HomeMy WebLinkAbout05 - Section 4 - Best Practice RecommendationsSECTION 4 4 Best Practice Recommendations 4.1 Financial Improvement Recommendations for 2013 4.1.1 Short -Term Financial Improvement Recommendations, (0 -2 years) The following best practice recommendations were developed as a result of airport interviews, and CH2MHILL experience managing General Aviation facilities. 1. Leasing: The city should establish a baseline commercial lease standard that will include; a rate schedule providing a rate of return that covers constructed cost and interest, debt service coverage, a standard return on investment, annual CPI increases, annual maintenance coverage if provided by the city and general maintenance and lease compliance. Cancel all month -to -month leases and renew with updated annual lease documents and rates. Replace the longer term leases with the new updated commercial lease as they expire. Section 3.4.9.6 of this report details eight discreet leasing recommendations with improved lease language that can be utilized in a new lease standard. Airport management should work directly with the city legal department to draft policy for approval that will include stronger lease terms, and ensure that all aeronautical businesses are paying their proper taxes and fees for business derived at GTU. 2. Fueling: The city should adopt minimum FBO standards that will ensure that any new entrants will invest and maintain a high level of service going forward. The City should also, fully evaluate the potential for taking a larger stake of the retail fueling margin at GTU. The range of options available to the city that would allow for a larger retail fueling revenue interest would be: 1. Existing limited retail operation, with an improved ROl; 2. Full retail fueling on a non - exclusive basis; 3. A fueling partnership with a private sector fixed base operator; 4. An exclusive fueling arrangement for the city. These options should be fully explored from a commercial, legal and financial perspective in order to determine which option would best serve the airport and its stakeholders in the long term. It is recommended that airport management develop a new rates and charges policy to be submitted to city council for FY 2014 that will cover the recommended changes. Under the current fueling operation, the city should view the wholesale fuel flowage margin as a flexible item in the annual airport budget to meet operational break even, and attain a target ROI of 10 -12 %. A more detailed fueling discussion is covered in section 3.4.2 of this report. 3. Organizational changes: best practices recommend a transition to an organization with the following full time employee contingent; (1) airport director /manager, (1) bookkeeper /business manager, (1) operations manager, (1) maintenance manager, Part -time help with maintenance, fueling and accounting as needed. 4. The GTU airport manager position should be re- chartered as a part of the recommended organizational changes. The re- chartered position would take on a much stronger business development role, while the recommended operations manager position should offer the airport manager relief from the more detailed day to day duties. The airport manager's perspective and charge should be that of developer of an important aviation economic development site with runways. 5. The GTU administrative function should be revamped to incorporate a private sector management perspective for the fueling and leasing functions. In this business management perspective, the airport business manager would actively manage these commercial functions with dashboard performance indicators, enabling timely business modifications to ensure maximum revenue return to the airport. 6. The city should work to define a vision and brand for the airport. This vision should be in the form of a policy statement that will enable staff to develop facility plans and marketing plans that will allow for a much more focused growth opportunity in aviation and aerospace related jobs, and resulting area tax base and economic development. This defined vision will also allow the airport to compete more successfully for the finite aviation and aerospace growth markets in the region. GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS 67 COPYRIGHT 2013 BY CH2M HILL, INC. BEST PRACTICE RECOMMENDATIONS 7. Develop a workable theme restaurant concept in the near proximity of the main terminal building. The concept could be a private sector venture, or possibly an addition to the terminal building remodeling. The restaurant would present a strong business case, in improving fly -in and itinerant fuel sales. 4.1.2 Medium -Term Financial Improvement Recommendations, (2 -5 years) 1. It is recommended that GTU be given an aviation development review and approval framework that will allow the airport to move as quickly as its competition in accommodating the regional aviation and aerospace business growth which is finite, and will present a winner or loser consequence for Georgetown. This plan recommends the initiation of an airport development City staff working group empowered to bring about priority capital and commercial development in a timely manner consistent with other airports in the metro area that are competing for the same aviation business. The committee should be chaired by the airport manager, and should include representatives from City departments; legal, finance, public works, planning and economic development departments at a minimum. The group would meet on a project specific basis. 2. Choose a long term airport management option for the airport that will work well with the selected fueling option, and meet the financial requirements and service level needs of GTU for the future. Options are further detailed in section 5 of this report. 3. Develop a comprehensive marketing plan for GTU that is based on achieving the community vision for the airport. The marketing plan would cover; aviation business development, aviation support business development, land development, developer /broker policy and include an incentive plan for private sector investment in economic development initiatives. 4. With the results of the marketing plan, develop RFP packages to go out to the private sector in order to gauge demand, and bring in private investment potential for; shade ports, t- hangars, community hangars and other aviation related facilities. 5. Consider developing shade hangars as a lower cost option to t- hangars. This concept has proven very successful in Sun Belt regions, and would bring in additional based aircraft, additional fuel sales, and the potential for additional ground lease revenue. 6. Utilize the land use plan to be developed in the upcoming airport master plan update to improve the marketing /property development plan for GTU. The land use plan will delineate highest and best use for developable parcels, and will also designate aviation support property and non - aviation use property for the long term. 7. Develop a strong relationship between airport management and the local economic development agencies to help further GTU as an important economic development community asset. This relationship will over time contribute to job growth and property development at GTU. 8. Replace terminating leases with the updated stronger commercial and lease compliance versions as current leases terminate. 4.1.3 Long -Term Financial Improvement Recommendations, (5 -15 years) 1. Utilize new lease boilerplate contracts that include stronger commercial and lease compliance terms and conditions. Implement these new documents as current leases terminate. 2. Consider reinstating a limited air show at GTU. The air show would help build community interest and support, while improving itinerant fuel sales. 3. Use airport revenue improvements to fund land development initiatives in a Public /Private/ Partnership arrangement where private investment in new aviation and non aviation facilities can be leveraged. 4. Use airport revenue improvements to continue to upgrade the airport ambiance, service offerings and public facilities. 68 COPYRIGHT 2013 BY CH2M HILL, INC. GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS BEST PRACTICE RECOMMENDATIONS 5. Continue to refine and develop GTU brand based marketing plans for attracting new aircraft owning businesses, aviation support businesses and leisure aircraft owners. 6. Implement any runway extension improvement plans that are documented and FAA approved in the upcoming airport master plan. Runway extensions usually offer strong safety and noise abatement benefits. Any extension would offer GTU a marketing boost, and offer a potential revenue boost. 4.2 General Best Practice Recommendations 4.2.1 Operations /Safety and Security 1. Develop a safety /security plan. Plan will detail Memorandum of Understanding (MOU) requirements and mutual /joint response needs with other agencies, tenant watch program, security upgrades needed and associated cost, identify grant sources for security program and capital funding. The security plan may be a component of a GTU master plan update, to the extent grant funding is available for this effort. Development of a security plan is recommended regardless of funding a master plan update, however, and should not be delayed beyond 2013. 2. Develop MOU with City firefighting located at GTU to promote a joint memorandum of understanding for the through the fence emergency response requirements for GTU. 3. Develop tenant security watch function as defined in the security plan. Meet with tenant security watch group on a standing schedule, recommend quarterly. 4. Work with Georgetown police to improve and expand the patrol cycle at the airport. 4.2.2 Finance /Legal 1. Develop and seek input on a new comprehensive set of airport rules and regulations and related set of tenant minimum development standards documents as stand alone, but as a compatible set to be given to existing and prospective tenants. 2. Delegate limited budgetary signing authority and commercial authority to the airport manager for administrative items included in the current budget, i.e. up to $25,000 for standard agreements of a year or Tess; up to $2,000 for a standard services purchase order. 3. Work with city finance with the goal of rolling up airport financial and accounting and FBO tenant reporting to include a set of mutually agreeable Key Performance Indicators (KPIs) that will give airport management dashboard metrics of current operating and financial information that will allow airport management solid and timely decision - making information. KPI examples: monthly fuel revenue /per actual unit cost; monthly operations /monthly fuel sales; monthly itinerant operations /monthly fuel sales; monthly based aircraft /monthly based aircraft fuel sales. 4. Work with the local tax collector and appraiser to try to find a resolution for airport tenant ad valorem /business tax assessment situation. This current assessment could be contributing to an uneven market dynamic as compared to other airports in the region. 5. Complete a comprehensive review and update of Airport Minimum Standards to reflect overall goals and objectives in airport master plan and business plan. Revise actual minimums for various commercial activities to include capital outlays for ramp /apron square footage, hangar square footage, fueling capabilities, hours of operation, terminal square footage, etc. Implement minimum standards grandfathering existing service providers with provisions that upon lease renewal new minimum standards will apply. 6. Review and update Airport Rules and Regulations to reflect actual operations occurring on the airport. For example, the Rules and Regulations should reflect the presence of the air traffic control tower (ATCT) at the airport, and its operational procedures. GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS 69 COPYRIGHT 2013 BY CH2M HILL, INC. BEST PRACTICE RECOMMENDATIONS 7. Update contract management system to improve efficiency and automate contract provisions currently done manually. 4.2.3 Capital Development and Maintenance 1. Update GTU master plan, if possible beginning in 2013, to include all traditional short, medium and long term capital needs. The plan should also include the following, to the extent FAA grant funding is available: a strategic planning section; a safety /security plan section; a marketing /branding and commercial development section; and should include the recommendations and findings of this business plan. A final recommendation on the long term runway length requirement, based on the master plan's updated forecast and demand /capacity assessment, should be a primary output of this master plan update. 2. Develop an airport property /commercial development plan. Work with local economic development and planning office of the City to provide input and direction for the plan. The plan should define goals for aviation, aviation support, and non - aviation development parcels. Include in the plan, provisions for State and local incentives and economic development tools. Develop a listing of workable economic development tools such as: a primary or sub zone Foreign Trade Zone (FTZ), a tax increment district, empowerment zone, etc. Work with the group to define just those tools that are available and workable in the GTU environment. 3. Establish an airport property /commercial development committee meeting and agenda as a part of a new and revised airport committee structure that will develop and provide solid recommendations to the City transportation committee. Provisions of the property /commercial development planning process should be brought forward and reflected in the GTU master plan update. 4. Develop a Landscaping and external enhancement plan to upgrade and improve the external landside look of the airport consistent with the intended high end general aviation role of GTU. 5. Develop a plan for the upgrade and internal renovation of the existing airport terminal, consistent with the intended high end general aviation role of GTU, and the service offerings of the new fuel farm facility. The terminal should include the full range of expected pilot and crew amenities and high end service levels, as well as the potential for a full service restaurant. Work with TxDOT toward identifying available economic development and other capital grants that might be available to offset the cost of the renovation. 6. Maintain and update on an annual basis, the capital maintenance plan developed as part of this business plan. Update each year with a 5 and 10 year outlook. 7. Consider accessing the TxDOT on call planning and engineering consultant contract on an as needed basis to help improve and expedite the project planning process for aviation and commercial property development proposals. 4.2.4 Administration /Organizational 1. Establish a new airport advisory committee structure that will work in unison with the two airport members that are assigned to the City transportation committee. The recommended structure is as follows: At the City Transportation advisory board level, two members: • One member assigned to cover airport operations and security • One member assigned to cover airport marketing and commercial development Each of the two Transportation Committee members briefs the committee on activities from their respective airport committees for the previous month. 70 GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS COPYRIGHT 2013 BY CH2M HILL, INC. BEST PRACTICE RECOMMENDATIONS At the Airport Committee level, the same two members appointed to the City Transportation advisory board: • One member chairs the quarterly airport operations and security committee meeting • One member chairs the quarterly airport marketing and commercial development committeell Committee membership is voluntary and open to all airport stakeholders. The Chairmen for the two committees are appointed by the Mayor. Each committee chair works with the airport manager to develop a quarterly meeting agenda, and prepares a brief to be delivered to the City Transportation advisory board. 2. Develop an Airport Marketing /Branding Plan for the airport. The plan will include a strategic visioning component that will set vision, mission, and goals and define the overarching airport role for the airport. The plan will be inclusive of a new branding exercise and a joint marketing plan that will include input from: airport, city, local chamber and economic development agency(s) and airport tenants. The plan will include: an updated airport brand name /logo; joint marketing goals for airport and tenants; aviation market development goals; annual marketing budgetary needs; listing of priority conferences with conference goals; identification of target markets; identification of airport facility needs; identification of fly in, and static aviation concepts that meet user and City goals. The Airport Marketing committee should consider renaming the airport according to strategic vision for the airport, i.e. "North Austin Executive ", "Georgetown Executive" etc. The airport marketing /branding plan can be stand alone, or it can be funded by and made a part of the airport master plan update. 3. Develop updated job descriptions for the four full time positions, and part -time positions being recommended for GTU. Airport manager job should be upgraded and should include a delegation of routine operations and maintenance duties to allow for more time to work professionally with City staff, outside agencies, economic development agencies, prospective tenants, neighborhood associations and others. The Airport Manager job description should take on more of an aviation business development aspect. 4. Develop concepts along with City Staff for identifying airport events and open house opportunities that will strengthen the airports' ties with both the City and the local community, i.e. meet the city manager, meet the city council, neighborhood association day, etc. 5. Consider upgrading the airport manager position to a higher level reporting structure within City government in order to improve job effectiveness. 11 Involves legal issues. GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS 71 COPYRIGHT 2013 BY CH2M HILL, INC. BEST PRACTICE RECOMMENDATIONS 4.3 Minimum Standards /Rules & Regulations /Leases 1. Complete a comprehensive review and update of Airport Minimum Standards to reflect overall goals and objectives in airport master plan and business plan. Revise actual minimums for various commercial activities to include capital outlays for ramp /apron square footage, hangar square footage, fueling capabilities, hours of operation, terminal square footage, etc. Implement minimum standards grandfathering existing service providers with provisions that upon lease renewal new minimum standards will apply. 2. Review and update Airport Rules and Regulations to reflect actual operations occurring on the airport. For example, the Rules and Regulations should reflect the presence of the air traffic control tower (ATCT) at the airport, and its operational procedures. 3. Complete a general aviation airport survey to determine current best practice rates and charges for t- hangar and aircraft storage rental rates. Implement updated rates and charges. 4. Complete a comprehensive review and update of airport lease templates to reflect inclusion of standard industry language. A sample lease is contained in Appendix B. 5. Cancel all month -to -month leases and renew with updated leases. 6. Update contract management system to improve efficiency and automate contract provisions currently done manually. 72 GEORGETOWN MUNICIPAL AIRPORT BUSINESS CASE ANALYSIS COPYRIGHT 2013 BY CH2M HILL, INC.