TITLE
Consider a memorandum/resolution accepting a grant from Texas Department of Transportation-Aviation Division to fund a T-Hangar Design and Construction Project on Skylark Field.
SUMMARY
DATE: August 1, 2017
TO: Ronald L. Olson, City Manager
FROM: Matthew Van Valkenburgh A.A.E., Executive Director of Aviation
SUBJECT: RESOLUTION TO ACCEPT A GRANT FROM TXDOT-AVIATION DIVISION FOR THE PURPOSE OF DESIGNING AND CONSTRUCTING A T-HANGAR BUILDING ON SKYLARK FIELD
BACKGROUND AND FINDINGS:
On October 25, 2016, Council adopted a new Skylark Field Master Plan which identified adding T-hangars as the highest priority facility requirement and recommended construction of a T-hangar complex in FY 2018.
A major revenue source for the Skylark Field enterprise fund is the rental of light aircraft storage units, commonly known as T-hangars, to individuals and businesses basing their aircraft at Skylark Field. The airport currently has 40 T-hangar and covered tie-down units. These facilities stay 100% occupied, and there is a waiting list with approximately 43 requests for additional T-hangar space. A new nine (9)-unit T-hangar building is estimated to earn approximately $28,000 per year in rental revenues. Additional revenues will be earned from the sale of fuel to the tenants of the new hangar.
On April 11, 2017, Council approved resolution # RS-17-041 authorizing TxDOT-Aviation Division to act as the airport’s agent for a T-hangar development project on Skylark Field. On June 29, 2017, the Texas Transportation Commission approved the use of state and federal funding for 90% of the cost of design and construction of the proposed hangar and the supporting infrastructure (taxiway, apron, and utility connections).
On July 14, 2017, the City received a Federally and State Assisted Airport Development Grant offer in the form of a Texas Department of Transportation Airport Project Participation Agreement in the amount of $1,285,800 to fund 90% of this project. The City will be required to provide a match of $142,866 (10% of estimated total project cost) to receive this grant funding and allow the project to proceed. The grant is comprised of $600,000 in FAA non-primary entitlement funding with the balance of the grant being state funding.
The estimated design and construction cost of a nine (9)-unit T-hangar building is $1,428,666; design being $118,500 and construction $1,310,166, based upon TxDOT’s initial estimates.
Acceptance of this grant, as does all FAA and TxDOT Aviation grants, requires the City to make certain assurances related to the continued availability of the facility to the public for aeronautical use, use of revenues generated by the airport, and compliance with a number of Federal Regulations and standards.
THE ALTERNATIVES CONSIDERED:
The alternatives for the project are: (1) accept the grant and proceed with the project; or (2) decline the grant and defer the project indefinitely.
Which alternative is recommended? Why?
Staff recommends Alternative 1. Rental of the additional T-hangar units will position Skylark Field for full cost recovery of airport operation and maintenance costs by FY 2019, while meeting citizen requests for aircraft storage facilities in Killeen.
CONFORMITY TO CITY POLICY:
The hangar construction plan conforms to Skylark Field Airport Master Plan as adopted by City Council on October 25, 2016.
FINANCIAL IMPACT:
No General Funds are required for this project.
What is the amount of the expenditure in the current fiscal year? For future years?
For FY 2017, the City’s share for this project is $11,850 to match the state funds being used for the design phase of the project.
For FY 2018, the City’s share will be $131,017 to match federal and state grant funds for the construction phase. Upon completion of the building, estimated annual insurance, operations and maintenance costs are approximately $1,500; however, the hangar will provide annual rental revenues of approximately $28,000.
Is this a one-time or recurring expenditure?
The grant matching expenditure is a one-time expense divided between FY 2017 and 2018.
Is this expenditure budgeted?
Funding was not included in the adopted budget.
If not, where will the money come from?
The funds are available in the Skylark Field Aviation enterprise fund balance to satisfy the grant matching requirements. The Skylark Field fund balance currently includes restricted funds that were received from the sale of approximately 15 acres of land in 2012; it is more than enough to satisfy this matching requirement. Those funds must be used for capital improvement projects at Skylark Field.
Is there a sufficient amount in the budgeted line-item for this expenditure?
Yes. Funding is available for FY 2017, and sufficient funding will be included in the FY 2018 budget to cover the remaining expense.
RECOMMENDATION:
City Council approve the attached Texas Department of Transportation Airport Project Participation Agreement CSJ No. 1709KILEN accepting the state and federal grant offer in the amount of $1,285,800 for design and construction of a T-hangar on Skylark Field, ratify and adopt all assurances, statements, representations, warranties, covenants and agreements incorporated into this Airport Project Participation Agreement and expressly authorize the City Manager to execute all amendments within the amounts set by state and local law.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
TxDOT Airport Project Participation Agreement