HomeMy WebLinkAboutAgenda CC 06.23.2015 WorkshopNotice of Meeting of the
Governing Body of the
City of Georgetown, Texas
JUNE 23, 2015
The Georgetown City Council will meet on JUNE 23, 2015 at 3:00 P.M. at City Council Chambers, 101 E.
7th St., Georgetown, Texas
The City of Georgetown is committed to compliance with the Americans with Disabilities Act (ADA). If you
require assistance in participating at a public meeting due to a disability, as defined under the ADA,
reasonable assistance, adaptations, or accommodations will be provided upon request. Please contact the City
Secretary's Office, least four (4) days prior to the scheduled meeting date, at (512) 930-3652 or City Hall at
113 East 8th Street for additional information; TTY users route through Relay Texas at 711.
Policy Development/Review Workshop -
A Overview of the City’s Internal Service Funds and related capital maintenance for the City facilities,
parks, fleet and technology services to be included in the 2015/16 Annual Budget -- Micki Rundell,
Chief Financial Officer
B Presentation and Discussion of the San Gabriel Park Master Plan -- Barbara Austin,Vice President and
Director of Park Planning & Design for RVi., Kimberly Garrett, Parks and Recreation Director and
Laurie Brewer, Assistant City Manager
C Presentation and Discussion on the City's annual year-end external audit on the Airport Fund for the
fiscal year ended September 30, 2014 and Financial Analysis and Process Review Report for the
Georgetown Municipal Airport -- Russ Volk, Airport Manager, Micki Rundell, Chief Financial Officer
and Edward G. Polasek, AICP, Transportation Services Director.
Executive Session
In compliance with the Open Meetings Act, Chapter 551, Government Code, Vernon's Texas Codes,
Annotated, the items listed below will be discussed in closed session and are subject to action in the regular
session.
D Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the
attorney has a duty to advise the City Council, including agenda items
Sec. 551.074: Personnel Matters
- City Manager, City Attorney, City Secretary and Municipal Judge: Consideration of the appointment,
employment, evaluation, reassignment, duties, discipline, or dismissal
Adjournment
Certificate of Posting
I, Jessica Brettle, City Secretary for the City of Georgetown, Texas, do hereby certify that this Notice of
Meeting was posted at City Hall, 113 E. 8th Street, a place readily accessible to the general public at all
times, on the _____ day of _________________, 2015, at __________, and remained so posted for at least
72 continuous hours preceding the scheduled time of said meeting.
__________________________________
Jessica Brettle, City Secretary
City of Georgetown, Texas
City Council Agenda
June 23, 2015
SUBJECT:
Overview of the City’s Internal Service Funds and related capital maintenance for the City facilities, parks,
fleet and technology services to be included in the 2015/16 Annual Budget -- Micki Rundell, Chief Financial
Officer
ITEM SUMMARY:
This item is to provide an overview of the City’s process to ensure that all City assets are maintained
appropriately and replaced when needed, and that funding is available within the City’s base budget.
For many years, the City has utilized Internal Service Funds to fund capital maintenance for non-utility
related assets. The City has 3 Internal Service Funds (ISF) which are used to account for goods or services
provided by one internal department to another. These include:
Fleet ISF which includes vehicle and equipment replacement, as well as, the operations of the
Vehicle Service Center (VSC)
Facilities ISF which includes various maintenance contracts, general facility upkeep and capital
maintenance of the City’s various buildings
Technology ISF which includes maintenance contracts for all technology systems, as well as,
replacement and operations for technology support
Each one of these funds has an allocation schedule that generates revenue to that Fund, from which the
expenses/operations are then paid. These “allocations” are recognized as a line-item expense within each
departmental budget. By doing this, true cost of operations is recognized at the departmental level within the
City’s budget. These allocations are managed as “transfers” within the budget for balancing purposes.
By using this methodology, the City not only recognizes true cost of service by department, it also ensures
funding is available for capital maintenance and replacement of non-utility system assets.
Each of the ISF funds has a replacement schedule that lists the various assets, their estimated useful life and
their replacement cost. From that, an annual “lease” payment is derived by dividing the cost of the asset by
its useful life. Each lease payment is then included in the departmental allocation. When assets have reached
their useful life, they are then replaced with the revenues generated into the ISF from the leased allocations.
Staff adjusts the replacement based on the actual condition of the individual asset. Each ISF is different,
depending on their specific assets. Examples include:
GMC Building (Facilities ISF) – Allocated based on number of cost per square feet used by each
department within the building, including maintenance items:
HVAC Contract
Carpet replacement & Painting
Copiers within the building
Janitorial for the building
Building Inspection Vehicle (Fleet ISF) – “Lease allocation” to department based on replacement cost
of vehicle divided by it’s useful life ($26,000/ 7 years = $3,715)
Mileage and maintenance history of each vehicle are reviewed annually and adjusted if needed
Insurance and inspections are included
Network Switch (Technology ISF) – “Lease allocation” to departments based on replacement cost of
the equipment divided by its useful life.
Network equipment is allocated by facility location or specific department if known (example
Library Building goes to Library)
In addition, departmental operations (support personnel and operating costs) within the ISF Funds are also
allocated, based on set methodology that can include prior year work orders, purchase orders or some other
identified basis for the allocation. Once established, ISF allocations are applied consistently year over year,
Cover Memo
Item # A
but are reviewed annually for modifications if needed. In any case, the City’s external auditor reviews the
allocation system annually and will investigate any variances or changes.
In the event that additional or non-scheduled projects or maintenance is requested that is not within the
current ISF replacement schedule, a budget request is submitted and reviewed as part of the annual budget
process. This includes the addition of new vehicles and new technology programs.
Park Capital Maintenance Plan
Up until a few years ago, the City’s park facilities did not have a specific maintenance program. Since then,
staff has developed a replacement schedule that records the various assets, their age and their condition, and
has developed a replacement program. Over the past two years, the City has included $150,000 in the Park
Department budget to address the maintenance needs of the City’s park system. And since this maintenance
is contained within the Parks Department, a separate ISF Fund is not necessary. The replacement schedule
will eventually determine the amount included in the departmental line item. In addition, the City plans to
implement the Asset Management System to track the Park assets and related maintenance, thus automating
their maintenance program. This implementation is currently scheduled for 2016/17.
ATTACHMENTS
Presentation
Replacement schedules & allocation information for Facilities, Fleet, Technology and Parks
FINANCIAL IMPACT:
The proposed City Manager’s 2015/16 Annual Budget will include allocations to departments or other direct
funding for the projects, equipment and other items included in these replacement plans.
SUBMITTED BY:
Micki Rundell, CFO / bh
ATTACHMENTS:
Facilities
Fleet
Technology
Parks
ISF Workshop 6.23.15
Cover Memo
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6/17/2015
1
Capital Maintenance
& Replacement Overview
City Council Workshop
June 23, 2015
Agenda:
• Overview of Internal Service Funds (ISF)
– Fleet ISF
– Facilities ISF
– Technology ISF
• Other non-utility City Assets
– Parks Maintenance
– Public Safety Equipment Replacement
• 2015/16 major repairs/replacements
– Base budget and requested increases
Attachment number 5 \nPage 1 of 9
Item # A
6/17/2015
2
What’s an
“Internal Service Fund”?
• ISF funds capital replacement &
maintenance for non-enterprise City Assets
– Accounts for goods/services provided by internal
departments
• Recognizes true “Cost of Service” at
department level
• Ensures funding is available to replace &
repair non-utility system assets
City Internal Service Funds (ISF)
• Fleet ISF
– Includes vehicle & equipment replacement
• Operations of Vehicle Service Center (8 FTE)
• Facilities ISF
– Includes maintenance contacts & general City
facility upkeep
• Maintenance Support staff oversee facilities (7 FTE)
• Technology ISF
– Includes maintenance contracts for all
technology systems
• Operations for technology support (18 FTE)
Attachment number 5 \nPage 2 of 9
Item # A
6/17/2015
3
How does an ISF work?
• Each ISF has “Replacement Schedule”
– Lists assets including useful life and estimated
replacement cost
• Determines “Lease Payment” for each asset
– Accumulated for each department calculated
• Each department has budget line item for
“ISF Lease” cost
– Separate line Items for each ISF Fund
• Lease Costs become “Allocations”
How does an ISF work?
• “Allocations” create revenue in ISF Funds
– Revenue to the ISF/ Expense to other funds
• Expensed at the department level of each Fund
• Pays for costs of replacement & maintenance
– When useful life is reached….asset is replaced
– Each ISF different depending on specific purpose
• Includes ISF operating department costs
– Allocation has specified basis depending on
specific criteria
• Methodology is audited through External Audit annually
Attachment number 5 \nPage 3 of 9
Item # A
6/17/2015
4
How does an ISF work?
• Allocations managed thru transfers within the
Budget
– ISF activity allocated in CAFR
• “Entity wide statements”
• “Non-scheduled” projects/maintenance
• Items outside the ISF process
– Submitted as “Budget Request” as part of annual
budget process
• Funding for request also determined
Fleet ISF
Fund manages over 500 vehicles + equipment
Proposed 2015/16 Budget:
Key replacement vehicles for next year:
DEPARTMENT Personnel Operating Capital Total Budget
Operations $ 602,123 $ 702,956 $ - $ 1,305,079
Contracts -339,233 2,558,100 2,897,333
TOTAL $ 602,123 $ 1,042,189 $ 2,558,100 $ 4,202,412
4 POLICE VEHICLES 3 MOWERS
FIRE TANKER BACKHOE
TYPE 4 ENGINE 2 SM SUV
2 DUMP TRUCKS 7 SM TRUCKS
WHEEL LOADER ELECTRIC BUCKET TRUCK
Attachment number 5 \nPage 4 of 9
Item # A
6/17/2015
5
Facilities ISF
Fund manages over 37 City facilities (+466K sq. ft.)
Key upgrades/replacements for next year:
DEPARTMENT Personnel Operating Capital Total Budget
Operations $ 533,364 $ 470,052 $ - $ 1,003,416
Contracts -1,770,354 107,000 1,877,354
TOTAL $ 533,364 $ 2,240,406 $ 107,000 $ 2,880,770
REC CENTER AIRPORT FIRE STATION 1 & 3
HVAC Replacement HVAC Replacement Exterior Painting
Interior Painting Interior Paint (Tower)
Exterior Paint (Tower)
PARKING LOT MAINT. LIBRARY PARKS ADMINISTRATION
GMC Interior Painting Vinyl Replacement
4th & Austin Exterior Painting
Fountain Maintenance
Technology ISF
Manages over 175 servers & 550+ PC/VDI users
Key upgrades/replacements for next year:
Department Personnel Operating Capital Total Budget
Operations $ 1,613,401 $ 295,091 $ - $ 1,908,492
Contracts -1,474,846 911,797 2,386,643
TOTAL $ 1,613,401 $ 1,769,937 $ 911,797 $ 4,295,135
5 TICKET WRITERS
2 COLOR PRINTERS
2 MULTI FUNCITON PRINTERS
150 VOIP PHONES
Various SWITCHES
Various SERVERS
CIS SYSTEM REPLACEMENT
Attachment number 5 \nPage 5 of 9
Item # A
6/17/2015
6
Parks Maintenance
• Until 2011, no specific maintenance program in
place
• Previously $25K annually for “playground” equipment
• Since then, replacement schedule developed
– Lists assets including location & condition
• Funding level $150K annually in base Parks budget
• Requesting an additional $50K to address identified
needs
• Annual maintenance schedule developed
• Automated work and asset management planned
2016/17
2015/16 Park Maintenance
REC CENTER EQUIPMENT REPLACMENT
Volleyball Standards, TV’s
PARK & TRAIL SITE FURNISHING
REPLACMENT
Water fountains, benches, picnic tables
PARKING LOT MAINTENANCE
Edwards Park
PLAYGROUND & SHADE REPLACEMENT
McMaster’s Athletic Complex
Attachment number 5 \nPage 6 of 9
Item # A
6/17/2015
7
Public Safety Equipment
• Replacement schedules maintained by
departments
• Funds included in departmental budget
– Fire Equipment - $73,500 includes…
• Bunker gear
• Hoses/Nozzels
– Police Equipment - $56,700 includes….
• Tasers
• Radars
• Flashlights
Major 2015/16 ISF Operating
Variances
• Facilities ISF
– Additional facilities at Western District
– Janitorial contract full year w/ expanded services
• Fleet ISF
– Additional expense for TRVs & Western District
• Technology ISF
– Increased on-going software maintenance
– Increase in major hardware replacement
Phone system - Virtual Server Host – Main Firewall
Attachment number 5 \nPage 7 of 9
Item # A
6/17/2015
8
2015/16 Budget Requests
• Additional mechanic at VSC
– Increase workload related to added vehicles
• 4 new TRVs
• 27 vehicles/heavy equipment added in Western
District in 2015
2015/16 Major Technology Budget
Requests
• Replace Park & Recreation Software –General Fund
– $160,000 includes implementation
• Previous system almost 20 years old & no longer
supported
• Customer Information System –Water/Electric Fund
– $2.5M to $3M including implementation
• RFP Process underway – implementation Feb 2016
• Update to City Council in August 2015
• Meter Asset Management System - Water/Electric
• Contract Management Software -General Fund
Attachment number 5 \nPage 8 of 9
Item # A
6/17/2015
9
Conclusion
• On-going maintenance & replacement
ensure cost effective asset management
– Provides reporting tool to Boards & Council
• Allows planning & prioritizing of projects
– Expansion of technology will increase efficiency
• Data/System security issue will be at forefront
– Infor EAM expansion to Vehicle Services,
Facilities & Parks in the next few years
• ADA compliance addressed in CIP &
department budgets
QUESTIONS?
Attachment number 5 \nPage 9 of 9
Item # A
City of Georgetown, Texas
City Council Agenda
June 23, 2015
SUBJECT:
Presentation and Discussion of the San Gabriel Park Master Plan -- Barbara Austin,Vice President and
Director of Park Planning & Design for RVi., Kimberly Garrett, Parks and Recreation Director and Laurie
Brewer, Assistant City Manager
ITEM SUMMARY:
FINANCIAL IMPACT:
NA
SUBMITTED BY:
Kimberly Garrett, Parks and Recreation Director
ATTACHMENTS:
San Gabriel Park Master Plan
Cover Memo
Item # B
Kimberly Garrett - Georgetown Parks and Recreation Director
Barbara Austin - RVi Project Director
SAN GABRIEL PARK MASTER PLAN
June 9, 2015
Attachment number 1 \nPage 1 of 26
Item # B
Master Plan Process
Project Goals
San Gabriel Park Analysis
Public Input Results
San Gabriel Park Future Plan
• Overall Master Plan
• Key Programming Illustrations
• Phasing Plan
Today’s Agenda
Attachment number 1 \nPage 2 of 26
Item # B
Master Plan Process
Parks
Master Plan
2008
Site Analysis
Geologic
Study
Downtown
Master
Plan
Water
Quality
Ordinance
Public Input
Meeting
Parks Board
Presentation
City Council
Presentation
Program
Development
Preliminary
Master Plan
Master
Plan
T
O
D
A
Y
Attachment number 1 \nPage 3 of 26
Item # B
Project Goals
• Preserve and enhance the natural environment
• Preserve and enhance park activities
• Strengthen community ties to the Park
Jay Janer - Austin American Statesman
Attachment number 1 \nPage 4 of 26
Item # B
Site Analysis -
What can you do in the park?
Restroom
LEGEND
Attachment number 1 \nPage 5 of 26
Item # B
Site Analysis -
Utilities & Water Quality Ordinance
FLOODPLAIN
LEGENDAttachment number 1 \nPage 6 of 26
Item # B
Public Input Results
What do you think needs to be improved or updated at
San Gabriel Park?
Opportunities along the trail
(exercise equipment, education
signs, benches) (19.3%)
Area along San Gabriel
River (21.05%)
Other (10.53%)
Smaller play areas (5.26%)
Large picnic shelters (5.26%)
Small picnic tables
and shelters (12.28%)
Bar-b-que pits (14.04%)
Disc golf (0%)
Sports fields (7.02%)
Gazebo (5.26%)
Attachment number 1 \nPage 7 of 26
Item # B
What do you enjoy about San Gabriel Park? (choose as
many as you like)
Public Input Results
San Gabriel River
Other
Variety of festivals
New creative playscape
Recreation center
Community center & garden
Sports fields
Springs
Picnic areas
Trails
Disc golf
Attachment number 1 \nPage 8 of 26
Item # B
Overall Preliminary
Master Plan
Entry at Chamber Way Creative Playscape
Entry at Morrow Street
Community Center and Bar-b-que Pavilion
Entry under College Street Bridge
Springs
“Rural Living” Play
“Forest” Play
Trailhead
San Gabriel River
Central Green
1
2
4
5
3
7
6
North Austin Avenue
M
o
r
r
o
w
S
t
r
e
e
t
971 /
W
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i
r
R
o
a
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Item # B
Key Programming:
Entry at Morrow Street1
Attachment number 1 \nPage 10 of 26
Item # B
existing large oaks
circle with signage
traffic calming & contrasting crosswalks
directional signageview to central green
Key Programming:
Entry at Morrow Street1
Attachment number 1 \nPage 11 of 26
Item # B
Key Programming:
Springs and River’s Edge2
Attachment number 1 \nPage 12 of 26
Item # B
young bald cypress trees
existing stone walls
remove concrete
native plantings to reduce foot traffic
signage and stepping stones at controlled observation points
protect existing tree roots
Key Programming:
Springs and River’s Edge2
Attachment number 1 \nPage 13 of 26
Item # B
Playscape: “Forest”3
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Item # B
Playscape: “Forest”
picnic tables w/ lowland species
bur oaks w/ themed nature play
poured-in-place surfacing
signature poppies
3
Attachment number 1 \nPage 15 of 26
Item # B
Playscape: “Rural Living”4
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Item # B
Playscape: “Rural Living”
trail
mural wall
family pavilion
volleyball
signature art and play elements
4
Attachment number 1 \nPage 17 of 26
Item # B
Key Programming: Pavilions5
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Item # B
Key Programming: Pavilions
paving treatment for pedestrian movement
parking and boy scout hut
pavilion for rentals, events
large group bar-b-que
renovated restroom
existing Community Center
drop-off
5
Attachment number 1 \nPage 19 of 26
Item # B
Key Programming:
Trailheads6
Attachment number 1 \nPage 20 of 26
Item # B
Key Programming:
Trailheads
controlled access points to water
existing trail
stained concrete w/ textured surface
young sycamore trees
map & rules
6
Attachment number 1 \nPage 21 of 26
Item # B
Key Programming:
Central Green - Existing
Recreation Center and Pool
SportsFields
Former Site of Football Stadium
Rodeo Arena
Show Barn
Morrow S
t
r
e
e
t
C
h
a
m
b
e
r
W
a
y
7
Attachment number 1 \nPage 22 of 26
Item # B
Key Programming:
Central Green - Average Day
Recreation Center and Pool
Vendor / Tailgate Picnic
Pavilion
Entry PlazaandSkate Park
Entry Plaza withRestroom & Splash Pad
Entry Plaza
Entry Plaza with Flag Pole
SportsField
Morrow
S
t
r
e
e
t
Ch
a
m
b
e
r
W
a
y
7
Attachment number 1 \nPage 23 of 26
Item # B
Key Programming:
Central Green - Festival Day
Recreation Center and Pool
SportsField
Morrow
S
t
r
e
e
t
Ch
a
m
b
e
r
W
a
y
7
Vendors
Pavilion
Entry PlazaandSkate Park
Entry Plaza withRestroom & Splash Pad
Entry Plaza
Entry Plaza with Flag Pole
Attachment number 1 \nPage 24 of 26
Item # B
• Entry monuments & signage
• Bar-b-que pavilion
• Picnic pavilions
• Play areas
• Trailhead
• Restrooms
• Parking
Phase 1 Work:
$2.7 million $3.4 million
Phase 2 Work: Phase 3 Work:
$4.6 million
Phase 4 Work (Future):
• Spring & river restoration
• Entry monuments & signage
• Picnic pavilions
• Play areas
• Trailhead
• Restrooms
• Trees & plantings
• Parking
• Entry monuments & signage
• Pavilions
• Central Green
• Teen plaza / skate park
• Splash pad
• Restrooms
• Parking
• Entry monuments & signage
• Sport fields & disc golf
improvements
• Creek stabilization
• Trailhead
Preliminary Master Plan -
Phasing
1
2
3
San Gabriel River
North Austin Avenue
4
Attachment number 1 \nPage 25 of 26
Item # B
Thank you!
Attachment number 1 \nPage 26 of 26
Item # B
City of Georgetown, Texas
City Council Agenda
June 23, 2015
SUBJECT:
Presentation and Discussion on the City's annual year-end external audit on the Airport Fund for the fiscal
year ended September 30, 2014 and Financial Analysis and Process Review Report for the Georgetown
Municipal Airport -- Russ Volk, Airport Manager, Micki Rundell, Chief Financial Officer and Edward G.
Polasek, AICP, Transportation Services Director.
ITEM SUMMARY:
The City’s external auditors with the firm of Weaver and Tidwell, LLP will present the results of the annual
external audit and the final Comprehensive Annual Financial Report for the Fiscal Year Ended September
30, 2014 related to the Airport Fund.
City Council also contracted the external auditors to perform a Process Review and Financial Analysis of the
Airport. The City’s external auditors will also discuss this report.
Staff has prepared a response to the Process Review and Financial Analysis.
FINANCIAL IMPACT:
N/A
SUBMITTED BY:
Edward G. Polasek, AICP
ATTACHMENTS:
Independent Audit of the Airport Fund
Process Review and Financial Analysis (Performance Audit)
Weaver Presentation
Staff Response to Audit
Cover Memo
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Confidential, Not for External Distribution
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Attachment number 2 \nPage 1 of 18
Item # C
Confidential, Not for External Distribution
TABLE OF CONTENTS
Page
REPORT TRANSMITTAL LETTER .............................................................................................................. 1
BACKGROUND ............................................................................................................................................ 2
SCOPE AND OBJECTIVES .......................................................................................................................... 2
DETAILED PROCEDURES PERFORMED, OBSERVATIONS, AND
RECOMMENDATIONS ................................................................................................................................. 3
Objective A: Airport Process Review ...................................................................................................... 3
Objective B: Response Validation and Financial Analysis ..................................................................... 8
CONCLUSION ............................................................................................................................................ 16
Attachment number 2 \nPage 2 of 18
Item # C
AN INDEPENDENT MEMBER OF
BAKER TILLY INTERNATIONAL
WEAVER AND TIDWELL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
1601 SOUTH MOPAC EXPRESSWAY, SUITE D250, AUSTIN, TX 78746
P: 512.609.1900 F: 512.609.1911
Confidential, Not for External Distribution
City Council
City of Georgetown
113 E 8th Street
Georgetown, Texas 78626.
This report presents the results of the advisory procedures performed for the City of Georgetown during
the period December 19, 2014 through April 17, 2015 relating to the process review and financial analysis
for the Georgetown Municipal Airport. We performed certain procedures to review the significant
processes of the airport for efficiency, effectiveness and scalability of operations. We also performed an
evaluation of the financial impact of changes made by the City in response to the 2013 Georgetown
Airport Business Analysis.
The objectives of our procedures were as follows:
A. Evaluate the significant operations and management processes of the airport to evaluate
whether:
The appropriate people, processes and technology are in place to effectively run, report, and
maintain compliance with statutory regulations
Processes are repeatable, scalable, and sustainable for future growth
B. Validate the progress of the City’s plan to address the recommendations made by CH2MHill in
the 2013 Georgetown Airport Business Analysis and analyze the economic consequences of the
actions put in place in response to those recommendations.
To accomplish these objectives, we conducted interviews with key Airport, Finance Department and
Utilities personnel. We also reviewed procedures, observed operations, and inspected documentation.
Procedures were performed at the Georgetown Municipal Airport and Georgetown Municipal Complex in
Georgetown, Texas, and were completed on April 17, 2015.
The following report summarizes the observations identified, and recommendations for improvement.
WEAVER AND TIDWELL, L.L.P.
Austin, Texas
April 17, 2015
Attachment number 2 \nPage 3 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 2 of 16
Confidential, Not for External Distribution
BACKGROUND
The Georgetown Municipal Airport (Airport) is owned and operated by the City of Georgetown (City). The
Airport serves as a general aviation airport in the greater Austin area. The Airport generates revenues
from leasing land, hangars, and aircraft tie down spaces as well as from the sale of fuel. There are three
fixed based operators (FBOs) at the Airport, including the City operated airport terminal that serves the
Airport. The Airport falls under the authority of the City’s Transportation Department.
Due to concerns about the airport’s operations, the City contracted CH2M Hill to review the Airport’s
existing infrastructure, long-term plans, processes, systems, and resources to identify areas needing
improvement. In May 2013 CH2M Hill issued the 2013 Georgetown Airport Business Analysis report
(CH2M Hill Report). That report made recommendations concerning the Airport’s operations and long-
term plans (the CH2M Hill Recommendations).
To have accurate, efficient and sustainable operations in any organization, three key components must
be in place: people, process and technology. After the release of the CH2M Hill Report, the City has
made efforts to improve each of these three components at the Airport, and hired a new Airport Manager
in January 2015.
SCOPE AND OBJECTIVES
The City Council and City Management requested a review of Airport operations to evaluate the key
business processes of the Airport and to evaluate the steps taken by Airport management to address the
CH2M Hill Recommendations.
The review focused on the significant processes of the Airport for efficiency, effectiveness and scalability
of operations. The review also included an evaluation of the financial impact of improvements
implemented by Airport management. The evaluation of key Airport processes included:
Inventory Management
Sales and Accounts Receivable
Contract Management and Compliance
Internal Financial and Operational Reporting
Regulatory Compliance and Reporting
The objectives of our procedures were as follows:
A. Evaluate the significant operations and management processes of the airport to evaluate
whether:
The appropriate people, processes and technology are in place to effectively run, report, and
maintain compliance with statutory regulations
Processes are repeatable, scalable, and sustainable for future growth
B. Validate the progress of the City’s plan to address the recommendations made in the CH2M Hill
Report and analyze the economic consequences of the actions put in place in response to those
recommendations.
Our procedure’s included interviews with key Airport, Finance Department, and Utilities personnel, review
of procedures, observation, inspection of existing documentation to evaluate the processes in their
current state. Our validation of the plan to address prior recommendations for the Airport included the
period through April 17, 2015.
Attachment number 2 \nPage 4 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 3 of 16
Confidential, Not for External Distribution
DETAILED PROCEDURES PERFORMED, OBSERVATIONS AND RECOMMENDATIONS
Our procedures included conducting interviews with select Airport, Finance and Utilities personnel,
reviewing procedures, observation, and inspection of records to evaluate the processes in place in their
current state. Our procedures were designed to achieve the two objectives.
Objective A – Process Review
Evaluate the significant operations and management process of the airport to evaluate whether:
The appropriate people, processes and technology are in place to effectively run, report, and
maintain compliance with statutory regulations
Processes are repeatable, scalable, and sustainable for future growth
Procedures Performed: We conducted interviews with Airport, Finance and Utilities personnel to
gain an understanding of the current state of procedures for key Airport processes including:
Inventory Management
Sales and Accounts Receivable
Contract Management and Compliance
Internal Financial and Operational Reporting
Regulatory Compliance and Reporting
We also examined existing documentation to validate the activities being performed.
Process Overview:
Inventory Management
The Airport’s fuel inventories include Jet A and Avgas. In addition, the Airport carries certain amounts
of oil for sale and souvenirs. The monetary value of these additional items held in inventory is
insignificant compared to the Airport’s fuel inventories. Jet A is delivered by truck and sold exclusively
to the FBOs, Gantt Aviation and Longhorn Jet Center. Avgas is sold to retail customers through self-
served pumps and Longhorn Jet Center. The following sub-processes were included in our
evaluation:
Initiation and Execution of Purchases
Receipt and Validation Volume and Quality of Goods Received
Record-keeping of Inventory Purchases
Inventory Relieve and Recording the Cost of Sales
Periodic Inventory Counts and Balances Reconciliation
Inventory Loss Allowances and Write-downs
Airport Sales Activity and Related Receivables
The Airport has two major revenue generating streams: sales of Avgas (aviation gas) and Jet A that
account for approximately 73% of revenue, and proceeds from leases and rental agreements that
represent approximately 17% of revenue. Jet A is sold exclusively wholesale to FBOs, Longhorn
Aviation and Gantt Aviation. The Airport does not sell the Jet A fuel to retail customers. Avgas is
sold to retail customers and FBO wholesalers.
Revenue from rental agreements consists of fees from land leases with master tenant and service
FBOs, hangar and tie-down rentals, and storage fees.
Attachment number 2 \nPage 5 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 4 of 16
Confidential, Not for External Distribution
The following sales and receivables sub-processes were included in our evaluation:
Identifying, Documenting, and Recording Sales Transactions
Validation of Volumes and Value for Items Sold
Preparation and Distribution of Invoices
Receiving and Posting Payments for Goods and Services Provided
Managing Accounts Receivables and Assessing Collectability
Contract Management and Compliance
The Airport manages lease contracts such as land-leases with FBOs and service providers, land-
leases for raw land, sub-leases, rental agreements for hangars and tie-downs as well as storage
facility contracts. Contract management and compliance is a joint function of Airport operations and
City Management. The following sub-processes were included in our evaluation:
Contract Review, Approval, and Execution Authorities
Catalogueing and Recording of Lease Agreements
Identification and management of key lease terms and compliance management
Internal Operational and Financial Reporting
The Airport maintains records on a series of spreadsheets and through billing systems of other City
Departments, such as the Utility Department. The Airport provides periodic financial and operational
information to the Georgetown Transportation Advisory Board (“GTAB”). The following sub processes
were included in our evaluation:
Preparation and Presentation of Financial and Operations Updates to the GTAB
Reporting of Monthly Sales and Accounts Receivables to the Finance and Accounting
Department
Regulatory Compliance Procedures and Reporting
The Airport operates as a General Aviation airport that does not provide regularly scheduled
passenger services and therefore is not required to obtain an Airport Operating Certificate from the
FAA. As such the Airport is excluded from many of the FAA’s Part 139 compliance and inspection
requirements. The Airport currently must file Airport Condition Reports (Notice to Airman (NOTAM)) to
the FAA, and Statistical Inventory Reports (SIR) to the TCEQ if a leak is detected in the AV Gas fuel
tank. The following sub-processes were included in our evaluation:
Airport Condition Inspections and Notice to Airman (NOTAM) Reporting
Statistical Tank Inventory Reconciliation (SIR) and Reporting
While the Airport is exempt from the Commercial Airport requirements of Part 139, the Airport
Manager recommends observing the following Part 139 procedures as best practices:
Daily inspections of fuel systems
Wildlife management plan
Vegetation control plan
Regular Fire Department Inspections
Mowing program
Results: We identified nine observations related to the improvement of processes and procedures for
the operations of the Airport.
Attachment number 2 \nPage 6 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 5 of 16
Confidential, Not for External Distribution
Observation 1: There are important operational or financial processes for which the Airport lacks
defined procedures designed to ensure they are executed. Some processes may be infrequently
conducted on an ad hoc basis. The following processes were identified as not having designed
procedures:
Inventory loss allowance recording
Follow-up on lease payments
Establishment of reserves for uncollectible lease payments
Tracking of Prokey fuel cards issued to customers
Lease tenant prepayments
Review and approval process for subleases (land-leases)
Formal review for CPI adjustments to vacant land-lease rates
Periodic rental rate assessments
Document retention for leases contracts
Lease contract compliance assessment process
Recommendation: Airport management should implement policies and design procedures for the
processes identified. Policies and procedures should establish basic expectations of how processes
should be performed and the criteria for evaluating or executing the transactions related to the
processes, including:
Inventory Loss Allowance: Establishing procedures to monitor inventory balances,
establishing inventory variance thresholds, defining write-off procedures, and requiring
appropriate review.
Delinquent Lease Payments: Establishing time intervals for follow-up, assigning responsibility
for collections, documenting collection attempts, and reviewing outstanding balances.
Reserves for Uncollectable Accounts: Establishing policies and procedures to evaluate
delinquent balances, defining criteria for proposed write-offs, performing appropriate review
and approval of write-offs.
Tracking Prokey Cards: Establishing and inventory of cards, developing criteria for issuance
of cards, logging the issuance of cards, monitoring card usage, and deactivating dormant or
revoked cards.
Lease Prepayments: Establishing procedures for recording and monitoring the amortization
of prepaid accounts.
Sublease Review and Approval: Establishing a review process for subleases, ensuring sub-
leases are in compliance with lease terms, and establishing a hierarchal approval process for
subleases.
CPI Adjustments: Establishing a process and timing to conduct research of an appropriate
CPI rate, approving rate adjustments for vacant land lease contracts.
Rental Rate Assessments: Establishing policies and procedures to annually evaluate hangar
and tie-down rates, benchmarking rates with similar airports, and approving changes to rates.
Lease Contract Retention: Establishing procedures to file and retain legal documents such as
leases and other contracts.
Lease Compliance Monitoring: Establishing policies to establish responsibility to annually
review FBOs and other significant contracts to ensure that tenants are in compliance with the
terms of the contracts.
Observation 2: There are critical processes for which the Airport lacks standardized and
documented procedures. While there are general processes, they occur on a regular and/or ad-hoc
basis with little direction or supervision. The following processes lack standardized, documented
procedures:
Establishment of fuel markup rates
Charging late fees to customers
Attachment number 2 \nPage 7 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 6 of 16
Confidential, Not for External Distribution
Prospective tenant evaluation for leases
Contract approval for new contracts and amendments
Checklist for performing airport condition inspections
Recommendation: Airport management should formalize and standardize the procedures and
implement policies to establish documentation standards for the critical processes related to the
Airport's operations. The policies, and/or procedures should establish an expectation of how the
processes are performed under normal operating circumstances including:
Fuel Markup Rates: Establishing a periodic evaluation; separating fuel contracts from land-
leases; determining appropriate markups to cover delivery, storage, flowage fees, admin, and
taxes; and approval of rates and markups.
Charging Late Fees: Establishing criteria for the posting of late fees to accounts; monitoring
accounts for timely payment; and approving fees posted to accounts.
Prospective Tenant Lease Evaluations: Establishing an application process; determining
evaluation criteria; documenting the review/selection process; and defining a hierarchal
approval of contracts.
New Contract Review/Change and Approvals: Establishing contract evaluation criteria;
documenting the review and approval process; and defining a hierarchal approval process.
Airport Condition Inspection Checklists: Developing a formalized airport inspection checklist
to be completed by staff on a regular basis and documenting the performance of inspections
appropriate of a general aviation airport, which may result in a NOTAM.
Observation 3: The Airport currently operates using ad hoc methods through spreadsheets and
systems managed by other Departments within the City. The Utilities Department currently bills for
hangar rentals for the Airport. This system does not have the ability to report unutilized rental units.
There is no review over the spreadsheets to ensure that there are errors in formulas, completeness of
data, and accuracy of data entered into the spreadsheet. The following items are recorded in a
spreadsheet:
Fuel inventory purchases, receipts, and sales
Customer payments and outstanding accounts
Lease inventories and tenant information
Recommendation: The Airport should be responsible for preparing and issuing the billing for leases.
Additionally, the Airport should explore discontinuing the use of applications not designed for airports
in combination with spreadsheets, and moving towards a system designed specifically to handle the
following transactions related to operations at an FBO:
Fuel sales processing and billing
Fuel inventory management
Rent roll processing and billing
Lease contract and inventory management
A standalone FBO system to process these transactions is more reliable and secure method to
processing transactions that occur at the Airport. Two examples of appropriate software that the City
should evaluate are:
1. TotalFBO: Modules include Inventory Control, Ordering/Receiving, Reservations/ Scheduling,
Concierge.
2. FBO Manager: Modules include tracking of receivables and payables, inventory
management, hangar and tie-down rental management.
Attachment number 2 \nPage 8 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 7 of 16
Confidential, Not for External Distribution
Observation 4: The key performance indicators reported to Airport management and the GTAB are
limited and do not provide a complete overview of operations. Some financial and operational
information is shared with the GTAB. However, other performance information is not provided to
Airport management and the GTAB on a regular basis that would be beneficial to manage operations.
Recommendation: The Airport should increase the information and data reported to Airport
management and the GTAB. The following KPI's should be added to the existing information that is
currently reported:
Number of new/lost tenants
Occupancy percentage
Fuel sales revenue and volumes sold
Budget to actual comparisons
Additionally, in order for Airport management and the GTAB to effectively evaluate KPIs and Airport
performance, the additional financial results and operations performance information should be
included in the monthly reports.
Commercial Lease Revenue
Hanger Revenue
Fuel Inventory levels and value
Outstanding accounts receivable balances and collection activities
Leasing activity including tenant retention and occupancy rates, and average waiting list
times
Rent roll reports including a breakdown of existing leases and the commencement date,
terms, rent payable, and accumulated rent paid.
Observation 5: Daily transactions and the reports provided to Airport management and the City
Council are not regularly reviewed for accuracy and completeness.
The following items were identified to have insufficient review over the source data.
Review of inventory roll forward balances
Posting of fuel invoices to customer accounts
Sales and Accounts Receivable data reported to Accounting and City Management
Statistical Inventory Report data submission.
Recommendation: Airport management should implement the review of transactional information as
well as the information reported to Airport and City Management and the public. Reviews should
include a validation of the data for completeness and accuracy. The items identified should be
reviewed, at a minimum:
Beginning inventory (fuel) and the roll forward of purchases, sales, and any shrinkage
Fuel sales recorded to receipts issued as well as changes in inventory to determine if sales
were accurately recorded
Fuel sales and receivables should be reviewed for reasonableness and accuracy before
reporting to the Council and management
Fuel inventory statistics should be compared to invoices, receipts and sales for reporting of
the Statistical Inventory Report
Observation 6: Certain processes at the Airport were identified to lack of segregation of duties. The
following specific segregation of duties conflicts were identified:
Fuel Attendants place orders, receive and accept deliveries, and issue sales receipts.
The Airport Business Coordinator receives and records cash payments.
Attachment number 2 \nPage 9 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 8 of 16
Confidential, Not for External Distribution
Recommendation: The Airport should ensure that duties related to receiving cash, inventory, and
recording of these items in the ledger are properly segregated.
The responsibility of ordering fuel, receiving fuel, and issuing sales receipts should be
segregated to separate individuals to remove the opportunity to misappropriate assets and to
provide for the detection of errors.
The ability to receive cash payments and record payments should be segregated or
monitoring controls should be implemented to remove the opportunity to misappropriate
assets.
Observation 7: Lease customers are billed on a monthly basis by the third-party provider through the
Utilities office. Per inquiry with the Customer Care Supervisor, it was determined that starting April 1,
2015, customers will have an option of pre-paying for a year; however this process has not been
implemented.
Recommendation: In order to reduce billing processing time and expenses, Customer Care within
the Utilities Department should pro-actively monitor the implementation process of yearly billing.
Observation 8: Fuel Attendants count oil inventory three times a day and record it in a Weekly
Inventory Report. Based on the facts that oil is a slow-moving inventory item, has a low inventory
level and a low monetary value, we consider counting oil inventory three times a day excessive.
Recommendation: We recommend updating the inventory monitoring procedures for the slow-
moving and low level items to reduce the number of counts from three times a day to a daily or twice-
weekly count to ensure that Airport staff is utilizing its time efficiently and effectively.
Observation 9: The Airport Ledger spreadsheet is stored on the City’s network and is password
protected. However, several users who have access to modify data in the Airport Leger file, but do
not require that access based on their function and responsibilities. Additionally, we could not verify
the date of the last password change on the spreadsheet.
Recommendation: Airport Management should review the user access to the Airport Ledger
spreadsheet and limit access to modify data in the spreadsheet to the Airport and/or Accounting
personnel whose job function includes the entry of transactions into the spreadsheet. Other personnel
should have read-only access to the file. This access can be managed through security rights
management in the City’s electronic file system. Additionally, the spreadsheet password should be
changed on a periodic basis.
Objective B – Response Validation and Financial Analysis
Validate the progress of the City’s plan to address the CH2M Hill Recommendations and analyze the
economic consequences of the actions put in place in response to those recommendations.
1. Procedures Performed: We interviewed Airport, Finance and Utilities personnel to validate the City’s
progress to date for each of the recommendations in the CH2M Hill Report provided to the City in
May of 2013. The following CH2M Hill Recommendations categories were included in our review:
Short-Term Financial
Medium-Term Financial
Long-Term Financial
Financial/Legal
Capital Development and Maintenance
Operations/Safety and Security
Administration/Organizational
Attachment number 2 \nPage 10 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 9 of 16
Confidential, Not for External Distribution
We also gained an understanding of efforts that are in progress and future plans to address other
recommendations. We obtained documentation and support for the changes that have been made or
are in progress.
The table below presents the status of recommendations from the CH2MHill report.
Open In
Progress
Partially
Closed Closed On Hold
No
Action
Short Term 7 2 2 1 1 0 1
Medium Term 8 2 2 0 0 4 0
Long Term 6 0 0 0 1 3 2
Financial and Legal 8 2 4 0 2 0 0
Capital Development
and Maintenance 800 0170
Operations, Safety,
and Security 440 0000
Administrative and
Organization 522 0001
Total 46 12 10 1 5 14 4
Recommendation Status
Category Total
CH2M Hill Report Recommendations Summary
Of the seven Short Term recommendations:
Two are Closed or determined to have No Action
Two are In Progress
One is Partially Closed
Two are Open
Four of the items that are Open or In Progress relate to observations and recommendations from our
procedures. Implementing the recommendations should aid the City in closing the recommendations
from the CH2MHill Report.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.1.1 Standard Lease and Lease Rate
Review Closed
4.1.1.2 Fuel Markup Rate Review In Progress JetA markup will go to GTAB for approval May
8, 2015. 2
4.1.1.3 Recommendation for Airport
Organizational Changes
Partially
Closed
Airport Manager position is filled. Airport
Operations Manager position recommended by
CH2MHill has not been created.
10
4.1.1.4 Airport Manager position elevated to
increase business development role No Action
4.1.1.5 KPI Performance Reporting Open 4
4.1.1.6 Vision and Brand Setting In Progress 11
4.1.1.7 Restaurant Development Open
Short Term
Of the eight Medium Term recommendations:
Two are In Progress
Four are On Hold
Two are Open
Attachment number 2 \nPage 11 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 10 of 16
Confidential, Not for External Distribution
The recommendations with an On Hold status should be able to be addressed upon the completion of
the Airport Master Plan Update.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.2.1 Airport Development Committee
Establishment Open 10
4.1.2.2 Long‐Term Airport Management
Option Analysis and Selection In Progress 10, 11
4.1.2.3 Develop Comprehensive Marketing
Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.2.4 Develop RFPs and Gauge Private
Sector Demand for Development On Hold Awaiting TxDOT for Master
Plan Update
4.1.2.5 T‐Hanger vs. Shade Hanger Analysis On Hold Awaiting TxDOT for Master
Plan Update
4.1.2.6 Coordination of Land Development
Plan with Marketing Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.2.7 Develop Relationships with Local
Economic Development Agencies Open
4.1.2.8 Replace Terminating Leases with
Updated Stronger Leases In Progress 1
Medium Term
Of the six Long Term recommendations:
One is Closed
Two were determined to have No Action
Three are On Hold
The recommendations with an On Hold status should be able to be addressed upon the completion of
the Airport Master Plan Update.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.3.1 Develop Stronger Standard Lease
Contracts Closed
4.1.3.2 Reinstating Airshow No Action
4.1.3.3 Using Airport Revenue to Fund Land
Development Initiatives On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.4 Using Increased Revenues to Upgrade
Airport On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.5 Continuous Refinement of Airport
Brand and Marketing Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.6 Consider Runway Extension No Action
Long Term
Of the six Financial and Legal recommendations:
Two are Closed
Three are In Progress
Two are Open
Attachment number 2 \nPage 12 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 11 of 16
Confidential, Not for External Distribution
Updates to the Airport minimum standards and rules are in progress. Implementing our
recommendations should aid the City in closing the recommendations from the CH2MHill report.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.2.1 Develop New Comprehensive Airport
Rules In Progress 11
4.2.2.2 Update Delegation of Authority Closed
4.2.2.3 Improving KPI Reporting Open 4
4.2.2.4 Improving Ad Valorem/Business Tax
Assessment Situation Open
4.2.2.5 Update Airport Minimum Standards In Progress Review completed by
outside counsel is in
4.2.2.6 Review and Update Airport Rules and
Regulations In Progress Review completed by
outside counsel is in
4.2.2.7 Update Contract Management
System In Progress 2
4.2.2.8 Conduct Annual Lease Compliance
Inspection. Closed
Financial and
Legal
Of the eight Capital Development and Maintenance recommendations:
One is Closed
Seven are on Hold
The seven recommendations with an On Hold status should be able to be addressed upon the
completion of the Airport Master Plan Update.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.3.1 Updating GTU Master Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.2 Developing an Airport
Property/Commercial Development On Hold Awaiting TxDOT for Master
Plan Update
4.2.3.3 Establish an Airport Property
Development Committee On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.4 Develop Landscaping Enhancement
Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.5 Developing Airport Renovation Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.6 Maintain and Update the Capital
Development Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.7 Consider TxDOT Assistance for
Project Planning Closed
4.2.3.8 Work with TxDOT to Development
Pavement Maintenance Program On Hold Awaiting TxDOT for Master
Plan Update 11
Capital
Development
and
Maintenance
All 4 of the Operations, Safety, and Security Procedures recommendations are Open.
Of the 5 Administrative and Organization recommendations:
One was determined to have No Action
Two are In Progress
Two are Open
Attachment number 2 \nPage 13 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 12 of 16
Confidential, Not for External Distribution
Upon completion of the Airport Master Plan Update, the Open items should be evaluated, and a
formal plan and timeline should be developed to address each recommendation.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.1.1 Develop an Updated Security Plan Open
4.2.1.2 Develop MOU with City Firefighting Open
4.2.1.3 Develop Tenant Security Watch
Function Open
4.2.1.4 Work With Police Department to
Improve Presence at the Airport Open
4.2.4.1 Establish Airport Advisory Committee
Structure Open 10
4.2.4.2 Develop Airport Marketing Plan In Progress 11
4.2.4.3 Develop Updated Job Descriptions In Progress
4.2.4.4 Develop Ties to Local Community Open
4.2.4.5 Elevating Airport Manager Position to
Higher Report Structure No Action
Administrative
and
Organization
Operations,
Safety, and
Security
Procedures
Results: Through our validation of progress on the CH2M Hill Recommendations we identified two
observations.
Observation 10: Due to changes in Airport management and governance structure, clear lines of
responsibility and authority have not been established to address all of the recommendations and
required changes identified in the CH2M Hill Report. Many of the recommendations provided in the
report have not been addressed, and to date, a plan has not been developed to respond to each of
the recommendations.
Recommendation: The City and GTAB should determine which CH2MHill financial and operational
issues to address and establish clear responsibilities identified by CH2M Hill and Weaver. These
responsibilities should be assigned to an individual to prepare a plan and timeline to address each
recommendation.
Observation 11: The City has no formalized plan or established timeline to carry out its role during
the update to the Airport Master Plan. The master plan update was scheduled to start in 2015;
however the project is not funded. Many CH2M Hill Recommendations have been deferred to the
update of the master plan; however there is no documented plan or timeline.
Recommendation: Airport and City Management should establish a formal action plan and timeline,
which includes the budgeted funds to execute the project, to fulfill their role during the Airport Master
Plan. Individuals such as the Airport Manager and Director of Transportation should be responsible
for the oversight of the development of the action plan. Milestone goals such as steering committee
selection, marketing/brand development plan, capital development plans, security procedure plans,
etc. should have specific deadlines for completion.
2. Procedures Performed: We evaluated the economic impact of the changes implemented by City
and Airport management in response to the recommendations from the 2013 Georgetown Airport
Business Analysis report from CH2MHill to project if future operations could result in self-sustaining
cash flow.
Attachment number 2 \nPage 14 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 13 of 16
Confidential, Not for External Distribution
To achieve this, we updated estimates prepared by the City’s Finance Department with the lease
rates, fuel markups, personnel and operating expenses that were changed, in response to the
recommendations in the Airport Business Analysis report. We prepared financial analysis schedules
beginning with the City’s year ended August 31, 2014 balances and extending through fiscal year
2019 for the following:
Rental Revenue and Expenses
Fuel Sales Revenue and Expenses
Other Revenue and Expenses
For the amounts provided by the City’s Finance Department, We used the estimated 2% increase for
projected revenues and expenditures, and the budgeted amounts for the 2015 fiscal year.
Amounts in blue represent 2015 projects provided by the Finance Department, adjusted for the
anticipated 2% annual increase.
Rental Revenue and Expense Analysis
Year End 2014 2015 2016 2017 2018 2019 Notes
Projected Rental Unit Revenues
Land Leases 217,024$ 216,839$ 236,559$ 231,719$ 231,719$ 231,719$ 1, 2
Hangar Leases 346,729$ 398,423$ 413,994$ 422,274$ 430,719$ 439,334$ 2, 3
Tie Downs 15,416$ 26,100$ 26,622$ 27,154$ 27,698$ 28,251$ 4
Total Rental Unit Revenue 579,169$ 641,362$ 677,175$ 681,148$ 690,136$ 699,305$
Rental Operating Expenses
Personnel 22,050$ 22,500$ 22,950$ 23,409$ 23,877$ 24,355$ 5
Utilities 20,969$ 21,397$ 21,825$ 22,261$ 22,706$ 23,161$ 5
Maintenance of Rental Units 19,600$ 20,000$ 20,400$ 20,808$ 21,224$ 21,649$ 5
Total Rental Unit Operating Expenses 62,619$ 63,897$ 65,175$ 66,478$ 67,808$ 69,164$
Rental Net Profit 516,550$ 577,465$ 612,000$ 614,670$ 622,329$ 630,141$
Rental Operating Margin 89.19% 90.04% 90.38% 90.24% 90.17% 90.11%
2. In 2017, the land lease for Gantt Aviation's commercial space expires and converts into a standard hanger lease at a rate that will be determined in
a market study. We are unable to estimate future revenues from 2017 and beyond as a result of the conversion of Gant Aviation's land lease to a
hanger lease. As a result, revenue from the Gant lease was not included in the land or hanger lease revenue estimate for the years of 2017 and
beyond.
Rental Revenues and Expenses
1. Land lease revenues are projected at the current rates. As of February 2015 there are 31 land leases that are fully occupied. The Airport has
capacity to add additional leases, however the analysis does not include the addition of additional land leases. Each land leas e contains provisions
for CPI adjustments in future years. The land lease revenue projected for 2016 includes a CPI adjustments that will take place in accordance with the
existing lease agreements. Other future adjustments based on CPI were not included in the analysis based on the unpredictability of future CPI rates.
3. As of February 2015 , there 122 hangar and storage units (114 hanger and 8 storage units) that are available to be leased. The hangars are
currently 88% occupied. Despite availability, there is a waiting listing for prospective tenants who want to lease a hangar. Hangar revenue was
projected using the rates effective March 2015, which were updated based on a market study and increased by 2% in subsequent years.
4. As of February 2015, there are 34 tie-downs available for leasing. The occupancy rate for tie down spots is 85%. Revenue for tie down spots is
projected using the rates effective March 2015, which were updated based on a market study and increased by 2% in subsequent years.
5. Estimated fuel, personnel, maintenance and operating expenses for Fuel and Rental operations are based on the Airport's budgeted 2015 costs
and increased by 2% each year. Personnel expenses are assigned to Fuel and Lease operations based on the position and time spent on each area.
There are a total of 3 Full-time employees and 4 Part Time Employees.
Attachment number 2 \nPage 15 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 14 of 16
Confidential, Not for External Distribution
Fuel Sales Revenue and Expense Analysis
Year End 2014 2015 2016 2017 2018 2019 Notes
Fuel Revenues 2,518,237$ 2,576,983$ 2,635,729$ 2,694,475$ 2,753,222$ 2,811,968$ 1
Total Fuel Revenues 2,518,237$ 2,576,983$ 2,635,729$ 2,694,475$ 2,753,222$ 2,811,968$
Cost of Fuel 2,266,418$ 2,272,600$ 2,318,052$ 2,364,413$ 2,411,701$ 2,459,935$ 2
Total Cost of Fuel Sales 2,266,418$ 2,272,600$ 2,318,052$ 2,364,413$ 2,411,701$ 2,459,935$
Fuel Sales Operating Expenses
Personnel 109,515$ 111,750$ 113,985$ 116,265$ 118,590$ 120,962$ 2
Utilities 9,757$ 9,957$ 10,156$ 10,359$ 10,566$ 10,777$ 2
Maintenance of Fuel Infrastructure 4,900$ 5,000$ 5,100$ 5,202$ 5,306$ 5,412$ 2
Total Fuel Sales Operating Expenses 124,172$ 126,707$ 129,241$ 131,826$ 134,462$ 137,151$
Fuel Net Profit 127,647$ 177,676$ 188,436$ 198,237$ 207,058$ 214,881$
Fuel Operating Margin 5.07% 6.89% 7.15% 7.36% 7.52% 7.64%
2012 2013 2014
2,341,998 2,332,610 2,518,237
-0.40% 7.96%2.33%
Fuel Revenue Projection
Average
Increase %Fuel Sales
Increase
Fuel Sales Revenues and Expenses
2. Estimated fuel, personnel, maintenance and operating expenses for Fuel and Rental operations are based on the Airport's budgeted 2015 costs
and increased by 2% each year. Personnel expenses are assigned to Fuel and Lease operations based on the position and time spent on each area.
There are a total of 3 Full-time employees and 4 Part Time Employees.
1. Fuel sales were projected using historical fuel sales for the years 2012-2014. The average increase was 2.33% in fuel revenues per year.
Attachment number 2 \nPage 16 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 15 of 16
Confidential, Not for External Distribution
Other Revenue and Expense Analysis
Year End 2014 2015 2016 2017 2018 2019 Notes
Other Airport Revenues
Ad Valorem Tax 31,057$ 31,678$ 32,312$ 32,958$ 33,617$ 34,289$ 1
Bond Proceeds -$ 890,000$
All Other 125,905$ 43,233$ 28,714.78$ 38,859.48$ 44,271$ 49,791$ 2
Total Other Airport Revenues 156,962$ 933,233$ 28,715$ 38,859$ 44,271$ 49,791$
Other Airport Expenses
Personnel 145,190$ 216,003$ 220,323$ 224,730$ 229,224$ 233,809$
Additional Operations Manager -$ -$ 78,000$ 79,560$ 81,151$ 82,774$ 3
Operations and Maintenance 94,508$ 185,280$ 188,985$ 192,765$ 196,620$ 200,553$ 4
Allocations (ISFs, Admin, Joint Svc) 266,008$ 351,254$ 354,767$ 358,314$ 361,897$ 365,516$ 5
Capital Expenditures -$ 890,000$ -$ -$ -$ -$
Debt Service 169,178$ 165,222$ 113,004$ 112,969$ 79,847$ 71,542$
Grant Matching -$ 66,000$ -$ -$ -$ -$
Total Other Airport Expenses 674,884$ 1,873,759$ 955,079$ 968,338$ 948,740$ 954,194$
Net Other Revenues and Expenses (517,922)$ (940,526)$ (926,364)$ (929,478)$ (904,469)$ (904,403)$
1. Ad Valorem Tax is based on the amount assessed 2014 increased by 2% each year.
2. All Other Revenue represents items including terminal sales of t-shirts and oil, bankruptcy collection settlements, grant revenue, airport event
revenues, and other miscellaneous revenues.
4. Budgeted Operations and Maintenance expenses are projected based on historical work orders fulfilled by the Maintenance Department. Actual
costs may exceed the budged amount due to increased awareness by the Airport Manager of maintenance issues that could cause an increased
number of work orders over the projected amount used for the budget estimate.
5. Allocations include the Building ISF, Technology ISF, Administrative Allocations, and Joint Services Allocations. These allocations are projected to
increase by 1% over the next 5 years.
Other Revenues and Expenses
3. CH2M Hill recommended an Operations Manager position to be filled at the Airport in 2016. We agree this is a needed position for operations. We
estimate this position will require a base salary of $60,000 plus benefits estimated at 30% ($18,000) resulting in a total carrying cost of $78,000.
Increases to the personnel expense for this position are based on 2% increases each year.
Based on the current lease rates, fuel pricing conditions and the current operating constraints, it is
anticipated that the Georgetown Municipal Airport will have expenditures in excess of revenues through at
least the 2019 fiscal year.
Year End 2014 2015 2016 2017 2018 2019
Rental Net Profit 516,550$ 577,465$ 612,000$ 614,670$ 622,329$ 630,141$
Fuel Net Profit 127,647$ 177,676$ 188,436$ 198,237$ 207,058$ 214,881$
Net Other Revenues and Expenses (517,922)$ (940,526)$ (926,364)$ (929,478)$ (904,469)$ (904,403)$
Revenues Greater/(Less) than
Expenditures 126,275$ (185,384)$ (125,928)$ (116,572)$ (75,082)$ (59,381)$
Revenues Greater/(Less) Than Expenditures
Attachment number 2 \nPage 17 of 18
Item # C
CITY OF GEORGETOWN
REPORT OVER MUNICIPAL AIRPORT PROCESS REVIEW AND FINANCIAL
ANALYSIS
APRIL 17, 2015
Page 16 of 16
Confidential, Not for External Distribution
CONCLUSION
After filling the position of the Airport Manager, the City and Airport management have focused on the
maintenance, safety and operations of the airport to improve it to acceptable operating conditions.
The Georgetown Municipal Airport does not have the fundamental processes and technology in place to
address the larger issues in the CH2M Hill Report. The City should implement the recommendations to
the observations from our procedures to establish the operational infrastructure necessary for effective
operations.
Once the Airport has restored acceptable operating conditions, the Partially Closed, Open, and On Hold
items should be evaluated, prioritized, and a formal plan and timeline should be developed to address
each outstanding recommendation in the CH2M Hill Report.
Attachment number 2 \nPage 18 of 18
Item # C
Georgetown Municipal Airport
June 23, 2015
City of Georgetown
Process Review Report and Financial
Analysis Report
Attachment number 3 \nPage 1 of 29
Item # C
Topics
2
•Scope
•Overview
•Process Review Results
•Roadmap Validation Results
•Financial Analysis Results
•Conclusion
Attachment number 3 \nPage 2 of 29
Item # C
3
Scope
The scope of the financial analysis and process review procedures included two distinct objectives.
1. Significant Process Review
Evaluate the significant operations and management processes of the Airport to evaluate whether:
Appropriate people, processes, and technology are in place to effectively run, report and maintain compliance with statutory regulations
Processes are repeatable, scalable, and sustainable for future growth
2. Financial Analysis and Road Map Validation
Perform an analysis of the economic consequences of the actions put in place by the City in response to the recommendations made in the CH2M Hill Report. We validated that the responses formulated by the City to the recommendations are:
For the actions that have a financial consequence we
Evaluated the projected economic out come on a prospective basis
Projected the economic impact to evaluate whether the financial outcome would result in a self-sustaining cash flow for the Airport
Closed and in place
In Progress No Action
On Hold
Open and planned for future implementation
Attachment number 3 \nPage 3 of 29
Item # C
To have accurate, efficient and sustainable operations in any organization, three key components must be in place:
People,
Process, and
Technology
Since the release of the CH2M Hill Report, the City has made efforts to improve each of the three components.
As part of those improvement efforts, the City hired a new Airport Manager in January of 2015.
The results of the process review provide specific recommendations for the City to enhance the processes and technology to improve the operations of the Georgetown Municipal Airport.
4
Overview
Attachment number 3 \nPage 4 of 29
Item # C
5
Process Review Results
To complete the review of the Airport’s significant processes, we interviewed Airport, Finance and Utilities personnel to gain an understating of the current state of the procedures. We also examined existing documentation to validate the activities being performed.
Processes Evaluated:
1. Inventory Management
2. Sales and Accounts Receivable
3. Contract Management and Compliance
4. Internal Financial and Operational Reporting
5. Regulatory Compliance and Reporting
The results of our process review included 9 observations and recommendations.
Attachment number 3 \nPage 5 of 29
Item # C
6
Process Review Results
Observation 1
There are important operational or financial processes for which the Airport lacks defined procedures
designed to ensure they are executed. Some processes may be infrequently conducted on an ad hoc
basis.
Recommendation
Airport management should implement policies and design procedures for the processes identified.
Polices and procedures should establish basic expectations of how processes should be performed and
the criteria for evaluating or executing the transactions related to the processes, including:
Inventory Loss Allowance: Monitoring inventory balances, establishing variance thresholds, defining write-off
criteria, and appropriate review.
Delinquent Lease Payments: Setting time intervals for follow-up, assigning collections responsibility,
documenting collection attempts, and reviewing outstanding balances.
Reserves for Uncollectable Accounts: Policies and procedures to evaluate delinquent balances, defining
write-off criteria, performing appropriate review and approval of write-offs.
Tracking Prokey Cards: Inventory of cards, card issuance criteria, logging card issuance, monitoring card
usage, and deactivating dormant or revoked cards.
Lease Prepayments: Procedures for recording and monitoring the amortization of prepaid accounts.
Sublease Review and Approval: Establishing a sublease review process, sublease compliance monitoring,
and sublease approval process.
CPI Adjustments: Process and timing to research CPI rate adjustments and approvals of vacant land lease
rate adjustments.
Rental Rate Assessments: Annual hangar and tie-down rate review policy, rate benchmarking, and rate
change approvals.
Lease Contract Retention: Procedures to file and retain legal documents such as leases and other contracts.
Lease Compliance Monitoring: Annual FBO and significant contract review for compliance with contract
terms.
Attachment number 3 \nPage 6 of 29
Item # C
7
Process Review Results
Observation 2
There are critical processes for which the Airport lacks standardized and documented
procedures. While there are general processes, they occur on a regular and/or ad-hoc
basis with little direction or supervision.
Recommendation
Airport management should formalize and standardize the procedures and implement
policies to establish documentation standards for the critical processes related to the
Airport’s operations. The policies, and/or procedures that establish an expectation of
how the process should be performed under normal operating circumstances including:
Fuel Markup Rates: Establishing a periodic evaluation; separating fuel contracts from land-leases;
determining appropriate markups to cover delivery, storage, flowage fees, admin, and taxes; and
approval of rates and markups.
Charging Late Fees: Establishing criteria for the posting of late fees to accounts; monitoring
accounts for timely payment; and approving fees posted to accounts.
Prospective Tenant Lease Evaluations: Establishing an application process; determining evaluation
criteria; documenting the review/selection process; and defining a hierarchal approval of
contracts.
New Contract Review/Change and Approvals: Establishing contract evaluation criteria;
documenting the review and approval process; and defining a hierarchal approval process.
Airport Condition Inspection Checklists: Developing a formalized airport inspection checklist to be
completed by staff on a regular basis and documenting the performance of inspections
appropriate of a general aviation airport, which may result in a NOTAM.
Attachment number 3 \nPage 7 of 29
Item # C
8
Process Review Results
Observation 3
The Airport currently operates using ad hoc methods through spreadsheets and systems managed by
other Departments within the City. The Utilities Department issues Airport hanger rental bills. This system
does not have the ability to report unutilized rental units.
There is no review to ensure that spreadsheet formulas are correct or that data is complete and
accurately entered into the spreadsheet. Critical spreadsheets are kept to record 1)fuel inventory
purchases, receipts, and sales, 2) customer payments and outstanding accounts, 3)lease inventories
and tenant information.
Recommendation
The Airport should be responsible for preparing and issuing the billing for leases. Additionally, the Airport
should explore abandoning the use of spreadsheets and applications not designed for airports to
process transactions, and move towards a system designed specifically to handle the following
transactions related to operations of an FBO:
Fuel sales processing and billing
Fuel inventory management
Rent roll processing and billing
Lease contract and inventory management
Standalone FBO systems are a more reliable and secure method to processing transactions that occur
at the Airport. Two examples of an appropriate software that the City should evaluate are:
TotalFBO – Modules include Inventory Control, Ordering/Receiving, Reservations/Scheduling,
Concierge.
FBO Manager – Modules include tracking of receivables and payables, inventory management,
hangar and tie-down rental management.
Attachment number 3 \nPage 8 of 29
Item # C
9
Process Review Results
Observation 4
The key performance indicators reported to Airport management and the GTAB are
limited and do not provide a complete overview operations. Some financial and
operational information is shared with the GTAB. However, other performance information
is not provided to Airport management and the GTAB on a regular basis that would be
beneficial to manage operations.
Recommendation
The Airport should increase the information and data reported to Airport management or
the GTAB. The following KPI's should continue to be reported:
Number of new/lost tenants
Occupancy percentage
Fuel sales revenue and volumes sold
Budget to actual comparisons
Additionally, in order for Airport management or the GTAB to effectively evaluate KPIs and
Airport performance, the additional financial results and operations performance
information should be included in the monthly reports.
Commercial Lease Revenue
Hanger Revenue
Fuel Inventory levels and value
Outstanding accounts receivable balances, accounts receivable aging, and collection activities
Leasing activity including tenant retention and occupancy rates, and average waiting list times
Rent roll reports including a breakdown of existing leases and the commencement date, terms, rent
payable, and accumulated rent paid.
Attachment number 3 \nPage 9 of 29
Item # C
10
Process Review Results
Observation 5
Daily transactions and the reports provided to Airport management and the GTAB are
not regularly reviewed for accuracy and completeness.
The following items were identified to have insufficient review over the source data.
Review of inventory roll forward balances
Posting of fuel invoices to customer accounts
Sales and Accounts Receivable data reported to Accounting and City management
Statistical Inventory Report data submission
Recommendation
Airport management should implement the review of transactional information as well
as the information reported to Airport and City management and the public. Reviews
should include a validation and review of the data for completeness and accuracy.
The items identified should be reviewed, at a minimum:
Beginning inventory (fuel) and the roll forward of purchases, sales, and any shrinkage
Fuel sales recorded to receipts issued as well as changes in inventory to determine if
sales were accurately recorded
Fuel sales and receivables should be reviewed for reasonableness and accuracy
before reporting to the GTAB and management
Fuel inventory statistics should be compared to invoices, receipts and sales for
reporting of the Statistical Inventory Report
Attachment number 3 \nPage 10 of 29
Item # C
11
Process Review Results
Observation 6
Certain processes at the Airport were identified to lack segregation of duties.
The following specific segregation of duties conflicts were identified:
Fuel Attendants place orders, receive and accept deliveries, and issue
sales receipts.
The Airport Business Coordinator receives and records cash payments.
Recommendation
The Airport should ensure that duties related to receiving cash, inventory, and
recording of these items in the ledger are properly segregated.
The responsibility of ordering fuel, receiving fuel, and issuing sales receipts
should be segregated to separate individuals to remove the opportunity to
misappropriate assets and to provide for the detection of errors.
The ability to receive cash payments and record payments should be
segregated or monitoring controls should be implemented to removed the
opportunity to misappropriate assets.
Attachment number 3 \nPage 11 of 29
Item # C
12
Process Review Results
Observation 7
Lease customers are billed on a monthly basis by the third-party provider through the
Utilities office. Starting April 1, 2015, customers will have an option of pre-paying for a year;
however this process has not been implemented.
Recommendation
In order to reduce billing processing time and expenses, Customer Care within the Utilities
Department should pro-actively monitor the implementation process of yearly billing.
Observation 8
Fuel Attendants count oil inventory three times a day and record it in a Weekly Inventory
Report. Based on the facts that oil is a slow-moving inventory item, has a low inventory level
and a low monetary value, we consider counting oil inventory three times a day excessive.
Recommendation
We recommend updating the inventory monitoring procedures for the slow-moving and
low level items to reduce the number of counts from three times a day to a daily or twice-
weekly count to ensure that Airport staff is utilizing its time efficiently and effectively.
Attachment number 3 \nPage 12 of 29
Item # C
13
Process Review Results
Observation 9
The Airport Ledger spreadsheet is stored on the City’s network and is password
protected. However, several users who have access to modify data in the
Airport Leger file, but do not require that access based on their function and
responsibilities. Additionally, we could not verify the date of the last password
change on the spreadsheet.
Recommendation
Airport management should review the user access to the Airport Ledger
spreadsheet and limit access to modify data in the spreadsheet to the Airport
and/or Accounting personnel whose job function includes the entry of
transactions into the spreadsheet. Other personnel should have read-only
access to the file. This access can be managed through security rights
management in the City’s electronic file system. Additionally, the spreadsheet
password should be changed on a periodic basis.
Attachment number 3 \nPage 13 of 29
Item # C
14
Road Map Validation
To validate the City’s progress to date for each of the recommendations in the CH2M Hill
Report, we conducted interviews with Airport personnel to determine the changes made
to address the CH2M Hill Recommendations.
We also gained an understanding of efforts that are in progress and future plans to
address other recommendations. We obtained documentation and support for the
changes that have been made or are in progress.
The table below presents the status of recommendations from the CH2M Hill Report.
Open In
Progress
Partially
Closed Closed On Hold
No
Action
Short Term 7 2 2 1 1 0 1
Medium Term 8 2 2 0 0 4 0
Long Term 6 0 0 0 1 3 2
Financial and Legal 8 2 4 0 2 0 0
Capital Development
and Maintenance 800 0170
Operations, Safety,
and Security 440 0000
Administrative and
Organization 522 0001
Total 46 12 10 1 5 14 4
Recommendation Status
Category Total
CH2M Hill Report Recommendations Summary
Attachment number 3 \nPage 14 of 29
Item # C
15
Of the 7 Short Term recommendations:
2 are Closed or have No Action
2 are In Progress
1 is Partially Closed
2 are Open
Four of the items that are Open or In Progress relate to observations and recommendations
from our procedures. Implementing the recommendations should aid the City in closing the
recommendations from the CH2M Hill Report.
Road Map Validation
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.1.1 Standard Lease and Lease Rate
Review Closed
4.1.1.2 Fuel Markup Rate Review In Progress JetA markup will go to GTAB for approval May
8, 2015. 2
4.1.1.3 Recommendation for Airport
Organizational Changes
Partially
Closed
Airport Manager position is filled. Airport
Operations Manager position recommended
by CH2MHill has not been created.
10
4.1.1.4 Airport Manager position elevated to
increase business development role No Action
4.1.1.5 KPI Performance Reporting Open 4
4.1.1.6 Vision and Brand Setting In Progress 11
4.1.1.7 Restaurant Development Open
Short Term
Attachment number 3 \nPage 15 of 29
Item # C
16
Of the 8 Medium Term recommendations:
2 are In Progress
4 are On Hold
2 are Open
The recommendations with an On Hold status should be able to be addressed upon the
completion of the Airport Master Plan Update.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.2.1 Airport Development Committee
Establishment Open 10
4.1.2.2 Long‐Term Airport Management
Option Analysis and Selection In Progress 10, 11
4.1.2.3 Develop Comprehensive Marketing
Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.2.4 Develop RFPs and Gauge Private
Sector Demand for Development On Hold Awaiting TxDOT for Master
Plan Update
4.1.2.5 T‐Hanger vs. Shade Hanger Analysis On Hold Awaiting TxDOT for Master
Plan Update
4.1.2.6 Coordination of Land Development
Plan with Marketing Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.2.7 Develop Relationships with Local
Economic Development Agencies Open
4.1.2.8 Replace Terminating Leases with
Updated Stronger Leases In Progress 1
Medium Term
Road Map Validation
Attachment number 3 \nPage 16 of 29
Item # C
17
Of the 6 Long Term recommendations:
1 is Closed
2 were determined to have No Action
3 are On Hold
The recommendations with an On Hold status should be able to be addressed upon the
completion of the Airport Master Plan Update.
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.1.3.1 Develop Stronger Standard Lease
Contracts Closed
4.1.3.2 Reinstating Airshow No Action
4.1.3.3 Using Airport Revenue to Fund Land
Development Initiatives On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.4 Using Increased Revenues to Upgrade
Airport On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.5 Continuous Refinement of Airport
Brand and Marketing Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.1.3.6 Consider Runway Extension No Action
Long Term
Road Map Validation
Attachment number 3 \nPage 17 of 29
Item # C
18
Of the 6 Financial and Legal recommendations:
2 are Closed
3 are In Progress
2 are Open
Updates to the Airport minimum standards and rules are in progress. Implementing our
recommendations should aid the City in closing the recommendations from the CH2M Hill
Report.
Road Map Validation
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.2.1 Develop New Comprehensive Airport
Rules In Progress 11
4.2.2.2 Update Delegation of Authority Closed
4.2.2.3 Improving KPI Reporting Open 4
4.2.2.4 Improving Ad Valorem/Business Tax
Assessment Situation Open
4.2.2.5 Update Airport Minimum Standards In Progress Review completed by outside
counsel is in review.
4.2.2.6 Review and Update Airport Rules and
Regulations In Progress Review completed by outside
counsel is in review.
4.2.2.7 Update Contract Management
System In Progress 2
4.2.2.8 Conduct Annual Lease Compliance
Inspection. Closed
Financial and
Legal
Attachment number 3 \nPage 18 of 29
Item # C
19
Of the 8 Capital Development and Maintenance recommendations
1 is Closed
7 are On Hold
The seven recommendations with an On Hold status should be able to be addressed upon
the completion of the Airport Master Plan Update.
Road Map Validation
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.3.1 Updating GTU Master Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.2 Developing an Airport
Property/Commercial Development On Hold Awaiting TxDOT for Master
Plan Update
4.2.3.3 Establish an Airport Property
Development Committee On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.4 Develop Landscaping Enhancement
Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.5 Developing Airport Renovation Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.6 Maintain and Update the Capital
Development Plan On Hold Awaiting TxDOT for Master
Plan Update 11
4.2.3.7 Consider TxDOT Assistance for
Project Planning Closed
4.2.3.8 Work with TxDOT to Development
Pavement Maintenance Program On Hold Awaiting TxDOT for Master
Plan Update 11
Capital
Development
and
Maintenance
Attachment number 3 \nPage 19 of 29
Item # C
20
All 4 of the Operations, Safety, and Security Procedures recommendations are Open.
Of the 5 Administrative and Organization recommendations
1 was determined to have No Action
2 are In Progress
2 are Open
Upon completion of the Airport Master Plan Update, the Open items should be evaluated,
and a formal plan and timeline should be developed to address each recommendation.
Road Map Validation
Category Ref # Recommendation Status Comment
Obser.
Ref.
4.2.1.1 Develop an Updated Security Plan Open
4.2.1.2 Develop MOU with City Firefighting Open
4.2.1.3 Develop Tenant Security Watch
Function Open
4.2.1.4 Work With Police Department to
Improve Presence at the Airport Open
4.2.4.1 Establish Airport Advisory Committee
Structure Open 10
4.2.4.2 Develop Airport Marketing Plan In Progress 11
4.2.4.3 Develop Updated Job Descriptions In Progress
4.2.4.4 Develop Ties to Local Community Open
4.2.4.5 Elevating Airport Manager Position to
Higher Report Structure No Action
Administrative
and
Organization
Operations,
Safety, and
Security
Procedures
Attachment number 3 \nPage 20 of 29
Item # C
21
Through our validation of progress on the CH2M Hill Recommendations,
we identified two observations and have these recommendations:
Observation 10
Due to changes in Airport management and governance structure, clear lines of
responsibility and authority have not been established to address all of the
recommendations and required changes identified in the CH2M Hill Report. Many
of the recommendations provided in the report have not been addressed, and
to date, a plan has not been developed to respond to each of the
recommendations.
Recommendation
The City and GTAB should determine which CH2M Hill financial and operational
issues to address and establish clear responsibilities to prioritize each of the
recommendations identified by CH2M Hill and Weaver. These responsibilities
should be assigned to an individual to prepare a plan and timeline to address
each recommendation.
Road Map Validation
Attachment number 3 \nPage 21 of 29
Item # C
22
Observation 11
The City has no formalized plan or established timeline to carry out its role
during the update to the Airport Master Plan. The master plan update was
scheduled to start in 2015, however the project is not funded. Many CH2M Hill
Recommendations have been deferred to the update of the master plan,
however there is no documented plan or timeline.
Recommendation
Airport and City management should establish a formal action plan and
timeline, which includes the budgeted funds to execute the project, to fulfill
their role during the Airport Master Plan. Individuals such as the Airport
Manager and Director of Transportation should be responsible for the
oversight of the development of the action plan. Milestone goals such as
steering committee selection, marketing/brand development plan, capital
development plans, security procedure plans, etc. should have specific
deadlines for completion.
Road Map Validation
Attachment number 3 \nPage 22 of 29
Item # C
23
Financial Analysis Results
After validating the progress to date the City and Airport
management have made on the recommendations from the CH2M
Hill Report, we evaluated the economic impact those changes will
have on the future operations of the Airport to project if future
operations could result in self-sustaining cash flow.
To achieve this, we updated estimates prepared by the City’s
Finance Department with the lease rates, fuel markups, personnel
and operating expenses that were changed, in response to the
recommendations in the Airport Business Analysis report.
For the amounts provided by the City’s Finance Department, we
used the estimated 2% increase for projected revenues and
expenditures, and the budgeted amounts for the 2015 fiscal year.
Attachment number 3 \nPage 23 of 29
Item # C
24
Amounts in blue represent 2015 projections provided by the Finance Department, adjusted for the
anticipated 2% annual increase.
Financial Analysis Results
Year End 2014 2015 2016 2017 2018 2019 Notes
Projected Rental Unit Revenues
Land Leases 217,024$ 216,839$ 236,559$ 231,719$ 231,719$ 231,719$ 1, 2
Hangar Leases 346,729$ 398,423$ 413,994$ 422,274$ 430,719$ 439,334$ 2, 3
Tie Downs 15,416$ 26,100$ 26,622$ 27,154$ 27,698$ 28,251$ 4
Total Rental Unit Revenue 579,169$ 641,362$ 677,175$ 681,148$ 690,136$ 699,305$
Rental Operating Expenses
Personnel 22,050$ 22,500$ 22,950$ 23,409$ 23,877$ 24,355$ 5
Utilities 20,969$ 21,397$ 21,825$ 22,261$ 22,706$ 23,161$ 5
Maintenance of Rental Units 19,600$ 20,000$ 20,400$ 20,808$ 21,224$ 21,649$ 5
Total Rental Unit Operating Expenses 62,619$ 63,897$ 65,175$ 66,478$ 67,808$ 69,164$
Rental Net Profit 516,550$ 577,465$ 612,000$ 614,670$ 622,329$ 630,141$
Rental Operating Margin 89.19% 90.04% 90.38% 90.24% 90.17% 90.11%
2. In 2017, the land lease for Gantt Aviation's commercial space expires and converts into a standard hanger lease at a rate that will be determined in
a market study. We are unable to estimate future revenues from 2017 and beyond as a result of the conversion of Gant Aviation's land lease to a
hanger lease. As a result, revenue from the Gant lease was not included in the land or hanger lease revenue estimate for the years of 2017 and
beyond.
Rental Revenues and Expenses
1. Land lease revenues are projected at the current rates. As of February 2015 there are 31 land leases that are fully occupied. The Airport has
capacity to add additional leases, however the analysis does not include the addition of additional land leases. Each land leas e contains provisions
for CPI adjustments in future years. The land lease revenue projected for 2016 includes a CPI adjustments that will take place in accordance with the
existing lease agreements. Other future adjustments based on CPI were not included in the analysis based on the unpredictability of future CPI rates.
3. As of February 2015 , there 122 hangar and storage units (114 hanger and 8 storage units) that are available to be leased. The hangars are
currently 88% occupied. Despite availability, there is a waiting listing for prospective tenants who want to lease a hangar. Hangar revenue was
projected using the rates effective March 2015, which were updated based on a market study and increased by 2% in subsequent years.
4. As of February 2015, there are 34 tie-downs available for leasing. The occupancy rate for tie down spots is 85%. Revenue for tie down spots is
projected using the rates effective March 2015, which were updated based on a market study and increased by 2% in subsequent years.
5. Estimated fuel, personnel, maintenance and operating expenses for Fuel and Rental operations are based on the Airport's budgeted 2015 costs
and increased by 2% each year. Personnel expenses are assigned to Fuel and Lease operations based on the position and time spent on each area.
There are a total of 3 Full-time employees and 4 Part Time Employees.
Attachment number 3 \nPage 24 of 29
Item # C
25
Financial Analysis Results
Year End 2014 2015 2016 2017 2018 2019 Notes
Fuel Revenues 2,518,237$ 2,576,983$ 2,635,729$ 2,694,475$ 2,753,222$ 2,811,968$ 1
Total Fuel Revenues 2,518,237$ 2,576,983$ 2,635,729$ 2,694,475$ 2,753,222$ 2,811,968$
Cost of Fuel 2,266,418$ 2,272,600$ 2,318,052$ 2,364,413$ 2,411,701$ 2,459,935$ 2
Total Cost of Fuel Sales 2,266,418$ 2,272,600$ 2,318,052$ 2,364,413$ 2,411,701$ 2,459,935$
Fuel Sales Operating Expenses
Personnel 109,515$ 111,750$ 113,985$ 116,265$ 118,590$ 120,962$ 2
Utilities 9,757$ 9,957$ 10,156$ 10,359$ 10,566$ 10,777$ 2
Maintenance of Fuel Infrastructure 4,900$ 5,000$ 5,100$ 5,202$ 5,306$ 5,412$ 2
Total Fuel Sales Operating Expenses 124,172$ 126,707$ 129,241$ 131,826$ 134,462$ 137,151$
Fuel Net Profit 127,647$ 177,676$ 188,436$ 198,237$ 207,058$ 214,881$
Fuel Operating Margin 5.07% 6.89% 7.15% 7.36% 7.52% 7.64%
2012 2013 2014
2,341,998 2,332,610 2,518,237
-0.40% 7.96%2.33%
Fuel Revenue Projection
Average
Increase %Fuel Sales
Increase
Fuel Sales Revenues and Expenses
2. Estimated fuel, personnel, maintenance and operating expenses for Fuel and Rental operations are based on the Airport's budgeted 2015 costs
and increased by 2% each year. Personnel expenses are assigned to Fuel and Lease operations based on the position and time spent on each area.
There are a total of 3 Full-time employees and 4 Part Time Employees.
1. Fuel sales were projected using historical fuel sales for the years 2012-2014. The average increase was 2.33% in fuel revenues per year.
Attachment number 3 \nPage 25 of 29
Item # C
26
Financial Analysis Results
Year End 2014 2015 2016 2017 2018 2019 Notes
Other Airport Revenues
Ad Valorem Tax 31,057$ 31,678$ 32,312$ 32,958$ 33,617$ 34,289$ 1
Bond Proceeds -$ 890,000$
All Other 125,905$ 43,233$ 28,714.78$ 38,859.48$ 44,271$ 49,791$ 2
Total Other Airport Revenues 156,962$ 933,233$ 28,715$ 38,859$ 44,271$ 49,791$
Other Airport Expenses
Personnel 145,190$ 216,003$ 220,323$ 224,730$ 229,224$ 233,809$
Additional Operations Manager -$ -$ 78,000$ 79,560$ 81,151$ 82,774$ 3
Operations and Maintenance 94,508$ 185,280$ 188,985$ 192,765$ 196,620$ 200,553$ 4
Allocations (ISFs, Admin, Joint Svc) 266,008$ 351,254$ 354,767$ 358,314$ 361,897$ 365,516$ 5
Capital Expenditures -$ 890,000$ -$ -$ -$ -$
Debt Service 169,178$ 165,222$ 113,004$ 112,969$ 79,847$ 71,542$
Grant Matching -$ 66,000$ -$ -$ -$ -$
Total Other Airport Expenses 674,884$ 1,873,759$ 955,079$ 968,338$ 948,740$ 954,194$
Net Other Revenues and Expenses (517,922)$ (940,526)$ (926,364)$ (929,478)$ (904,469)$ (904,403)$
1. Ad Valorem Tax is based on the amount assessed 2014 increased by 2% each year.
2. All Other Revenue represents items including terminal sales of t-shirts and oil, bankruptcy collection settlements, grant revenue, airport event
revenues, and other miscellaneous revenues.
4. Budgeted Operations and Maintenance expenses are projected based on historical work orders fulfilled by the Maintenance Department. Actual
costs may exceed the budged amount due to increased awareness by the Airport Manager of maintenance issues that could cause an increased
number of work orders over the projected amount used for the budget estimate.
5. Allocations include the Building ISF, Technology ISF, Administrative Allocations, and Joint Services Allocations. These allocations are projected to
increase by 1% over the next 5 years.
Other Revenues and Expenses
3. CH2M Hill recommended an Operations Manager position to be filled at the Airport in 2016. We agree this is a needed position for operations. We
estimate this position will require a base salary of $60,000 plus benefits estimated at 30% ($18,000) resulting in a total carrying cost of $78,000.
Increases to the personnel expense for this position are based on 2% increases each year.
Attachment number 3 \nPage 26 of 29
Item # C
27
Based on the current lease rates, fuel pricing conditions and the
current operating constraints, it is anticipated that the Georgetown
Municipal Airport will have expenditures in excess of revenues
through at least the 2019 fiscal year.
Financial Analysis Results
Year End 2014 2015 2016 2017 2018 2019
Rental Net Profit 516,550$ 577,465$ 612,000$ 614,670$ 622,329$ 630,141$
Fuel Net Profit 127,647$ 177,676$ 188,436$ 198,237$ 207,058$ 214,881$
Net Other Revenues and Expenses (517,922)$ (940,526)$ (926,364)$ (929,478)$ (904,469)$ (904,403)$
Revenues Greater/(Less) than
Expenditures 126,275$ (185,384)$ (125,928)$ (116,572)$ (75,082)$ (59,381)$
Revenues Greater/(Less) Than Expenditures
Attachment number 3 \nPage 27 of 29
Item # C
28
Conclusion
After filling the position of the Airport Manager, the City and Airport
management have focused on the maintenance, safety and
operations of the airport to improve it to acceptable operating
conditions.
The Georgetown Municipal Airport does not have the fundamental
processes and technology in place to address the larger issues in the
CH2M Hill Report. The City should implement the recommendations
to the observations from our procedures to establish the operational
infrastructure necessary for effective operations.
Once the Airport has restored acceptable operating conditions, the
Partially Closed, Open, and On Hold items should be evaluated,
prioritized, and a formal plan and timeline should be developed to
address each outstanding recommendation in the CH2M Hill Report.
Attachment number 3 \nPage 28 of 29
Item # C
Discussion
Alyssa Martin, Executive Partner
Alyssa.Martin@Weaver.com
972.448.6975
Daniel Graves, Senior Manager
Daniel.Graves@Weaver.com
512.609.1913
Weaver
Risk Advisory Services
1601 S. Mopac Expressway, Suite D250
Austin, Texas 79746
Attachment number 3 \nPage 29 of 29
Item # C
Staff Update
to
Process Review Report and
Financial Analysis Report
City of Georgetown
Attachment number 4 \nPage 1 of 16
Item # C
Overview
CH2M Hill Business Case Analysis Provided:
–Best Practices for Airport Operation/Management
–Alternatives to “plug” the gap in Revenue vs
Expenses
–Recommendations without constraint of staff or
revenue limitations
–City Council accepted Report, directed Staff and
GTAB to address recommendations starting with
fuel and lease revenues
City of Georgetown
Attachment number 4 \nPage 2 of 16
Item # C
CH2M Hill Implementation Steps
–Management Team Oversight
•Transportation Director, Deputy GM, Customer Care
Director
–Multi-Divisional Implementation Team
•Legal, Purchasing, Accounting, Customer Care, Airport
–Short-Term Financial Improvement Plan
•In process – details included
–Internal Controls
•Completed
City of Georgetown
Attachment number 4 \nPage 3 of 16
Item # C
Key Financial Changes
•Fueling
–Completed “rate/margin” analysis
•Modeled margins and “Fuel Markup” Policy in
Spring
–Shortened payment terms to 7 days
•Fuel invoices no longer due in 30 days
–Discontinued discounts
•No more fuel discounts
–Current Fuel Contract expires after FY 2016
City of Georgetown
Attachment number 4 \nPage 4 of 16
Item # C
Key Financial Changes
•Leasing
–Market lease rate review New Rates
–Implemented new T-Hangar and Tie-down lease
agreements
–Billing to lease reconciliation Updated bills
–Business Model Property Management
approach to lease operations
•Software being planned for FY 2016 Implementation
City of Georgetown
Attachment number 4 \nPage 5 of 16
Item # C
Key Internal Control Changes
•Limited access & control – DUAL REVIEW
–Limited access to deposits & cash safe
–Controlled access to fuel billing spreadsheets
–Process implemented to set fuel rates
–Manuel process
•Reengineered revenue cycle services
–Moved to Customer Care from Airport
–City standards for cash & receivable controls
–Formalized review of receivables & aging
•Review on bi-weekly basis
City of Georgetown
Attachment number 4 \nPage 6 of 16
Item # C
Next Steps Moving Forward
City of Georgetown
Attachment number 4 \nPage 7 of 16
Item # C
Airport Master Plan Update
•TxDOT Approved Airport Master Plan Update
–July 2016 start date for consultant selection and
scope review
–City Staff will present CH2M Hill
recommendations for inclusion in Planning Scope
–Anticipated January 2017 AFA amendment with
TxDOT to initiate the formal approved planning
process
City of Georgetown
Attachment number 4 \nPage 8 of 16
Item # C
Business Management Software
•Needed to address Weaver concerns
•Implement specialized Airport Management
Software in early FY 2016
–Request for Proposals (RFP) development
underway
•Target date for RFP July 2015
–Staff identifying the requirements for new system
•Collaborative effort
–Estimated project costs = $50,000
•Funding source to be identified
City of Georgetown
Attachment number 4 \nPage 9 of 16
Item # C
Current Focus Efforts
City of Georgetown
Attachment number 4 \nPage 10 of 16
Item # C
Airport Staff Focus Areas
•Filled Airport Business Coordinator position
•Review of Airport Expenses/Revenues
•Reorganized GL accounts to match actual operations
•CPI adjustments to land leases
•Implementing Foreign Object Debris Removal
Program
•Program to track /report TCEQ SWPPP Permit
•Routine Hanger Inspection/Maintenance Program
•Airfield lighting upgrade thru TxDOT Grant
City of Georgetown
Attachment number 4 \nPage 11 of 16
Item # C
Airport Staff Focus Areas
•Asphalt temp repair to Taxilane between B & C
Hangars
•Expanded daily Airport Self-Inspection Program
•Weed Abatement Program
•Implementing Pavement Management Program
•Developed Training Program for Fuel Attendants
•Electronic Gate Preventative Maintenance Program
•Quarterly Inspection Program for FBO Fuel Trucks
•Reviewing Spill Prevention Control and
Countermeasures Program
City of Georgetown
Attachment number 4 \nPage 12 of 16
Item # C
Airport Staff Focus Areas
•Draft Environmental Assessment for relocation of
fuel farm
•Developing Hanger Preventative Maintenance
Program
•Planning Routine Pavement Maintenance Funding
•Developing lease agreement for storage locations
•Updated Storm Water Pollution Prevention Plan
•Conducting based airplane inventory and updating
FAA database
City of Georgetown
Attachment number 4 \nPage 13 of 16
Item # C
Planning for the Future
City of Georgetown
Attachment number 4 \nPage 14 of 16
Item # C
Planned Projects
•Continue review of:
•All CH2M Hill Report recommendations
•All Weaver Audit Observations
•Update Airport Rules and Regulations and Minimum
Standards
•Develop Airport Preventative Maintenance Program
•Evaluate possible software solutions for Pavement
Management Program
•Evaluate possible software solutions for Airport Self -
Inspection Program
•Upgrade Control Tower voice recording system
City of Georgetown
Attachment number 4 \nPage 15 of 16
Item # C
Any Questions
City of Georgetown
Attachment number 4 \nPage 16 of 16
Item # C
City of Georgetown, Texas
City Council Agenda
June 23, 2015
SUBJECT:
Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the attorney has
a duty to advise the City Council, including agenda items
Sec. 551.074: Personnel Matters
- City Manager, City Attorney, City Secretary and Municipal Judge: Consideration of the appointment,
employment, evaluation, reassignment, duties, discipline, or dismissal
ITEM SUMMARY:
FINANCIAL IMPACT:
N/A
SUBMITTED BY:
Cover Memo
Item # D
