City of Quesnel

CITY OF QUESNEL

AGENDA

QUESNEL MUNICIPAL COUNCIL SPECIAL OPEN COUNCIL MEETING NO. 8 COUNCIL CHAMBERS - CITY HALL April 30, 2013 6:00 P.M. Page

A. CALL TO ORDER: MAYOR SJOSTROM

B. APPROVAL OF AGENDA (Late Items):

C. DELEGATION

2 - 51 1) All-West Crane & Rigging Ltd. - Proposed Airport Development - Jerry and Barb van Halderen, Owners/Operators

[Addenda] D. ADJOURNMENT:

Page 1 of 51

2538 Bouchie Lake Road, Quesnel, B.C. V2J 7C7 Ph. (250) 249-5151 Fax (250) 249-5101

April 25, 2013

City of Quesnel 410 Kinchant St Quesnel, BC

Dear Mayor Sjostrom & Council

Please find attached our completed Feasibility Study as provided by SNC Lavalin. We find this study to be comprehensive and includes recommendations for the furtherance of this project.

Timing for this project is critical, as we wish to have the building and improvements “substantially” completed for the 2013 Airshow weekend Aug. 3rd and 4th. This will provide maximum exposure for the new facility, as well the airport as a whole. This window of opportunity is further enhanced with the presence of a television film crew that will be filming the entire event for a new television series set to air this coming fall or spring. The tremendous benefit of this exposure will be lost if a common goal is not pursued. With the attendance of our Canadian Forces Snowbirds, and F-18 Jet Demo team at this year’s show, it is clear to see our airport and community will be in the spotlight.

As stated during preliminary meetings, this project is conditional on expansion of the current apron (approx. 150 ft. X 350 ft.) in order to allow adequate access to the proposed hangar complex. We are suggesting the apron to be increased by an additional 150 ft. X 150 ft. which is in line with a phased approach to the apron expansion plan drafted for the city in recent years. This expansion would not only allow for access to the new hangar complex, but also additional manoeuvring and parking space needed with increased usage. At a minimum, a 75 ft. X 150 ft. extension would be required.

We have acquired budgetary quotations for an apron expansion for both asphalt and concrete surfaces. Ground preparation and surfacing will cost in the range of $250,000 to $300,000 for an apron with a PLR rating (pavement load rating) of 6. This load rating has been suggested by SNC Lavalin to be more than adequate for current and future aircraft types utilizing our airport. It is our understanding the current apron has a PLR of 10, although it is not confirmed if the asphalt portion carries the same rating. We suggest a

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core sample could be taken from the current asphalt portion to determine the actual load rating for that portion. The apron expansion can either then be matched to that load rating or one specified at that time. We would recommend SNC Lavalin as the engineering firm to oversee the expansion as they are already familiar with this development proposal and were directly involved with some 20 airport apron/taxi/runway improvements last year in BC alone.

The budgetary quotations do not include drainage or electrical at this point. The ground and apron expansion is higher in elevation than the surrounding area and therefore drainage improvement costs should be minimal if required. Additional apron marker lights will be required, but again this should be a simple extension of the current lighting in place and therefore minimal as well.

If the city is in favour of this proposal, we suggest a budget be allocated for apron expansion with final terms to be worked out in the near future. Furthermore, NDI funding is available for infrastructure improvements covering up to 70% of project costs to a maximum contribution of $250,000. This can leverage a $107,000 investment by the City to a $357,000 project budget easily allowing for the proposed expansion.

The report produced by SNC Lavalin suggests this project is not without risk, and will require effort to promote and secure tenants for the facility, and therefore recommends provisions to allow “non-aviation” related businesses or uses at this facility if needed. This would be conditional so as not to interfere with day to day operation, safety, or appearance of the current airport. All-West Crane & Rigging is in agreement with these conclusions, but is of the opinion that with promotion, there are sufficient tenant and usage opportunities for this complex to be not only viable, but also act as a catalyst for further economic development at the airport. It is for these reasons All-West is willing to make investment in this project.

In summary, this project is conditional upon expansion of the current apron and other recommendations outlined in section 5.2 of the report. We recognize the timeline is ambitious, but feel the benefit derived by the opportunities stated above, outweigh the effort required to meet the objective.

All-West Crane is committed to this project and looks forward to working with, and or partnering with the City of Quesnel.

Sincerely,

Jerry van Halderen All-West Crane & Rigging Ltd.

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SNC-Lavalin Inc. Transportation Division, Airport Group 1800-1075 W Georgia St Vancouver, BC, V6E 3C9 Telephone: (604) 662-3555 Facsimile: (604) 662-7688

April 25, 2013

Jerry and Barb van Halderen All-West Crane and Rigging Ltd. 1891 Campbell Crescent Quesnel, BC V2J 5Z8

Re: QUESNEL HANGAR FEASIBILITY STUDY

Thank you for selecting SNC-Lavalin as a partner in completing a feasibility study for a multi-use hangar at Quesnel Regional Airport. We have enjoyed completing the study and trust you will find the information useful in your deliberations.

As outlined in the report this feasibility analysis is based on information gathered through interviews as well as official Transport Canada forecasts. We have also provided comparative information for similar multi-use hangar projects at other airports as well as providing example hangar development scenarios at similar airports.

We wish you success in working with Quesnel Regional Airport and with the City of Quesnel in completing the final business plan for this project.

Again thank you for the opportunity and let us know if you require any further information or assistance.

Sincerely,

Mark Duncan Senior Advisor Airport Group SNC-Lavalin Inc.

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Table of Contents

1.0 Executive Summary ...... 2 2.0 Background ...... 4 2.1 SNC-Lavalin ...... 4 2.2 Project Background ...... 4 3.0 Hangar Alternatives ...... 5 3.1 Example Hangars and Development Examples...... 5 3.2 Example Hangar costs...... 6 3.3 Example Hangar Lease Rates ...... 7 4.0 Hangar Feasibility Analysis ...... 8 4.1 Hangar Project Scope ...... 8 4.2 Hangar Demand Analysis ...... 9 4.3 Demand Forecasts and Revenue Projections ...... 20 4.4 Meeting City Objectives ...... 24 4.5 Meeting Airport Objectives ...... 25 5.0 Recommendations and Findings ...... 26 5.1 Hangar Construction ...... 26 5.2 City and Airport Requirements ...... 26 5.3 Economic Considerations ...... 27 6.0 Next Steps ...... 28

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1.0 EXECUTIVE SUMMARY

All-West Crane and Rigging Ltd. (All-West) is considering the opportunity to construct and operate a multi-use hangar facility at Quesnel airport. This study explores the feasibility of the project from a technical, aviation and business demand perspective. With new mining and natural gas exploration in the area it is anticipated that demand for hangar, shop and office facilitates will increase and that this proposed project will be a catalyst for further aviation and business development at the airport. This study has compared other representative multi-use hangars as well as costs and lease rates at various airports. As expected the costs and lease rates vary significantly with the economy of the area and wealth of the area. Quesnel is emerging from the recession of 2008 with strong growth in the forest and mining sectors. As a service centre Quesnel is attracting daily flight service from Central Mountain Airlines which has recently increased service to approximately 3 flights per day. A review of development approaches at representative airports also indicates a pattern of increasing demand once a new hangar facility is built. For example at Boundary Bay Airport (ZBB) the construction of a new hangar on spec encouraged the relocation of the RCMP from YVR to ZBB. Hangars also tend to attract ancillary businesses such as flight schools, technical training, logistic and cargo support, aircraft maintenance and promote the increase of jobs based at an airport. The conceptual layout of the proposed multi-use hangar/office complex was analysed and sufficient clearance exists at the proposed site to allow for a phased expansion as well as shop and office facilities. A taxiway is envisioned to access Phase 2 expansion of the project and the current apron should be expanded to ensure adequate access to the proposed hangar. To meet the time frames envisioned for construction of the multi-use hangar building permit approvals and final design would need to proceed in parallel. As well the apron construction could likely be carried out by the same contractor that builds the access apron to the proposed hangar. In order to establish scenario based demand estimates interviews were conducted with over 20 businesses and related organizations to assess the demand for multi-use hangar and office space. This information was supplemented by a review of publications and interviews with local government. The following conclusions were made regarding hangar useage and demand over the next 15 year period. • Central Mountain Air have indicated a desire to overnight aircraft at Quesnel during winter months. • Initial demand for small GA aircraft long term storage is estimated at 5 aircraft. • Medium to long term: the increased wealth arising from growth in the oil/ gas/mining industry will provide a strong stimulus in generating increased demand for small GA at Quesnel. • Medium to long term: a general increase in primary, secondary and induced economic impact

arising from the oil/ gas/mining industry will increase commercial movement demand. This Company confidential. Company will include more frequent flights to Vancouver, possibly a Calgary service, and more flights overnighting to provide early morning departures /late evening arrivals. • Medium to long term : The growth in the oil/gas/ mining indusrty will provide the incentive to

All rights reserved. reserved. rights All develop service industries for the region. While most will pass to Prince George and Williams Lake some will locate in Quesnel. This will encourage and require local and itinerent local traffic demand and the associated need for hangar requirements.

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• Long term: Some corporate GA will utilize Quesnel and require hangar space. • There is an opportunity to encourage increased traffic demand ( and hence hangar demand), through planned airport marketing and incentives to development. • Near to long term: Renting of workshop, office and hangar space to light commercial aviation businesses (and non-aviation businesses) should be considered as an opportunity to suppliment hangar revenue paticularly during the early start up years. • A possible partnership with the College or UNBC could lead to aviation or industrial training at the airport. Based on this assesssment the revenue projections for aircraft hangarage and other light commercial and storage useage for the proposed hangar are shown in the graph below. Short term base aviation revenues would be in the range of $56,000 to 71,000 pa ($4,700 to $7,400 per month) with a base case revenue stream of $71,000 pa ($5,900 per month). In the medium term these aviation revenues would be expected to increase to between $83,000 and $130,000 pa. It is likely this level of demand would equal the capacity of the proposed hangar. These estimates do not include untilities and taxes which may be added and also do not include any revenues that may result from related services and businesses. The addition of a phase 2 hangar would likely be required to satisfy further aircraft hangar demand.

Projected Annual Aircraft Hangar Revenue $160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0 Short Term (0-5 years ) Medium Term (5-10 years ) Long Term (10- 15 years)

Base Case High Case Low Case

Company confidential. Company This project is expected to act as a catalyst for further business development at the airport and will also provide a location for overnight storage in the winter months to permit early departures of scheduled flights from Quesnel. The proposed multi-use hangar is to be designed to meet the sustainability objectives outlined in ourQuesnel and it is also intended to match the construction design themes of the

All rights reserved. reserved. rights All city and the airport. The project can also provide an opportunity for ancillary businesses that may use the hangar and proposed office space as a base. There may be an opportunity to cost share certain aspects of the project with the city for items such as the sewage field and the apron.

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2.0 BACKGROUND

2.1 SNC-LAVALIN

The SNC-Lavalin Airport Group is committed to delivering high quality projects to our local, national and international clients. For each client, we assemble teams with the appropriate skills and project understanding to deliver the most efficient project with the highest level of client satisfaction, and to ensure that:  Airports and Clients enjoy optimum flexibility and functionality;  The needs of travellers, air carriers and airport stakeholders are carefully considered;  Projects are delivered on time and on budget.  Innovation and cost effectiveness are incorporated into our approach to ensure low life cycle costs; and  A flexible and open approach is maintained with regard to the needs of our clients; Our commitment to high quality deliverables is backed by the Transportation Division’s certification to the ISO 9001 quality standard, applicable to all transportation projects worldwide.

2.2 PROJECT BACKGROUND

The Quesnel Flying Club and the city of Quesnel have been discussing new hangar development at the airport since 2006 and several reports have been completed including a business plan for the airport. As a member of the flying club All-West has been involved in these studies and has had several discussions with the city. All-West is also involved in the staging of the airshow at Quesnel and is exploring the possibility of having a hangar in place by August the 1st, 2013. This date will coincide with the Airshow and bring publicity to both the hangar development and the city. This study is for All-West Crane and Rigging Ltd. and is intended to be an independent analysis of the facts and opportunities around this project. The scenario forecasts are based on the information available at the time of the study. The decision to proceed or not to proceed will rest with All-West. All- West also expects the city will provide funding for the apron associated with this project and that the city will provide the necessary permit approvals and project management resources to meet project time frames. This study provides updated information on traffic patterns and TC approved forecasts as well as data on similar airports. Only order of magnitude cost estimates have been used in this study as detailed estimates are in progress. At this time it is expected that the hangar project will be financed and managed by All-West Crane and Rigging Ltd. The management and construction of the apron will need

to be decided and integrated with the project. Company confidential. Company

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3.0 HANGAR ALTERNATIVES

3.1 EXAMPLE HANGARS AND DEVELOPMENT EXAMPLES

As a first step the study team explored the project scope and the stakeholders involved. Since this hangar project involves the city and an adjoining apron it is important to examine the sizing, the proposed location on the airport and any issues with respect or access or zoning. As a starting point a number of Hangar alternatives were explored and a tour conducted of Boundary Bay Airport (ZBB) Hangars.

Hangar 120ft by 120ft-ZBB • 14000 sq ft • Approx $90/sq ft- box only • Lighting considerations • Door size and operation • Apron connection, parking additional

Multi-tenant hangar-ZBB • Built 7 years ago • Capable of C90 • Costs in range of $70 to $90 sq ft. –costs for office fit up • Apron costs additional

Hangar-office combination-ZBB • Estimated $60-70 sq ft. • $100K development charges

• Fire code-drywall steel Company confidential. Company • Rental $7 sq ft plus maintenance taxes and improvement fee

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T-hangar concept • No heat • Sliding doors • Limited space • Sale rather than lease • Common developer

The survey of hangars also included the various marketing and business concepts for hangars at several airports. There is now a trend for hangars to be more “multi-use” in nature and have several businesses occupying the hangar space as well as attached offices. At Boundary Bay Airport the land use plan defines the type of hangars and aviation business expected in each area of the airport. This sets up a stable environment for private sector investment. For example the most recently constructed hangar has a tire distribution business integrated into a portion of the hangar. All construction at Boundary Bay Airport is approved by the Corporation of Delta. Hangar construction and expansion also attracts new business and promotes ancillary jobs at the airport. The construction of the Heli-One Maintenance hangar at Boundary Bay brought over 400 jobs to the airport. In another example the RCMP is relocating from YVR to Boundary Bay into a new hangar recently constructed by the private operator of the airport Alpha Aviation Inc. At Vernon Airport the City has adopted an aggressive strategy to attract hangars and businesses to the airport and frequently advertises available lots for hangar construction. Vernon has been successful in attracting general aviation traffic and related hangar development and maintenance businesses. Their recently completed economic impact study indicates 101 direct jobs or $3.6M in wages as well as a total of 799 direct, indirect and induced jobs in the surrounding area. Based on the hangar survey and other airport examples a multi-use hangar facility would appear to be the best solution to meet market demands at Quesnel Airport. The survey also indicates a trend toward multi-use development through the construction of adjacent office and shop space to encourage businesses that see an advantage to being located on an airport. The hangar should be sized to allow multiple and flexible uses and the trend is toward larger hangars with integrated office space.

3.2 EXAMPLE HANGAR COSTS

Project costs will vary with the degree of finishing required and local site and market conditions. As part of the study costs and lease rates for several example hangars were explored. RS Means Data from the

US gave some average costs for varying sizes of hangars but it should be noted that individual hangar Company confidential. Company costs varied greatly. • National US average cost small hangars is $22 sq ft. and T-hangars and small box-RS Means Data US

All rights reserved. reserved. rights All • Average climbs to above $95 sq ft. for a 20000 sq ft. hangar-RS Means data US • An example 3600 sq. ft. hangar for sale in High River Alberta was selling for $55 per sq. ft.

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Experience in the Lower Mainland (Boundary Bay Airport and Langley) gave similar cost per square foot figures but costs can vary based on the local construction market and building costs. In Quesnel it may be possible to have a lower construction cost but that will depend on final design and construction cost estimates. A few of the cost considerations include: • Fire suppression, building codes, stair access, exit doors and code requirements. • Apron connection, services, and parking are normally considered to be part of the developer’s expense. Detailed costing of the project has not been completed as part of this study but an anticipated order of magnitude cost based on averages from other hangar projects would place the proposed project in the range of $85 to $95 per square foot for a 10000 sq.ft. hangar with integrated base office space. It is expected that final fit up of office space would depend on the tenants for that space. Apron costs, parking and access charges would be additional.

3.3 EXAMPLE HANGAR LEASE RATES

Lease rates for hangars must consider taxes, airport lease, utilities and maintenance fees. Traditionally these expenses are charged over and above the base hangar lease rate. In Vancouver YVR for example the base rate could be $7 per sq. ft. per year plus $12 per sq. ft. for additional charge for a total of $18 dollars per sq. ft. annually. At Boundary Bay Airport lease rates for new hangars are in the range of $7 per sq. ft. plus land lease and utilities for a total of approximately $10 to $12 per sq. ft. Hangar lease rates also depend on the age of the hangar and the local market. An example at Brantford Ontario demonstrates a $3 sq. ft. rental rate: Brantford-For Commercial Hangar #175, 15,000 sq.ft. Building: 2012: $43,105.50 per year, or $3,592.13/month plus HST 2013: $44,398.67 per year, or $3,699.89/month plus HST Parking: $792 per year plus HST ( 6 stalls) Property Taxes: An estimated amount of $1.25 per Sq. $18,750 Brantford-For Commercial Hangar #150-2, 10,451 sq ft. Building: 2012: $29,994.87 per year, or $2,499.57/month plus HST Parking: $1,552.70 per year plus HST (10 stalls) Property Taxes: An estimated amount of $0.53 per Sq. F $5,557.02 Airport land lease rates also vary depending on the local market conditions and range from $.29 sq ft

Company confidential. Company (Tillsonburg, Ont.) to $1.00 (YVR). Based on new building construction and the location of the proposed project this survey suggests rental rates for aviation related uses would be in the range of $5 to $7 dollars per square foot with taxes, land rent and utilities added to the base for a total of approximately $10 per square foot annually. Rates for

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4.0 HANGAR FEASIBILITY ANALYSIS

4.1 HANGAR PROJECT SCOPE

The study team developed a scale drawing of the proposed hangar and determined the best location. Based on the hangar and development survey the project scope has been defined as a 100 ft. by 100 ft. building with adjacent two level office spaces of approximately 25 by 100 feet that would have fit up completed based on tenant requirements. This sizing would give a usable hangar space of 10000 square feet and office/shop location of approximately 5000 square feet. The operational requirements and objectives of the hangar project will need to be clearly articulated. Aircraft operating requirements for target aircraft will need to be considered to ensure appropriate building sizing. In order to protect for future expansion a phased approach was recommended. By planning for expansion at this stage of the project land can be protected for future demand and services can be planned to meet future requirements. All-West will need to negotiate the necessary covenants in the lease to protect for future expansion. In the survey of hangars several comments were collected from owners who had recently constructed hangars as follows: • Would install a door at both ends • Think of lighting and changing light bulbs-high ceiling • Install plumbing • Put in skylights or high windows if possible • Think insulation and ventilation-condensation • Consider orientation and drainage carefully-snow clearing at doors • Do not scrimp on the floor In order to meet the proposed time frames for delivery of this project building permit approvals, lease approvals and final design completion will need to proceed in parallel. The following figure is a concept drawing only. Final locations and lot lines will follow site survey and soil testing.

Company confidential. Company

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In summary the proposed project has the following attributes: • Sized to meet 5 to 10 year projection • Phased development • Multi-tenant and multi-use building • Shops and office space • Maximum flexibility • Compatible with airport development and official community plan • Trigger for future expansion

4.2 HANGAR DEMAND ANALYSIS

The approach for establishing the potential hangar demand at Quesnel airport is based upon data and information gathered from a number of sources. These include web based data and information searches,

interviews with representatives from a number of aviation related companies as well as Company confidential. Company stakeholders/organizations within the region and local government. The information/data is translated into a SWOTCH analysis (strengths weaknesses, opportunities, threats and challenges). This forms the basis of a scenario based forecast estimate and provides the framework for establishing a quantitative demand profile for a 15 year base, high and low case projection

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Table 1: Quesnel Airport

Name Quesnel Regional Airport YQZ Hub Status Commercial Located Within the Community Yes Hours of Operation 24 hrs. / 7 days week Number of Runways 1 Runways Length 5501 feet long X 200 feet wide Helicopter Pad: Yes Carriers Serving Airport - Passenger Central Mountain Air (CMA) - Charter Aberdeen Helicopters Ltd. Lawrence Aviation Quesnel Flying Club

Interviews and Information Gathered

The following highlight the main points gathered during interviews and data/information gathering with representatives from companies/stakeholders/organizations within the region and local government

Table 2: Interview Notes and Information Gathered

Contact Notes and Information

Harlene Hunt • Movement data for Quesnel provided. Airport Manager • The airport is operated under Municipal Governance guidelines Quesnel • The Strategic Action Plan for 2006 has not been updated. • There is no formal marketing plan. Any development from private developer is welcomed. • Another party has an interest in providing aircraft cover. • There are two company hangars owned by West Fraser (used for their Learjet) and C & C Wood (used for storage) and one private hangar (used for small GA).

Dan McKeith • The Club has about 30 member aircraft in total. Quesnel Flying Club • The Club has tried for 35 years to get a hangars constructed all have been disallowed by the airport manager • Hangars that were built at Prince George are poorly built (Flooding problems and doors that freeze shut in the winter) • Unlikely that private aircraft owners from PG would come all the way to Quesnel to park their aircraft

Company confidential. Company • 5 or 6 owners would probably be interested in hangar space however rent fees would be an issue. Many owners are retired and are financially limited. • Considers that $200 per month would be the top end for rent.

All rights reserved. reserved. rights All • Considers that another proposal being studied for a covered area (i.e. no sides) is a poor idea • Considers that club members would prefer less expensive T hangars

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Geoff Norburn • Would like to see more development from private investors. The city Director of would like to see a business case in regard to airport development. Community Services • The airport is not marketed aggressively. and responsible for • Economic Development Corporation has lobbied New Gold for the airport issues construction of a bridge over the Blackwater River to provide good Quesnel City connection to the proposed site. • Harlene Hunt is the person to discuss airport development initiatives with. • The city is very conservative in airport development proposals that involve the city providing finance

Amy Reid • New to job and is still coming up to speed on the issues. Quesnel Community • Provided a contact list of mines forestry companies and Economic Development Corporation

Kara Perdue • Bridge and 1st Nation’s issues are an impediment to a direct New Gold Quesnel Chamber of mine access. Commerce • Mention of a flight service to Fort McMurray to serve workers living in Quesnel and surrounding area.

Rob Bardozi • Very rarely do they stage helicopter operations out of Quesnel. Ministry of Forests Everything is out of either Prince George (PG) or Williams Lake (WL) (Caribou region) • Out of 1000 hours rotary flying less than 5% would be out of Quesnel Williams Lake • Quesnel is a low risk fire area. It is known as “”the asbestos forest” • If there was an operator based in Quesnel they may not use them • They use 4 fixed wing carriers out of PG and WL.

Pat Dielman • WL is the regional centre for environmental work Ministry of • They need specialized pilots for their work. Environment • Helicopter and contract fixed wing hired out of WL (caribou region) • Would see little need to use Quesnel. All the support they need is in WL Williams Lake

Eric Stier • 11 flying schools in the north half of the province have closed in recent Owner years Guardian Aerospace • Flying school Business disappeared with the collapse of the logging

Company confidential. Company Vanderhoof industry • Tried to get an aviation college stated at Vanderhoof but no real enthusiasm from the college • The market is rebounding but it is slow.

All rights reserved. reserved. rights All • Would consider Quesnel as a flying school location but would not necessarily consider a hanger as an incentive to do so. Maintenance would be still being carried out at Vanderhoof

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• All aircraft are currently parked outside at Vanderhoof • CMA are buying out the competition

Mike Savage • Dunkley has its own hangar Helicopter Pilot • There may be a seasonal demand for firefighting helicopter operations Dunkley s • Considers that there is a considerable demand for fixed wing hangars at Quesnel Quesnel

Dave Evens • Company has one Learjet Chief Pilot • No additional aircraft being purchased by West Fraser West Fraser Wood • Current aircraft use is less than previously Quesnel • Current hanger has space for larger aircraft • Enquiries were made once by an employee to use the hangar for parking aircraft but this was refused

Shaun Rickards • Sees some potential in Quesnel but not in the short term. However Regional Manager they would be conscious of “poaching” work from Highland helicopters Yellowhead that are based there. They have a good relationship with Highland and Helicopters tend to have their own regional areas of work. Prince George • They would need a contract for work before they would move to Quesnel. • If the company located to Quesnel available hangar space would be a benefit • Forestry work has dropped off in the last few years • A lot of work is currently being carried out for New Gold Mining • Regarding the potential airstrip at New Gold Backwater, the North Cape Kemess mine has an airstrip that flies in workers direct from Vancouver.

Terry Jones • Main base for the region is Williams Lake Highland Helicopters • Seriously considering leaving their Quesnel base because of lack of Operations manager work in that area. Vancouver • Primary work is in forestry. Only a small % in mining and environmental. • A lot of competition from PG based helicopter companies •

Central Mountain • Would be interested in using hangar space for overnighting aircraft Air • Presently has three overnights per week

Doug McCrae CEO • Likely confined to winter months Company confidential. Company Smithers • Flights are dependent on demand from business • Will need business travelers as visiting friends and relatives will make the drive to Prince George • Compares the Quesnel situation to Dawson Creek and Grand Prairie

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Kathy LaForge Email response following a telephone call to discuss the Blackwater Mine New Gold Mines development Vanderhoof “I spoke with my superior with regard to your call yesterday. I’m advised that it will be quite some time yet before we will be in a position to discuss our plans regarding transportation of employees, goods and services and the possibility of an airstrip at site. We are doing some investigations at this time with regard to cost/benefit of various modes of transport but no decisions have been made. Amy Reid, from the Quesnel Community and Economic Development Corporation is a member of our Community Liaison Committee and we have made a commitment to this group to share information on project developments such as this in a timely manner. Currently, the road access to our site is through Vanderhoof. Workers are transported by bus/van to site from various pick up points including Quesnel, Prince George and Vanderhoof. Out of area workers travel to PG via commercial flights. Supplies and services are delivered to site via road. Our plans are to commence construction of the mine in 2015 at which time we are estimating there will be 1000 (1500 at peak) workers on site. We will have our transportation strategy in place well before then.” If you require any other specific information, please advise. Kathie”

Brian Battison VP • No response Toseko Mines

Spanish Mountains • Although here are a number of mining sites close to Quesnel only the Gold Spanish Mountain site is currently being serviced. • Williams Lake is used as the transportation center. It has good road access to the Spanish Mountain site • Highly unlikely to use Quesnel

Derrick Watts • Larger hangars are more expensive than smaller ones due to more President , expensive fire suppression systems. Avitat FBO • Is not a fan of clam shell doors Vancouver • Must expect losses to be incurred in at least the first few years. • Should assume a 25% occupancy as a maximum in the first year. • For a 100,000 sq. ft. hangar recommend 2,000 – 3,000 sq. ft. office

Company confidential. Company space built above 1,000-1,500 sq. ft. of shop space. • Avitat gets about $20 per sq. ft. in YVR. Roughly estimates that Quesnel would be of the order of $8-10 sq. ft. if they are lucky. • Most revenue for Avitat comes from having the fuel concession for

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Ian Darling • DC has few airline services but there is some need for overnight hangar Airport Manager space. Dawson Creek • DC is the centre of the regional oil and gas industry • DC has wealth. School leavers straight from school can get high paying jobs. • City sold a lot of airport land a few years ago. A big mistake. • The city is starting to understand the benefit of their airport • There is a large corporate jet and GA demand • The airfield has two T hangars holding about 10 aircraft each. • The local flying school is gaining 4 or 5 aircraft per year. • There is a demand for more hangar space

Extract from Dawson Creek City Website http://www.dawsoncreek.ca/wordpress/wp- content/uploads/2011/10/Dawson-Creek-Airport-Sustainability-Report.pdf

“Community Economic Development Officer ($150,000 Salary and Expenses) In a community which is experiencing growth, such as the city of Dawson Creek, many communities feel it is imperative that there be a professional municipal Economic development Officer whose job is to attract new business to the community. Part of the mandate of this officer would be to attract users, businesses and airport specific uses to develop in and around the airport. Additionally, it would be the responsibility of the Economic Development Officer to liaise with airlines, charters, tour groups, and the chamber of commerce to encourage and support the use of the local airport as opposed to using Ft. St. John or Grande Prairie”

Extract from “Dawson Creek Airport Sustainability report:5th December 2011” http://www.dawsoncreek.ca/wordpress/wp- content/uploads/2011/10/Dawson-Creek-Airport-Sustainability-Report.pdf “Recommendation Medium Term 3-6 years

Construction of an Airplane Hangar and Apron Expansion ($600,000) in order to accommodate earlier and more convenient flights from Dawson Creek to other communities, such as Vancouver or Edmonton, there needs to be accommodation for a plane to overnight at the Dawson Creek Airport. This allows maintenance to occur if required, keeps the aircraft out of the winter weather elements, and increases security for the airline. The construction of a

Company confidential. Company hangar on dedicated airside land proximal to the airport terminal should be considered a significant milestone in the development of the Dawson Creek Airport. The hangar should be sized to accommodate Dash-8-300 aircraft and Bombardier Regional Jets (see Table 1). This hangar could also serve as a

All rights reserved. reserved. rights All maintenance facility and training ground in relation to the local college’s aircraft maintenance program or provide a business opportunity for instructors at the college for a maintenance company.”

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Ian Atkins • The airport has a number of private hangars comprising T hangers, two Airport Manager older type hangars (30 years old) and two more recent buildings. Vernon Airport • Hangar space is used by smaller aircraft, helicopters and corporate jets. • Corporate jets are owned by both local companies (Kal Tire) and private owners from Calgary visiting their Vernon vacation homes. • Corporate jets are choosing Vernon because there is not space at Kelowna. • Local owned Vernon based helicopter company uses Vernon for heavy maintenance and pilot training. However they do not work around Vernon.

Extracts from Vernon Airport website and Reports

Website

Home for the Vernon Flying Club is the airport at Vernon, B.C. Sporting just over 3500 feet of paved runway, the Vernon Regional Airport is located in the picturesque Okanagan Valley and is surrounded by lakes and hills that provide season-dependant camping, boating, fishing, golfing, and skiing. A community airport, it is a city-owned and managed facility located approximately eight kilometers southwest of downtown Vernon. It is the site of several aviation related industries that inject millions of dollars into the Vernon economy as well as providing business access, medical evacuation capability, and a base for firefighting operations.

The Vernon Regional Airport is a City owned and managed facility located on approximately 95 acres at an elevation of 1140' above sea level approximately five miles southwest of downtown Vernon.

Vernon Regional Airport is a commercial airport that houses industrial based businesses focusing on aircraft manufacturing and maintenance as well as a base for corporate, commercial, and general aviation.

The City of Vernon has completed Phase I of a multi-phase upgrade to the airport since assuming control in 1998 with the goal of continuing to attract

Company confidential. Company new business to the Vernon area.

Extract from the Report “Economic Impact Assessment For Vernon Airport- 2006”

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“The presence of YVK generates significant economic impacts in the regional economy and throughout the province of British Columbia. There are 101 direct jobs associated with the presence of the airport along with 376 indirect and 325 induced jobs. In terms of income, the airport generates $3.6 million in direct income, $13.9 million in indirect income and $12.0 million in induced income. This is a total of $29.6 million in total economic impacts”

Extract from Vernon City’s Strategic Plan for Vernon Airport

http://www.vernon.ca/services/airport/downloads/2007_2008_airport_busi ness_plan.pdf

Objectives

• To support the existing businesses and industries currently using the Airport and rely upon the Airport as part of their business. • To attract new business to Vernon through development of an airport industrial park. • To secure a serviced land base to accommodate aviation related industry and to support airport uses. • To contribute to the creation of an educational resource to assist in attracting new businesses, and to contribute to the skill sets of the local community. • To support local tourism related activities by ensuring the airport infrastructure is sufficiently developed so tourists will be able to easily access area resorts and other tourism related businesses by using the Airport. • To support Airport services that contributes to the wellbeing of the Community, such as the Air Ambulance service. • To achieve Council support for capital and operating initiatives at the Airport when it is demonstrated that supporting the improvements will support the location in the community of significant new business or will ensure the • To clarify for the community the benefits of the Airport, and the role played by the Airport in the social and economic health of Vernon.

Lindsay Cotter Extracts from the Prince George Master Plan Marketing Manager Company confidential. Company Prince George http://www.pgairport.ca/Documents/YXS_MasterPlan.pdf Airport This report was completed in 2005. Feedback from the airport director is that the current situation remains basically unchanged from the report

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“PGAA has developed an aggressive development and marketing program to develop new Markets. One of the objectives is to develop International transatlantic passenger charter Business at YXS in collaboration with the regional tourism industry.”

“Local movements are mostly associated with training flights (touch-and-go), equipment testing, etc. In Canada, they have been declining regularly for the last 20years and the trend is for further decline. The high cost of flying, fuel costs and an aging clientele in the flying clubs explain this decline for the most part.”

“Local movements are mostly flight training. They fluctuate each year but on a longer period, the trend indicates a decreasing slope, as observed elsewhere in Canada. Over the last 10 years, the average number of local movements was 17,000, varying over that period between 21,000 and 12,000; but over the last 5 years a sharp decline has been observed with an annual average of 13,000 movements.”

“There are no other Airports near Prince George which could handle these local movements. Moreover, the runway capacity at YXS appears to be sufficient to continue to handle these flights without any problem.”

“It is suggested to keep the 5 year average of 13,000 movements constant until 2030, which means a null (0 %) growth rate.”

Kim Hayhust Extracts From the Report “Northern British Columbia: A Vision for Prosperity” University of Northern BC http://www.unbc.ca/assets/reports/outlook_2020_northern_bcs_vision_for_pr osperity2_august_24_09.pdf

“Northern British Columbia will drive the province’s economic future. It is a region of boundless economic potential with a broad array of renewable and non-renewable natural resources”.

Mining, oil and gas

“The mining and oil and gas industries have become increasingly important to the provincial economy in recent years, and have the potential to be key drivers Company confidential. Company of the Northern B.C. economy for decades to come”

“The development of shale gas reservoirs in Northeast B.C. and increased production of high-value commodities such as coal, gold, copper and

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social development.”

“In order to realize the full potential of the mining and oil and gas industries in Northern B.C., conditions must be established to ensure not only that mining and oil and gas exploration continues, but that exploration projects progress to the next level of development and operation. These conditions include both a favourable policy environment that supports industry development within the context of First Nations, and the available infrastructure to facilitate and support the growth of these and other diverse economic activities in Northern B.C.”

“Investments in transportation infrastructure in Northern B.C. are critical to lowering the cost of doing business and to improve the environment for global investment in our resource base.”

Transportation infrastructure “Investments in transportation infrastructure in Northern B.C. are critical to lowering the cost of doing business and to improve the environment for global investment in our resource base.”

“Prince George is poised for significant growth catalyzed by its strategic location and transportation” “Prince George has built a strong position as a transportation hub and the in- land gateway to Asia and the United States. During the past 18 months, the Prince George Airport Authority oversaw the completion of the third longest commercial runway in Canada, situated on a great circle route between Asia and the U.S. mid-west.” “CN Rail also completed an inter-modal handling facility, marking the first step towards building a multi-modal hub at Prince George linking to the railway’s north, south, east, and west”

“With aggressive action, it is anticipated that the province will see an increase of $76 billion in trade with Asia, and 255,000 new jobs in B.C. by 2020. Canada

is expected to gain from an extra $230 billion in trade with Asian countries. B.C. is strategically positioned as a global hub for trade between Asia and North America, and facilities like the Prince George Airport and the Ports of Prince Rupert and Kitimat are integral to the realization of the economic benefits associated with close trade relations with Asia.”

Company confidential. Company Key Recommendations: “Embark on technical and safety improvements to Highway 97 from Quesnel to Dawson Creek which will enable a 5.3 metre (18 foot) high clearance for

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SWOTCH Analysis

The SWOTCH analysis encapsulates the points gathered from interviews and data/information gathering.

Table : SWOTCH ANALYSIS

Strengths • Price competitive with competing airports • New facilities • Well maintained • Land and potential Hangar availability. • No congestion. • Location

Weaknesses • Strong competition from Williams Lake and Prince George Airports. • Access to Black Water Development is more restrictive than from Prince George • Airport management and a city have many competing priorities • No focused marketing plan to generate airport business • Private flying and flying school business is not expanding. • Quesnel out of the high risk forest fire zone •

Opportunities • A forecast booming economy for Northern BC • Near term - CMA seeking overnight hangar space for current services • Medium to long- term- increased frequency and overnight hangars requirements for CMA • Near- term- Private aircraft owners seeking long term hangar space. • Medium to long- term- regional wealth creating more private flying opportunities- aircraft owners and flying school • Medium to Long- term- Overspill from Prince George and Williams Lake of oil and gas company corporate jets requiring hangar space. • Medium to long-term- development of oil/gas/mining service industries resulting in demand for increased commercial services and a consequent increase in hangar demand. • Medium to long –term: development of “mini” logistics business supplying time sensitive components to the oil/gas/ mining industries.

Threats • Purpose built air strips at mines/oil/ gas sites bypassing regional airports for

corporate aircraft movements and direct transfer of workers from Vancouver. Company confidential. Company • Prince George and Williams Lake having capacity to handle demand for both commercial and private aviation (corporate jets and small aircraft owners).

Challenges • Absorbing potential losses during initial years.

All rights reserved. reserved. rights All • A lack of a formal marketing plan to promote airport development • Competing city demands that are not conducive to proactive airport development • Competition from Prince George and Williams Lake

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4.3 DEMAND FORECASTS AND REVENUE PROJECTIONS

Traffic Demand

The following graph shows aircraft movement demand at Quesnel between 2001 and 2012. During this period total traffic movements (itinerant and local traffic) dropped from 8,209 to 5,082 movements, a decrease of 4.2% pa. Separately this comprised itinerant and local traffic declining by 4.2% and 13% pa respectively. Local traffic fell at a faster rate than itinerant movements due mainly to the closure of the flying school in 2006. However since 2006 the decrease in local traffic has reduced to 4.3% pa

In terms of traffic levels for the whole of the Pacific region, between 1995 and 2008 the region registered an average annual passenger growth rate of 1.3 percent; this is well below the national growth rate of 3.9 percent for the same period. Over the longer term, average annual growth rates for total E/D revenue passengers in the Pacific region are expected to reach 2.6 percent and 2.0 percent in the periods 2008-2017 and 2008-2022 respectively.

In respect of aircraft movement growth rates for the whole of Canada, between 2008-2017 and 2008- 2022 domestic aviation are expected to increase at a rate of 1.2% and 1.4% pa respectively. Over the same time period general aviation movements are expected to increase at an annual rate of 1.2% and 1.3%. For the Pacific region the growth rate for all itinerant movements is slightly higher than Canada as a whole with a growth rate of 1.5% pa expected for both periods.

For Quesnel it is expected that traffic levels will remain stable in the near term and thereafter will begin to increase. This is indicated by the recent introduction of three flights per day by Central Mountain Air and, in the in the longer term, with the projected economic growth arising from the recent demand for lumber and growth projections for the oil/gas and mining industry. As such it is anticipated growth for both passengers and movements at Quesnel should match or exceed the Transport Canada forecasts for Canada and the region. On this basis it is broadly and conservatively projected that aircraft movements at Quesnel will grow at an average rate of about 2% and 3% pa over the whole of the forecast period to 2027 for Itinerant and local traffic respectively. The growth projections are shown in the graph below.

Company confidential. Company

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10000 Quesnel Airport: Aircraft Movements 9000 Forecast 8000 7000 6000 5000 4000 3000 Annual Movements Annual 2000 1000 0 2000 2005 2010 2015 2020 2025

ITINERANT YearLOCAL TOTAL

Hangar Demand Forecast

Based on the data/information gathered, interviews and SWOTCH analysis the following conclusions have been made regarding hangar demand at Quesnel Airport over the next 15 years. These forecasts are based on the information availble at the time of the study and on the assumptions made based on the survey data.

• CMA have indicated a desire to overnight aircraft at Quesnel. • Initial demand for small GA aircraft long term storage is 5 aircraft. • Medium to long term: the increased wealth arising from growth in the oil/ gas/mining industry will provide a strong stimulus in generating increased demand for small GA at Quesnel. • Medium to long term: a general increase in primary, secondary and induced economic impact arising from the oil/ gas/mining industry will increase commercial movement demand. This will include more frequent flights to Vancouver, possibly a Calgary service, and more flights overnighting to provide early morning departures /late evening arrivals. • Medium to long term : The growth in the oil/gas/ mining indusrty will provide the incentive to develop service industries for the region. While most will pass to Prince George and Williams Lake some will locate in Quesnel. This will encourage and require local and itinerent local traffic demand and the associated need for hangar requirements.

• Long term: Some corporate GA will utilize Quesnel and require hangar space. Company confidential. Company • There is a need to encourage increased traffic demand ( and hence hangar demand), through proactive airport marketing. • Near to long term: Renting of workshop, office and hangar space to light commercial aviation

All rights reserved. reserved. rights All businesses (and possiby non-aviation businesses) should be considered as an opportunity to suppliment hangar revenue paticularly during the early start up years.

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• A partnership with the College of New Caledonia or UNBC may be possible for aviation or maintenance instruction and training.

Based on the above assesment the following scenerios have been assumed to represent base, high and low case for hangar demand over the next 15 years.

Table 4: Hangar Demand Projections

Near term: 0-5 years Medium term: 5 to 10 years Long term: 10 to 15 years

Base Case Commercial Commercial Commercial • CMA * may • CMA may require • CMA may require require overnight overnight hangar space overnight hangar space hangar space during during winter months 5 during winter months 7 winter months 3 nights nights per week nights per week per week • A/c type: Beech 1900 • A/c type: Beech 1900 • A/c type: Beech1900 and possiblly Dash 8 Private GA Private GA Private GA • 5 GA requiring long • 7-8 GA requiring long • 8-10 GA requiring long term storage term storage term storage • a/c type: small Flying • a/c type: small Flying • a/c type: small Flying club a/c club a/c club a/c Executive GA • 1 or 2 corporate jets requiring hangar space (overload from Prince George) • a/c type: Cessana Citation etc • 50% light industrial • 70% light industrial • 80% light industrial commercial workshop commercial workshop commercial workshop and office space and office space and office space utilisation (5000 sq ft utilisation (5000 sq ft utilisation (5000 sq ft

max.). max.). max.). Company confidential. Company • 50% hangar storage • 70% hangar storage • 80% hangar storage space utilisation (1000 space utilisation (1000 space utilisation (1000 sq ft max)-high value sq ft max)-high value sq ft max)-high value equipment equipment/express equipment/express

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High Case Base Case +20% Base +20% Base Case +20% Helicopters Executive GA • Local helicopter operator • 2 to 4 corporate jets will start to provide requiring hangar space general charter services (overload from Prince • a/c type: Bell 206B George) • a/c type: Cessana Citation etc • 60% light industrial • 80% light industrial • 90% light industrial commercial workshop commercial workshop commercial workshop and office/training and office/training space and office/training space space utilisation (5000 utilisation (5000 sq ft utilisation (5000 sq ft sq ft max.). max.). max.) including a mini • 60% hangar storage • 80% hangar storage space utilisation (1000 space utilisation (1000 sq logistics centre providing sq ft max)-high value ft max)-high value time sensitive equipment equipment/express equuipment to the cargo/air freight oil/gas /mining industry. 90% hangar storage space utilisation (1000 sq ft max)-high value equipment/express cargo

Low Case Base Case -20% Base Case -20% Base -20% • 40% light industrial • 70% light industrial • 70% light industrial commercial workshop commercial workshop commercial workshop and office space and office space and office space utilisation (5000 sq ft utilisation (5000 sq ft utilisation (5000 sq ft max.). max.). max.). • 40% hangar storage space utilisation (1000 • 80% hangar storage • 80% hangar storage sq ft max)-high value space utilisation (1000 sq space utilisation (1000 equipment ft max)-high value sq ft max)-high value equipment equipment * Note that overnight aircraft storage precludes the use of that space for long term storage.

Revenue Projections It is anticipated that base rate revenue per sq. ft. would be in the range of $5 to $7 dollar per square foot and $13 to $15 based on the hangar survey above and the local market rates for commercial space. Depending on the size of the General Aviation aircraft a monthly rent of $300 to $400 dollars would be

Company confidential. Company expected for each aircraft. Overnight rates for heated hangar space would range from $125 to $200 dollars for larger aircraft. It is recognized that longer term contracts may be negotiated for overnight serivces. Based on the projected hangar demand shown in Table 4 revenue projections for aircraft hangarage and

All rights reserved. reserved. rights All other light commercial and storage useage for the proposed hangar are shown in the graph below. Short term base aviation revenues would be in the range of $56,000 to 71,000 pa ($4,700 to $7,400 per month) with a base case revenue stream of $71,000 pa ($5,900 per month). In the medium term these

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aviation revenues would be expected to increase to between $83,000 and $130,000 pa. It is likely this level of demand would equal the capacity of the proposed hangar. These estimates do not include additional charges for untilities and taxes and also do not include any revenues that may result from related services and businesses. The addition of a phase 2 hangar would likely be required to satisfy further aircraft hangar demand in the long term.

Projected Annual Aircraft Hangar Revenue $160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0 Short Term (0-5 years ) Medium Term (5-10 years ) Long Term (10- 15 years)

Base Case High Case Low Case

4.4 MEETING CITY OBJECTIVES

The objective of the project is to both create a business opportunity as well as spark economic development for the airport and the city. The project is consistent with the Official City Plan and meets the designated use for airport lands. The following points should be considered in this project: Council Objectives 1. Preserve and enhance airport operations 2. Support economic use of airport lands Policies 1. Direct uses compatible with the airport the airport lands

Company confidential. Company 2. Allow agricultural uses 3. Protect for certified airport operations 4. Encourage complementary development

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The project is also designed to meet the objectives of the Integrated Community Sustainability Plan. The project will need consider the airport theme and could incorporate a number of initiatives to align with ourQuesnel objectives: • Building to feature compatible design elements • Long term construction and useful life • Accessible and safe • Landscaped with local plants • Insulated and energy efficient • Enhancing the airport experience • Supporting resource sector growth

4.5 MEETING AIRPORT OBJECTIVES

The proposed project will require an apron connection and expansion. The city has been considering this expansion for some time in order to be positioned for future air traffic growth and to meet peak travel periods. The new multi-use hangar development is expected to trigger further business expansion and taxes for the municipality providing an off-set for the capital expenditure on the apron. Several options for delivery of the apron expansion can be explored with the city in order to establish the most cost effective approach. In discussion with the city a phased approach to apron expansion can also be explored. A lease will be required for the multi-use hangar and approach ramp as well as identification of future expansion locations. In order to permit financing of the project a long term lease with the airport will be required. The project is compatible with the land use plan for the airport and there is also additional land for other developments in the future. The proposed multi-use facility is ideally situated next to the terminal and the proposed office development can promote logistics and other aviation related businesses at the airport including flying training, maintenance, high value-just in time mining support, possible College and UNBC partnerships and other businesses. These will also contribute to the airport bottom line. In order to achieve the necessary building permit approvals the engineering drawings and approvals will need to be phased following soil testing, and surveys to establish the hangar footprint. An agreement- in-principle may be possible in order to allow a number of these items to proceed in parallel and meet project timelines. The servicing requirements for the hangar appear on preliminary inspection to be available and in close

proximity. Power and water are available but it is anticipated that a sewage facility will be required and

Company confidential. Company there may be a requirement to provide a multi-use facility as a replacement to the existing terminal sewage facility which is reaching its life expectancy.

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5.0 RECOMMENDATIONS AND FINDINGS

5.1 HANGAR CONSTRUCTION

The hangar development is compatible with both the city and airport objectives and will serve as a catalyst to bring more business to the airport and the city. The project can be financially viable with medium to long term aviation demand but will need to have other commercial uses in the short term to remain viable. The project has a tight timeline and will require a focused effort to be delivered on time and on budget. The tight time frame will also create some risk with respect to costs and approval requirements. Recommendations related to the construction include: 1. Soil and foundation work should be completed as soon as possible to ensure the buildings envelop and location meets taxiway objectives and minimizes servicing costs. 2. The lot lines and proposed connection with the apron will need to be negotiated with the airport and city. 3. A joint septic field may need to be negotiated with the city. 4. The apron should be designed and delivered concurrently with this development project. It may be beneficial for one contractor to complete the apron and the lead-in ramp to the hangar. The apron expansion could be phased to meet hangar requirements but it is recommended that the first phase have sufficient maneuvering area and be practical with respect to quantity price points. 5. The building should be phased to allow expansion to meet demand. 6. Appropriate doors should be developed in the hangar to allow multiple uses. There may be a requirement for logistics and short term storage for the mining sector. 7. Snow loads for the area and building permit requirements will need to be factored into the design.

5.2 CITY AND AIRPORT REQUIREMENTS

The project is in line with the recently published ourQuesnel sustainability plan. The design of the hangar will meet city design guidelines and should fit into the overall development plan for the airport. Quesnel airport has sufficient land for future hangar developments and the scope of this project with provision for office space and other business activities will provide an economic generator for the airport. To be viable this project will need to be zoned for commercial use. Recommendations for meeting City and Airport requirements include the following:

Company confidential. Company 1. It is recommended a 40 year lease or a combination of 20 years and two 10 year options be negotiated with the city to cover the life of the building. 2. Zoning for the hangar should permit commercial uses other than aviation with aviation as a priority. The facility should be considered a multi-use facility and permit the establishment of an

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3. A preliminary outline of the lease provisions and a building permit approval process should form part of an agreement in principle. 4. Since the structure of the building is likely movable it is recommended that there be not be a reversionary clause in the lease with the city. 5. Building permit approvals will need to be tracked in parallel with hangar design and engineering drawings to meet the project timelines. 6. The lease with the city could contain a rent holiday to recognize the cost of development and servicing. This development will also spark economic activity and provide a catalyst for jobs in flight training, maintenance, overhaul, and high value logistics and possible education and training partnerships. This hangar will permit overnight winter storage of scheduled aircraft to allow early morning departures. 7. If possible taxes for the building should be at a rate which encourages commercial development for the airport. 8. Site survey and lease should allow for future expansion of the phased project. 9. A cost share agreement may be possible for the delivery of the apron requirements and could form a separate capital agreement with the city.

5.3 ECONOMIC CONSIDERATIONS

The proposed hangar will serve as a catalyst for further business development at the airport. Experience at other airports suggests that new hangar facilities attract additional traffic and actually spur other development on the airport. For example the recent hangar constructed on spec at Boundary Bay Airport encouraged the RCMP to become a permanent resident. With the increase in mining activity and tourism in the Quesnel region this hangar facility is well positioned to take advantage of this growth. Recommendations in this area include the following: 1. The hangar should respect as much as possible the use of airport design features and landscaping in its design. 2. By adopting the design themes for the city and the airport it can meet the joint economic development objectives of the city. 3. The proposed multi-use office and hangar facility will provide an opportunity for new businesses at the airport as well as development of a possible training facility for the College and UNBC. 4. The development of this hangar will be seen as a strong marketing move for the airport as a whole.

Company confidential. Company

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6.0 NEXT STEPS

A final decision on the proposed project will require more detailed cost estimates to compare with anticipated aviation demand and projected revenues. An agreement in principle with the City is likely required in order to meet the projected timelines for this project.

Company confidential. Company

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Business Proposal for the Development of a Multi-use Facility at the Quesnel Regional Airport

Page 36 of 51

Presented by: All-West Crane & Rigging Ltd. All-West Crane & Rigging Ltd. - Proposed Airport Development...

Introduction & History

• With the present growth in the Mining and Oil & Gas industries, together with the present economic conditions, the “time is ripe” to consider expansion of

Page 37 of 51 infrastructure at the Quesnel Airport.

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The Feasibility Study

• The study presents some key findings: • It identifies sufficient interest for worthy consideration. • It provides some comparable examples of other airport Page 38 of 51 management strategies.

All-West Crane & Rigging Ltd. - Proposed Airport Development...

Benefits to the City

• This project can act as a catalyst for further activity & economic development at the airport. • It will affect better operating conditions for present & future charter services. • It will provide a more attractive operational platform as a result of increased apron space & support services. Page 39 of 51 • It will attract individuals and businesses contemplating making Quesnel their home base, even if the majority of their business is conducted outside Quesnel.

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What is Required

• The new facility requires connection to the apron such that full size aircraft can access and exit facility safely and efficiently.

Page 41 of 51 • Minimum 75 x 100’ • Recommended 150 x 150’ All-West Crane & Rigging Ltd. - Proposed Airport Development... The Proposed Hangar Page 42 of 51 All-West Crane & Rigging Ltd. - Proposed Airport Development... Page 43 of 51 All-West Crane & Rigging Ltd. - Proposed Airport Development... Detailed Layout Page 44 of 51 All-West Crane & Rigging Ltd. - Proposed Airport Development...

Summary

• Airports are infrastructure that plays a key role in the growth and development of a community. The points covered in this proposal demonstrate a clear need for new infrastructure at the Quesnel Regional Airport.

• The feasibility study identifies what type of facility should Page 45 of 51 be built and how it can provide the greatest opportunity to protect or enhance Quesnel’s present level of services, increase revenue and create jobs.

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Summary Continued

• This project is not without risk, and it is anticipated that ongoing investment will be required over the initial years together with diligent promotional efforts for this facility to be self sustaining. • With the development of this project, utilization of the Page 46 of 51 Quesnel Airport will increase significantly. Commercial and aviation tourism dollars will no longer continue to fly literally over and around us each day.

CITY OF Late Agenda Item: C.1

CITY STAFF REPORT QUESNEL Administration Report No. 60/2013

Original signed by: City Manager Johnson Administration Report Report Date: April 29, 2013 Meeting Date: April 30, 2013 (Special Open Meeting)

To: City Manager From: Director of Community Services Subject: Airport Hanger Proposal

PURPOSE The purpose of this report is to clarify key issues for Council to consider regarding the proposal from All-West Crane and Rigging Ltd. to construct a multi-purpose hanger facility at the airport. SUMMARY  All-West Crane and Rigging Limited have submitted a letter to Council along with a feasibility study for a hanger facility at the Quesnel Airport.  They hope to have the facility substantially completed by the Skyfest Airshow on August 3 and 4, 2013.  They are requesting that Council approve funds to expand the airport apron in 2013, approve in principle a long term lease with a number of concessions, and support in principle an accelerated approval process to meet their desired timeline.  Staff from multiple City departments have reviewed the proposed plan and the requests made of the City.  Staff support the project and its location at the airport.  Staff however are concerned that the proposed timeline for the project may not be achievable, noting that it may not allow for sufficient time for building permit reviews and approvals, other agency approvals, the coordination and review of the various engineers required for the project or for other unexpected delays that are common with any major construction project.  If Council would like to allocate funds in the 2013 budget for an apron expansion at the airport, an amendment to the Financial Plan Bylaw is required.  If Council supports a lease agreement in principle with All-West Crane a notice of proposed property disposition is required and a draft agreement will need to be brought forward to a future Council meeting for approval. STATUTORY REQUIREMENTS Community Charter Section 25 - General prohibition against assistance to business and exceptions Community Charter Section 26 - Notice of proposed property disposition COUNCIL POLICY The Official Community Plan states that Council Objectives for the airport lands are to preserve and enhance airport operations and support economic use of airport lands. Page 1 of 5

All-West Crane & Rigging Ltd. - Proposed Airport Development... Page 47 of 51 FINANICAL IMPACT The anticipated lease from the proposed hanger is approximately $4,300 per year (2013). The anticipated tax revenue to the City if the project were to proceed is approximately $12,000 per year (2013). If the project generates increased activity at the airport there is potential for modest increases in revenues generated from fuel sales and airport landing fees. The developer has requested that the City allocate funds in the 2013 budget to expand the apron. The estimated cost for the expansion, without grants, is approximately $250,000 - $350,000. Grants of up to $250,000 may be available to offset the cost of the expansion. BACKGROUND All West Crane and Rigging Limited have submitted a letter to Council along with a feasibility study for a hanger facility at the Quesnel Airport. They have proposed constructing a 15,000 square foot multi-use hanger facility with office/shop space at the airport, adjacent to the terminal building. They hope to have the facility substantially completed by the Skyfest Airshow on August 3 and 4, 2013. They are requesting that Council approve funds in the budget to expand the airport apron, approve in principle a long term lease with a number of concessions, and support in principle an accelerated approval process to meet their desired goal of having the facility substantially completed by August 3. Concept: Staff are supportive of the proposed concept of a multi-purpose hanger at the airport and its location adjacent to the terminal building. The proposal will preserve and enhance airport operations and will potentially provide economic benefits to the airport and the community at large. Apron Expansion: An expansion of the apron has been discussed for a number of years and is noted in the five year capital plan as a ‘future non-funded project’. No funding has been allocated for an apron expansion in the five year capital plan. If funding were to be allocated for this project in 2013 it will be necessary for Council to amend the Financial Plan Bylaw. All-West Crane is requesting that the City expand the current apron by 11,250 square feet - 22,500 square feet. Their consultant suggests that the cost for a 22,500 square foot expansion would be $250,000 - $300,000 at a Pavement Load Rating (PLR) of 6. A PLR of 6 is a lower standard than the airport currently has. The Quesnel Airport runway and apron were built to a PLR rating of 10. The estimated price does not include costing for drainage and electrical/lighting of the apron. All-West Crane has noted that the City may be able to apply to the Northern Development Initiative Trust (NDIT) for a grant that could pay for up to 70% of the cost of the apron expansion up to a maximum of $250,000. The developer is not eligible for this funding but the City could apply. The intake for grant submissions is May 10. The City would not receive confirmation of the grant until after July 17. To be eligible for the grant, no work could be started until after the grant is approved. As with any grant application, there is no certainty that it will be approved for the full amount requested. If the total project cost were $350,000 and the City were to receive the full 70% funding available from NDIT, the City share of the apron expansion would be $105,000. The City has sufficient funds in airport and/or general surplus to provide $105,000 toward this project however it should be noted that this allocation will result in these funds not being available for other potential projects that Council may want to consider in the future. If the City allocates $105,000 in the budget for the apron expansion but is not successful in obtaining the grant, there will not be sufficient funds in the budget to complete the minimum portion of the apron that the developer requires. Unless Council is prepared to budget for the full cost of the apron expansion, the City cannot guarantee the apron expansion will be completed in 2013. If the City budgets for a portion of the cost only, the developer will be required to determine whether or

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All-West Crane & Rigging Ltd. - Proposed Airport Development... Page 48 of 51 not they are willing to assume the risk that the City may not receive a grant and may not complete the apron expansion. If Council is supportive of allocating funds in the 2013 budget for an apron expansion they may choose to pass a resolution to allocate a fixed monetary amount for this purpose, with the expectation that additional funds will be secured through grants and/or a contribution from the developer. The size of the expansion and the PLR of the apron can be determined at a later time by staff based on the funding received and further discussions with the developer and City engineers. It is recommended that before a decision is made on whether or not to accept a lower PLR than current exists at the airport, City engineers have the opportunity to review and provide input to staff. Lease Conditions: In order for the project to proceed, All-West Crane and Rigging Ltd will need to enter into a long term lease for the property at the airport. Based on standard lease rates applied at the airport, the lease rate would be approximately $4,300 per year (2013) with a standard 2% increase in subsequent years. The developer has requested a number of concessions to standard leases provided at the airport and elsewhere in the City. Specifically they have requested a 40 year term, waiving standard vesting requirements, consideration for a reduction in tax rates, a lease rate ‘holiday’, and first right of refusal on adjacent properties for future expansion. Staff recommend a 20 year lease with two 10 year options to renew. Staff recommend providing the developer with first right of refusal for property adjacent to the proposed hanger to allow for future expansion. Staff do not support the waiving of the vesting requirement that is standard in all City leases and licenses of occupation. If the City terminates the agreement before expiration of the lease the developer would have the option of vesting the improvements to the City or removing the structure and returning the site to its condition prior to the lease. The Community Charter prohibits Council from providing assistance to businesses and as such Council cannot agree to a lease rate that is below market value or provide a moratorium on lease payments to the developer. Similarly, Council cannot provide a permissive tax exemption to a business. It is estimated that taxes for the facility, depending on its assessed value, will be approximately $24,000 per year, approximately 50% of which would be for City taxes. It is recommended that the lease address issues related to the construction of the facility and maintenance and management of the site once the facility is complete. The lease should include clauses that stipulate that construction will only commence upon approval of the City and that construction will be continuous once it commences and completed within a specified period of time. It should also contain clauses that stipulate that the developer is responsible for all costs associated with the construction of the hanger including site security during construction, drainage, water and utility connections, permits, and the paved approach between the hanger and the apron. The lease should include standard clauses as provided for in similar City leases. Standard language regarding items such as compliance with regulations, payment of taxes, subleasing, environmental conditions including installation of oil and soil interceptors, liability and indemnification, insurance, termination of the lease, and dispute resolution should form part of the agreement. The Community Charter requires that before the City enter into a lease that it advertises a notice of property disposition once each week for two consecutive weeks before entering into the agreement. This process may impact the proposed timeline of the developer. Timeline and Approval Process: The developer has acknowledged that they have an ambitious time-line for the project. It is noted in their feasibility study that ‘in order to achieve the necessary building permit approvals the engineered drawings and approvals will need to be phased following soil testing, and surveys to establish the hanger footprint. An

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All-West Crane & Rigging Ltd. - Proposed Airport Development... Page 49 of 51 agreement in principle may be possible in order to allow a number of these items to proceed in parallel and meet project timelines’. In order to meet the goal of having the facility substantially completed by the August long weekend, the developer has indicated that they need to place their order for the pre-engineered building by Wednesday May 1. The developer has indicated they require confirmation that the City is prepared to expand the airport apron, agree to a lease agreement in principle, and agree in principle to allow aspects of the building permit process to proceed in parallel. City staff are fully supportive of the project however it is important to note that even with staff committed to streamlining the process as much as possible, the proposed time line may not be achievable. The Development Services Department has not received engineered drawings for the proposed buildings at this time. The speed with which the Development Services Department can process approvals depends greatly on the completeness and timeliness of drawings, engineer’s schedules, and other information provided by the developer. Staff will need sufficient time to review documents and drawings. Approvals cannot be given until sufficient documentation has been provided. The sequencing of approvals can be streamlined where possible however some steps in the process will require approval before the next step commences. Approvals for some components of the project will require approvals from other agencies which are beyond the control of City staff, such as Ministry of Health approval for the septic system. A finalized lease agreement will require Council approval and some issues such as the option of shared septic services with the terminal building will require further discussion and negotiation with the developer and funding approval by Council. Securing NDIT funding for the apron will require the City to submit a grant application by May 10 and provide a staff report for approval by the Joint Planning Committee on May 28. To receive funding, the grant will need to be approved first by the Regional Advisory Committee on June 18 and then by the NDIT Board on July 17. In order to be eligible for the grant, construction on the apron cannot begin until after the grant is approved on July 17 at the earliest. This will create an extremely short time line for completion of the apron prior to the August 3 and 4 weekend. Staff are committed to working with the developer to achieve his goal of having the facility substantially completed by the August long weekend; however it should be noted that the building approval process is subject to a wide range of factors, not all of which can be predicted. In order for the process to move as quickly as possible it is essential that the developer ensure the engineers from each phase of the project coordinate and provide required documents and drawings in a timely manner. Unexpected delays can impact any project. Ideally, the developer should allow for contingencies in time. It is recommended that Council direct staff to work with All-West Crane to process the building permit approvals for this project as efficiently and quickly as possible but in a manner that is consistent with similar projects, and recognizes the importance of sequential approvals where required. CONCURRENCE Director of Finance and Corporate Services Director of Public Works and Engineering Manager of Development Services Transportation Manager

RECOMMENDATION 1. That Council support the concept presented by All-West Crane and Rigging Ltd. to construct a multi- purpose hanger and office/shop space at the Quesnel Airport 2. And further that Council support the proposed location of the multi-purpose hanger and office/shop space adjacent to the terminal building.

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All-West Crane & Rigging Ltd. - Proposed Airport Development... Page 50 of 51 3. And further that Council allocate up to $105,000 in the 2013 budget from surplus for apron expansion and direct staff to bring forward the required Financial Plan Bylaw amendment for approval at a future Council meeting. 4. And further that Council direct staff to submit an application to the Northern Development Initiative Trust for the apron expansion project for 70% of the estimated project cost. 5. And further that Council support in principle a lease agreement with All-West Crane and Rigging Ltd. under the following terms and conditions, with the understanding that the final agreement will be reviewed and considered by Council at a future Council meeting, following the posting of notices of proposed property disposition and upon receipt of a completed draft agreement: a. A 20 year term, with two 10 year options to renew b. A lease rate that is consistent with similar lease agreements at the airport and commences upon signing of the lease agreement. c. Construction to commence upon approval of the City d. Construction to be continuous once it commences and completed within two years. e. The lessee to be responsible for all costs associated with the construction of the hanger including, but not limited to, site security during construction, drainage, the paved approach between the hanger and the apron, water and utility connections, and permits. f. The lessee to have first right of refusal for property adjacent to the proposed hanger to allow for future expansion g. The lease to include standard clauses as provided for in similar City leases including, but not limited to, compliance with regulations, payment of taxes, vesting, subleasing, environmental conditions including installation of oil and soil interceptors, liability and indemnification, insurance, termination of the lease, and dispute resolution. 6. And further that Council direct staff to work with All-West Crane to process the building permit approvals for this project as efficiently and quickly as possible but in a manner that is consistent with similar projects, and recognizes the importance of sequential approvals where required.

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