifying the indirect allocation expense that the Airport pays each year, based in part
on the Maximus Report.
• Using Gas Well royalty revenues (not related to surface leases) as a capital investment
pool, similar to how it is being used today, except for the surface lease revenue portion.
• Preparing to pay to the City and reserving a 5.0 percent Franchise Fee plus a 3.5 percent
Return On Investment fee based on gross revenues of the Airport.
As an enterprise fund, the City would benefit from development of additional revenues from
ground leases or construction and ownership of hangars or other aviation related facilities. This
would include hangars that reverted ownership to the City by virtue of reversion clauses in lease
agreements. As part of the transition to an enterprise fund it is recommended that:
The City of Denton shoultl identify an Advisory Board or Commission to
provide policy reconamentlations for the Enterprise Fund
Reversion Clauses
Reversion clauses have become normal in the aviation industry for a number of reasons.
These include maximizing future revenue streams and maintaining a level of control over the
development and maintenance of facilities on the airport. Each airport has its own lease language
and different approaches to the issue. At Denton, the current lease language supports the
reversion of property improvements to the City. From our analysis, it can be shown that the
Airport will have greater financial production with the reversion clauses than without. Even if
there are individual cases where a negotiated lease term increase or other modification that
postpones the actual property reversion is reached, the prime motivation is because of the
reversion clause. Thus, the reversion clause is a valuable part of the Airport's future revenue
stream and should remain in place. Therefore, it is recommended that:
The City of Denton shoultl retain its interest in leases that specify a reversion
of ownership of leasehold improvements to the City.
Once a property reverts to City ownership, it is incumbent upon the City to seek rental
rates as close to market value as can be negotiated. It is understood that this may be difficult
with tenants that have constructed their hangars and now must pay more for them after 30 years
of leases. However, the value of the hangar or other property is that it adjoins the Airport
runway system. Thus, its location is functional to its value. Likewise, extending the lease
should have some value above prevailing ground lease rates.
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Staffing
As the Airport continues to grow and attract more activity, the staffing should also
expand. Currently, four full time staff operate the Airport. This covers business hours, but after-
hours are difficult to fill, since the current staff is stretched so far. It is recommended that an
additional staff position be created that would assist with virtually all aspects of airport operation
and management. This addition will increase personnel costs for the Airport, but will benefit the
management team over the long run, by reducing the amount of overtime work and other burnout
inducing factors. Therefore, it is recommended that:
The City of Denton should increase Airport staffing to include at least one
additional staff resource.
This staffing increase should occur in the near term - either FY 2010-2011 or FY 2011-2012.
Capital Development and Revenue Producing Projects
From a policy standpoint, it is recommended that the gas well revenue continue to be
reserved for capital development purposes or specific programs. These purposes should include
the payment of local share capital costs for Airport improvement projects as well as investment
in revenue-producing projects. Non-revenue producing projects include matching local share
funding for runway and taxiway projects and the like. Revenue-producing projects, on the other
hand, involve hangar and other building development that will produce long-term revenue
streams for the Airport. In Texas and around the nation, this is a very common practice, as
airports own their own hangars, fuel farms, etc. Examples in Texas where the airport owns some
or all of its hangars include: Sugar Land Regional, Taylor Municipal, Stephenville Municipal,
New Braunfels Municipal, North Texas Regional, and Kimble County, to name a few.
Therefore, it is recommended that:
The City of Denton should consider investing in revenue producing
development to ensure future financial self-sufficiency.
Retention of Existing Business/Corporate Clientele
Existing business and corporate clients represent a large part of Airport activities, as well
as sources of revenues at Denton Airport. Additionally, each contributes jobs to the local
economy. Looking forward, it is important for the Airport to retain these operators as a baseline
to preserve current revenue streams. The retention of existing clientele requires care and
communication, particularly in this difficult economic environment. Today, there are no regular
meetings held with existing tenants. Airport management indicated that the Airport has hosted a
hamburger cook-out in the past to communicate the construction phasing plan for the runway
construction and that a portion of the Airport's website will be devoted to tenant feedback. In
striving to meet and exceed customer expectations, the City of Denton should consider
expanding its communications with Airport tenants. Therefore, it is recommended that:
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The City of Denton should meet quarterly with existing clients and tenants
to solicit feedback on economic and service issues facing tenants.
Such quarterly meetings with tenants should seek to learn of future plans for operations at the
Airport or changes to their corporate flight operations that may affect the Airport. In this way,
the City of Denton will be better positioned to provide assistance where appropriate for
expansions, or take steps to address any negative issues that could decrease use of the facility by
these clients.
6.2 Revenue Enhancement Recommendations
Revenue enhancement options for Denton Airport are based upon the Plan's
recommended business response to aviation demand growth in the region. The sections that
follow describe how a number of options might improve revenues for the Airport. The projected
levels of enhanced revenues, which are presented in tables at the end of this section, reflect these
and other specific initiatives recommended by this Plan.
Airport Branding
The current Denton Airport brand has been defined by aviation business that has been
"home grown" at the Airport. In the past five years, the Airport has evolved from its former
image of being a municipal airport focused on service to general aviation pilots for recreational
and personal flying. Instead, the current level of corporate aviation and pilot training activity at
the Airport indicate a change in the image and direction of the facility. From a branding
standpoint, this may include the need for a name change for the Airport, new logo, upgraded
website, new Airport entranceway, or marketing campaign. Ideally, a branding process should
precede marketing and promotional campaigns so that materials and communications sent can
benefit from the new Airport identity.
The focus of Airport branding for DTO should be toward business aviation, education,
and training. The business and corporate aviation focus is paramount in improving the revenue
picture for the long term. However, pilot training has also become a very valuable activity
source for the Airport. With UNT becoming the focal point of aviation education in the region,
there is a natural bridge toward pilot training at the Airport. The term "education" is viewed
favorably by most people, whereas the phrase "pilot training" does not convey the same image.
Negatives associated with pilot training may include a perception of noise generation, high
activity, and possibly safety concerns. Thus, crafting the Airport brand must include
consideration of potential upsides to the mix of activities at the Airport. This includes the
spreading of revenue generation to several different activities rather than relying on one segment
of demand.
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While this business plan is not commissioned to specify a new Airport brand, suggestions
toward this end are included. In this regard, potential name changes and taglines are suggested
as follows:
• Denton Regional Airport
• Denton Regional Jetport
• Dallas/Fort Worth Regional Airport
• Dallas/Fort Worth Executive Airport
The terms "Jetport" and "Executive" imply a primary business use. This may be too strong for
the Airport due to its current role in pilot training. However, the concept of geography should be
included in the name, along with the size of the facility (regional versus municipal), and its target
clientele.
Taglines for the Airport can build upon the brand image and help to convey more than the
name implies. The existing tagline "North Texas Airport of Choice" is serviceable, but lacks
information describing its brand. Thus, for the Airport, the following taglines (among others)
could be considered:
• "D%FW's General Aviation Business Hub "
• "D'FW's Top Business, Education, and Training- Ahport"
• "Where Business, Education, and Training Excel"
These and other concepts should be explored by the City as they change the legal name of the
Airport from Denton Municipal to a name more closely tied to its evolving image and brand.
Therefore, it is recommended that:
The focus of Airport branding for DTO should be toward business,
education, and training.
In addition:
The City of Denton should consider renanung the Airport, once the
branding activities have begun.
This process may require the allocation of resources for the design of a new logo. This can be
accomplished through a design agency by invitation or by using an RFP process.
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Communicating the Brand
Communication of a new Airport brand would utilize the normal channels of media,
including direct mail (to potential corporate users), print media, web page design, and industry
conferences (NBAA, TxDOT/TTI, and AAAE). In addition, the new social media can be used
effectively by airports to promote their brand awareness. In this regard, the use of Facebook,
Twitter and even YouTube is growing as a means for airports to stay in touch with their users.
These sites offer an opportunity for the Airport to connect directly with users on their terms and
in ways these users already connect with other brands. While utilizing such tools is relatively
new to the aviation industry, just a few minutes of searching on these and other sites revealed the
following aviation/airport-related results:
Communities of Enthusiasts Use these Sites: Interestingly, a "Support General
Aviation" page on Facebook has 1,570 members. Exploring this community of
general aviation enthusiasts could uncover insights for generating interest and
activity at Denton Airport.
A Compelling Case: Akron-Canton Airport: Located approximately 15 miles
outside of greater Cleveland, the airport is making tremendous strides utilizing
new media. The airport maintains two blogs, has more than 1,800 followers on
Twitter, and over 10,600 fans on Facebook. A YouTube post of their capital
improvement plan has already had over 4,000 hits.
The use of new media is a means to communicate directly with those who are passionate about
and rely on general aviation for business, training, and recreational travel. Such tools offer a
new opportunity to create "fans" where the Airport can engage directly with users who will
ultimately contribute to the Airport's brand. Therefore, it is recommended that:
The City of Denton should include new media as part of its growth strategy.
To accomplish this, the City of Denton should select the best tools (blog, Facebook, Twitter,
YouTube, etc.), that can help the Airport break into this new territory. Also, there may be an
opportunity to assign this task to existing administrative staff that updates the Airport website.
Social networking as a strategy for communicating the Airport brand requires regular attention,
therefore the media utilized should be updated regularly (at least once per week).
Attraction Corporate/Business Aviation
As the general aviation industry has evolved, most airport owners, sponsors, and
operators throughout the country have recognized that corporate/business aviation provides a
higher source of revenue to airports than recreational general aviation. This is especially the case
given the rising costs of fuel, which business users can more easily pass on to customers. For
Denton Airport, the international contract pilot training business of US Aviation Group has
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similar diversification qualities. Both of these areas of business should be encouraged and
pursued.
One of the benefits of being located in the greater Dallas area is the amount of aviation
demand searching for airport locations. Unlike many general aviation airports in other parts of
the nation, Denton Airport has had a significant number of inquiries from businesses and aircraft
owners desiring to locate at the Airport. Most other general aviation airports have to pursue
marketing leads and generate their own list of potential tenants. Thus, Denton's job of screening
potential tenants is much easier, as Airport Management sifts through the backlog of calls and
requests. Two facility developments will encourage more corporate aviation at Denton Airport:
• The on-going runway extension
• The development of corporate aviation hangars.
In this regard, the expansion of the runway to 7,000 feet, coupled with the Airport's development
of hangar facilities should serve to accommodate inquiries received.
To ensure that sufficient exposure is given to these facility developments, it is
recommended that a formal program announcing these developments is undertaken. In this
regard, detailed contact information for corporate and business aircraft owners can be used for
direct mail marketing. Preliminary queries of data available from Avantexti indicate that there
are over 2,600 multi-engine aircraft registered in the North Central Texas region. Registered
aircraft owners include individuals and corporations, co-owners, and partnerships. Prior to the
completion of expanded facilities, it is recommended that:
The City of Denton should initiate a direct marketing information campaign
targeting business and corporate aviation.
A direct mail campaign is relatively inexpensive and can use the brochure and target
mailing list generated as a part of this business plan. One focus is to identify owners that might
be willing to relocate their aircraft to Denton and work toward securing pre-sale commitments
for new hangars. Additionally, Internet marketing through social networking sites offers an
inexpensive method for engaging prospective tenants and transient activity as the facilities are
developed.
Hangar Development
There is a significant demand for additional hangar space at Denton Airport. This
demand can be accommodated through a variety of methods. The primary methods analyzed in
this analysis include the following:
Avantext, Inc., Aircraft and Airmen CD, 2009
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• Ground Lease with private hangar development
• City development of new hangars
• Combination of City and private hangar development
These methods were used in evaluating potential net revenues to the Airport, based upon demand
forecasts through the year 2018. Estimates of hangar demand were generated from the activity
forecasts. For the period, an estimated need of 165,000 square feet of additional hangar space is
predicted. On the Southeast Taxiway area, it was estimated that a total of 22 acres and 288,000
square feet of developable hangar space is available. Thus, all of the predicted demand will fit
into the land area available on the east side of the runway.
This is not to say that the west side development will not occur before 2018. Rather, it is
to say that the business options evaluated in this plan use only the east side development area in
ascertaining the feasibility of each hangar development option. For this analysis, it was assumed
that the site preparation for the hangar development cost $10 per square foot, while construction
of the hangars themselves cost $40 per square foot. The need for hangar apron or taxiways
resulted in a total cost of near $60 per square foot of finished hangar space. Some projects
would be less expensive and some more. It is recommended that:
The City of Denton should seek the development of hangar space
and other revenue producing buildings as demand warrants.
As activity at Denton Airport increases, requests for hangar space can be taken until there
is enough critical mass to warrant construction of hangars. In some cases, private sector
construction costs are believed to be significantly lower than similar public sector costs. This
cost differential may reduce demand for some portion of City-built hangars. In the event that
private developers of hangars desire to lease property for hangar construction rather than to lease
completed hangar buildings, the City may consider the combination option of ground leases and
City-construction of hangars. In this regard, private construction of hangars with ground leases
should be allowed on a case-by-case basis. However, for City-sponsored development, pre-sale
commitments should be secured prior to the use of public money to prepare land or develop new
hangars or buildings.
Aviation Education and Pilot Training
An important segment of Denton Airport's business is the pilot training that is conducted
by US Aviation Group and others. Operational growth supporting increased Control Tower
hours, increased fuel sales, hangar storage area, and aircraft maintenance activities can be
attributed in large part to the growth in the pilot training business. For the short and intermediate
future, this component of Denton's demand is an integral part of the Airport's overall success. If
the University of North Texas (UNT) adds a flight training program to its aviation curriculum, it
will bring with it the prestige of the State university system to the Airport. While there have been
discussions regarding whether or not training activities hurt the corporate aviation business and
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overall Airport brand, there is no argument about the current significance of the economic impact
(in terms of local jobs and income) of pilot training.
The recommendation of this business plan is to promote and continue the aviation
education and pilot training brand. Working with US Aviation Group and UNT, the City can
develop capacity enhancements such as a new parallel runway, an on-airport student pilot
dormitory, and extended Control Tower hours needed to demonstrate a safe flying environment
for corporate aviation. As such, it is recommended that:
The City of Denton should encourage aviation education and flight
training as a part of its core brand while maintaining general aviation service
for individual pilots.
West Side Development
At Denton Airport, there are approximately 200 acres of open land on the west side of the
existing runway. Figure 7 shows the full aviation development of that area. Shown in the
concept plan is a parallel runway that should be constructed in the near term to relieve training
activity on the main runway. Thus, it is recommended that:
The City of Denton should plan for the development of a parallel runway on
the West Side to accommodate pilot training activity.
In addition to the 100 acres of airport-related development area west of the airfield, the
concept also displays a potential of nearly 100 acres on existing airport property for a potential
on-airport business and industrial park, with instant access to the Airport as well as the Loop 288
highway corridor. Within this area, there are two existing gas wells sites that are approximately
two acres each that provide revenue to the Airport for future development projects.
Development of the west side is believed to be several years away, barring the possibility that a
large tenant requiring significant property desired to locate there in the near term. However, by
developing a helipad in the near term and possibly a parallel runway in the intermediate term on
west side of the existing runway, aviation demand for the west side property may be jumpstarted.
The conventional wisdom suggests that Loop 288 highway will open and encourage
development on that side of the Airport. Timing, then, for revenue development from this
property would likely occur in the post-2018 period. However, this area remains a significant
future potential revenue generator for both aviation and non-aviation sources. Therefore, it is
recommended that:
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The City of Denton should plan for the development of aviation uses the west
side of the Airport as demand warrants.
Non-Aviation Property Development/Acquisition
Currently, non-aviation property at the Airport (primarily on the west side) is used for
both agricultural operations and gas well leases, generating revenue. While the gas well revenue
is essential to the Airport's future growth and development, the agricultural revenue is not
significant. By preserving the footprint of land needed for the gas wells, the remaining non-
aviation property could be reserved for future development. Conversion of this property for
other commercial or light industrial development should wait until demand warrants. With that
demand will be improved surface access, which is critical to non-aviation development purposes.
Thus, the Loop 288 Highway is an important ingredient in the timing for non-aviation property.
Non-aviation development revenues could be significant for the Airport, particularly if
they support the operation of the facility after the depletion of gas well revenues. Therefore, it is
recommended that:
The City of Denton should plan for the development of non-aviation uses on
the west side of the Airport as demand warrants.
Property Acquisition
It is recommended that the City purchase land adjacent to the current Airport boundaries
in order to protect the Airport from incompatible development and in some instances, as a
reserve for future economic development. Figure 6 shows the recommended property
acquisition for the Airport. The concept also displays an 87-acre area to the north of the existing
property and along the planned Loop 288 that could be potentially acquired and used for aviation
or non-aviation use or an extension of both uses. While the exact location of Loop 288 has not
yet been determined, the Airport should keep the acquisition of any property between the
existing property line and the future Loop 288 corridor in their plans as it may provide an
opportunity to extend the business park. The Airport should consider acquiring 29-acres to the
south of the existing property line along Hickory Creek. The business park area concept would
be bounded by the Dry Fork Creek to the north and Hickory Creek to the south if this property
was acquired.
In addition, to the east of the existing airfield, there are two prime locations for
commercial development in conjunction with the Airport. A 6-acre area is available along
Westcourt Road near the existing gas well that is ideally suited to aviation industry use. An
additional 16-acre site along the airport entrance could potentially be acquired and used as a
hotel/restaurant site. Furthermore, there are two locations totaling 47 acres to the north that are
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recommended for acquisition in order to have the recommended development control over the
future Runway Protection Zones for the existing runway and the potential parallel runway.
In total, the Plan suggests the potential acquisition of 185 acres at a number of different
locations adjacent to the Airport. By acquiring the property, the Airport stands to benefit in the
future either through the protection of its on-going aviation activities, or through additional
revenue production resulting from lease revenues. Therefore, it is recommended that:
The City of Denton should acquire land for aviation and non-aviation
activities in support of the Airport mission.
Most of the revenue production capability of this property can be considered as long term or
ultimate phase income.
Foreign Trade Zone
In concert with long-term non-aviation development at the Airport, the Foreign Trade
Zone (FTZ) at Denton Airport should be incorporated into the long-term marketing, advertising,
and promotion of Airport amenities. FTZs are designated sites that serve as autonomous
territories outside the Customs territory of the United States where special customs procedures
apply. Essentially, FTZs function as a "buffer," where goods may be transported and stored
before they are assessed customs duties and certain excise taxes. Goods are not considered
imported until they leave the zone and enter the flow of the United States commerce system for
domestic consumption. Likewise, all foreign merchandise that is imported, and at some point re-
exported, is not subject to U.S. customs duties. By deferring customs duty until merchandise is
actually imported from a FTZ into the United States, companies avoid having expenses tied-up
in Customs duties on their inventory and are able to utilize that money for other purposes. Such
benefits also apply to the elimination of duties on waste, scrap, and yield loss.
The existing FTZ at Denton Airport is used by an avionics manufacturing and repair
company that ships aircraft instrumentation internationally. As such, the long-term marketing
and business development functions of the Airport should include the identification of other
importers, manufacturing and processing companies as those most likely to be attracted to and to
benefit from the Airport FTZ. This task is well suited to a partnership effort with the Denton
Economic Development Department and Chamber of Commerce.
Other Amenities and Services
There are a number of amenities and services that would help the Airport attract more
customers and create convenience for users. Services and accompanying facilities that have been
suggested include:
City-Controlled Services
• Public Transportation to and from the Airport and the City
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• U.S. Customs Facilities and Services that May Attract International Flights from
Mexico and Other Countries
• Greater Airfield Security (to assure aircraft owners that their property is safe against
vandalism or theft)
• Airport Rescue and Fire Fighting (ARFF) Services
Market-Controlled Services
• Airport Restaurant
• On-Airport Satellite Car Rental Station
• Automated Teller Machine (ATM) within the Terminal Building
• Convenient Hotel Near Airport Property
• U.S. Customs Facilities and Services that May Attract International Flights from
Mexico and Other Countries
• Public Transportation to and from the Airport and the City
Greater airfield security is something that the City is already planning for. The U.S. Customs
facilities and services are shown in both the City-Controlled and Market-Controlled services
since they are dependent upon both. Typically, an airport sponsor will have to pay the cost to
locate U. S. Customs on their field. However, this should not be undertaken without some market
assurance of commercial demand. The same holds true for public transportation to and from the
Airport and the City. With this in mind, it is recommended that:
The City of Denton should encourage the provision of other amenities and
services described in this Plan as demand warrants.
6.3 Impact on Revenues and Expenses
The revenue enhancement strategies recommended for Denton Airport represent growth
opportunities, and as such, will impact baseline projections of revenues and expenses. Those
impacts are discussed in this section.
Revenue Impacts
Quantifying the levels of additional potential revenue that might result from
implementing the strategies presented above is highly subjective. In this regard, there are a wide
variety of complex external economic forces that will have some affect on revenues at the
Airport, not the least of which is the fluctuating cost of aviation fuel and uncertainty regarding
the regional and national economic conditions. For each strategy, a cost/benefit analysis should
be undertaken. Alternatives suggested for consideration include analysis of revenues and
expenses that would be derived from:
• Continuing the current practice of developing land for ground leases only;
• Investing gas well royalty revenue in income-generating facilities on the Airport; or,
• A combination of those actions to maximize the financial performance of the Airport.
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Those analyses should give consideration to the financial impact on individuals and companies
who have invested private funds in the successful development of individual hangars and
aviation industry at DTO.
From preliminary analyses, both options where the City invests in revenue producing
development would produce positive cumulative net revenues over the planning period. The
Land Leases Only option shows negative net operating revenues through the year 2016, which
produces cumulative negative net revenues of -$582,000 through the planning period. If the City
desired to operate the Airport as an Enterprise Fund in the near term, it would best be
implemented using either the gas well royalty investment scenario or a combination of City
investments and private ground leases for future Airport development.
Impact on Expenses
When projecting impacts of increasing activity at Denton Airport, and subsequent
increases in revenue, it is important to consider any effects that such activity may have on
expenses. Such impacts typically come from spending that must be made for capital projects
used to accommodate the growth. At Denton Airport, much of the revenue potential is based on
investments in hangar and rental property development. Costs associated with these activities
should be included in any projection of expenses at the Airport.
Assumptions for growth rates on the cost side of the Airport financial operation are
primarily related to the capital costs of revenue producing projects. In this regard, revenues from
the gas wells could be used in capital development projects. Amounts of usage should be based
upon investment policies adopted by the City. From a strategic planning standpoint, a more
active role on the part of the City in developing rentable property could ensure a strong near-term
financial performance. This is particularly important if the City is considering the Airport as a
future enterprise fund.
6.4 Summary of Business Plan Recommendations
A number of recommendations have been made as a part of this Business Plan, all with
the ultimate goal of improving the financial performance of Denton Airport and helping to attract
growth. To do so, this Business Plan sets forth a recommended plan of action for the City that
rests on the following four initiatives:
1) Airport Brand Development: The suggested Airport brand would target two
distinct segments of aviation demand: corporate aviation and flight training. By
separating traffic through the development of a parallel runway, the Airport could
enjoy benefits associated with both types of activity. Corporate aviation benefits
bring significantly higher levels of spending and employment than recreational
general aviation activity. Training activity has also become a big business on the
Airport and is responsible for growth in activity levels, aircraft storage and
maintenance, and on-airport employment. Retaining these two segments of
demand will be important in the long term development of the Airport.
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2) Enterprise Fund Transition: The Business Plan recommends the transition of the
Airport financial system from that of general fund to an enterprise fund. This
transition would involve continued management actions to make the Airport
economically self-sufficient in the future. The City of Denton should identify an
Advisory Board or Commission to provide policy recommendations for the
Enterprise Fund.
3) Hangar/Rental Property Development: As discussed, the availability of the gas
well revenues to fund capital development at the Airport should not be limited to
non-revenue producing infrastructure. Rather, this Business Plan recommends
that the City develop hangars and other buildings that can be leased in support of
operating revenues. Development at the southeast taxiway site could be provided
solely by the City or in concert with private development, if desired. City
ownership of rental property is already scheduled to occur as current leases expire
and reversion clauses transfer ownership of existing hangars to the City.
4) Long Term Development: In the near term, the Airport has expansion capacity on
the east side. However, for the long term, the focus of development should be on
the west side, with Loop 288 providing access in the future. To begin moving
toward more use of the west side, this plan recommends the development of a
helipad and later, a parallel runway for general aviation training operations. Other
long-term growth involves the potential partnership with UNT for more training
and aviation education, development/expansion of the Foreign Trade Zone, and
attraction of a large aviation industrial client (aviation manufacturing/fabricating).
As guidance for the City of Denton and Airport Management, the following is a proposed
timeline for implementing the recommendations presented in this section.
2010
• P Priority - Reversion Clauses: The City of Denton should retain its interest in
leases that specify a reversion of ownership of leasehold improvements to the City.
• 2"d Priority - Branding: The focus of Airport branding for DTO should be toward
business, education, and training.
o The City of Denton should consider renaming the Airport, once the branding
activities have begun.
• 3rd Priority - Existing Clientele Feedback: The City of Denton should meet quarterly
with existing clients and tenants to solicit feedback on economic and service issues
facing tenants.
• 4`h Priority - Marketing: The City of Denton should include new media as part of its
growth strategy.
• 5~h Priority - Revenue Producing Property: The City of Denton should consider
investing in revenue-producing development to ensure future financial self-
sufficiency.
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o The City of Denton should seek the development of hangar space and other
revenue producing buildings as demand warrants.
o The City of Denton should consider changing the surface gas leases from non-
operating to operating revenue designation.
2011-2012
• Is` Priority - Airport Enterprise Fund: The City of Denton should set up an
enterprise fund accounting structure for the Airport after FY 2009-2010.
• 2"d Priority - S'taffrng: The City of Denton should increase Airport staffing to include
at least one additional staff resource.
• 3rd Priority -Land Acquisition: The City of Denton should acquire land for aviation
and non-aviation activities in support of the Airport mission.
• e Priority - Hangar Development: The City of Denton should seek the
development of hangar space and other revenue producing buildings as demand
warrants.
• 5 h Priority - Marketing Program: The City of Denton should initiate a direct
marketing information campaign targeting business and corporate aviation.
• 6d' Priority - Amenities and Services: The City of Denton should encourage the
provision of other amenities and services described in this Plan as demand warrants.
2013 - 2018
• I'` Priority - Hangar Development: The City of Denton should seek the development
of hangar space and other revenue producing buildings as demand warrants.
• 2nd Priority - Parallel Runway: The City of Denton should plan for the development
of a parallel runway on the West Side to accommodate pilot training activity.
• 3rd Priority - West Side Development: The City of Denton should plan for the
development of aviation and non-aviation uses the west side of the Airport as demand
warrants.
• 4`r' Priority - Amenities and Services: The City of Denton should encourage the
provision of other amenities and services described in this Plan as demand warrants.
Timetable and Trigger Points
Table 18 presents a timetable and listing of trigger points for implementation of the
recommended plan, grouped by type of action (administrative, marketing, etc.).
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Table 18 - Action Plan Trigger Points
Action
Description
Trigger Point
Timeframe
Airport Services
Market-Controlled Seivices
Airport Restaurant, On-Airport Satellite Car
As demand
N/A
Rental Station, Automated Teller Machine (ATM)
warrants
within the Terminal Building, Convenient Hotel
Near Airport Proper-
Cite-Controlled Seivices
Public Transportation to and from the Airport and
As soon as
2010
the City-, U.S. Customs Facilities and Seivices,
practical
Greater Airfield Securit--
Airport Development
Aircraft Hangars
City should develop hangars for revenue
As demand
Immediate -
production as demand warrants
warrants
2018
Land Acquisition
Acquire property adjacent to current boundaries
As soon as
2011
for potential development
practical
Parallel Runway
Develop parallel nrmvay for pilot training.
When funding
2013
becomes
available
Development of the West
Develop the landside area of the West Side
Adequate access
2013 - 2018
Side
Marketing
Create a stronger brand
Create a stronger brand name for the Airport
As soon as
2010
name
focusing on business, education, and training
practical
New Media
Use new media in marketing efforts for the
When Branding is
2010-2018
Airport.
Completed
Market Business Aviation
Develop marketing materials for the Airport that
Continuous
2011-2018
are targeted on business aviation.
Other Items
Reversion Clauses
City should keep reversion clauses in leases
Continuous
2010-2018
Client Feedback
City should begin holding quarterly meetings for
Continuous
2010-2018
airport tenants
Enterprise Fund
City should set up the Airport as an Enterprise
Nest Fiscal Year
2011
Fund, considering property- taxes and other
indirect revenues and expenses.
Staffing
City should add one staff member to Airport
Next Fiscal Year
2011
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Appendix A:
SWOT Analysis
Denton Municipal Airport
Business Plan October 2010
APPENDIX A
Denton Airport SWOT
A SWOT (STRENGTHS/WEAKNESSES/OPPORTUNITIES/THREATS) WORKSHOP WAS held at
the Denton Airport on July 22, 2009. A total of 26 professionals representing a wide
range of the Airport stakeholder base attended the sessions. The purpose of the SWOT
Workshop was to provide an opportunity to better identify and understand the Airport operating
environment. In this regard, the SWOT is not a strategy session. Rather, it is the preparatory
step toward making strategic recommendations. Thus, the information generated in the SWOT
about the Airport's position in its environment can be used to develop follow-on strategies for
achieving the Airport's mission. This Business Plan will serve as the vehicle to define these
strategies and focus resources on the implementation process which will take place over the next
ten years.
From a definitional standpoint, a SWOT for Denton Airport involves the following:
• Strengths:
Internal attributes of the Airport. These can include
Physical/Infrastructure, Managerial, Financial, Political, Brand,
Tenants, and "Other."
• Weaknesses:
Internal attributes of the Airport. These also can include
Physical/Infrastructure, Managerial, Financial, Political, Brand,
Tenants, and "Other."
• Opportunities:
External conditions that may be available to the Airport. These
can include such items as Regional Business, On-Airport Business,
Funding, Aviation Trends, Branding, and "Other."
• Threats:
External conditions that may threaten the Airport's viability.
These conditions may include Funding, Operational Activity (e.g.
Loss of Future Contracts for Pilot Training), Local Surface Access,
Infrastructure, Brand, and "Other."
There were five simple rules for the SWOT Workshop itself:
1) It is okay to disagree.
2) All ideas are potentially good ideas.
3) We will honor time limits unless the entire group desires longer sessions.
4) What is said at the meeting will not be attributed to a specific person
(confidentiality).
5) Cell phones should be in the "off' position.
The Workshop began at 10:00 am and ended at 3:00 pm. Discussion topics included a wide
range of issues including, but not limited to:
• Reversion Clauses in Lease Agreements;
• Need for a Parallel Runway;
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• FAA Tower Service;
• Financial Operation as a General Fund Department or an Enterprise Fund;
• Airport Management Structure (Including the Role of the Airport Advisory Board);
• Airport Branding;
• West Side Development;
• City Development of Hangars or Private Enterprise Development of Hangars;
• Gas Well Lease Royalty Fund Management;
• Rates and Charges Comparison with Other Airports;
• Future Client Base and Airport Amenities;
• University of North Texas Aviation Program and Other Educational Services;
• Flight Training Operations;
• Airport Property Expansion;
• International Activity Through a Foreign Trade Zone;
• Master Plan Update
The following sections summarize the discussions held at the Workshop concerning Airport
Strengths, Weaknesses, Opportunities, and Threats. Participants were asked to rank the top five
items of importance within each category.
1. AIRPORT STRENGTHS
Nine areas of Airport Strengths were identified during the Workshop including the
following, in rank order of importance:
• Services: The number of services offered by the Airport was viewed as a significant
strength, relative to its competitive position and future viability. These internal
attributes were identified as including the following:
- Fuel Sales, Maintenance for both Jet and smaller GA aircraft, Paint Shop
- Full Service and Specialty FBOs, Avionics Sales and Repair
- Interior Refurbishment, Aircraft Sales, Charter/Air Taxi, Supplies
- Flight Training - Fixed Wing and Helicopter
- Rentals - Aircraft and Automobile, Courtesy Car
DTO enjoys services from two major FBOs which sell fuel. Also of note, avionics
sales and repair is performed at DTO and the Foreign Trade Zone permits economical
international sales of these instruments. Also, fixed wing and helicopter flight
training are offered at DTO. This activity has grown significantly over the last three
years with pilot training contracts for foreign airlines and governments.
• Financial Resources: The Airport has financial resources that give the City an
ability to develop capital infrastructure as needed and to withstand downturns in the
aviation economy. Revenue sources and financial support is derived from the
following:
- Gas Well Revenue, Operating Revenue, Investment Revenue (from CDs)
- Government Support (Grants, Contributions In-Aid)
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- Capital Improvement Bonds
DTO has a growing number of gas wells that produce royalty income which can
provide for capital improvements or help to offset operating costs, as needed. In
addition, the Airport generates significant income from operations, including those
from land leases and fuel flowage fees.
Political Support: DTO enjoys widespread political support from a large base of
stakeholders. Such support is important for funding, land use protection, and future
projects. Supportive groups include:
- City Council, TXDOT Aviation, Congressional Delegation
- Greater Denton Community
Potential support also exists at the County level, particularly regarding the proposed
West Loop 288. It should also be noted that the City has provided land use and
zoning protection for the Airport through an overlay zoning district called an Airport
Compatibility Land Use District, which limits the types of land uses in the vicinity of
the Airport that may be subject to noise impacts from aircraft operations. In addition,
the City has instituted an overlay zoning district which limits building heights, called
an Airport Height Hazard District.
Location: The Airport's location is considered a strength, given that it has good
access to two Interstate Highways and US 380 (east-west highway). Another plus is
that the Airport is far removed from residential housing. The Airport is located close
enough to both Dallas and Fort Worth to serve these communities, yet it is far enough
away from D/FW International Airport to have favorable airspace within the Class B
airspace environment.
Economic Development Engine: The Airport is becoming more of an economic
development engine, particularly over the past three years. In addition to the
international flight training activity, the Airport is teamed with the University of
North Texas for the development of an aviation curriculum that may include domestic
student pilot training. One of the Airport's Specialty Aviation Service Organization
(SASOs) - Jet Works - performs interior finishing work for aircraft, including those
for the Italian aircraft manufacturer of the Piaggio. There are also a growing number
of businesses that are locating at the Airport. All together, these and other activities
at the Airport have produced a significant employment base, which continues to build
over time.
• Annual Air Show: The annual Air Fair is considered a strength, gaining significant
positive public relations for the Airport. Last year, over 10,000 spectators attended
the event.
Transportation Utility: The Airport provides a transportation utility and
infrastructure that cannot be duplicated in Denton. Air access is provided through a
variety of outlets:
- Air Charter Operations, Business/Corporate Flights, Sports Events
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- Air Cargo (both Turboprop and Jet), Flight Training, Personal Flying
- Civil Air Patrol, U. S. Marshall - Law Enforcement, Government
- FAA Flight Certification and Test Flights
The more services available from the Airport, combined with its close proximity to
the community, the greater is its transportation utility.
• Leadership/Management Support: In addition to political support, the Airport has a
significant leadership and management support base. That is, the technical expertise
provided by the City Staff and Airport Advisory Board, combined with the leadership
of the City Council is a strength for DTO. In addition, TxDOT and the FAA have
provided support for management decisions regarding the future development of the
Airport.
• Airport Facilities and Expandability: The size and capability of the Airport itself is
considered a strength. In this regard, the Airport has 6,000 feet of runway length that
will soon be expanded to 7,000 feet. Other important facilities include:
- Full Parallel Taxiway, Aircraft Hangars, New Terminal Building
- Instrument Landing System, contract FAA Control Tower
- Available Development Sites, Offsite Development for Non-aviation Use
In addition to these impressive facilities, water and electricity is available on the
Airport. The west side of the Airport is available for the development of a second
runway or landing area for helicopter pilot training. The west side also has additional
space for landside development and the capacity to take advantage of new business
opportunities.
2. AIRPORT WEAKNESSES
Seven major areas of Airport weakness were identified as a part of the SWOT workshop
process. These are internal to the Airport and are listed below in rank order of importance to the
SWOT participants:
• Airport Brand: According to participants, the Airport brand is nonexistent. That is,
there is confusion in the marketplace concerning Denton Airport's core identity. In
some cases, residents of Denton do not even know that they have a local airport.
Likewise, business users are not sure whether the Airport is primarily devoted to
flight training or to corporate aviation. Several brand weaknesses that were identified
include:
- Airport Naine: The word "Municipal" in "Denton Municipal Airport"
gives the impression that DTO is a low activity, small general aviation
aircraft airport. Airport names that incorporate terms like "regional" or
"executive" imply a larger service area than a municipal airport. Also,
airport names that can include larger, more nationally identifiable cities
tend to extend their service area reach.
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- Airport Entrance: The lack of a formal airport entrance is considered a
brand weakness.
There has been a limited amount of funding for public relations and marketing for
branding the Airport. Funds will be needed when and if a new brand is developed for
the Airport.
• Security: External (perimeter) and on-field security are weaknesses that need to be
addressed, according to SWOT Workshop participants. The Airport houses Boeing
727 and 737 jets, along with other large corporate jet aircraft. As such, owners of
these and other aircraft desire protection from theft, vandalism, and terroristic acts.
As a general aviation airport, security card access and other forms of protection
against airfield incursions are not mandated by FAA or the Transportation Security
Administration. Only some FBO facilities require card access presently. There is no
assigned law enforcement officer to the Airport and City police rounds are infrequent
at night. In addition, portions of the Airport perimeter are not protected by security
fencing.
• Tower Operating Hours/Staffing and Other Issues? The Airport has a contract
FAA Air Traffic Control Tower, meaning that a private firm trains and staffs the
tower for the FAA. Currently, the working hours for the tower staff are from 8:00 am
to 8:00 pm, even though flight training is conducted 24 hours per day, seven days per
week. On many days, the airport traffic pattern for aircraft is full by the time
controllers get to work in the morning. Thus, it is believed that there is a significant
need for longer hours and more staff for the Tower. Other issues for the Tower
include:
- Lack of Repeater Radar ,Scope: The Tower operates on a visual flight rule
basis. That is, there is no radar scope within the Tower cab that shows
controllers what air traffic controllers in Dallas can see with their radar. A
repeater radar scope would increase margins of safety during poor weather
visibility conditions and high activity periods.
- Language Barrier: English is the universal language of international air
traffic control. Foreign student pilots have the challenge of learning to fly
an aircraft within a controlled airspace environment, in addition to
mastering conversational English. When operational activity at DTO
exceeds 100 per hour, it is vital that student pilots understand and respond
to air traffic control directions.
With operations now exceeding 15,000 per month, many of these problems could not
have been anticipated five years ago when operations were one-third that amount.
However, the combined effects of the issues described above are now considered an
inherent Airport weakness, particularly with the mixing of large and small aircraft.
1 This issue was address by- FAA after the SWOT, by increasing Control Tower hours of operation to a 16-hour
day - 6:00 a.m. to 10:00 p.m.
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• Infrastructure: While the large infrastructure at the Airport is a strength, there are
aspects of the infrastructure that represent weaknesses. In this regard, the SWOT
Workshop participants identified the following infrastructure needs at the Airport:
- Parallel Runiray: It is believed that an airfield operational capacity issue
is developing based upon the high numbers of training operations at DTO.
One solution would include the addition of a parallel runway on the West
side of the Airport. Thus, the lack of a parallel runway is considered a
weakness of the current infrastructure.
- Ramp Space: There is a need for additional ramp space at the Airport.
While the West side has an abundance of space, there is no adequate
ground access. The East side is limited in the amount of additional
landside expansion that can be accommodated.
- ARFF: The Airport does not have aircraft rescue and firefighting
equipment located at the Airport.
- Utilities: Water and electricity are available to most of the east side,
however, they are nonexistent on the west side. Sewer service is available
to portions of the east side but not to the west side of the Airport.
- Ground Access: Access to the west side of the Airport will be significantly
inconvenient when the imminent runway extension closes portions of Tom
Cole and Masch Branch Roads.
- U'. Customs: International air cargo and passengers from Mexico and
other foreign nations cannot be cleared through U.S. Customs at DTO for
lack of those facilities and services. It is believed that this deficiency
inhibits some business expansion at the Airport.
- Restaurant Facilities: With more than 5,600 workers at Airport area
industries, there is no restaurant at DTO.
- Signage: Unless an airport is directly off of a State or an Interstate
highway, TxDOT will not install a sign directing traffic off an exit. Thus,
directions to the Airport may be difficult for those not familiar with the
area.
- Security Fencing: The lack of full perimeter security fencing was listed as
a weakness.
- Heliport: It was said that the present location of the helipad is not far
enough removed from the active runway and taxiway system to eliminate
interaction with fixed wing operational activity.
• Lack of Services: Participants indicated another weakness at the Airport involves the
lack of certain services including: public transportation to/from Airport, on-Airport
police, and banking services. With the large number of employees that work near the
Airport, it was viewed as a weakness that public transportation/bus service was not
available.
• Slow/Non-Responsive Development Support: For private enterprise to construct
facilities at the Airport, there is a very long development approval process required by
the City. It is believed that the length of time required to gain these approvals is
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driving business away from the Airport. Some of the delays are caused by a lack of
understanding of aviation needs and requirements. That is, instead of treating each
new hangar proposal as a completely new item, there may be a way to permit certain
similar types of buildings within an Overlay District.
Other weaknesses that were listed in the exercise included a lack of ramp clearance with
light poles on their perimeter, limited ramp access, an overall resistance to change within City
government, and a lack of County Commissioner awareness of the Airport situation.
3. AIRPORT OPPORTUNITIES
Opportunities that exist are considered external conditions that may be available to the
Airport. Generally, these opportunities will require strategies and efforts to achieve. Most
opportunities involve the market place or additional services or facilities at the Airport.
Participants in the SWOT Workshop identified a number of opportunities available to the Airport
and ranked them in the following order of importance:
• Branding: There is an opportunity to increase the use of DTO through branding.
This branding would involve a name change for the Airport. Participants indicated
that the Airport name should reflect the fact that DTO is a business reliever airport,
and that it is a regional facility rather than a "municipal" airport.
• FAA Tower Services: By providing repeater radar scopes in the Tower, more
corporate aviation may be attracted to DTO. Some corporate aviation departments
will choose radar airport environments over visual/non-radar service airports. In
addition, by increasing the staffing and hours of Tower operation, the Airport could
benefit by improved safety and from greater utilization by all types of general
aviation aircraft.
• Parallel Runway: The Airport could benefit from the addition of a parallel runway.
Current activity levels, if sustained, would justify the additional runway from an
airfield capacity standpoint. The parallel runway would also help to separate some of
the training activity from the corporate aviation activity, thereby enhancing safety.
• Public Transportation: Public transportation from the City to the Airport could
assist employees working at or near the Airport. Public transportation could also
accommodate foreign student pilots that live near the Airport and travel back and
forth. Most of these students do not have their own vehicles for transportation. The
provision of bus service would have to be addressed by the Denton County
Transportation Authority (DCTA).
• Enterprise Fund vs. General Fund: It is believed that the Airport could benefit by
setting up an enterprise fund versus the current general fund accounting. The primary
benefit cited was greater independence and flexibility, relative to the budget process.
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• University Pilot Training: It was stated that diversification in pilot training would be
advantageous to the Airport, since the impacts of losing a foreign contract could be
offset with other sources of student pilots. Thus, the addition of a North Texas
University aviation curriculum with pilot training at DTO could smooth out future
activity swings and reduce the risk of relying on one source for pilot training.
• Reversion Clause: The inclusion of reversion clauses in leases is seen by some as a
means to decrease the impact of reduced funding of the Airport by existing sources.
If the City can lease property at full market rates, the Airport may become more
financially self-sufficient.
• Highway Access to the West Side: The proposed Texas State Highway Loop 288
would open access to the Airport's West side. This would be important for any
industrial or commercial development of that area, in addition to aviation-type
development.
• Super Bowl: It is believed that the Super Bowl football game being held in Dallas in
2011 will attract activity to the entire Dallas/Fort Worth area. This would include a
significant number of general aviation/corporate aircraft at DTO.
• Attraction of Corporate Aviation: Corporate aviation was viewed as a potential
opportunity for growth at DTO. Corporate aviation generates significant airport
revenues due to hangar leases, fuel consumption, and maintenance requirements.
• Other Opportunities: There are a number of other opportunities listed during the
SWOT Workshop that only received one or fewer votes. These included:
- Airport Restaurant
- Terminal Expansion
- Greater Use of the Foreign Trade Zone
- More Charter Operations
In addition, it was stated that a hotel at the Airport and a small museum might attract
additional patrons to DTO.
It was stated that population migration trends in the D/FW area are to the north toward Denton.
Because of the lakes that are blocking development in Dallas, Workshop participants believe that
the northward growth will eventually result in a common border with Dallas/Fort Worth. That
works favorably for the location of the Airport and the City for future growth potential.
4. THREATS TO THE AIRPORT
In this context, threats to the Airport refer primarily to its potential growth, development,
and viability. While security is an important threat issue, it is not the only issue. Threats are
external conditions to which the Airport is exposed. In some cases, unresolved weaknesses may
develop into threats. In other cases, threats may be perceived as the other side of the
"opportunity coin." For example, if the opportunity to expand the Tower hours and staffing does
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not occur, it could turn into a threat for Airport operational activity and possible degradation of
flight safety margins. Threats to Airport viability were listed by SWOT Workshop participants
in the following rank order:
• Security: A threat to the growth of corporate aviation and other businesses on the
Airport is a lack of perimeter and internal security. This is needed to prevent
vandalism, theft, and inadvertent airfield incursions.
• Tower Personnel Workload: The Tower personnel workload was cited as a threat to
the Airport, in that continued growth in operations may be limited by Tower staffing.
In addition, margins of safety, particularly during high training activity periods might
be increased with more personnel.
• VaturationlLand: Other development around the Airport may threaten DTO's
expansion capability or operational flexibility. There are floodplain issues around the
Airport and the East side has only about 25 percent more expansion available on the
landside area. Without adequate land for runway expansion, the Airport is limited in
what types of aircraft can be served in the future. Similarly, without adequate
landside area, the Airport's operational activity will cease to grow, simply because
users have no place to park or store their aircraft on the Airport.
• City Bureaucracy: The bureaucratic process required to develop or improve Airport
property is believed to be a hindrance to future growth at DTO. Airport users would
like uniform standards and a quick process.
• Conflict Between Training and Corporate Activity: There is a perception that
training activity and corporate activity do not mix at an airport. The threat expressed
by SWOT Workshop participants was that future corporate aviation activity may be
reluctant to locate at an airport where significant student pilot training occurs.
• Future Training Demand: Because the Airport may become committed to
significant training activity (increased staffing of the Tower, FBO commitments for
aircraft, hangar space, mechanics, etc.), there is a significant threat to the economic
well being of the Airport should future training contracts be cancelled or lost to a
competing airport.
• Future Funding: A loss of future funding (both capital and operating) would
threaten the Airport's viability. State and federal programs appear stable, but should
they be cut, it may adversely impact DTO. Similarly, if local support for the Airport
declines, the operating budget may suffer. Also, as gas well royalties decrease in the
future, that revenue may need to be replaced with other sources of revenue.
• Maintenance Support: Similar to the funding issue, a lack of proper Airport
maintenance will threaten the Airport's future ability to compete for the region's
general aviation aircraft users.
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Denton Municipal Airport
Business Plan
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• Reversion Clause: Property reversion to the City after the expiration of a long term
lease is considered a threat to the Airport by some.
• GA User Fees: General Aviation user fees that were considered in the recent federal
funding legislation are considered a threat to overall activity in the general aviation
system nationwide. These fees were eliminated from the current legislation, but will
likely return in future proposals.
• National Economy: As demonstrated in 2008, the aviation industry is closely tied to
the national economy. Downturns in the economy impact aviation in that businesses
will eliminate discretionary air travel at the beginning of the negative cycle and then
do not resume normal air travel until well after the recovery is underway.
• Class B Airspace: Currently the Class B Airspace surrounding the Dallas/Fort Worth
area permits a 4,000 foot ceiling above DTO. If greater airspace restrictions are
placed on the Airport in the future, it may result in reduced activity levels.
• Fuel Cost. As demonstrated in 2008, rising fuel costs significantly reduced general
aviation operations. This threat remains, as fuel prices can escalate at any time due to
unforeseen political events in or near oil-producing nations.
• Residential Development: Residential development near an airport can threaten its
long term growth. This may not be a current threat at DTO since the City of Denton
has protected its Airport with zoning restrictions on the land uses under the approach
areas of existing and future runways. However, large residential development areas
are planned just beyond these restricted zones. Proposed residential development to
the south will need to be closely monitored to ensure compliance with the Airport
Compatibility Land Use District regulation.
• Competition from Other Airports: DTO competes with other airports in the region
that can provide similar facilities and services. Significant competing airports would
include Addison, Fort Worth Alliance, North Texas Regional (Grayson County), and
Collin County Regional. These airports can take market share from Denton unless
DTO remains competitive with regard to pricing, services, and facilities.
5. SUMMARY
To summarize the SWOT workshop results, a graphic representation of the process was
developed that shows the relationships between the components of the analysis. Figure 1 shows
four quadrants, each representing one area of the SWOT. The axes of the quadrants indicate the
degrees of flexibility or change for each of the SWOT components. The center of the graphic
represents the highest degree of flexibility or ability to change, whereas the outer edges represent
the greatest inflexibility or lack of ability to change. For example, the Super Bowl is an
inflexible Opportunity that will happen in Dallas regardless of any actions taken in Denton. On
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Denton Municipal Airport
Business Plan October 2010
the other hand, Airport Branding is something that can be controlled by the City and as such, it is
located near the center or most flexible
Components that are located on an axis show that, depending upon how they are
addressed, can move from one SWOT function to another. For example, highway access to the
west side is currently a Weakness and an Opportunity. If the Access is provided, then the
Opportunity is fulfilled and it no longer is a Weakness. The future access will then move into a
J r I
J d J I r J ~1J J J~ J Super Bowl
Economic
Development Engine 1
r a r
J 1 J 1 J J J 1 J
FAA Tower
Location
Services
Puplic Transportation
Financial
/ Resources
Transportation
Utility
Enterprise Fund vs-
General Fund
Political Support `v
University Pilot
♦O-Ai
Training
. le Airport Facilities
& Fxpandahilily
`
\V
Attraction of
Corporate Aviation ID 4 `
Annual
110 Air Show Airport Services
Parallel Runway
Leader
Ship
Management
Highway Access ~f Alk Branding
Support
to West Side
17
Security
Tower
Slow
Personnel ~
Future Funding
Development
f Support -
! Workload
0 Class B
Lack of Services
AAA
ii C
porate
Airspace
Act
on
Activvity y Conflict
C Infrastructure
City Bureau
cracy
Competition
from Other
Airports
.
National
Economy I
0
J ~r~J~t~_'J J_'J
Fuel Costs
GAUser
Fees
r
Figure I - SWOT Illustration
Strength for the Airport. Similarly, Branding at the Airport is currently a Weakness and an
Opportunity. When a new brand is successfully promoted, it will cease to be a Weakness and
ultimately become an Airport Strength. Also, the issue of the Reversion Clause has been
characterized as both an Opportunity and a Threat. Analysis in this business plan will help to
establish grounds for each claim. One other item, Security (the lack thereof), is both a Weakness
and Threat.
The FAA Tower appears in two different quadrants - Opportunity and Threat. There are
different aspects of the Tower's operation considered in each SWOT function, such that the
Opportunity relates to the availability of Tower services and its attraction of corporate aviation,
while the Tower Threat refers to workload and safety margins.
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Denton Municipal Airport
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Overall, the SWOT Workshop highlighted the key issues for the Airport and its operating
environment. The Business Plan will use the results to develop strategies for building on
strengths, overcoming weaknesses, taking advantages of opportunities, while minimizing threats
to the Airport's future operation.
IN 1 R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. A-12
Appendix B:
Detailed Survey Results
Denton Municipal Airport
Business Plan October 2010
APPENDIX B
Detailed Survey Results
N EARLY JULY, 2009, DENTON MUNICIPAL AIRPORT users and businesses were surveyed for
purposes of evaluating local area business use of Denton Municipal Airport. The Airport
User Survey was developed and mailed to two groups of aircraft owners: those who base
their aircraft at Denton Municipal Airport; and those known to have used the Airport. A total of
74 Airport User Surveys were mailed. The Airport Business Survey was developed and mailed
to 34 businesses that either use the Airport or have owners that base their aircraft at the Airport.
In addition to these direct mailings, the Airport User and Business Surveys were distributed by
FBOs on the Airport to their sub-tenants. The surveys were also launched via Zoomerang.com
so that respondents could complete them online. The surveys were posted on the Business Plan
project website at www.dentonairportsurvey.com. Both the Airport User Survey and the
Business Survey are included in this Appendix.
The direct mailings and online surveys asked respondents to return completed surveys by
the end of September. This date was then extended to the beginning of December due to a low
response rate. During this period, a total of 43 visits were recorded on Zoomerang.com with 14
Airport User Surveys and 6 Business Surveys completed. Additionally, a number of hard copy
surveys were received, for a total of 18 responses to the Airport User Survey and 7 responses to
the Airport Business Survey and 5 mailed surveys returned undeliverable. This created a
response rate of 24 percent, which is between the normal response range of 18 percent and 28
percent. A total of 15 different cities and towns within Texas were represented in the responses.
1. AIRPORT USER SURVEY
Questions and responses from the Airport User Survey are described briefly below.
1. Please list type of aircraft (specify make & model)
A total of 18 Airport users responded to this question. Aircraft types included 16 single-
engine aircraft, 2 multi-engine aircraft, and 5 helicopters (four respondents owned multiple
aircraft) for a total of 23 aircraft. All but two of the users that responded had all of their based
aircraft at Denton Municipal Airport. One respondent that did not base his or her single engine
aircraft at the Airport still supplied information about their expenses at Denton Airport. The
second respondent had multiple aircraft (three single engine aircraft) of which, one aircraft was
based at the Airport. They also reported their expenses at Denton Airport.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-1
Denton Municipal Airport
Business Plan
October 2010
Economic Impact Assessment of
IT MW Denton Municipal Airport
Denton Airport
The N~w.rtbTexas Airport of Chwcc
AIRPORT USER SURVEY
Nam e Contaot Phon e
City State---- ZIP
Email
Aircraft Economic Information
Aircraft hype:
2. Hove Airport far your aircraft fir different frori Dentan Airport);
3. Please estivate the total annual level of spending associated vaith your aircraft at your hove Airport'
Fuel:
Maintenance' S
Storage
f axes (aviation related)
Gather
POTA.L
Denton Airport Activity Information
4. 1'k-ase esliriate the number of takeoffs that you wake per year at Denton Airport
5.
5.
Over the next 5 years. do you expect this activity to'
Stav the. Save Increase % Decrease ~a
Are there any services of taciI es that vrould cause you to increase your use of the Denton Airport'?
13lease explain:
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-2
Denton Municipal Airport
Business Plan October 2010
Business/Aviation Relationships
r. i'ie-a sees tim3te the perventa-go use of your aircratt: Lousiness: `gib
Personal: b
Other: %
1,31-31 tiCl%
It passible. pE ase expbin the irlp-if tai)--e -at the business use of vouf aircraft to Your companyof business:
- - - - - - - - - - - -
-
to Net urn the Survey, You May Either Mail this Survey to the Address Betov or Complete On Iine at:
wmv.dontonairportsurvey.com (Click on the Airport Survey Link)
Thank You For Your Response."
R.A. Wiedemann & Associates. Inc.
Denton Survey Response
P.C. Box 621
Georgetown, KY 40324
I M I R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-3
Denton Municipal Airport
Business Plan October 2010
2-3. Please estimate the total annual level of spending associated with your aircraft at your
home airport:
Seventeen respondents, accounting for 26 based aircraft at Denton Municipal Airport
spent an average per aircraft of $10,427 annually for fuel, $4,013 for maintenance, $4,862 for
storage, $279 for aviation related taxes and $569 for "other." Average annual aircraft spending
for the group was $30,819. Total spending for the 17 respondents to this question equaled
$523,920.
If the response from one major respondent is taken out of the mix, the average spending
per aircraft decreases significantly to $3,386 annually for fuel, $3,064 for maintenance, $4,591
for storage, $345 for aviation related taxes and $705 for "other." Average annual aircraft
spending (fuel, maintenance, storage, aviation-related taxes, and other) per aircraft (21) in this
context dropped to $12,090 with total spending falling to $253,920.
4-5. Estimated Yearly Takeoffs at Denton Municipal Airport and expected changes in the
future:
Seventeen users with 24 aircraft (22 single engine and 2 multi-engine) reported an
estimated 2,838 annual operations (1,419 takeoffs) for an average of 118 operations per aircraft
or 167 operations per user. One user with five based helicopters had an additional 7,200
operations per year. All together, survey respondents accounted for a total of 10,038 annual
operations with 29 aircraft.
Seventeen respondents answered the question about their expected change in aircraft
activity over the next five years. Of these respondents, 12 indicated that their activity would
remain the same. Four respondents expected to increase their activity by an average of 16
percent, for a total of 7,379 operations, over the next five years (one respondent indicated an
increase of 7,200 operations). One respondent indicated that they expected their activity to
decrease by 50 percent (100 operations).
6. Are there any services or facilities needed at the Airport that, if provided, would
increase your use of the facility?
There were nine responses to this question. Three respondents had remarks concerning
the Air Traffic Control Tower. One respondent thought that the tower should be closed, one
wanted to have the tower's hours minimized, and one wanted to see an improvement in control
tower personnel. Two respondents indicated the need for radar. One respondent indicated the
need for addition of RNAV/ LPVs for 17/35 GPS approaches. One respondent indicated that
they would like to have freedom to buy fuel from someone other than their landlord and would
also like to have the restrictions taken away so that they could build their own facilities. Other
needed facilities and services mentioned were a restaurant and additional air shows/events. Two
of the respondents did not have any requests and were positive about management, facilities and
fuel prices.
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Business Plan October 2010
7. Please estimate the percentage use of your aircraft?
A total of 17 Airport users responded to this question. The Airport users indicated that
79.2 percent of flights flown were for business reasons, 17.8 percent of flights flown were for
personal reasons, and 3 percent of flights flown were for other reasons. In terms of the number
of flights flown, respondents indicated that 3,976 were for business, 894 were personal, and 150
were for other purposes.
If the response from one major respondent (3,600 business flights) is taken out of the
mix, the percentages change dramatically. This will show a more realistic number as to the
percentage use (business, personal, and other) of the average airport user. If the 3,600 flights
from this one outlier are taken out of the mix then 26.4 percent of the flights flown were for
business reasons, 63 percent of the flights flown were for personal reasons, and 10.6 percent of
flights flown were for other reasons.
8. If possible, please explain the importance of the business use of your aircraft to your
company or business:
There were eight responses to this question. All eight respondents indicated that business
use was very important to them and their companies. Responses included the importance of time
savings, accessibility, convenience, and commuting.
Summary of Airport User Survey Results
In summary, there were several key points expressed by respondents to the Denton
Municipal Airport User Survey:
• A total of $523,920 was spent by 17 Denton Municipal Airport users on their aircraft in
2008. If the response from one major outlier is taken out of the mix, the average
spending amounts at Denton Municipal Airport per aircraft were $3,386 annually for fuel,
$3,064 for maintenance, $4,591 for storage, $345 for aviation related taxes and $705 for
"other." Average annual aircraft spending (fuel, maintenance, storage, aviation-related
taxes, and other) per aircraft (21) was $12,090, with total spending of $253,920.
• If the average level of spending is extrapolated to all aircraft reported at the Airport, over
$5.5 million is the estimated expenditure by users of the Airport.
• Sixteen based airport users and one itinerant user reported an estimated 10,038 annual
operations, with 7,200 of these being helicopter operations.
• Twelve Airport users indicated that their activity would remain the same. Four
respondents expected to increase their activity by an average of 16 percent, for a total of
7,379 operations, over the next five years (one respondent indicated an increase of 7,200
operations). One respondent indicated that they expected their activity to decrease by 50
percent (100 operations).
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-S
Denton Municipal Airport
Business Plan October 2010
2. AIRPORT BUSINESS SURVEY
The business survey responses represent seven businesses located in Denton County.
The survey form is presented on the following page. Six of the businesses are located in the City
of Denton and one business is located in the City of Plano. All seven of the businesses responded
to the question concerning full and part-time employment. They also provided data related to
their annual gross sales volume for the year 2008. The following is a summary of these
answers.
• Full-time Employees: 121
• Part-time Employees: 36
• Total Annual Gross Sales Volume: $18,398,000
• Total Expenditures in Denton County: $24,226,000
1. Type of Business Product or Service
The following businesses responded to this question:
• Title Insurance
• Aircraft Hangars
• Flight Training / Aircraft Maintenance
• Wholesale Avionics and Parts Supplier
• Repair of Solid State Electronics
• Helicopter Charter and Flight Instruction
2. Is this business Aviation-related?
Of the seven businesses that responded to this question, all but one are aviation related.
3. Estimate what percent at your company's employment and sales are related to the
availability of'Denton Municipal Airport
Businesses asked to attribute jobs and sales to the availability of Denton Municipal
Airport responded as follows: Six businesses indicated a total of 73 full-time and 28.3 part-time
employee positions were generated by the availability of Denton Municipal Airport. Seven
businesses reported that 31 percent of their sales, or $5,738,000 was related to the availability of
the Airport.
4. Does your company or client base use air travel to and from Denton Municipal
Airport?
Of the 7 businesses that answered this question, 6 indicated that they used Denton
Municipal Airport for business purposes. Frequency of use was estimated by 5 businesses at
2,966 times per year. Five businesses indicated that their visiting clients used Denton Municipal
Airport an estimated 25,940 times per year.
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Denton Municipal Airport
Business Plan
October 2010
U ""I, Economic Impact Assessment of
1w Denton Municipal Airport
Denton Airport EMPLOYER/BUSINESS SURVEY
7hv Horth Fe.tas Jlirpa•t of Charcc
fume------------- - Phone
. -
Address
City--- State ZIP
Email Address:
Company Information
1. Type of Business Product or Service.
2. This Business is, Aviation Related Non-Aviation Related Partial Aviation
3. Number of Employees: Full Time Part Time -
4, Annual Gross Sales Volume, if applicable. at this location (2008 estimate) 5------------_
5. Total Estimated Expenditures at this location (those in Denton County) for 2008: S_
6. Please estimate what percent: if any, of your company's employment and sales is related to the availability of the
Denton Municipal Airport.
Employment Sales-----%
Community-Airport Relationships
7. Does your company or client base use air travel to and from Denton I'vIunidpal Airport?
Yes-,i_ No-----
If yes, please estimate the following number of flights:
Company I i g htsfyear ClientsiVendors fIi g htsJyear
8. Please describe your business or organization`s use of or dependence on Denton Municipal Airport:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Thank you for your responsef
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-7
Denton Municipal Airport
Business Plan October 2010
5. Please describe your business or organization's use of or dependence on Denton
Municipal Airport
Business users indicated that they rely on the use of the Denton Airport for:
• Extremely dependent on services of airport including tower operations and runway
availability. Strongly feel a second runway would enhance our business opportunities at
airport.
• We capitalize on the growth of DTO and the surrounding business community.
• We rely on the Airport to bring in clients. We lease hangar space at the airport, buy fuel
from the FBO, and use the terminal building for business meetings.
• Convenience to their office facilities.
• Corporate flights come in and out at DTO.
• As a helicopter operator we are not as dependent on the airport facilities as a fixed wing
operator. The fuel availability is a convenience. The tower offers more training options.
We can operate easily away from a runway surface.
Summary of Business Survey Results
A summary of findings from the business user survey include4 the following points:
A total of seven firms that were represented in the business survey had 121 full-
time employees and 36 part-time employees.
Six of the businesses indicated that they were aviation-related.
The availability of Denton Municipal Airport can be linked to the creation of 73
full-time and 283 part-time employment positions for 6 of the businesses
responding to the survey. Seven firms indicated that $5,738,000 of their gross
annual sales in 2008 was due to the availability of Denton Municipal Airport.
0 Overall, six businesses indicated that they used Denton Municipal Airport for
business-related purposes. Five businesses indicated that they used the Airport an
estimated 2,966 times per year, while five businesses had clients that used the
Airport an estimated 25,940 times annually.
W R.A. Wiedemann & Associates, Inc. in association with CHA, Inc. B-8
Appendix C:
Lease Analysis
Denton Municipal Airport
Business Plan October 2010
Appendix C
Leasehold Analysis
This section summarizes findings from a review of lease agreements in place at Denton
Municipal Airport. In short, the leases are well written and offer no significant or glaring
omissions or causes for great concern. Generally, the leases reviewed appear to be standardized
and without a significant amount of deviation in clauses from lease to lease. It is important to
note that this review was not performed by an attorney and should not be taken as legal advice.
Therefore, before modifications to any existing leases at the Airport are pursued, these
recommendations should be reviewed with and by the City's legal counsel. The leases reviewed
are summarized in Table C-1. Leases or other lease assignment documents for several Tenants
were either expired or not available, and are therefore not included in this analysis'.
1. KEY FINDINGS
One point that became apparent in the review is that there seems to be some history
regarding indemnification, specifically referring to the added bold, capitalized and underlined
text distinguishing between "sole" and "concurrent" negligence on behalf of the Lessor. To
clarify, it is common for Lessors to be indemnified against negligence claims if they are a
contributor to a cause, but not if they are the sole cause. This added language to some of the
leaseholds at the Airport clarifies and better defines that distinction. Some best practices and
sound advice regarding indemnification is outlined below, courtesy of The Barthet Firm of
www.thelienzone.com:
• Who Is Indemnifying Whom;
• Does The Contract Clearly Express an Intent to Indemnify a Party Against Its Own
Negligence;
• Do the Terms of the Agreement Determine Whether the Indemnitor Is Obligated to
Reimburse the Indemniee for a Particular Claim;
• What Is Being Indemnified, i.e., Personal Injury, Property Damage, Attorneys' Fees And
Costs of Defense, Economic Loss;
• Is There a Monetary Limitation on the Extent of the Indemnification That Bears a
Reasonable Commercial Relationship to the Contract and Is Such Monetary Limitation
Part of the Project Specifications or Bid Documents, If Any; and,
• Is There a Provision Requiring That the Risk Be Covered by Insurance Such That the
Indemnity Is Limited to the Amount of the Insurance Coverage (Contractual Liability
Insurance).
Another area which should be addressed is the "required services" sections of the leases.
For aeronautical activities, the Airport should have or cause to be developed Minimum Standards
r The David Moore, First Financial, and the William Evans leases appear to be expired, and are therefore not included in
the malty-sis. No documentation was found re,ardin, extensions and or new agreements signed for those leases.
Additionallv, the Nebri, lease refers to an assignment of a lease that is not accounted for.
R.A. Wiedemann & Associates, Inc. in association tivith CHA, Inc. C-1
Denton Municipal Airport
Business Plan October 2010
for Aeronautical Activities so that these requirements are removed from the lease agreements
and identified in a separate, FAA-approved document. The primary purpose for developing
minimum standards is to "level the playing field" for all aeronautical tenants, so as not to offer
an unfair advantage to one over another, while ensuring that the Airport is able to offer the
services it needs and desires to the flying public at an acceptable standard. If such required
services are negotiated in each lease agreement, chance arises for inconsistencies that can lead to
claims of discrimination and/or exclusive rights (by default, not intent) between competing
businesses on the Airport (or those wishing to become a tenant).
One additional trend noted during the analysis is that lease terms among many Tenants,
regardless of the size of space rented or the purpose/use of the space (i.e., recreational, business,
or corporate), appear similar in length. Specifically, 30 year lease terms (with two, 10-year
options) are offered to a wide variety of Tenants. From a business perspective, terms should be
directly proportional to the amount of investment a Tenant is making in the property. In some
cases, where the Tenant is pledging larger, community-wide impacts such as job creation, some
consideration of these impacts might also be considered in the lease, if not addressed by separate
agencies involved in a State or local incentive package arrangement. One approach for resolving
this is to develop a matrix or formula, which establishes certain criteria and/or investment and
impact thresholds required to qualify for a 10, 20, or 30 year lease at the Airport. As mentioned
below, all options should be mutually shared by both the Airport and the Tenant, not just
assigned to Tenants.
Additional key findings include:
• Rights of First Refusal and purchase options on property should have some form of
consideration.
• Avoid multiple assignments and use those opportunities to renegotiate. Multiple
assignments and amendments make for confusing provisions and allow for
misunderstanding of terms and obligations.
1.1 Reversion Clauses
Many lease documents for long-term ground leases at airports contain a provision known
as a Reversion Clause. FAA Order 5190.6a requires airports to make all facilities and services
available on a fair and reasonable term without unjust discrimination. A perpetual lease would
violate this condition. The Reversion Clause addresses what happens to improvements on a
leasehold at the end of a lease. Generally, the ownership of improvements made by the tenant
will revert to the airport sponsor at the end of the lease period, which can vary from 20 to 40
years, depending upon the amount of investment, useful life assessments of the building
involved, and the length of time required by the investor to recoup his/her capital investment. A
long term lease lets the tenant get financing to build the improvements and gives them adequate
time to get a return on their investment. At the conclusion of the initial lease term, the airport
sponsor can assess the improved value of the property and structures, and exercise the right to
lease both the land and improvements at their prevailing market rent. A sample reversion clause
from a Denton Airport lease is:
W R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. C-2
Denton Municipal Airport
Business Plan October 2010
C. Ownership of Improvements: All buildings and improvements constructed upon the premises by
Lessee shall remain the property of Lessee unless said property becomes the property of Lessor under
the following conditions, terms and provisions:
1. Removal of Buildings. No building or permanent fixture may be removed from the premises.
2. Assumption. All buildings and improvements of whatever nature remaining upon the leased
premises at the end of the primary term, or any extension thereof, of this lease shall
automatically become the property of Lessor absolutely in fee without any cost to Lessor.
3. Building Life. It is agreed that the life of the building to be constructed by Lessee on the
property herein leased is thirty (30) years.
4. Cancellation. Should this lease be cancelled for any reason before the end of the thirty (30)
years expected building life, it is especially understood and agreed that Lessor reserves the
right to purchase all buildings, structures and improvements then existing upon the premises
by tendering to Lessee one thirtieth (1130) of the undepreciated value of such building for
each year remaining on the agreed life of such building. The undepreciated value of all
improvements is to be determined by having such improvements appraised by three
appraisers, one appointed by Lessor, one appointed by Lessee and one appointed by the two
appraisers.
The Pros and Cons of Reversion Clauses: A Tenant's Perspective
Tenants have at least two main concerns about reversion clauses. The first is the future
loss of property title, which will ultimately lead to the payment of market rents for facilities that
they have improved. Thus, property on which they were paying land leases only will revert to
full market rates for their building rents as well. The second concern is that tenants must pay full
taxes each year until reversion on a building in which the tenant is losing equity because of the
reversion clause.
For the tenant, there is no real solution to paying full market rents after the expiration of
the lease term except the possible extension of the lease. That is, some tenants approaching a
lease reversion deadline will attempt to negotiate with the airport sponsor to extend the lease for
a period of time. This extension can postpone the market rate hike, but at a cost. Extensions
such as these are negotiated and can include up-front cash payments along with higher rent
amounts. They can be preemptively negotiated several months or years before the expiration of
the lease in question.
In some cases the airport sponsor provides compensation for the residual value of the
improvement at the end of the lease. This only occurs through negotiation and implies that the
facilities to be constructed are valuable to the sponsor or that the tenants cannot recoup their
investment through the lease period. This also motivates tenants to maintain their premises.
For the tax issue, one solution (implemented in Brookhaven NY), is to let tenants develop
improvements but the title to those improvements transfers immediately to the airport sponsor
upon building completion or certificate of occupancy. The ground lease protects the tenant
investor for a specified period of time (usually more than 20 years). At the expiration of that
W R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. C-3
Denton Municipal Airport
Business Plan October 2010
lease, the airport sponsor (as owner of the improvements) can then lease the property and its
improvements at full market rates. Tenants are required to maintain the rented building during
the lease period, and the airport sponsor inspects and requests repairs and maintenance if needed.
This takes the tax burden off of the tenant and also lets the airport sponsor remain in control of
their hangars.
Another solution to the tax issue may be a Payment in Lieu of Taxes (PILOT). PILOT
can be used as an incentive for investment in taxable infrastructure or other facilities that create a
public benefit. The PILOT may be negotiated to reduce or defer the property taxes on a
developer, striking a balance between public and private financial burdens and needs. In effect,
the sponsor absorbs tax payments on the improved property because it is receiving the benefit of
the business (jobs, activity at the airport, road improvements, etc).
The Pros and Cons of Reversion Clauses: A Sponsor's Perspective
One concern with reversion clauses for the Sponsor is that tenants are less likely to make
improvements on their buildings toward the end of the lease period. One solution to this is by
performing inspections of the tenant premises well before the expiration date of the lease. At
this time a lessor can determine the condition and use of the premises, and ascertain the
willingness of the tenants to make new investments in the leasehold that might merit an
extension of the lease.
In some cases new leases have been approved with suitable ground lease escalators, if the
tenant was willing to make significant new investments in the leasehold. In other cases, an
inspection has shown seriously deficient buildings that cannot readily or cost-effectively be
brought up to code. Then the airport will notify the tenant that the reversion clause of the lease
will take effect at the end of the lease period.
Performing inspections well in advance of the lease expiration date, especially if the
building is in good condition, allows the tenant to get an early answer on what lies ahead, make
investments before the lease is up, and keep the building in good condition. Making sure that
new leases have a clause that allow for periodic inspections of new facilities by airport staff can
also help ensure that the airport takes over a building that has been properly maintained. If an
inspection does not happen until the lease is almost expired, the building may suffer from
deferred maintenance since the building owner may be reluctant to put money into it without
knowing how much time is available to amortize such improvements.
Further Considerations
Before adopting a leasing policy that addresses reversion, the Airport should consider the
following issues:
• The reversion policy should be consistently applied to all existing and prospective
tenants.
W R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. C-4
Denton Municipal Airport
Business Plan
October 2010
• The airport should take an inventory of the buildings it will be absorbing in the near term
and determine if it can cover the cost to bring any real property improvements up to code.
• Determine if reverted improvements will be attractive to prospective tenants.
• Refer to the airport's Master Plan to find out if current structures and their locations meet
current and future airport development needs.
• Confirm that the reversion policy is in agreement with the FAA Airport Compliance
Manual stated in FAA Order 5190.613.
• Ensure that there is no discrimination between prospective tenants and current tenants
whose property has reverted.
No Reversion
• This approach may be appropriate if the building is in reasonably good shape and the
type of land use on the leasehold meets the needs of the airport and its tenants. However,
this approach will not maximize the financial return to the sponsor.
• It provides an incentive for tenants to maintain their buildings well and make
improvements over time, and to make sure that all airport rules and lease conditions are
met at all times. However, providing an existing tenant with a new (long-term) lease may
not meet federal non-discrimination requirements if there is other demand for the
leasehold, because it precludes opportunities for new tenants.
• A short-term lease may be appropriate if the Airport Master Plan and/or Layout Plan
defines a new use for it but the new use is not practical yet because other leaseholds that
would be needed are not available yet.
Reversion: Airport,Sponsor Takes Title to a Building
For the reversion options under which the airport sponsor takes title to a building, a
number of issues must be considered:
• The sponsor gains more control over the airport, as there are no tenant subleasing
arrangements.
• The City gains additional revenue.
• The City will have to commit staff and resources to manage and maintain the buildings.
Some buildings may take more resources than others.
• Building maintenance and management needs for facilities that have reverted to the
sponsor will vary.
• Since facilities would revert to the airport sponsor over a long period of time, other
factors (such as whether building maintenance can be adequately handled by existing
airport sponsor staff, or would require additional hiring) are also relevant. Further
detailed analysis would be required.
Building Is Not Salvageable or Land Is Needed for Other Purposes
If the building is not salvageable or the land is needed for other purposes the following
options should be considered:
W R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. C-S
Denton Municipal Airport
Business Plan October 2010
• Lease the building back to the tenant, who then makes a new investment.
• Lease it to a new tenant that will make an investment.
• Airport sponsor develops the land.
A reversion clause can also state that the tenant remove any improvement that they have
made to the property. This can be beneficial to the sponsor if the sponsor believes that the
hangar is in too much disrepair to salvage. This saves the cost of demolishing buildings that are
in structural failure. This can also be beneficial to the tenant if the tenant believes the building
materials can be used or sold for some other project.
Reversion clauses have become normal in the aviation industry for a number of reasons.
These include maximizing future revenue streams and maintaining a level of control over the
development and maintenance of facilities on the airport. Each airport has its own lease language
and different approaches to the issue. At Denton, the current lease language supports the
reversion of property improvements to the City. From this analysis, it can be shown that the
Airport will have greater financial production with the reversion clauses than without. Even if
there are individual cases where a negotiated lease term increase or other modification that
postpones the actual property reversion is reached, the prime motivation is because of the
reversion clause. Thus, the reversion clause is a valuable part of the Airport's future revenue
stream and should remain in place.
1.2 Recommendations
The following are a number of basic recommendations to address the key findings
discussed above:
• Thresholds for Terns: Draft and adopt a matrix or formula, which establishes certain
criteria and/or investment and impact thresholds required to qualify for short, medium,
and long term leases. For example, if a tenant is investing up to $100,000, they qualify
for a 10 year lease. For investments of $100,001 to $500,000, tenants would qualify for a
lease of between 10 and 20 years. Investments of over $500,000 could qualify a tenant
for a 30 year lease. Other criteria, such as jobs created or retained, may also be
developed.
• New Leases for Changes: Ensure a new lease is drafted when a tenant wishes to increase
its permitted uses. Assignments only change the responsible party.
• Lease Extensions: For lease extension options, there should be more requirements than
simply the tenant's choice to extend at a new rate. A list of requirements is typically
present in leases for term extensions (tenant is in compliance, no more than X events of
default over X time period, it is in the best interest of the airport, etc.). Additionally, there
may be statutory and/or charter-based limitations on leasehold agreements. Often, options
are not considered part of such limitations; however, if not articulated precisely, some
language could actually exceed the authority of the City.
• Rent Escalations: The method of determining rent escalations should be modified at the
Airport. While escalations based on the Consumer Price Index (CPI) are common, a
M R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. C-6
Denton Municipal Airport
Business Plan
October 2010
growing number of lessor's and lessee's prefer straight-line increases (X percent
annually, periodically, etc). Additionally, the analysis found no provisions in lease rent
escalations for re-appraisals of the demised premises being rented. In this way, the
Airport as the lessor could be vulnerable to changes in the market value that are not
balanced with CPI or other increases. The inclusion of property appraisals every five
years, with maximum limitations, will likely provide added protection to the Airport.
• FAA Requirements: Ensure that all FAA required and recommended clauses are
present.
• Insurance Provisions: Ensure that there is a clear procedure and method of dividing up
insurance proceeds in the event of partial or total destruction of the property. It is clear
that the buildings revert to the Airport at the end of the lease; however, it is unclear what
happens if the demised premises are destroyed in year one or in year 29. Thus, leases
should establish the procedure and identify recipients of insurance claim payments.
• Reversion Clauses: From this analysis, it can be shown that the Airport will have greater
financial production with the reversion clauses than without. Even if there are individual
cases where a negotiated lease term increase or other modification that postpones the
actual property reversion is reached, the prime motivation is because of the reversion
clause. Thus, the reversion clause is a valuable part of the Airport's future revenue
stream and should remain in place.
W R.A. Wiedemann & Associates, Inc. in association pith CHA, Inc. G 7
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Appendix D:
Local and State Incentives
Denton Municipal Airport
Business Plan October 2010
Appendix D - Local and State Incentive Programs
There are a number of local and State incentive programs available to businesses that intend
to expand or locate in Denton. These programs are listed on the Denton Economic Development
Partnership web site (http://dentonedp.com/existing business/existing business incentives. asp) as
follows:
1. LOCAL PROGRAMS
1.1 Tax Abatement
The City of Denton adopted a tax abatement policy that is available to new and expanding
businesses, corporate office headquarters and distribution centers. History and philosophy of the
firm, project specifications, and the potential impact on the community are factors that are
considered during the application approval process. Projects must meet the Qualifying Criteria. Each
project is negotiated on a case-by-case basis and must be approved by the City Council.
Qualifying Criteria:
• New and expanding businesses
• Corporate office headquarters and distribution centers
• Minimum capital investment required is $5 million
• History and philosophy of the firm, project specifications, and the potential impact
on the community are factors that are considered during the application approval
process.
Abatement Guidelines:
• Abatements begin at 25% and can range up to 50% based on additional factors.
• Each project is negotiated on a case-by-case basis and must be approved by the City
Council.
• No applicant may receive credit for more than five of the additional factors.
Additional Factors (5% Each):
• The project will occupy a building that has been vacant for at least two years;
• The prof ect will create high-skilled, high-paying j obs as documented by the applicant
(A breakdown of number of jobs per job classification and entry level wage per
classification will be used to determine eligibility);
• The project will involve a significant relationship with one of the two universities in
Denton;
• At least 25% of the new jobs created by the project will be filled by Denton
residents;
• The project will provide knowledge-based jobs (at least 25 percent of jobs require
college bachelors degree at entry level);
• The proj ect will donate significant public art to the community (To qualify, donation
must be approved by Greater Denton Arts Council and City Council);
IOf R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. D-1
Denton Municipal Airport
Business Plan October 2010
• The project will donate significant materials/equipment to the public schools (to
qualify, donation must be approved by DISD and City Council);
• The project will create improvements to the Denton Central Business District;
• The project will result in the formation of a business park;
• The project is an international or national headquarters facility;
• The project is a medical manufacturing or research facility.
1.2 Denton Municipal Electric Industrial Development Rider
Denton's electric utility service provider is Denton Municipal Electric (DME). New and
expanding industrial and commercial service customers may receive a reduction from DME in their
demand billing.
Qualifying Criteria:
• New and expanding industrial and commercial service customers.
• Customers whose electric service represents demand not previously served by the
City at any location in the City's service area in the last 12 months.
• Metered demand is in excess of 225 KVA or 200 KW per month.
1.3 Triple Freeport Tax Exemption
The City of Denton, Denton County and Denton Independent School District passed the
Freeport Amendment, which exempts certain business personal property from ad valorem taxes.
Goods, wares, merchandise, other tangible personal property, ores (other than oil, natural gas and
other petroleum products) are exempt from ad valorem taxation if the property is (1) used for
assembling, storing, manufacturing, processing, or fabricating and (2) is shipped outside the state
no longer than 175 days after it is acquired.
1.4 Infrastructure Assistance
The City of Denton promotes economic growth through a program of infrastructure
financing. This program is available to industrial, distribution, and corporate headquarter prospects
which have committed to building facilities in Denton. Commercial and retail prospects, which sell
a majority of their goods or services to individuals or businesses outside of Denton, may also
qualify. An economic analysis is performed on each project to determine project costs and benefits
over a five-year period. The results of the analysis are an important factor in the project approval
process.
1.5 Industrial Revenue Bonds
The City of Denton has established a nonprofit industrial development corporation
authorized to issue tax-exempt or taxable revenue bonds under Texas' Development Corporation Act
of 1979. Eligible projects must promote the development or expansion of manufacturing facilities
in Denton. Bond proceeds may be used for land, depreciable property, inventory, raw materials,
IOf R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. D-2
Denton Municipal Airport
Business Plan October 2010
finance charges, and research and development costs.
1.6 Downtown Incentive Reimbursement Grant Program
The City of Denton Economic Development Department works to revitalize and enhance the
unique character of Downtown through historic preservation and community involvement, while at
the same time promoting Downtown, providing educational and technical assistance to business and
property owners, and maintaining the beauty of Denton. As an economic incentive, the City of
Denton Economic Development Department has designed an incentive reimbursement grant
program that provides up to $50,000 for qualifying projects.
1.7 Grants and Loans (Chapter 380)
Chapter 380 of the Local Government Code provides very significant legislative authority
for Texas municipalities in the area of economic development. When a city wants to provide a grant
or a loan of city funds or services in order to promote economic development, it generally cites its
powers under Chapter 380. Cities have utilized the provisions under this law to provide a myriad
of incentives that have drawn businesses and industries to locales throughout Texas. This statute
basically allows the provision of loans and grants of city funds, as well as the use of city staff, city
facilities, or city services at minimal or no charge.
2.0 STATE INCENTIVES
The Texas Office of the Governor, Economic Development & Tourism assists relocating
businesses by linking them with other programs that are offered through agencies statewide. Listed
below are some additional economic development programs:
2.1 Texas Enterprise Fund
The Texas Enterprise Fund can be used for a variety of economic development projects,
including infrastructure development, community development, j ob training programs, and business
incentives. These funds are used primarily to attract new business to the State of Texas or to assist
with the substantial expansion of an existing business as part of a competitive recruitment situation.
2.2 Emerging Technology Programs
The Texas Emerging Technology Program is designed to help Texas create jobs and grow
the economy over the long-term by expediting the development and commercialization of new
technologies and attracting and creating j obs in technology fields that will from the backbone of our
economy. The program works through three-way partnership between the state, institutions of higher
educations, and private industry to focus greater attention on the research, development and
commercialization of emerging technology.
IOf R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. D-3
Denton Municipal Airport
Business Plan October 2010
2.3 Skills Development Fund
The Skills Development Fund is an innovative program created to assist Texas public
community and technical colleges in financing customized job training for their local businesses.
Average training costs are $1,000 per trainee; however, the benefit may vary depending on the
proposal. North Central Texas College has worked in conjunction with state officials on the skills
development fund program and would be willing to submit an application on the project's behalf.
2.4 In-State Tuition for Employees
The Economic Development and Diversification In-State Tuition incentive may be offered
to qualified businesses that are in the decision-making process to relocate or expand their operations
into Texas. The incentive allows employees and family members of the qualified businesses to pay
in-state tuition fees if the individual files with a Texas institution of higher education. Without this
incentive designation, a strident must reside in Texas for a 12-month period to be entitled to pay the
tuition fees of a Texas resident.
2.5 Pollution Control Property Tax Exemption
A Texas constitutional amendment providing an exemption from property taxation for
pollution control devices, equipment or land for air, water, or land pollution control was approved
in 1993. This program provides an exemption of real and personal property tax for the life of the
eligible equipment. The individual or company seeking the exemption must submit a use and
determination permit to the Texas Commission on Environmental Quality (TCEQ). That positive
use determination is then provided to the local appraisal district, which must accept the TCEQ's
decision and grant the property an exemption from property taxes.
2.6 Texas Manufacturing Assistance Center
The Texas Manufacturing Assistance Center (TMAC) is part of a national network of
Manufacturing Extension Partnerships supported by the National Institute of Standards and
Technology. TMAC helps identify problems in manufacturing processes, recommends solutions,
and helps execute projects. TMAC field engineers operate out of offices located nearby to provide
hands-on assistance to firms seeking to upgrade their operations to become more competitive.
TMAC services include assessment and benchmarking of existing operations; technical awareness
projects (seminars, workshops, etc.); technical assistance projects including specific technology
engineering or management solutions (e.g., TQM, ISO 9000, Process Improvement, Inventory
Control and Management, Plant/Equipment upgrades, CAD/CAE/CAM); and Deployment Group
Management to assist sets of companies with common problems implement common solutions.
IOf R.A. Wiedemann & Associates, Inc., in association with CHA, Inc. D-4