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HomeMy WebLinkAbout2017-05-31 Special Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, MAY 31, 2017 PAGE 793 ASSEMBLY The New Hanover County Board of Commissioners met for a Special Meeting with the New Hanover County Airport Authority on Wednesday, May 31, 2017, at 8:00 a.m. in the Conference Room of the Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina. Members present: Vice-Chairman Skip Watkins; Commissioner Jonathan Barfield, Jr.; Commissioner Patricia Kusek; and Commissioner Rob Zapple. Chairman Woody White arrived at 8:15 a.m. Staff present: County Manager Chris Coudriet; County Attorney Wanda Copley; and Clerk to the Board Kymberleigh G. Crowell. New Hanover County Airport Authority members present: Chairman Tom Wolfe; Thomas C. Barber, II; Donna Girardot; Dan Hickman; Carter T. Lambeth; and John O. Perritt, III. Member Jonathan S. Crane was absent. Wilmington International Airport staff present: Julie Wilsey, Airport Director; Gary Broughton, Deputy Director; Robert Campbell, Finance Director; Whitney Prease, Facilities Director; Carol LeTellier, Business Development Director; Gary Taylor, Chief of Public Safety; Erin McNally, Marketing and Public Relations; and Rose Davis, Executive Assistant. Vice-Chairman Watkins and Chairman Wolfe called their respective Boards to order for the Special Meeting reporting that the purpose of the meeting is to hear the Annual Report of the Wilmington International Airport. Airport Director Julie Wilsey and Deputy Director Gary Broughton presented the annual report highlighting the following information on the operations, maintenance, development and existing projects of the airport:  2016 Aviation Statistics:  817,896 Passengers (6.2% Increase); 50,527 Operations (5.4% Increase); and 106 Based Aircraft  Wilmington International’s (ILM) One-Stop Connections:  Two airlines to five hubs and four international gateways  1,300 seats per day  American Airlines provides majority of service:  Two LaGuardia (LGA) flights per day starting June 2017  Seasonal Ronald Reagan Washington National Airport (DCA) flight returns June 2017 (weekends only)  Flights to hubs of Philadelphia (PHL) and Charlotte (CLT)  Delta Airlines has six flights to Atlanta (ATL) each day and seasonal LGA service  Top Origins and Destinations (O&D) Markets:  Four of five non-stops in top O&D Markets  NY Metro (LGA/EWR/JFK) market is the largest market to/from ILM (87.6 Passengers Per Day Each Way \[PDEW\])  ILM serves five markets non-stop  US Department of Transportation (USDOT) Grant for non-stop to Chicago (ORD) or Dallas-Fort Worth (DFW) extended through January 2018  Fare Comparison:  ILM average fares are comparable to Raleigh-Durham (RDU), CLT, and Myrtle Beach (MYR), taking into account travel costs and time  ILM does not have low fare carriers, only has network carriers  At RDU, CLT, and MYR Delta and American compete with low cost carriers (Spirit, Allegiant, Southwest)  Airfares are dynamic and vary by destination, time of day, and booking window  Economic Impact of Aviation:  All North Carolina airports (2015): $31.1 billion and 122,000 jobs  ILM (2015): $1.6 billion and 4,910 jobs  New Property Taxes and Revenue:  Hangar value - $6.2 million  Annual rent to ILM - $32,592 (first year)  Property tax (approximately) - $35,000/year  General Aviation (GA) Transition to North Ramp:  $16 million invested since 2011  Effective July 1, 2017:  42 tie-downs for based aircraft  New access gate for tie-downs  Clubhouse for tie-down tenants  Future: Public aircraft wash area and vehicle parking area  Professional Golfers Association (PGA) Event Statistics:  Main Terminal:  125 players arrived on commercial flights  200 Avis rental cars for players and caddies  Delta upgraded two regional jets to MD88 on Monday, May 8th (+198 seats)  th Over half of the flights on Monday, May 8 were at or near capacity  4/28/17 to 5/8/17 - increase of 1,359 passengers vs. 2016 (+ 10.9%) NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, MAY 31, 2017 PAGE 794  Busiest day was May 8th - 94% load factor  Air Wilmington:  87 aircraft carrying players and caddies  Wells Fargo had two corporate jets stay all week  Four of the players had their privately owned jets stay all week  Fuel flowage – 30,000 gallons  Facility Development:  2016 Projects: North Ramp completed; storm water infrastructure; and security fencing  Financial Highlights for Fiscal Year Ended June 30, 2016:  Operating Revenue of $9,516,700 (12.3% increase over FY15):  Aviation = 14.5%  Parking Lot = 40.6%  Rent = 21.3%  Commissions = 13.3%  Security = 7.1%  Other = 3.1%  Unqualified audit option on all reports:  Financial Statements  Internal Control Over Financial Reporting and Compliance and Other Matters  Compliance on the Major Federal Program and the Passenger Facility Charge Program  Compliance on the Major State Program  Summary of Cash Inflows and Outflows:  Cash Inflows:  Operating Revenues = 48.6%  Federal Grants = 37.5%  State Grants = 0.6%  Passenger Facility Charges = 8.2%  Contract Facility Charges = 5.0%  Cash Outflows:  Capital Assets = $11,297,600 (63.8%)  Operating Expenses = $6,418,200 (36.2%)  Excluding depreciation and amortization  Debt Summary:  International Terminal (PFC) $ 983,047  Loan agreement runs through 12/1/2020  Rental Car Facility (CFC) 3,965,000  Loan agreement runs through 6/1/2029  Total Debt as of June 30, 2016 $4,948,047  Facility Development:  Environmental Outreach: Terminal Expansion Environmental Assessment and Sustainability Conference  Community Collaboration: Airport Layout Plan Stakeholders; County Special Use Permit (SUP) and Unified Development Ordinance (UDO); and Metropolitan Planning Organization (MPO) and Transportation Advisory Committee (TAC)  Economic Impact:  Partnered with Wilmington Business Development (WBD), Chamber, Southeast Partnership, and local real estate companies on big and small economic development opportunities.  rd ILM Flex Building: Continuous process; three new tenants in last year (Scratch on 23, Toshiba Business Solutions and Shaw Real Estate, LLC/KBT Realty)  Goal is to be the place for business in the 23rd Street and Castle Hayne area. The additional revenue from the business park will be used to expand infrastructure and facilities at ILM.  Accolades for ILM Partners:  Air Wilmington’s $350,000 investment in renovations  Battle House, high tech laser tag tenant, won the 2017 Coastal Entrepreneur Award  84 Lumber warehouse facility expansion  ILM welcomed newest GA tenant, SeaHawk Aviation in 2016  ILM in the News:  Positive news coverage: The addition of art in the terminal through the Wilmington Arts rd Council and the opening of a Scratch on 23 restaurant in the flex building in the business park. Also received positive review in the Business Journal and unveiled the mural by Wells Fargo highlighting Wilmington’s history.  ILM throughout the Community:  Autism Takes Flight Program  United Way Giving and Project  Azalea Festival and Parade Fly-Over: ILM has sponsored for the last two years  UNCW Vision Project: Supporting college internships and MBA projects is another important way ILM interacts with potential employees and prepares future leaders. Both UNCW and ILM benefit from the partnership. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 33 SPECIAL MEETING, MAY 31, 2017 PAGE 795 GENERAL DISCUSSION In response to questions about the possibility of a second fixed-base operator (FBO), Deputy Director Broughton stated that a Request for Proposals (RFP) was sent out and ILM did not receive any bidders. ILM is still open to a second FBO. However, he does not think there is a demand and ILM’s consultants have said the same. Regarding questions on the flex space, Director Wilsey explained that ILM built the space with its own money and the cost was approximately $2 million. The incoming revenues are used to replenish the loan from the general fund. Any profits from the building will be put back into the additional infrastructure on the land side and/or air side as needed. She is hoping the investment will be recouped in approximately six years. It will be completely dependent on the type of tenant(s), up fit needs, and lease structure. In partnering with a private entity for developing a building and overseeing rent, Director Wilsey explained that previous opportunities were land leases which is common with airports. The Airport Authority (Authority) did try “build to suit”. It was a strategic objective of the Authority and it decided to move forward with building the structure. This would allow the organization to recoup a higher rental rate. She does not disagree that this assumes a higher risk and the challenge is to fill the building. Airports across the country are attempting to diversify their revenue streams. There are airports that have taken this same path. There is less risk to lease the ground and let the company handle the rest, but she does not see anything wrong with the Airport building a facility on its own. Regarding partnering with a commercial real estate company, Director Wilsey explained that the Authority did have a broker under contract to fill the building and it did not lead to any results. The decision was made that the best way to handle filling the building was to use in-house staff. Authority Member Tom Barber stated that this airport has land that many airports would be envious to have. The infrastructure is out there for the business park. Looking forward five to ten years, he believes there will be a much larger business park on the site. Chairman White commented that as the Authority moves forward he would ask that they look at greater length competing with the private sector as there are companies in the community that do this type work. For government to do it in reverse seems to be odd, but it can and has been done in this case. In his opinion, in light of the forthcoming terminal expansion and a lot of the capital needs that will be coming with a growing community, an evaluation should be done about committing capital and assuming all the risk with new buildings. Chairman Wolfe stated that the Authority did take the Garner Report into consideration when deciding to move forward with building the facility. Between the Garner Report and the Authority’s goals of what it is trying to accomplish and the facts it had at the time, building the facility was the right decision. In retrospect, he agrees with Chairman White. There are no ad valorem taxes being paid on the building. Although there are land leases, one goal is to have ad valorem taxes to go along with it to help support the County. In comparing ILM to other airports, ILM leads the pack on ad valorem taxes coming in on aircraft, etc. During last year, over $600,000 in ad valorem taxes came in on aircraft. That will exponentially grow as new aircrafts arrive such as the Live Oak Bank aircraft. The Authority and ILM staff are aware of the need to get the building fully occupied and they can handle it. Chairman Wolfe feels that with the efforts being made this will come out great in the end. In response to questions about the square footage of the units, Director Wilsey stated that the units are 1,400 square feet each with the entire facility being 10,000 square feet. There is the ability to combine the units. Authority Member Donna Girardot commented that the local legislative delegation has been very supportive of ILM and it has been a successful relationship. About three years ago, legislation was passed concerning allowing UBER to participate in serving the North Carolina airports. Since that time this legislation has now become a template for other states. This year the airports are requesting, as the Port has done, for a consistent annual recurring funding source from the State for long range planning purposes. While it is unusual to obtain a funding request in the first year of making the request of the General Assembly, it has happened in this case. The Senate, which has already passed its budget, has included $50 million for airports of which $12 million is designated for ILM over the two-year cycle. The House budget includes $77 million for airports of which approximately $15 million is designated for ILM. The Authority and staff are hopeful this will establish an annual consistent source of funding and allow ILM to move forward on the terminal expansion. ADJOURNMENT Hearing no further discussion, Chairman White thanked the Airport Authority members and staff for the report. Chairman White and Chairman Wolfe adjourned the meeting at 8:48 a.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the Special Meeting of the New Hanover County Board of Commissioners.