2017-056 Airport Budget OverviewDate: August 11, 2017 Report No. 2017-056
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Overview of Airport Budget
BACKGROUND:
During the Airport budget presentation on June 27, the City Council requested information on a
number of items relating to the Airport budget. This report provides information on Airport
revenues and expenses, property tax revenues, use of gas well funds for capital projects, a hangar
pro forma, and US Aviation’s revenues.
DISCUSSION:
Airport 10 year pro forma:
Two (2) Airport pro formas have been provided in your backup. Airport’s financial outlook with
the current practice of having the general fund pay the Airport’s debt service (Attachment 1).
The Airport debt service began being paid from the debt portion tax rate in fiscal year 2016-17 as
a way to help the Airport become financially self-sufficient. In this scenario the Airport has
average net revenues of $308,635 over the next ten (10) years.
Attachment 2 is the ten (10) year Airport outlook with the inclusion of debt service. This
demonstrates the Airport averaging a $326,998 annual operating loss and the fund balance would
be expended by fiscal year 2025-26.
The use of gas well revenues for capital:
The City began receiving royalties from gas wells at the Denton Airport in 2004. A separate gas
well fund was created in 2005 with the purpose of supporting capital projects at the Airport.
Since 2004, the gas wells generated $16.8 million in revenues with expenditures of $12.9 million
through fiscal year 2015-16. As shown in attachment 3.
Pro forma on hangar:
The attached hangar pro forma (Attachment 4) shows a total net revenue after 30 years of $2.4
million with debt service included. The debt service is currently being funded by the general
fund, so the Airport fund will receive $4.9 million in revenue from the hangars over the 30 year
expected life.
Date: August 11, 2017 Report No. 2017-056
Property taxes generated on Airport property:
The property taxes generated from the Airport are $293,960 for this year. This information was
provided to the City by the Denton Central Appraisal District. The total property value has been
applied to the proposed tax rate.
Real Property 21,267,232$
Aircraft 14,744,769$
Business Personal Property 10,073,674$
Total 46,085,675$
Tax Rate 0.637856
Total Airport Ad Valorem 293,960$
US Aviation Group revenues:
The US Aviation Group (USAG) is a fixed based operator (FBO) at the Airport. Denton
Enterprise Airport receives revenues from fixed based operators through land leases, hangar
rental and aircraft tie down fees, and fuel commissions. In fiscal year 2015-16, the Airport
received $192,674 in revenue through USAG.
Category FY1516
Land Lease 101,017$
Hangar/Tiedown Fee 11,678$
Fuel Commision 79,979$
Total 192,674$
US Aviation Group Revenue
Financial Solvency
The Airport is exploring additional methods of cost recovery such as a Solid Waste fee for
certain leaseholds and an adjustment to the calculation of FBO fuel commission fees. A primary
initiative of new Airport administration is the review of airport ground leases, revenue streams,
and cost centers. Preliminary indications are that additional revenue from existing leaseholds will
be available. There may also be an opportunity to revise the calculations for fuel commissions
which would increase revenues by $40,000 annually. This will improve stability in the revenue
stream while also helping USAG reduce variation in planned expenses for fuel commissions.
This would be achieved by reformatting the current formula based on percent of wholesale cost
of fuel to a specific fee such as $.15 per gallon. This change has been included in the revenue
calculations for the Airport pro formas (Attachment 1 and 2).
Date: August 11, 2017 Report No. 2017-056
ATTACHMENT(S):
1. Ten Year Pro Forma with Debt Service
2. Ten Year Pro Forma without Debt Service
3. Gas Well Fund Schedule of Revenues and Expenses
4. Hangar Pro Forma
STAFF CONTACT:
Mark Nelson
Director of Transportation
Mark.Nelson@cityofdenton.com
940-349-7702
Revised Estimate Revised Estimate ProjectedProjectedProjectedProjectedProjectedProjectedProjectedProjectedProjectedFY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27Beginning Fund Balance $2,482,155 $2,536,469 $2,620,310 $2,937,892 $3,293,148 $3,640,100 $3,979,950 $4,314,006 $4,643,693 $4,970,566 $5,296,321Revenues AIRPORT GROUND LEASES 480,703$ 565,124$ 582,078$ 599,540$ 617,526$ 636,052$ 655,134$ 674,788$ 695,031$ 715,882$ 737,359$ AIRPORT QUEBEC HANGARS 116,400 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 AIRPORT GROUND LEASES - NEW ACREAGE - 50,000 50,000 100,000 103,000 106,090 109,273 112,551 115,927 119,405 122,987 AIRPORT FUEL FLOWAGE 195,891 240,000 244,800 249,696 254,690 259,784 264,979 270,279 275,685 281,198 286,822 AIRPORT FBO RENTAL COMMISSION 84,199 92,619 101,881 112,069 123,276 135,603 149,163 164,080 180,488 198,537 218,390 AIRPORT GAS ROYALTIES 589,217 577,433 565,884 554,566 543,475 532,606 521,953 511,514 501,284 491,258 481,433 INTEREST INCOME 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Total Revenues1,491,410$ 1,689,541$ 1,709,008$ 1,780,236$ 1,806,332$ 1,834,500$ 1,864,868$ 1,897,577$ 1,932,780$ 1,970,646$ 2,011,357$ ExpendituresPersonnel Services 576,417$ 530,482$ 546,396$ 562,788$ 579,672$ 597,062$ 614,974$ 633,423$ 652,426$ 671,999$ 692,159$ Materials & Supplies 44,211 46,700 48,101 49,544 51,030 52,561 54,138 55,762 57,435 59,158 60,933 Maintenance & Repair 93,750 105,193 84,857 86,554 88,285 90,051 91,852 93,689 95,563 97,474 99,423 Franchise Fees - - - - - - - - - - - Insurance 21,604 21,823 22,041 22,262 22,484 22,709 22,936 23,166 23,397 23,631 23,867 Board Expenses 630 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434 Operations 224,959 238,160 242,923 247,782 252,737 257,792 262,948 268,207 273,571 279,042 284,623 Cost of Services - Other 94,187 86,488 88,218 89,982 91,782 93,617 95,490 97,400 99,348 101,334 103,361 Debt Service - - - - - - - - - - - Debt Service - New ($3.56MM) - West Side Runway Constructionand North Taxiway & Existing Runway Repair (1,000 ft) - FY 17/18- - - - - - - - - - - Debt Service - New ($435K) - Taxiway Bravo Realignment &Connecting Taxiway Approaches (3) - FY 19/20- - - - - - - - - - - Cost of Service - General Fund 381,338 350,653 357,666 364,819 372,116 379,558 387,149 394,892 402,790 410,846 419,063 Transfer to Capital Projects - 225,000 - - - - - - - - - Total Expenditures1,437,096$ 1,605,699$ 1,391,427$ 1,424,980$ 1,459,380$ 1,494,650$ 1,530,812$ 1,567,890$ 1,605,908$ 1,644,891$ 1,684,864$ Net Revenue/Expense54,314$ 83,842$ 317,581$ 355,257$ 346,952$ 339,850$ 334,056$ 329,687$ 326,872$ 325,755$ 326,493$ Ending Fund Balance 2,536,469$ 2,620,310$ 2,937,892$ 3,293,148$ 3,640,100$ 3,979,950$ 4,314,006$ 4,643,693$ 4,970,566$ 5,296,321$ 5,622,814$ Notes:1. CPI readjustments - $70,000 increase FY17/182. New acreage does not include West side development3. Gas well revenue decrease of 2%4. Fuel flowage to $0.15/gal - $40,000 increase FY17/18Airport 10yr Financial Pro FormaWithout Debt Service
Revised Estimate Revised Estimate ProjectedProjectedProjectedProjectedProjectedProjectedProjectedProjectedProjectedFY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27Beginning Fund Balance $2,482,155 $2,537,461 $2,146,302 $1,774,900 $1,442,082 $1,076,655 $705,457 $369,479 $63,657 -$243,767 -$490,350Revenues AIRPORT GROUND LEASES 480,703$ 565,124$ 582,078$ 599,540$ 617,526$ 636,052$ 655,134$ 674,788$ 695,031$ 715,882$ 737,359$ AIRPORT QUEBEC HANGARS 116,400 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 139,365 AIRPORT GROUND LEASES - NEW ACREAGE - 50,000 50,000 100,000 103,000 106,090 109,273 112,551 115,927 119,405 122,987 AIRPORT FUEL FLOWAGE 195,891 240,000 244,800 249,696 254,690 259,784 264,979 270,279 275,685 281,198 286,822 AIRPORT FBO RENTAL COMMISSION 84,199 92,619 101,881 112,069 123,276 135,603 149,163 164,080 180,488 198,537 218,390 AIRPORT GAS ROYALTIES 589,217 577,433 565,884 554,566 543,475 532,606 521,953 511,514 501,284 491,258 481,433 INTEREST INCOME 24,964 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Total Revenues1,491,374$ 1,689,541$ 1,709,008$ 1,780,236$ 1,806,332$ 1,834,500$ 1,864,868$ 1,897,577$ 1,932,780$ 1,970,646$ 2,011,357$ ExpendituresPersonnel Services 576,417$ 530,482$ 546,396$ 562,788$ 579,672$ 597,062$ 614,974$ 633,423$ 652,426$ 671,999$ 692,159$ Materials & Supplies 44,211 46,700 48,101 49,544 51,030 52,561 54,138 55,762 57,435 59,158 60,933 Maintenance & Repair 93,750 105,193 84,857 86,554 88,285 90,051 91,852 93,689 95,563 97,474 99,423 Franchise Fees - - - - - - - - - - - Insurance 21,604 21,823 22,041 22,262 22,484 22,709 22,936 23,166 23,397 23,631 23,867 Board Expenses 630 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434 Operations 224,959 238,160 242,923 247,782 252,737 257,792 262,948 268,207 273,571 279,042 284,623 Cost of Services - Other 93,159 86,488 88,218 89,982 91,782 93,617 95,490 97,400 99,348 101,334 103,361 Debt Service475,000 456,984 456,074 430,379 429,048 388,034 353,509 352,297 290,338 286,663 Debt Service - New ($3.56MM) - West Side Runway Constructionand North Taxiway & Existing Runway Repair (1,000 ft) - FY 17/18- - 232,000 232,000 232,000 232,000 232,000 232,000 232,000 232,000 232,000 Debt Service - New ($435K) - Taxiway Bravo Realignment &Connecting Taxiway Approaches (3) - FY 19/20- - - - 50,000 50,000 50,000 50,000 50,000 50,000 50,000 Cost of Service - General Fund 381,338 350,653 357,666 364,819 372,116 379,558 387,149 394,892 402,790 410,846 419,063 Transfer to Capital Projects - 225,000 - - - - - - - - - Total Expenditures1,436,068$ 2,080,699$ 2,080,411$ 2,113,054$ 2,171,759$ 2,205,698$ 2,200,846$ 2,203,399$ 2,240,205$ 2,217,229$ 2,253,527$ Net Revenue/Expense55,306$ (391,158)$ (371,403)$ (332,817)$ (365,427)$ (371,198)$ (335,978)$ (305,822)$ (307,425)$ (246,583)$ (242,170)$ Ending Fund Balance 2,537,461$ 2,146,302$ 1,774,900$ 1,442,082$ 1,076,655$ 705,457$ 369,479$ 63,657$ (243,767)$ (490,350)$ (732,520)$ Notes:1. CPI readjustments - $70,000 increase FY17/182. New acreage does not include West side development3. Gas well revenue decrease of 2%4. Fuel flowage to $0.15/gal - $40,000 increase FY17/18Airport 10yr Financial Pro FormaWith Debt Service
City of DentonAirport Gas Well Fund1Schedule of Revenues & Expenditures For the Period Ended June 30, 2017FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16DESCRIPTION ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTALREVENUES: Royalties2619,841 1,323,993 1,233,849 1,108,335 807,847 4,124,918 2,389,035 1,216,740 1,162,508 1,023,526 581,848 478,310 16,070,750 Surface Agreements 25,057 43,299 25,559 13,952 48,526 15,152 15,152 9,152 13,952 13,952 - - 223,753 Interest Income - 17,517 108,150 90,718 110,827 32,050 28,879 34,336 23,150 26,153 27,708 26,225 525,713 Total Revenues 644,898 1,384,809 1,367,558 1,213,005 967,200 4,172,120 2,433,066 1,260,228 1,199,610 1,063,631 609,556 504,535 16,820,216 EXPENDITURES: Return on Investment - General Fund - - - - - - 27,973 15,239 - - - - 43,212 Franchise Fees - General Fund - - - - - - 39,962 34,800 36,022 37,853 34,778 35,268 218,683 Grant - City Match - - - - - 49,836 62,674 61,718 56,006 49,891 50,000 55,900 386,025 Professional Services - - 39,905 17,692 80,996 65,607 60,778 5,327 - - - - 270,305 Marketing - - - - - - - 30,082 - - - - 30,082 Debt Service - 206,777 255,437 228,750 221,993 216,987 224,815 219,455 77,605 151,753 204,776 475,790 2,484,138 Transfer to General Fund (Indirect Costs) 51,038 - - - - 973,582 178,124 178,124 294,997 381,338 - 367,890 2,425,093 Transfer to Capital Projects - 185,000 - - 1,300,000 1,210,900 654,125 479,160 1,000,000 816,636 1,204,276 169,835 7,019,932 Transfer to Other Funds (Indirect Costs) - - - - - - - - 16,030 29,340 - - 45,370 Total Expenditures 51,038 391,777 295,342 246,442 1,602,989 2,516,912 1,248,451 1,023,905 1,480,660 1,466,811 1,493,830 1,104,683 12,922,840 Net Income (Loss) 593,860 993,032 1,072,216 966,563 (635,789) 1,655,208 1,184,615 236,323 (281,050) (403,180) (884,274) (600,148) 3,897,376 Beginning Unreserved Fund Balance - 593,860 1,586,892 2,659,108 3,625,671 2,989,882 4,645,090 5,829,705 6,066,028 5,784,978 5,381,798 4,497,524 Ending Unreserved Fund Balance 593,860 1,586,892 2,659,108 3,625,671 2,989,882 4,645,090 5,829,705 6,066,028 5,784,978 5,381,798 4,497,524 3,897,376 3,897,376 1Federal law restricts the use of these revenues for Airport expenses only.Total Airport Appropriable Fund Balance 2,482,155 2Royalties from 10 gas wells located on Airport property and 1 gas pooling agreement.Airport Operating Fund Appropriable Fund Balance (1,415,221) Debt Service - Principal CorrectionTotalDebt Service Principal Payments Recorded Against Airport Operating F148,847 205,388 269,677 623,912(Reccomendation to reclassify the $623,912 in cash/equity from the Airport Gas Well Fund to the Airport Operating Fund)