La Porte Municipal Airport Business Plan
Final Technical Report
Prepared for:
City of La Porte, Texas Texas Department of Transportation
Prepared by:
R.A. Wiedemann & Associates, Inc.
P.O. Box 621 ! Georgetown, KY 40324 ! (502) 535-6570 ! FAX (502) 535-5314 TABLE OF CONTENTS
SECTION 1: INTRODUCTION 1.1 Understanding & Key Issues ...... 1-1 1.2 Desired End Products ...... 1-3 1.3 Report Outline ...... 1-4
SECTION 2: AIRPORT MISSION AND MANAGEMENT STRUCTURE 2.1 Current Airport Mission ...... 2-1 2.2 Airport Accounting and Business Practices ...... 2-2 2.3 Current Airport Management Structure ...... 2-4 2.4 Summary and Preliminary Observations ...... 2-5
SECTION 3: EXISTING AIRPORT CHARACTERISTICS 3.1 Airport Location...... 3-1 3.2 Description of the Service Area ...... 3-1 3.3 Airport Facilities ...... 3-5 3.4 Airport Activity ...... 3-8 3.5 Competitive Market Assessment ...... 3-9
SECTION 4: BASELINE FINANCIAL PROJECTIONS 4.1 Historical Revenues and Expenses ...... 4-1 4.2 Baseline Forecast of Operating Revenues and Expenses ...... 4-3
SECTION 5: BUSINESS PLAN ALTERNATIVES 5.1 Application of SWOT Findings ...... 5-1 5.2 Revenue Enhancement ...... 5-3 5.3 Impact of Revenue Enhancement Strategies on Potential Demand ...... 5-21
SECTION 6: RECOMMENDED PLAN 6.1 Recommended Administrative and Policy Actions ...... 6-1 6.2 Revenue Enhancement Recommendations ...... 6-8 6.3 Impact on Revenues and Expenses ...... 6-22 6.4 Summary Recommendations ...... 6-25
SECTION 7: AIRPORT COMMUNITY VALUE 7.1 Economic Activity Generated by La Porte Municipal Airport ...... 7-1 7.2 Existing Value of Airport Property and Facilities ...... 7-3 7.3 Summary of Airport Community Value ...... 7-6
TABLE OF CONTENTS (Cont.)
LIST OF FIGURES Figure 2-1 – Organizational Chart for the Airport ...... 2-4 Figure 3-1 – Service Area Airports ...... 3-1 Figure 3-2 – Existing Airport Layout ...... 3-5 Figure 3-3 – Landside Buildings...... 3-7 Figure 5-1 – UAS Pavilion at Kansas State University ...... 5-11 Figure 5-2 – Existing Potential Non-Aviation Airport Property ...... 5-13 Figure 5-5 – Potential Airport Land Use with Crosswind Runway Closure...... 5-17 Figure 6-1 – UAS Pavilion at Kansas State University ...... 6-14 Figure 6-2 – Non-Aviation Property Development Options...... 6-19
LIST OF TABLES Table 3-1 – Historical Population Trends ...... 3-2 Table 3-2 – Historical Per Capita Personal Income Trends ...... 3-2 Table 3-3 – Top Employers in the City of La Porte and La Porte ETJ ...... 3-3 Table 3-4 – La Porte Municipal Airport Runway Data ...... 3-6 Table 3-5 – La Porte Municipal Airport Landside Building Inventory ...... 3-7 Table 3-6 – Estimated Aircraft Operations at La Porte Municipal Airport ...... 3-8 Table 3-7 – Facility Comparison ...... 3-12 Table 3-8 – Services Comparison ...... 3-13 Table 3-9 – Rates and Charges Comparison ...... 3-14 Table 4-1 – Revenues and Expenses: Five Year History ...... 4-1 Table 4-2 – Comparison of Operating Revenues & Expenses ...... 4-3 Table 4-3 – Baseline Forecast of Operating Revenues and Expenses ...... 4-5 Table 5-1 – Baseline Forecast of Based Aircraft and Operations ...... 5-4 Table 5-2 – Impact of Revenue Enhancement Strategies on Potential GA Demand ..... 5-21 Table 6-1 – Ten Unit T-Hangar Breakeven with FAA Grant ...... 6-9 Table 6-2 – Private Development of Hangars ...... 6-10 Table 6-3 – Potential Benefits and Costs of Runway Closure ...... 6-15 Table 6-4 – Costs for Decision Analysis ...... 6-15 Table 6-5 – Revenues for Decision Analysis ...... 6-16 Table 6-6 – Recommended Forecast of Operating Revenues and Expenses ...... 6-23 Table 6-7 – Recommended Plan Net Revenue (Deficit) ...... 6-23 Table 6-8 – Airport Capital Improvement Program 2016-2019 ...... 6-25 Table 7-1 – Airport Replacement Value ...... 7-4 Table 7-2 – Depreciated/Existing Airport Value ...... 7-5
APPENDIX Appendix 3A – SWOT Analysis...... 3A-1 Appendix 3B – Lease Analysis ...... 3B-1 Appendix 3C – Survey Results ...... 3C-1 Appendix 6A – Revenue & Expense Work Sheets ...... 6A-1
La Porte Municipal Airport Business Plan June 2017 FINAL TECHNICAL REPORT La Porte Municipal Airport Business Plan
1. INTRODUCTION
HE PURPOSE OF THIS BUSINESS PLAN FOR La Porte Municipal Airport (T41) is to assess potential means to improve the Airport’s financial performance, economic development, Tand operation. To do this, the Business Plan will evaluate a number of potential operational and development scenarios and provide the City of La Porte with decision-making information. We understand that this plan can be a dynamic vehicle to identify new aviation demand markets, support facilities, public-private investment opportunities, improved Airport financial and economic performance, and a better understanding of the mission and value of the Airport by the community and region it serves. Thus, to become more financially self-sufficient, it is likely that specific types of Sponsor initiatives and possible investments should occur, along with a growing perception of the Airport brand. The Airport has upside potential, but must take a measured and deliberate business approach to reaching its goals.
It should be noted that a Business Plan is a strategic effort that provides the vision to guide subsequent studies such as master plans or airport land use compatibility studies. Airport master plans are more directed at building and infrastructure planning and do not generally incorporate market niche forecasts or proactive branding and marketing activities associated with business planning.
1.1 Understanding & Key Issues
Currently, La Porte Municipal Airport is home to 82 based aircraft. Of these, there are five multi-engine aircraft and one helicopter. The Airport has two runways: a 4,165 by 75-foot runway (12/30), and a 2,998 by 75-foot crosswind runway (05/23). There are 64 T-hangars and four large conventional hangars on the field, with several ramp areas on the south side, some of which could be used for more hangars, if needed. Of note, the Airport is only five air miles from Ellington Airport (EFD). This proximity impacts the competitive market for based aircraft storage as well as airspace and other operational issues.
To prosper, La Porte Municipal Airport must carve out a niche in the local market. The proximity of EFD and other general aviation airports in the area presents a challenge to the City to expand operations and financial production at La Porte Municipal Airport. This Business Plan is one step in the long process of growing the Airport in harmony with the aviation community and the City stakeholders. Key issues that are recognized at the outset of the business planning process include but are not limited to the following:
Airport Capital Improvements: There is a perception by the Airport users that in the past, needed capital improvements were deferred by the City. Political Support: There is a mix of political support that ranges from low to high among the residents and their representatives on City Council. Land Use Compatibility: The Airport is located amid residential development, which is typically the least compatible with Airport operations.
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No Main Entrance: The Airport lacks a sense of entry. The Airport has numerous gates to access the Airport, but no main entrance. There is no clear focal point or terminal building for the Airport. Visitors flying into the Airport do not know where to taxi and deplane because of the lack of a terminal building. Poor Drainage: The lack of good drainage is a significant issue, with large areas of moist ground and standing water on the Airport. This problem is shared by neighbors of the Airport, particularly to the north in the Lomax neighborhood. Limited Runway Length: The primary runway length is too short to attract the majority of corporate aircraft. Thus, there is a limit on how much business aviation can be attracted to use the Airport. Proximity to Petro-Chemical Plants: Proximity to Petro-chemical plants creates the perception of additional risk from small plane accidents over these facilities. Management: The Airport does not have an on-site manager from the City. Generally, on- site airport managers improve communications between airport users and the airport sponsors. Branding/Marketing: Every airport has a brand. Some are good and some are not. For La Porte Municipal, there is no consistent brand for the Airport and its facilities need a facelift. Minimal upkeep and general aging of facilities creates a negative brand from an appearance standpoint. The Airport currently does not have a stand-alone website, or a significant social media presence. Ground Transportation Services: There is a need for improved taxi, limo, courtesy car, and rental car options. Lack of Hangars: Some individuals would like the option to construct hangars on leased property, rather than rent hangars from hangar developers/operators. Lack of Public Attractions: The Airport does not have on-airport attractions such as restaurants, an aviation museum, or other features that would serve to draw the public to the Airport. Lack of Public Awareness: There are too few people in the community who know what goes on at the Airport and what its value is to the community.
While these issues will be addressed by the Business Plan, it is recognized that there are a number of positive factors surrounding the Airport, including:
Funding: La Porte Municipal is one of 188 federally funded airports in Texas, allowing access to $150,000 non-primary entitlement funding annually. This funding can be banked up to four years, totaling as much as $600,000 for project funding from TXDOT. Revenue Neutral: Financially, the Airport is revenue neutral, which means that it operates at near break-even. Less than 10 percent of general aviation airports are self-sustaining in the U.S. Airport Infrastructure: The Airport has adequate infrastructure in place. Most is in good condition, although many areas of pavement need maintenance to prolong the useful lifespan. The Airport has a crosswind runway, which is much appreciated by pilots. Water and electric utility services are readily available. There is a good mix of hangars and tie- down spaces, most of which are in good condition. Geographic Location: The Airport’s location, approximately 2.5 miles northeast of the La Porte city center, is positive in several ways:
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- The Airport has good proximity to the Port of Houston, significant light industry, warehousing, and other business activity in the region. - The Airport is relatively close to downtown Houston. Third Party Operation: Although the Airport is owned by the City, it has been operated and maintained in large part by on-Airport businesses over the years. This has kept costs low for the City. No Expansion: The inability to expand the Airport’s runways limit noise issues to those currently generated. Economic Development Opportunities: La Porte Municipal Airport serves as a competitive advantage with surrounding cities for pursuing economic development. The FAA reports that there are more than 7,750 licensed pilots in Harris County, TX. Airport Services and Activities: The Airport is fortunate to have several hangar operators, two fuel sellers, aircraft maintenance and avionics activity on the field, as well as flight instruction. Passionate Aviation Community: Generally, the Airport's community of tenants and users is very cohesive and passionate about the Airport's vitality, success, and preservation. Land Development: The Airport is situated on approximately 300 total acres of land, with electric and water readily available. There are many acres available for development to support aviation and other commercial uses. There is ample room on the Airport for additional hangar development. Airport Use: The Airport is viewed primarily as a recreational facility populated by passionate and loyal tenants and customers. Although business aviation does occur on the Airport, it is a less significant percentage of current Airport activity.
1.2 Desired End Products
The desired end products produced as a result of this analysis include the following:
Airport Community Value: Detail current and potential future airport/community value and economic impact of the Airport. Strategic Vision: Detail strategic vision for the Airport development and operation in the future. Branding Strategy: Present a suggested branding strategy for La Porte Municipal Airport. This would help identify the Airport's market niche and provide steps toward the growth of the customer base and brand messaging to stakeholders. Future Runway Configuration: Feasibility of decommissioning Runway 5-23, including the reuse of property for revenue production. Business Opportunities: Explore new business opportunities including development/use of available Airport lands. This would include out-of-the box thinking for landside developable Airport property. Partnering Opportunities: Identify potential partnering opportunities with area schools or other businesses. Current Business Practices: Identify current business practices, lease terms, and systems. Staffing: Identify any operational or staffing issues that may be improved. Airport Amenities: Identify needed Airport amenities and/or services, including AWOS,
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terminal building, security systems, and new informational kiosk for pilots. Airport Business Uses: An analysis will be provided of what uses, identified by NAICS codes, are not yet represented at the Airport, but for which the Airport, especially if any new improvements are made, may be ideally suited to attract. ACIP Options: Discuss capital investment options for the Airport Capital Improvement Plan. Financial Pro Formas: Present financial pro formas for the recommended plan. Growth Strategies: Retention and expansion strategies for existing tenants and businesses. Graphic Airport Land Use Plan: Provide an Airport Land Use Plan showing existing and future land uses on and around the Airport. Airport Video: Develop an Airport video for the City's website.
1.3 Report Outline
To address the issues described above and to produce the desired end products, this report has been organized to include the following sections:
Section 1 - Introduction Section 2 - Airport Mission and Management Structure Section 3 - Existing Airport Characteristics Appendix 3-A - SWOT Analysis Appendix 3-B – Airport Lease Analysis Appendix 3-C – Survey Results Section 4 - Baseline Financial Projection Section 5 - Business Plan Alternatives Section 6 - Findings and Recommendations Appendix 6-A - Revenue and Expense Work Sheets Section 7 - Airport Community Value
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2. AIRPORT MISSION AND MANAGEMENT STRUCTURE
CLEARLY ARTICULATED MISSION REFLECTS THE GOALS AND vision for La Porte Municipal Airport. It also empowers the City to develop a long-range plan to fulfill the mission and Arole of the Airport. In this regard, the management structure and capabilities of the City must fit with the mission of the Airport to ensure success. Understanding the background, business practices, and management structure of the Airport aids in working through some of the key issues identified in the previous section. As such, the following topics are discussed in this section:
Current Airport Mission Airport Accounting and Business Practices Airport Management Structure
2.1 Current Airport Mission
The role of La Porte Municipal Airport is that of a publicly-owned, public-use general aviation airport facility, providing general aviation services for regional air transportation and pilot training. La Porte Municipal Airport is owned and operated by the City of La Porte, and accommodates general aviation activity including all types of propeller aircraft and a number of small jet powered aircraft types. The Airport is classified as a reliever airport in the Houston system, along with nine other general aviation reliever airports in the area. These airports provide general aviation relief to both Houston Hobby and Houston Intercontinental airline airports.
As part of the National Air Transportation System, La Porte Municipal Airport functions to meet the air transportation needs for a range of constituents and agencies including: local businesses, recreational use, pilot training, and critical emergency services during a disaster or serious incident. The Airport is maintained and managed under the City’s Public Works Department.
The Mission of La Porte Municipal Airport
The mission statement of La Porte Municipal Airport is tied to the mission statement of the City’s Public Works Department:
“To provide essential public services to the Citizens of La Porte in the most efficient, cost- effective manner possible by utilizing creative and innovative techniques of public works services and facilities.”
The City’s written description of the function of the Public Works Department includes a statement about the Airport saying that one of its responsibilities is to maintain the La Porte Municipal Airport. Discussions with City representatives indicate the following are mission goals for the Airport:
To operate a safe, efficient and cost-effective Airport providing for general aviation operations in a manner that avoids environment impacts.
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To retain existing clientele while taking full advantage of available land, runway size and convenient location to develop revenue producing facilities, attract based aircraft, and provide continued growth. To operate in conformity with all applicable laws and Federal Aviation Administration (FAA) requirements. To be self-supporting and operate without subsidy from the City’s General Fund. To attract public participation to ensure that the Airport’s mission reflects the concerns of the public, the Airport’s users, and local businesses. To manage vegetative growth on the Airport’s 300 acres monthly. Monitor Airport operations to ensure proper infrastructure maintenance and management. Incorporate the Airport as a revenue generating property. Monitor compliance with existing FBO Standards.
At present, the Airport does not have a specific written mission statement. However, the Airport’s mission is linked to the City’s core values as endorsed by City Council and its objectives for the Airport. These values cover a wide range of topics, and include applicable statements for the Airport including: accountability and integrity, superior infrastructure, superior customer service, and quality. This covers the way in which the City strives to function, but it does not address the aviation mission of the Airport. With this in mind, a possible mission statement for the Airport might be:
“La Porte Municipal Airport strives to be the Galveston Bay area’s first choice for pilot training, business, and personal air transportation, supplementing economic growth and striving for financial self-sufficiency, while maintaining operational safety, outstanding service, and a safe and welcoming environment for aircraft owners, operators, and the flying public.”
To be most effective, any formally adopted mission statement for the Airport must reflect the desires and goals of the community and its elected and appointed representatives.
As discussed in Section 1, financial self-sufficiency and preservation are the primary goals of the City for the Airport. The challenge to achieving these and other goals at the Airport will depend, in part, upon the City’s ability to elevate existing activities to take on new initiatives. While there may be some variety of opinion, La Porte Municipal Airport is recognized by most to be an asset to the City, providing air transportation infrastructure needed for both business and personal travel. Subsequent sections of this Business Plan will further examine the Airport’s market potential to achieve financial and operational goals.
2.2 Airport Accounting and Business Practices
From an accounting standpoint, the Airport functions as an Enterprise fund of the City of La Porte. The underlying accounting system of the City is organized and operated based on separate funds, each of which is a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are
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allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and how spending activities are controlled.
Enterprise Funds
Enterprise funds are used to account for the acquisition, operation and maintenance of governmental facilities and services that are entirely or predominantly self-supporting by user charges. The operations of enterprise funds are accounted for in such a manner as to show a profit or loss similar to comparable private enterprises. Enterprise funds are often created to ensure that tax dollars are not required to provide annual operating cost or future capital improvements of an airport. Communities that have set up enterprise funds for their airports usually do so with the intent that user charges will be set at appropriate levels to cover the activity’s operating cost and capital improvements.
However, some communities have established enterprise fund operations that are not self- supporting and are supported by taxes to a certain degree. This mainly happens when fees for services cannot cover operating expenses and/or capital improvements. Technically, the La Porte Municipal Airport cannot make a “profit” because all revenue is pledged toward the operation and capital improvement of the Airport. Public airports that have accepted grants from the FAA must sign assurances that they will not divert revenue to other governmental activities, funds, or departments.
In one sense, the enterprise fund for the Airport shields its finances from some City-wide budgeting issues. In some cities, budget cuts are applied evenly to all departments. When an enterprise fund is involved, it often has its own direct funding sources and is not subject to the same departmental reductions. This is the case at La Porte Municipal Airport.
Airport Accounting Practices
The City derives revenue from the Airport primarily from land leases with four main tenants. Two of these tenants sell fuel and function as Fixed Base Operators (FBOs) and two tenants provide aircraft maintenance service or parts sales and function as Specialty Aviation Service Operators (SASOs). The City collects revenues from these sources and posts charges, based upon its expenses at the Airport. In recent years, the revenues have come close to covering expenses charged for maintenance and operation of the Airport. \
Business Model
The business model used by the City for the Airport is one that is employed throughout the nation at most municipal airports. This model involves the provision of airport infrastructure by the municipal government for air transportation by the public. Typically, the airport owner manages and operates the airport, earning revenues from the lease of airport property and facilities, while generating fuel flowage fees from aircraft activity.
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At La Porte, the City provides administration of Airport land leases and Airport public facilities and equipment. Further, the City, through its Public Works Department, ensures compliance with Federal Aviation Administration and the Texas Department of Transportation Aviation Division requirements for General Aviation airport facilities. From an operational standpoint, the primary responsibility of the City is the upkeep of the Airport. This involves any mowing, repair, security, and general oversight of the Airport.
While there is no on-site Airport Manager from the City, the FBOs and SASOs serve as de facto managers and contact points for the flying public. Because the City is not represented at Airport on a day-to-day basis, the FBOs and SASOs represent the default brand of the facility. Any impression that a visitor has will be made by the interactions with these businesses.
2.3 Current Airport Management Structure
La Porte Municipal Airport is owned and operated by the City of La Porte. Figure 2-1 presents an abbreviated Organizational Chart, showing the direct lines of responsibility and communication for Airport operation and management. The Chart shows the Citizens of La Porte at the top, with the Mayor and City Council responsible for their representation. The City Manager and the Assistant City Manager have responsibility for all City Departments, including the Public Works Department, in which the Airport is classified. The Public Works Director is shown in the line of authority over the full-time Public Works staff position working part-time maintaining the Airport.
Figure 2-1 – Organizational Chart for the Airport
There is an Airport Advisory Board, appointed by City Council to advise staff and the City Council on all matters relating to Airport management. This Board has been recently revived and met in November of 2016.
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La Porte Municipal Airport is open 24 hours per day, seven days per week, but is not staffed by City personnel. Rather, the Airport is staffed by four on-Airport aviation businesses, two of which sell fuel. Typically, these FBOs attend the Airport during daylight hours, or more specifically, from 8:00 am to 6:00 pm, daily. The Public Works Department consists of 11 City divisions, including the Airport. The Airport is the responsibility of the Director of Public Works and one City staff position is assigned to cover Airport maintenance on a part-time basis. The overall responsibilities are to keep the Airport groomed/mowed, secure, and administratively functioning.
As the City looks to the future and begins to move toward its goal of integrating the Airport into its economic development infrastructure and becoming more financially self-sufficient, the Airport staffing must be evaluated. The Business Plan will examine this issue later in the Recommendations section of the report.
2.4 Summary and Preliminary Observations
Prior to making any recommendations concerning staffing or management structure, more analysis must be made as a part of the Business Plan. This includes the need to examine the future role of the City in managing the Airport, revenue potential from Airport activities, and current job responsibilities. In addition, discussions with the City are important to determine the feasibility of making any changes to the existing operation.
There are two general observations that can be made preliminarily concerning the workforce and operational situation at La Porte Municipal Airport. The first involves the attitudes and motivation of personnel working on Airport administration. From our preliminary observations, City staff exhibit good attitudes and professional work practices, particularly when compared to previous time periods. This viewpoint is borne out by comments from Airport patrons during the SWOT meeting.
Second, the City has a decision to make in whether or not to employ a professional Airport Manager to function as the point of contact for Airport users and stakeholders. The current practice of having the Director of Public Works serve as the Airport Manager on a part-time basis may not work over the long run because of constrained time commitments. However, the Airport is not in a financial position to hire a full-time professional Manager. This decision will likely be influenced by the future investment in revenue producing facilities by the City and the need for more direct supervision of Airport issues. The Business Plan will make recommendations on this point, later in the planning process.
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3. EXISTING AIRPORT CHARACTERISTICS
HIS SECTION OF THE BUSINESS PLAN DISCUSSES the existing characteristics of La Porte Municipal Airport, including its facilities, services, aeronautical activity, surface access T features, market area, competitiveness, and planned development. The information collected in this inventory effort will be used throughout the remaining portions of the plan to develop business strategies for the Airport.
3.1 Airport Location
La Porte Municipal Airport (FAA identifier T41) is located 2.5 miles northeast of the city center of La Porte, Texas, and approximately 15 miles east of the Houston Central Business District (CBD). La Porte Municipal occupies 300 contiguous acres and can be accessed via Spencer Highway which transits east to west along the Airport's southern perimeter. Airport access along the western side of the airport is provided by Farrington Drive, which transits north to south. The role of La Porte Municipal Airport is that of a publicly-owned, public-use reliever airport facility, and is included in the FAA's National Plan of Integrated Airport Systems (NPIAS).
3.2 Description of the Service Area
By identifying a reasonably convenient service area, the potential demand available to La Porte Municipal can be more accurately determined. This potential demand is key to forecasting
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La Porte Municipal Airport Business Plan June 2017 whether or not the Airport can generate activity from local based aircraft demand or whether the strategy must shift toward attracting business aircraft activity. Narrowing the service area geography also permits the focus on key economic and demographic factors that drive general aviation demand in La Porte, TX. These factors, described below, will likely provide the foundation for future growth and Airport development, and set La Porte Municipal Airport apart from competing airports within the service area.
Demographic Characteristics
There are several demographic factors within the City of La Porte and Harris County that can drive general aviation demand for La Porte Municipal Airport. In numerous studies accepted by the FAA, population growth has been related to the need for more air transportation facilities and services. Table 3-1 presents the historical population trends for Harris County (Houston) compared to the State and national figures. As shown, Harris County has experienced an increase in population growth since 2000, with an overall gain of 30.1 percent for the period 2000-2014. This growth has outperformed the comparative areas. The State of Texas experienced an increase of 28.7 percent over the same period, and the national population increased a total of 13.0 percent.
Table 3-1 - Historical Population Trends Year Harris State of Texas United States 2000 3,414,239 20,944,499 282,162,411 2005 3,681,829 22,778,123 295,516,599 2010 4,108,909 25,245,717 309,347,057 2014 4,441,370 26,956,958 318,857,056 Percent Change 30.1% 28.7% 13.0% Source: Regional Economic Information System (T41S), Bureau of Economic Analysis, U.S. Department of Commerce
Per Capita Personal Income (PCPI) also has an impact on the demand for aviation facilities in the service area. Intuitively, the higher the level of economic activity in a region, the more that aviation facilities and services will be demanded because of increased air travel. Table 3-2 shows the historical PCPI for Harris County compared to the State and national figures.
Table 3-2 - Historical Per Capita Personal Income Trends Year Harris State of Texas United States 2000 34,913 28,365 30,602 2005 41,869 33,330 35,904 2010 46,278 38,282 40,277 2014 56,896 45,669 46,049 Percent Change 63.0% 61.0% 50.5% Source: Regional Economic Information System (T41S), Bureau of Economic Analysis, U.S. Department of Commerce
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As shown, Harris County displayed a PCPI increase totaling 63.0 percent from 2000 to 2014. Comparatively, this is higher than both the Texas State PCPI increase of 49.7 percent over the same period, as well as the national PCPI increase of 50.5 percent.
Local Economic Drivers
The major industries that make up the economic fabric of the La Porte Municipal Airport service area include manufacturing, petrochemical, oil, and manufacturing services industries. These sectors all require support businesses and services that can affect aviation demand in the area, either directly or indirectly. By way of background, Table 3-3 shows the top employers in the La Porte city limits and extra-territorial jurisdiction (ETJ). Many of these employers are affiliated with companies that require air transportation to and from the region, and as such, provide potential opportunities for increased use of La Porte Municipal Airport.
Table 3-3 - Top Employers in the City of La Porte and La Porte ETJ Company Employment Industry Aker Industrial Constructors 1,500 Construction Total Petrochemicals USA 1,500 Petroleum Refinery La Porte ISD 1,200 Government International Plant Services 1,000 Engineering Services Rockwood Service Corp. 700 Engineering Services Longview Inspection, Inc. 664 Testing Laboratory J P & D Digital Satellite Systems 600 Manufacturing E. I. Du Pont De Nemours and Company 500 Freight Katoen Natie USA, Inc. 500 Transportation Services Sulzer Turbo Systems Int'l 400 Manufacturing City of La Porte 368 Government Sulzer Turbo Services Houston 350 Manufacturing Global Nutech, Inc. 317 Engineering Services A&L Industrial Services, Inc 300 Industrial Services Cat-Spec, Ltd. 300 Industrial Services Contech Control Services, Inc 300 Engineering Services Other 9,566 Total 20,065 Source: Bay Area Houston Economic Partnership, 2013
Petrochemical Industry
As shown in Table 3-3, several of the top employers are either directly part of the petrochemical industry, or provide indirect support services to the industry. This complex
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industrial environment is centered on the activities required to transform oil and natural gas into gasoline, jet fuel, plastics, cosmetics, and a vast array of other household items. Petroleum, petrochemical, and specialty chemical companies from around the world are in La Porte to carry out these processes, and make it the second-largest petroleum cluster in the world. Typically, industrial activities of this magnitude necessitate the occasional use of general aviation airports to transport vital personnel quickly. These executives and personnel would typically use a larger airport than T41, however, there are times and aircraft types that are suited to La Porte Municipal Airport. The midstream and downstream petrochemical manufacturing sectors, which make up much of the industrial land use throughout La Porte, generally receive a positive boost. Reflecting this trend, over $50 billion in petrochemical construction is currently underway on Houston’s greater east side.
The industrial landscape of La Porte includes large warehouse and distribution clusters and access to sophisticated supply and logistics networks. Manufacturing, warehousing, distribution, assembly, and production activity are considered highly compatible for non-aviation airport property development, partially due to the capability of these entities to absorb the noise impacts from airport activity. For this reason, La Porte Municipal Airport should consider which of these surrounding land uses are compatible with development at the airport. Currently, the industrial vacancy rate for Houston’s east side submarket sits at 3.4 percent, and is expected to remain in the low single-digits for the foreseeable future[1]. This means that demand for new industrial property in the La Porte area is high.
Port of Houston
Located 10 minutes from La Porte Municipal Airport, the Port of Houston serves the petrochemical industry and can accommodate a diverse mix of domestic and international cargo. It encompasses a 25-mile long complex containing over 150 public and private industrial terminals. These terminals are responsible for moving more than 200 million tons of cargo each year, and has generated more than $264.9 billion in statewide economic impact over the last five years[2]. Ideally located, the shipping channel intersects the Gulf Intercostal Waterway that connects the local area with international markets all over the world. The Port of Houston ranks first in foreign waterborne tonnage, first in export tonnage, and second in total tonnage in the United States.
The City of La Porte is fully equipped to facilitate the trucking, rail and air connection needs that arise from Port of Houston. This infrastructure allows shippers to economically transport their goods to inland locations. From a logistical standpoint, general aviation airports often supplement these activities as needed. Over the next ten years, the Port of Houston Authority has announced plans for $700 million in improvements to accommodate larger cargo vessels, which will increase demand for supply chain facilities and services. The aviation component of this demand is small, but the need for land-based support facilities is significant and growing.
[1] CBRE Research, 2016 [2] http://www.portofhouston.com/about-us/economic-impact/
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3.3 Airport Facilities
La Porte Municipal Airport is situated upon 300 acres in northeast La Porte, Texas. Airport facilities are generally classified into two categories: airside and landside. Airside facilities include those directly involved with aircraft operations, whereas landside facilities provide a safe transition from surface to air transportation and support aircraft servicing, storage, maintenance, and operational safety.
Airside Facilities
Airside facilities include runways, taxiways, airfield lighting, and navigational aids. These facilities are depicted in Figure 3-2 below, and described as follows:
Figure 3-2 – Existing Airport Layout
Runway Information
La Porte Municipal Airport has two active runways (Table 3-4). Runway 12-30 and crosswind runway, Runway 5-23, are both are equipped with full parallel taxiways. Runway 12- 30 is 4,165 feet in length by 75 feet in width, and is equipped with medium intensity runway edge lights. The ends of Runway 12-30 are equipped with a four-light Precision Approach Path Indicator
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(PAPI) system to provide pilots with visual vertical guidance on the approaches. Runway 12-30 is ideally suited for light propeller aircraft, with a pavement strength or 23,000 pounds per single wheel, although it has served a number of larger twin turbine propeller aircraft and light business jet aircraft. Crosswind Runway 5-23 is 2,998 feet in length by 75 feet in width is also equipped with medium intensity runway edge lights.
Table 3-4 - La Porte Municipal Airport Runway Data Runway Item 12 30 5 23 Length 4,165' 2,998' Width 75' 75' Surface Asphalt Asphalt Weight Bearing Single Wheel – 23,000 Single Wheel – 25,000 Capacity Marking Non-Precision None Lighting MIRL MIRL Visual Aids 4-Light PAPI N/A Traffic Pattern Left Left Left Left Approach GPS GPS GPS GPS
The existing design standards for the Airport are listed on the Airport’s current Airport Layout Plan (ALP) as Airport Reference Code (ARC) B-II. By way of explanation, an ARC is used to relate airport design criteria to the operational and physical characteristics of the airplanes intended to operate at the airport. The coding system has two components: the aircraft approach category and the airplane design group. The first component is depicted by a letter (A, B, C, D, or E) and is related to the aircraft approach speed with A being the slowest and E being the fastest. The second component is depicted by a Roman numeral and is related to the airplane wingspan. Thus, Airport’s design aircraft are light single engine, light twin, light turboprop, and small business jets (B-II). That design aircraft has a wingspan of 49 feet up to but not including 79 feet, a tail height less than 20 feet, and an approach speed of between 91 and 121 knots.
These design standards will ultimately limit the role of the Airport by defining its function. Due to property constraints, there are no runway expansion options currently available. As it stands, the Airport will be limited to smaller general aviation aircraft. This limitation will constrain corporate aviation and focus the activity on pilot training, personal flying, and business aviation which uses mostly propeller aircraft.
Taxiways
Runway 12-30 is served by a full-length parallel Taxiway A, which provides primary access to all landside facilities, as illustrated in Figure 3-2. Taxiway A is 40 feet wide and is separated from Runway 12-30 by 200 feet to the southwest (centerline to centerline). Crosswind
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Runway 5-23 is supported by parallel Taxiway B on the southeast side of the runway. Various connector/exit taxiways connect the parallel taxiways to the runways and/or apron areas.
Landside Facilities
Landside facilities provide a platform for business interaction and thus, are important in terms of revenue production at most general aviation airports. As such, a thorough inventory of these facilities is important to the Business Plan. All landside facilities at La Porte Municipal Airport, except for Harvey & Rihn Aviation, are currently located southwest of Runway 12-30 and are primarily accessible via Spencer Highway which transits east to west along the Airport's south border. In addition, there is access via Farrington Drive on the west, and Airport Boulevard on the east. Landside facilities include the FBO facilities, box hangars, T-hangars, and apron areas. (Figure 3-3 and Table 3-5).
Figure 3-3 – Landside Buildings
Table 3-5 – La Porte Municipal Airport Landside Building Inventory Map Number Structure Description Size (SF) Harvey & Rihn Aviation – 2, 10 Unit T-Hangar Buildings & 1, 4-Unit 1 39,000 Hangar 2 La Porte Flight Line 9,400 3 La Porte Flight Line 11,800 4 K & W Aviation 9,200
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Table 3-5 – La Porte Municipal Airport Landside Building Inventory Map Number Structure Description Size (SF) 5 La Porte Flight Line - T-Hangar Building 7,500 6 Tri-Star Aviation - 2 Buildings 10,500 7 Tri-Star Aviation - 2 Buildings 56,000 8 Tri-Star - T-Hangar Building 15,000 9 Air National Guard Complex -- 10 Harvey & Rihn Aviation 9,700 11 Tri-Star Apron Area 160,000 12 Apron Area 104,000 13 Apron Area 80,000 All square footage estimates are based upon data derived from aerial photography. Actual sizes may vary.
3.4 Airport Activity
The Airport’s operational characteristics form the basis for future projections of revenues and expenses. The Airport supports a significant level of flight training and personal flying. Of the 82 aircraft based at T41, the profile breakdown by type is 76 single engine, 5 multi-engine, and one helicopter. For 2014, the FAA estimated 55,460 annual aircraft operations, as reported on the FAA 5010 Airport Master Record. An aircraft operation is either a takeoff or a landing, a takeoff and landing are two operations. As shown in Table 3-6, there has been little or no change in the estimated activity at the Airport for a number of years.
Table 3-6 – Estimated Aircraft Operations at La Porte Municipal Airport Year GA Local GA Itinerant Military Total Ops 2009 55,460 23,973 0 55,460 2010 55,460 23,973 0 55,460 2011 55,460 23,973 0 55,460 2012 55,460 23,973 0 55,460 2013 55,460 23,973 0 55,460 2014 55,460 23,973 0 55,460 2015* 56,754 24,532 0 56,754 2016* 58,078 25,104 0 58,078 Source: FAA Terminal Area Forecast (January 2016) * Estimated by FAA
From a financial standpoint, the greater number of based aircraft and operations at an airport, the greater the revenues that can be generated for the airport Sponsor. These revenues are derived from leases for tie-down spaces, hangar rentals, fuel sales, and FBO leases. An exodus of based aircraft can negatively impact the bottom line for the Airport, just as an influx of new based and transient aircraft can provide positive boosts to revenues.
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3.5 Competitive Market Assessment
As previously shown in Figure 3-1, the general aviation service area includes a 30-mile radius from La Porte Municipal. Within this service area, Ellington Airport, William P Hobby, and George Bush Int./Houston Airport all offer scheduled airline service. In addition to the airports within this range, there are several airports outside the service area that are relevant to any comparison of facilities, prices, and services available at La Porte Municipal, as they represent the “going rates” for the aviation industry within the greater Houston area. For this reason, they are included in the competitive market assessment. The larger database of airports provides a good basis for comparing regional pricing, the impact of fleet mix on facilities and services, etc. There were ten airports within the designated service area of La Porte Municipal Airport and four airports) included within the greater area.
La Porte Municipal (T41) Chambers County (T00) Ellington Airport (EFD) Houston Southwest (AXH) Baytown Airport (HPY) George Bush International (IAH) William P Hobby (HOU) Scholes International (GLS) RWJ Airpark (54T) Sugar Land Regional (SGR) Pearland Regional (LVJ) Liberty Municipal (T78) Hooks Memorial (DWH) West Houston (IWS)
Facilities
Table 3-7 provides a comparison of service area and greater area airport facilities. Of the 14 listed airports, eight have runways of 5,000 feet or greater, which makes them the best candidates for business jet activity. George Bush Int./Houston Airport has the two longest runways in the service area (12,000 feet by 150 feet and 10,000 feet by 150 feet). La Porte Municipal has the tenth longest primary runway in the service area, and is the seventh largest airport in terms of property area. Every airport in Table 3-7 has instrument approach procedures of some type. Five of the airports maintain Instrument Landing System (ILS) precision approaches and air traffic control towers. La Porte Municipal has GPS approaches.
Based Aircraft
There are 1,402 based aircraft within the identified La Porte Municipal Airport service area. The majority of based aircraft (58.6 percent) are single engine aircraft. Jet aircraft make up 21.3 percent of based aircraft, multi-engine represent 13.2 percent, helicopters represent 3.9 percent, and aircraft designated as "other" represent the remaining 3.0 percent. Of the 299 jet aircraft in the service area, over half (54.8 percent) are located at William P Hobby. There are currently no business jet aircraft based at La Porte Municipal, but the airport has the fifth-highest number of single engine aircraft in the service area. In total, there are 76 single engine, 5 multi- engine, and one helicopter based at La Porte Municipal.
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Aviation Services
Table 3-8 presents the availability of various aviation services at each of the area airports. Every airport except Chambers County offers some form of aircraft maintenance service. Ten airports offer major power and frame repairs, and three airports offer minor airframe and powerplant repairs. Eight airports offer flight instruction, five offer charter service, six offer avionics, three offer aircraft sales, and eight offer aircraft rentals. La Porte Municipal's services listed on-line and in published material include flight instruction, avionics, aircraft sales, and aircraft rentals. With a variety of services, La Porte Municipal is in the mid-range of service offerings with the other comparable general aviation airports.
Hangars and Tie-downs
As shown in Table 3-9, two airports do not charge for monthly tie downs. For airports with tie down rates, the monthly prices range from $40 at La Porte Municipal, to $150 at Sugar Land Regional. At La Porte Municipal, the tie down fees are set and collected by the FBOs. Nine airports in the service area had T-hangars located on the field, however only three airports had space currently available. Monthly T-hangar rates ranged from $250 per month at Liberty Municipal to $587 at Sugar Land Regional. Monthly rates at some airports depend on the age and condition of T-hangars and can vary widely between airports and even on the same airport. La Porte Municipal Airport is on the lower range for prices on T-hangars in the service area, starting at $300 per month.
Ten airports in the greater service area had conventional hangar space available, which includes box hangars, community hangars, and larger clear-span hangars. For the purposes of this study, the monthly rates were converted to price per square foot figures to better allow for comparisons. This conversion was based on the price range given, divided by the total square footage of the corresponding aircraft. For example, if an airport reported charging $200 per month for a Cessna 172, the price per square foot estimation would equal $200 divided by the length times the wingspan of the aircraft (980 square feet) - resulting in a monthly rate of $0.20 per square foot. Chambers County Airport had the lowest monthly conventional hangar pricing in the greater service area, starting at $0.09 per square foot per month. Ellington Airport had the highest rates for conventional hangar space, starting at $0.85 per square foot per month. La Porte Municipal Airport offers monthly conventional hangar space starting at $0.49 per square foot, which is in the mid-range for monthly conventional hangar pricing in the service area.
Fuel Prices
It should be noted that all fuel prices change frequently, therefore the following narrative and associated table were compiled on the same day - June 24, 2016 - for the most accurate snapshot. There was no Mogas found at any of the area airports. All information regarding fuel prices was compiled from www.airnav.com.
Self-serve Avgas is available at eleven of the airports within the greater service area. The highest per gallon price was found at Scholes International ($4.54). The lowest self-serve Avgas price was $3.55 per gallon found at Liberty Municipal. The average price per gallon for self-serve
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Avgas was $3.93. Full-serve Avgas was available at eleven airports within the greater service area, with an average price of $4.38 per gallon. Baytown Airport offered the lowest price per gallon ($3.80), and Ellington Airport had the highest price per gallon ($5.45). Self-serve Jet Fuel is available at five of the area airports, with an average price of $3.17 per gallon. Baytown Airport offered the lowest self-serve price per gallon ($2.85), and Scholes International had the highest self-serve price per gallon ($4.39). Full-serve Jet Fuel is available at eleven airports in the service area, with an average price of $3.80 per gallon. The lowest price was found at Baytown Airport ($2.85) and the highest price was found at Ellington Airport ($5.12). Overall, La Porte Municipal's fuel prices were competitively priced, falling below the average for both full service Avgas and Jet A. The City does not charge a fuel flowage fee for these sales, so currently all revenue is collected by the Airport FBOs who sell fuel.
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Table 3-7 - Facility Comparison Number of Based Aircraft Runway Navaids Tower Airport Service Area Airports Ownership Acres First Second Code Jet Multi Single Heli Other Total Highest L x W L x W La Porte Municipal T41 Public 300 0 5 76 1 0 82 4,165 x 75 2,998 x 75 GPS No
Ellington Airport EFD Public 2,362 53 21 84 3 24 185 9,001 x 150 8,001 x 150 ILS Yes
Baytown Airport HPY Private 125 1 16 44 1 0 62 4,334 x 60 -- GPS No
William P Hobby HOU Public 1,304 164 27 28 21 0 240 7,602 x 150 7,599 x 150 ILS Yes
RWJ Airpark 54T Private 55 0 3 30 0 12 45 5,035 x 40 3,532 x 100 GPS No
Pearland Regional LVJ Private 450 0 12 128 3 0 143 4,313 x 75 -- GPS No
Chambers County T00 Public 216 0 1 10 0 1 12 3,005 x 60 1,900 x 300 GPS No
Houston Southwest AXH Private 165 0 15 72 3 0 90 5,002 x 100 -- GPS No George Bush IAH Public 10,000 37 2 39 0 0 78 12,000 x 150 10,000 x 150 ILS Yes Int./Houston Airport Scholes International GLS Public 966 2 15 81 14 3 115 6,001 x 150 6,000 x 150 ILS Yes
Sugar Land Regional SGR Public 426 37 44 97 3 0 181 8,000 x 100 -- ILS Yes
Liberty Municipal T78 Public 127 0 3 25 0 2 30 3,801 x 75 -- GPS No
Hooks Memorial DWH Private 480 5 21 108 5 0 139 7,009 x 100 3,987 x 35 GPS Yes
West Houston Airport IWS Private 225 0 0 0 0 0 0 3,953 x 75 -- GPS No Source: Airport Master Record as Published June 2016 (www.gcr1.com/5010WEB & www.airnav.com).
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Table 3-8 - Services Comparison Frame Power Flight Charter Aircraft Aircraft Service Area Airports Avionics Other Repairs Repairs Instruction Service Sales Rentals La Porte Municipal Major Major Yes No Yes Yes Yes
Ellington Airport Major Major Yes No No No Yes Cargo Handling
Baytown Airport Minor Minor N/A N/A N/A N/A N/A Air Freight, Ambulance, William P Hobby Minor Minor Yes Yes Yes No Yes Cargo Handling RWJ Airpark Minor Minor No No No Yes No
Pearland Regional Major Major Yes Yes Yes No Yes
Chambers County None None No No No No No Crop Dusting Services
Houston Southwest Major Major Yes No No No Yes Air Freight, Cargo George Bush Int./Houston Airport Major Major No No Yes No No Handling Scholes International Major Major Yes Yes Yes No Yes Aerial Surveying
Sugar Land Regional Major Major Yes Yes No No Yes Air Ambulance
Liberty Municipal Major Major No No No No No
Hooks Memorial Major Major Yes Yes Yes No Yes
West Houston Airport Major Major Yes No Yes Yes Yes Source: Airport Master Record as Published June 2016 (www.gcr1.com/5010WEB & www.skyvector.com).
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Table 3-9 - Rates and Charges Comparison Tie-Down Conventional Hangars T-Hangars Fuel Price/Gallon Hangar Service Area Airports 100 100 LL Jet A Jet A $/month Avail $/month Avail $/ month Avail Waiting List LL SS FS/AS SS FS/AS La Porte Municipal $40 Yes $0.49 Yes $300 Yes $4.21 $4.10 -- $3.80 No
Ellington Airport $100 Yes $0.85-$1.00 No -- No $3.79 $5.45 -- $5.12 Yes
Baytown Airport $75 Yes $0.45 No $400 No $3.80 $3.80 $2.85 $2.85 Yes
William P Hobby -- -- $0.69 No -- -- $3.70 $4.55 -- $4.07 Yes
RWJ Airpark $75 No $0.49 No $300 No $4.05 -- $2.95 -- Yes
Pearland Regional $75 Yes $0.41 Yes $500 No $4.13 $4.23 -- $3.45 Yes
Chambers County NC Yes $0.09 No N/A N/A $3.90 -- $2.95 -- Yes
Houston Southwest $100 No $0.35 Yes $342 Yes -- $3.97 -- $2.99 No
George Bush Int./Houston ------$4.15 -- $3.52 --
Scholes International NC Yes $0.43 Yes $300 No $4.54 $4.84 $4.39 $4.69 Yes
Sugar Land Regional $150 Yes $0.50 Yes $587 Yes $3.70 $4.40 -- $4.07 No
Liberty Municipal -- -- N/A N/A $250 No $3.55 -- $2.70 -- Yes
Hooks Memorial N/A N/A N/A N/A $375-$450 $3.89 $3.99 -- $3.52 N/A
West Houston Airport $100 Yes N/A N/A N/A N/A -- $4.73 -- $3.77 N/A Source: RA Wiedemann & Associates Inc. Telephone Survey 06-24-16 & www.airnav.com Legend: LL = Low Lead; SS = Self-Serve; FS = Full Serve; AS = Assisted Serve sf = Square Feet; NC = No Charge; N/A = Not Available
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Appendix 3-A La Porte Municipal Airport SWOT
HREE SWOT (STRENGTHS/WEAKNESSES/OPPORTUNITIES/THREATS) WORKSHOPS were held in La Porte – two at the Municipal Court Building on April 25 and 26, and one at City Hall Ton May 12, 2016. A total of more than 100 participants representing a range of Airport, City, business and private interests attended the sessions. Also present were representatives of R.A. Wiedemann & Associates, TxDOT, and the City of La Porte. The purpose of the SWOT Workshop was to provide an opportunity to better identify and understand the Airport operating environment. In this regard, the SWOT was not a strategy session. Rather, it was a preparatory step in developing a comprehensive profile of the Airport and its service area. Thus, the information generated in the SWOT about the Airport’s position in its environment can be used to develop follow-on strategies for achieving the Airport’s mission. This Business Plan will serve as the vehicle to define these strategies and focus resources on the implementation process which will take place over the next ten years.
The SWOT for La Porte Municipal Airport involved the following categories as defined below:
• Strengths: Internal attributes of the Airport. These can include Location, Physical Layout/Infrastructure, Managerial, Financial, Political, Brand, Competition, and "Other." • Weaknesses: Internal attributes of the Airport. These also can include Location, Physical/Infrastructure, Managerial, Financial, Political, Brand, Competition, and “Other.” • Opportunities: External conditions that may be available to the Airport, including Local and Regional Business, On-Airport Business, Funding, Brand, Aviation Trends, and “Other.” • Threats: External conditions that may threaten the Airport’s viability. These conditions may include Funding, Operational Activity, Local Surface Access, Infrastructure, Brand, Competition, Neighbors and “Other.”
There were five simple rules for the SWOT Workshops:
1) It is okay to disagree. 2) All ideas are potentially good ideas. 3) We will honor time limits unless the entire group desires longer sessions. 4) What is said at the meeting will not be attributed to a specific person (confidentiality). 5) Cell phones should be in the “off” position.
Discussion topics included a wide range of issues including, but not limited to:
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• Airport Branding and Marketing • Financial Sustainability • Preservation/Improvement of Existing Airport Infrastructure • Airport Development/Aviation and Non-Aviation Land • Airports in the Surrounding Service Area • Potential Attractions to the Area • Relationship Between the Airport and Its Neighbors • Present and Future Client Base • On-Airport Businesses • Airport Amenities and Services • Economic Development Goals
The following sections summarize the discussions held at the Workshops concerning Airport Strengths, Weaknesses, Opportunities, and Threats. Participants in the afternoon Workshop were asked to rank their top three items of importance within each category. Due to time constraints and other considerations, participants in the evening Workshop did not rank items of importance within each category. However, key comments from that Workshop are included below.
1. AIRPORT STRENGTHS
IRPORT STRENGTHS ARE CONSIDERED INTERNAL OR INHERENT attributes of the Airport. The following Strengths were identified during the Workshops by participants. A • Funding: La Porte Municipal is one of 188 federally funded airports in Texas, allowing access to $150,000 non-primary entitlement funding annually. This funding can be banked up to four years, totaling as much as $600,000 for project funding from TXDOT. • Revenue Neutral: Financially, the Airport is revenue neutral, which means that it operates at near break-even. Less than 10 percent of general aviation airports are self-sustaining in the U.S. • Airport Infrastructure: The Airport has adequate infrastructure in place. Most is in good condition, although many areas of pavement need maintenance to prolong the useful lifespan. The Airport has a crosswind runway, which is much appreciated by pilots. Water and electric utility services are readily available. There is a good mix of hangars and tie- down spaces, most of which are in good condition. • Geographic Location: The Airport’s location, approximately 2.5 miles northeast of the La Porte city center, is good in several ways. - The Airport has good proximity to the Port of Houston, significant light industry, warehousing, and other business activity in the region. - The Airport is relatively close to downtown Houston. • Third Party Operation: Although the Airport is owned by the City, it has been operated and maintained in large part by on-Airport businesses over the years. This has kept costs low for the City. • Noise Exposure: The inability to expand the Airport’s runways limit noise issues to those currently generated.
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• Economic Development Opportunities: La Porte Airport serves as a competitive advantage with surrounding cities for pursuing economic development. The FAA reports that there are more than 7,750 licensed pilots in Harris County, TX. • Airport Services: The Airport is fortunate to have several hangar operators, two fuel sellers, and aircraft maintenance and avionics activity on the field, as well as flight instruction. • Passionate Aviation Community: Generally, the Airport's community of tenants and users is very cohesive and passionate about the Airport's vitality, success, and preservation. • Land Development: The Airport is situated on approximately 300 total acres of land, with electric and water readily available. There are many acres available for development to support aviation and other commercial uses. There is ample room on the Airport for additional hangar development. • Airport Use: The Airport is viewed primarily as a recreational facility populated by passionate and loyal tenants and customers. Although business aviation (as differentiated from personal flying) does occur on the Airport, it is a less significant percentage of current Airport activity.
2. AIRPORT WEAKNESSES
IRPORT WEAKNESSES WERE IDENTIFIED DURING THE SWOT workshops process. These are considered internal attributes of the Airport and are listed below as identified by SWOT Aworkshop participants:
• Airport Capital Improvements: There is a perception by Airport users that in the past, needed capital improvements were deferred by the City. • Political Support: There is a mix of political support that ranges from low to high among the residents and their representatives on City Council. • Land Use Compatibility: The Airport is located amid residential development which is typically the least compatible with Airport operations. • No Main Entrance: The Airport lacks a sense of entry. The Airport has numerous gates to access the Airport, but no main entrance. There is no clear focal point or terminal building for the Airport. Visitors flying into the Airport do not know where to taxi and deplane because of the lack of a terminal building. • Poor Drainage: The lack of good drainage is a significant issue, with large areas of moist ground and standing water on the Airport. This problem is shared by neighbors of the Airport, particularly to the north in the Lomax neighborhood. • Limited Runway Length: The primary runway length is too short to attract the majority of corporate aircraft. Thus, there is a limit on how much business aviation can be attracted to use the Airport. • Future Uncertainty: Uncertainty about the Airport’s future has limited the incentives for additional investment on the Airport by existing businesses. • Proximity to Petro-Chemical Plants: Proximity to Petro-chemical plants creates the perception of additional risk from small plane accidents over these facilities.
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• Management: The Airport does not have an on-site manager from the City. Generally, on- site airport managers improve communications between airport users and the airport sponsors. • Branding/Marketing: Every airport has a brand. Some are good and some are not. For La Porte Municipal, there is no consistent brand for the Airport and its facilities need a facelift. The minimal upkeep and general aging of facilities creates a negative brand from an appearance standpoint. The Airport currently does not have a stand-alone website, or a significant social media presence.
Other Weaknesses:
• Ground Transportation Services: There is a need for improved taxi, limo, courtesy car, and rental car options. • Lack of Hangars: Some individuals would like the option to construct hangars on leased property, rather than rent hangars from hangar developers/operators. • Lack of Public Attractions: The Airport does not have on-airport attractions such as restaurants, an aviation museum, or other features that would serve to draw the public to the Airport. • Lack of Public Awareness: There are too few people in the community who know what goes on at the Airport and what its value is to the community. The lack of an independent website may contribute to this issue.
3. AIRPORT OPPORTUNITIES
PPORTUNITIES THAT EXIST ARE CONSIDERED EXTERNAL CONDITIONS that may be available to the Airport. Generally, these opportunities will require strategies and efforts to achieve. OMost opportunities involve the market place or additional services or facilities at the Airport. Participants in the SWOT Workshops identified a number of opportunities available to the Airport:
• Federal/State Funding: There is an opportunity to leverage Federal funding, administered by the State of Texas, on a 90/10 percent split basis. This money has been paid into a trust fund by taxes from airline tickets, aviation fuel sales, and other user fees. • Security for the Port of Houston: The location of the Airport could be very important to the security of the Port of Houston, as a staging area for helicopter patrols. • Potential to Develop a Compatible Restaurant: An opportunity exists to develop a viable restaurant. Although there are several nearby restaurants, none have an airport or aviation theme. • Partnering with Colleges: Opportunities exist to increase Flight Training with potential partners and educational institutions. It is believed that area universities, colleges, and technical schools could support a flight school and possibly an aircraft maintenance program. San Jacinto College in Pasadena has an aviation program that is staffed by vendors at local airports. Bidding for these positions occurs every three years. • Support for Local Industry: There is an opportunity to attract support business for the local petro chemical businesses, and other industry.
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• Airport Branding: The Airport can improve its brand. As infrastructure and services are improved, efforts must be made to rebrand the Airport. • Development Opportunities: The Airport has ample acreage and infrastructure to accommodate both aviation and non-aviation related development. There is land on the Airport that could be developed for compatible non-aviation use. • National Guard Armory: The Texas Air National Guard and Texas Army National Guard are considering reactivating the Armory at the Airport. • Opportunity to Renegotiate Leases: When leases expire, renegotiations could work greatly in the Airport's favor and provide increased revenues. • Opportunity to Partner with Emergency Service Providers: The Airport serves as a base of operations and staging area for local law enforcement, fire protection, and other emergency services. • Opportunity to Gain New Tenants: It was reported that Ellington Airport is not friendly to small general aviation operators. It may be possible for the Airport to attract some of these users. • New Technologies: It was suggested that there may be compatible openings in the realm of drone piloting and instruction. • Need for New Terminal: It was suggested that a new terminal building would be a huge asset in the development and growth of the Airport. • Opportunity to Improve Communications: There is a distinct opportunity to improve communications between the City, the tenants and users of the Airport, and the Airport neighbors. This option was expressed by more than one speaker, and strongly endorsed by many. It was acknowledged by many that recent changes in City staff and policy have resulted in improved communications, which are greatly appreciated.
Other Opportunities
• Hangar Development: There appears to be a demand for the development of additional conventional and T-hangars. • Ground Transportation: There is adequate space to improve ground transportation at the Airport: ‒ Satellite Location for Rental Cars ‒ Courtesy Cars ‒ Taxi & Limousine Services • Airport Events: The Airport has hosted the La Porte Texas Airplane & Auto Show as recently as October, 2015. This event and similar events attract non-aviators to the Airport. Other events such as 5K runs, radio controlled aircraft events, school and scouting group outings, etc., are used by some airports to attract public participation and promote good community relations. • Independent Website: The lack of awareness about the Airport and its value to the community may indicate a need or opportunity to develop a website and other social media to increase public awareness.
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4. THREATS TO THE AIRPORT
N THIS CONTEXT, THREATS TO THE AIRPORT refer primarily to factors that would hinder its potential growth, development, and viability. Threats are generally external conditions to Iwhich the Airport is exposed. In some cases, unsolved weaknesses may develop into threats. Threats to Airport viability were identified by participants in the SWOT Workshops.
• Inaction by the City: Neighbors of the Airport pointed out that the City has neglected some of the problems associated with the Airport, the most serious of which is the drainage issue. (This is being addressed by the City at this time). • Access to Funding: Given that the Airport must rely upon the City to supplement income, it is important for the Airport to maintain financial support, generate new revenues, and operate as efficiently as possible. Without this support, future projects and development at the Airport could be jeopardized. The TxDOT grant funding process demands that the Airport be sustained via matching funds at the state and local level. • Compatibility with Residential Neighborhoods: The Airport is surrounded by residential development – most of which came after the Airport was developed. Even so, neighbors desire little or no noise from aircraft operations. This sets up a conflict between the Airport’s ability to earn income and the neighbors’ desire for quiet. • Infrastructure Needs: The Airport needs new drainage and runway and other paving improvements. Without these improvements, the condition of the facility could degrade significantly. • Potential Landing Fee: It was suggested that a landing fee be imposed, which would work to decrease activity at the Airport. • Decreasing Pool of Pilots: The total number of pilots is decreasing nationwide. This could create issues in the future resulting in reduced activity and revenues. • Changing Political Environment: The political environment could shift from ideal, to less than ideal, or blatantly negative. • National Economy and Fuel Prices: General aviation activity is dependent upon a good national economy. It is unpredictable, and as such may pose a threat to future private and corporate activity if there are economic downturns. A substantial increase in fuel prices could have an adverse effect on Airport operations.
Other Threats
• Facilities Maintenance: Airport maintenance from lighting to mowing to the upkeep of various structures is a constant demand. Without ongoing maintenance, the Airport viability suffers. • Competitive Pressure: Within a 30-mile radius, competition from other airports of similar size or larger exists. This competition could reduce aviation demand if businesses on the Airport do not monitor overall pricing and service norms in the service area.
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5. SUMMARY
A PORTE MUNICIPAL AIRPORT IS IN AN IDEAL position to take advantage of its strengths and opportunities made available by the active aviation community of pilots, aviation L businesses, and good economic climate in the greater Houston metro area. This SWOT has identified numerous opportunities that can be translated into additional financial production, if they are implemented. These include the potential need for new hangar space, the attraction of aviation businesses to the Airport, and better branding and marketing activities.
On the other side of the ledger, there are a number of weaknesses and threats that work to constrain activity at the Airport and reduce its potential financial production. These items mostly involve the existence of residential development around the Airport that constrain expansion, the lack of a “front door” or terminal building at the Airport, poor drainage and its impact on Airport infrastructure, and secondary impacts from the health of the overall national economy.
Overall, the SWOT Workshops highlighted the key issues for the Airport and its operating environment. The Business Plan will use the results to develop strategies for building on strengths, overcoming weaknesses, taking advantage of opportunities, while minimizing threats to the Airport’s future operation.
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Appendix 3B: Lease Analysis
La Porte Municipal Airport Business Plan June 2017
Appendix 3-B: Lease Analysis
HIS APPENDIX SUMMARIZES OUR ANALYSIS OF SAMPLE lease agreements between La Porte Municipal Airport and their corresponding airport tenants. Included within this analysis are T several lease strategies, best practices, and general areas of advice. Because disputes often arise where ambiguity persists in lease language, leases should be standardized to lower the deviation from lease to lease. It is important to note that this analysis was not performed by an attorney and should not be used in place of legal advice. Before modifications to any existing leases from La Porte Municipal Airport are pursued, these recommendations should be reviewed with and by the City's legal counsel. This analysis is organized as follows:
• Inventory of Sample Lease Agreements • Lease Structure Modifications • Analysis of Lease Elements • Strategies for Correcting Lease Issues
B-1 Inventory of Sample Lease Agreements
This analysis is based on three lease samples provided by the City of La Porte, each representing an aviation-related business on the Airport. These leasehold agreements cover a wide range of issues relevant to most aviation leases. A checklist was utilized to verify the use of important sections in each lease. This checklist does not evaluate the specific conditions of each lease section, but only verifies that it has been used in the lease.
Lessee: Harvey Rihn Lease Type: Aviation, Commercial Business Type: Fixed Base Operator Lease Term: Varies by Facility Type Rent: $0.20 per square foot, 30% gross revenue for tie-downs Premises: Hangars, Tie Downs Lease Element Checklist Lease Term √ Lease Rent √ Escalation Clause √ Use of Premises √ Taxes and Fees √ Damage to Facilities √ Operation & Maintenance √ Liens √ Insurance Obligations √ Construction of Improvements √ Defaults √ Environmental √ Assignments and Reversion Clause √ √ Living Clauses √ Subletting Lessor Rights, Reservations, √ Regulatory Compliance √ Force Majeure X and Obligations
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Lessee: Harvey Rihn Lessee Rights, Reservations, Hold Harmless √ √ Holdover √ and Obligations Provision Security Requirements X Nondiscrimination √ Term Extension Options X Checklist Score: 21/24
Lessee: La Porte Flightline Lease Type: Aviation, Commercial Business Type: FBO Lease Term: 01/01/2008 to 12/31/2027 Optional 10 yr Extension Rent: $6,564/year Premises: T-Hangars, Tie Downs Lease Element Checklist Lease Term √ Lease Rent √ Escalation Clause √ Use of Premises √ Taxes and Fees √ Damage to Facilities √ Operation & Maintenance √ Liens √ Insurance Obligations √ Construction of Improvements √ Defaults √ Environmental √ Assignments and Reversion Clause √ √ Living Clauses √ Subletting Lessor Rights, Reservations, √ Regulatory Compliance √ Force Majeure √ and Obligations Lessee Rights, Reservations, Hold Harmless √ √ Holdover √ and Obligations Provision Security Requirements X Nondiscrimination √ Term Extension Options √ Checklist Score: 23/24
Lessee: Tri-Star Aviation Lease Type: Aviation, Commercial Business Type: Avionics Lease Term: 04/01/2002 to 03/31/2022 Rent: $1,539 per acre per year. 30% gross revenue for tie-downs
Premises: T-Hangars, Tie Downs Lease Element Checklist Lease Term √ Lease Rent √ Escalation Clause √
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Lessee: Tri-Star Aviation Use of Premises √ Taxes and Fees √ Damage to Facilities √ Operation & Maintenance √ Liens √ Insurance Obligations √ Construction of Improvements √ Defaults √ Environmental X Assignments and Reversion Clause √ √ Living Clauses √ Subletting Lessor Rights, Reservations, √ Regulatory Compliance √ Force Majeure X and Obligations Lessee Rights, Reservations, Hold Harmless √ √ Holdover √ and Obligations Provision Security Requirements X Nondiscrimination √ Term Extension Options X Checklist Score: 20/24
B-2 Lease Structure Modifications
A number of lease issues have been identified with the sample leases at La Porte Municipal Airport that should be corrected in the future. It is important to note that during lease negotiations a tenant could make additions to these policies to protect their own interests. Such additions should be left up to the discretion of the Airport sponsor, keeping in mind that no lease can give a single tenant an advantage over its on-airport competition, and that exclusive rights are a violation of federal grant assurances. Some of these issues cannot be corrected until the current lease expires. Others may be subject to correction strategies and incentives offered by the Airport in the near term. The following lease sections were identified as deficient in one or more of the sample leases:
• Security Requirements: At a minimum, the lease should reference controlling all entry points of the Airport that provides access to the Air Operations Area (AOA) on the leased premises to prevent unauthorized access of persons and vehicles. All security measures must comply with any regulations or guidelines stipulated by the TSA and Homeland Security. • Escalation Clause: Although some leases specify a term as month-to-month or could be classified as "short term," every lease should include an escalation clause that facilitates an increase in rental rates to compensate for inflation. As a rule, the escalation for each lease should be tied to a Consumer Price Index or 2.5% (whichever number is higher). With monthly lease terms, the concept of escalating lease rates should be visited once the tenant has occupied the premises for 12 consecutive months. • Force Majeure: This clause frees both the Airport and tenant from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an act of God. • Term Extension Options: Lease term extensions give added flexibility when determining the term length of a lease. Typically, a lease extension is 5-10 years in length, and the agreement is subject to the obligations of the initial lease term.
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La Porte Municipal Airport Business Plan June 2017
• Environmental Considerations: A baseline of expectations needs to be established in each lease regarding the usage of fuels, solvents, and other contaminants. It is suggested that a section be added, with wording that takes into consideration federal, state, and local laws and regulations.
B-3 Analysis of Lease Elements
There are a number of lease strategies, best practices, and general areas of advice discussed in this analysis. For La Porte Municipal Airport, the following issues should be considered:
• Indemnification, • Minimum Standards for Commercial Aeronautical Activities • Lease Term • Rental Rates • Reversion
Indemnification
To indemnify is to secure against hurt, loss, or damages. In contract language, indemnification is the section that lays out which parties are responsible for protection against loss or harm. Insurance is the primary means by which parties are protected from potential losses. To protect both the Airport and the tenant, insurance requirements need to be outlined in each lease agreement. These requirements should include coverage for property, commercial general liability, auto, employer liability, and fire.
Aside from general insurance requirements, lease agreements at La Porte Municipal Airport need to include indemnification protection stipulations including a hold harmless provision, damage to facility clause, and force majeure language.
Minimum Standards for Aeronautical Activities
For aeronautical activities, the Airport has Minimum Standards for Aeronautical Activities. As a result, specific requirements can be removed from the lease agreements and identified in the separate, FAA-approved, minimum standards document. The primary purpose for developing minimum standards is to “level the playing field” for all aeronautical tenants so as not to offer an unfair advantage to one over another. At the same time, minimum standards help to ensure that the Airport can offer the services it needs and desires to the flying public at an acceptable standard. If such required services are negotiated in each individual lease agreement, there is a chance for inconsistencies to arise that can lead to claims of discrimination and/or exclusive rights (by default, not intent) between competing businesses on the Airport (or those wishing to become a business on the Airport). Leases at La Porte Municipal Airport should include leasehold sections that specifically deal with these Standards. These sections should include living clauses, regulatory compliance, security requirements, construction of improvements, environmental considerations, and nondiscrimination provisions.
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La Porte Municipal Airport Business Plan June 2017
Rules and Regulations
The City has established rules and regulations for the Airport in Article III of Chapter 18 of the City’s Code. The current rules and regulations establish definitions of aeronautical terms, penalties for breaking the rules, commercial business requirements, and numerous aviation use rules and regulations. These cover issues such as federal air traffic rules, non-aviation activities, unauthorized signs, wrecked aircraft, the safeguard of persons and property, surreptitious activities, repairs to aircraft, agricultural operations, damage to the Airport, injury to persons, licensed pilots, prohibited operations, debris, and intoxicants and narcotics. In addition, rules for ground operations including vehicular traffic, aircraft fueling, tie downs, taxiing aircraft, parking aircraft, and other items are addressed. The rules and regulations also address landings and takeoffs as well as fire regulations.
Lease Term
Ground lease terms for tenants should be directly proportional to the amount of investment a tenant makes in the property. In some cases, where the tenant is pledging larger, community- wide impacts such as job creation, some consideration of these benefits might be reflected in the lease. This is true if these impacts/benefits are not addressed by separate agencies involved in State or local incentive packages. One approach for considering tenant investment/benefit is to develop a matrix or formula which establishes certain criteria and/or investment and impact thresholds required to qualify for a 10, 20, or 30-year lease. This approach helps to ensure that the terms of the lease are mutually beneficial to the Airport and to the tenant.
Rental Rates:
The FAA requires that airports establish fair and reasonable fees, and it is recommended that airports maintain a fee and rental structure that makes or moves the Airport toward self- sustainability. The monthly payment due from the tenant should be based on the fair market value of the leasehold. Within Airport leases, the rental rate section should outline the timing and acceptable methods of payment for the rent, and stipulate the penalties associated with late payments.
It was noted in the review that no fuel flowage fees are charged by the City to FBO fuel sellers on the Airport. At most airports, these fees are charged and collected by the airport sponsor as a concession fee for the privilege of selling fuel. For this Business Plan, Section 5 will address rates and charges, including potential fuel flowage fees for the Airport.
Reversion Clauses
Many lease documents for long-term ground leases at airports contain a provision known as a Reversion Clause. FAA Order 5190.6b requires airports to make all facilities and services available on a fair and reasonable term without unjust discrimination. A perpetual lease would violate this condition. Generally, the ownership of improvements made by the tenant will revert to the airport sponsor at the end of the lease period, which can vary from 20 to 40 years, depending
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La Porte Municipal Airport Business Plan June 2017 upon the number of renewal periods granted. Lease terms typically depend upon on some or all of the following factors:
• The amount of tenant investment • The useful life assessment of the building involved • The length of time required by the investor to recoup his/her capital investment
A long-term lease lets the tenant get financing to build the improvement and gives them adequate time to receive a return on their investment. After the initial lease term, the airport sponsor can assess the improved value of the property and structures and exercise the right to lease both the land and improvements at their prevailing market rent, if a reversion clause is included in the ground lease and they choose not to extend the lease.
B-4 Strategies for Correcting Lease Issues
The lease structure changes outlined in this document can be easily implemented into new lease agreements. For the current lease agreements that do not adhere to the practices outlined in this document, there are limited options to change. To adjust the terms in current leases, the Airport will need to utilize one of the following methods:
• Renegotiation of Lease Terms: This could be initiated by either the tenant or the Airport, seeking to add an amendment to the current lease. If the Airport is initiating the renegotiation, an incentive will need to be offered to the tenant in exchange for adhering to the new lease policy. That incentive may be a lease extension that is not already included in the current lease. • Upon Assignment or Subletting of Current Lease: A tenant cannot assign or sublet the lease terms without the express approval of the Airport. A scenario involving a negotiation for an assignment of a lease agreement, the Airport would have the opportunity to update the lease terms to the new Airport lease policy. • Default of Current Lease: If a tenant does not adhere to the obligations of their specific leasehold agreement, either through non-payment of rent or violations of the Airport's Rules and Regulations, the Airport can institute the standard leasing policy for future agreements. • Expiration of Current Lease Term: When the term of any lease expires, and the tenant is unable to utilize an extension option, that lease can be discarded if it does not conform to the new leasing policy of the Airport.
Under the worst-case scenario, the Airport could attempt to buy out the tenant lease through a negotiated process or through eminent domain. Typically, these arrangements are costly and as such are seldom used.
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Appendix 3C: Survey Results La Porte Municipal Airport Business Plan June 2017
Appendix 3-C Survey of Airport Users and Businesses
In June, 2016, La Porte Municipal Airport users, businesses, and stakeholders were surveyed for purposes of evaluating local area business use and economic impact of T41. The Airport User Survey was developed and the City emailed them to based aircraft owners and frequent users of the Airport. In September, a second effort was developed because response rates were very low for the first attempt. Responses, by category, included the following:
In addition, an Airport Employer/Business Survey was developed and mailed to businesses that either use the Airport or have owners that base their aircraft at the Airport. Prior to sending these out, the Airport User, Business, and Stakeholder Surveys were launched via Surveymonkey.com, and a separate airport survey website was developed so that respondents could complete them online. The surveys were on-line at laporteairportsurvey.com. A copy of the Airport User Survey is included on the following page.
The Stakeholder survey was developed for on-line response. The City advertised the availability of the survey and respondents filed their comments using the on-line access portal.
User Survey • 17 airport responses • 1 response for someone saying they didn’t use the airport • 10 returned undeliverable
Stakeholder Survey • 33 responses
Business Survey • 7 Reponses from people that have a business • 1 response from someone that did not have a business
Summaries of the survey responses for each of the airport user, business, and stakeholder surveys are presented in the following pages.
AIRPORT USER SURVEY
1. Please indicate how many of the following types of aircraft you operate, or simply list the N Number for your aircraft:
A total of 17 Airport users responded to this question. Airport types included 15 single- engine aircraft, and 4 multi-engine aircraft for a total of 19 aircraft (some respondents owned multiple aircraft).
2. Home Airport for your aircraft:
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All but two respondents listed La Porte Municipal Airport as their home airport. Pearland Regional Airport (LVJ) and Ellington Airport (EFD) were also listed.
3. Please estimate the total annual level of spending associated with your aircraft at La Porte Municipal Airport:
Sixteen respondents representing 16 based aircraft and 2 itinerant aircraft spent a total of $183,280 on their aircraft at La Porte Municipal Airport for fuel, maintenance, storage, and other.
Fourteen respondents, accounting for 16 based aircraft at La Porte Municipal Airport spent an average of $3,869 annually for fuel, $3,744 for maintenance, $2,983 for storage and $98 for other. Average annual aircraft spending (fuel, maintenance, storage, and other) per aircraft (16) equaled $10,693. Total spending for the 14 based aircraft respondents to this question equaled $171,080.
Two respondents accounting for two itinerant aircraft that use La Porte Municipal Airport but don't base their aircraft at the Airport spent an average of $1,100 annually per aircraft for fuel, $5,000 for maintenance, $0 for storage and $0 for other. Average annual aircraft spending (fuel, maintenance, storage, and other) per respondent equaled $6,100. Total spending for the two itinerant aircraft respondents to this question equaled $12,200.
• Single Engine: Average annual spending per aircraft (13) equaled $10,498. • Multi-Engine Average annual spending per aircraft (3) equaled $15,200.
4. Please indicate your total number of take-offs or landings per year at T41:
Fourteen users with 15 aircraft (13 single engine aircraft, and 2 multi engine aircraft) reported an estimated 2,514 annual operations (1,257 takeoffs) for an average of 168 operations per aircraft or 180 operations per user.
Average spending on fuel per takeoff at La Porte Municipal Airport: • Single Engine (13): Spent an average of $45.57 in fuel per takeoff (1,095 takeoffs) • Multi Engine (2): Spent an average of $56.79 in fuel per takeoff (162 takeoffs)
Total average spending per takeoff for the users that answered the question: • Single Engine (13): Spent an average of $121.90 in fuel per takeoff (1,095 takeoffs) • Multi Engine (2): Spent an average of $166.67 in fuel per takeoff (162 takeoffs)
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5. From the above question, please estimate the percentage of training flights that you conduct each year:
Of the 2,514 annual operations reported by respondents at La Porte Municipal Airport, 705 (28.0 percent) were training flights. The following shows the number of training flights by aircraft type: • Single Engine (7): 703 Operations • Multi Engine (1): 2 Operations
6. Please estimate the average trip length on flights other than training flights:
Of the 2,514 annual operations reported by respondents at La Porte Municipal Airport, 1,809 (71.9 percent) were for purposes other than training flights. Breakdown of trip length by aircraft type:
• Single Engine (9): Averaged 350 miles per trip (744 trips) • Multi Engine (2): Averaged 200 miles per trip (161 trips) • Total (11): Averaged 323 miles per trip (904 trips)
Some Respondents gave trip time instead of miles. The two respondents that responded with hours instead of miles traveled an average of 1.6 hours per takeoff. One respondent who has a multi-engine aircraft gave an estimated flight length of 600 miles but did not give an estimate of the number of annual flights.
7. What new facilities or services would cause you to use La Porte Municipal Airport more frequently?
There were 13 responses to this question. Four respondents indicated the need for competitive fuel prices. Four also indicated the need for additional hangars at competitive prices. Two indicated the need for a restaurant and two indicated the need for the instillation of PAPIs on the runways. Other needed facilities and services mentioned were: improvements to the 24 hour fueling facility, an Automated Surface Observing System (ASOS), improved runway lighting, maintenance shop, pilot lounge and terminal building.
8. Please estimate the percentage use of your aircraft (Total should equal 100%):
A total of 16 Airport users responded to this question. They indicated that in terms of the percentage of flights flown, 38.5 percent of flights flown were for business reasons, 61.2 percent of flights flown were for personal reasons, and 0.34 percent of flights flown were for other reasons. In terms of the number of operations flown, respondents indicated that 965 operations were for business, 1,533 operations were for personal reasons and 8 operations were for other purposes.
9. Comments: (If applicable, please explain the importance of the business use of your aircraft to you or your business)
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The following are summarized comments of Airport users:
• Important since it is local. • The airport and city of La Porte are missing out on attracting traffic associated with the ship channel. This might require extension of the runway to 5,000 ft. • The airport is beginning to look neglected. Runway lights are often inoperable, and the PAPI has been out of service for a long time. The GPS instrument approach should have a PAPI added. • I do pipeline inspections covering seven states and 12,000 miles of pipeline. I often arrive at T41 at sunset after a long flight and there is no restroom, no or very poor lighting at the self-serve fuel pump and way too many times the credit card function at the gas pump is out of order or the grounding cable is broken. It can take weeks or months before being repaired and the rickety old light weight ladder scares me. If I fall off that ladder, it could ruin my career. Have been told several times that "you are the only one who uses that service at night" (so get over it). It is a shame that in all my travels, the worst fuel station I encounter is at my home airport. • Using the airport saves time and money when traveling to out of town jobsites/meetings • Transportation to and from work • Plane is hangered and has not been flown for several years. • On a waiting list for another airport due to high hangar fees.
Summary of Airport User Survey Results
In summary, there were several key points expressed by respondents to the La Porte Municipal Airport User Survey:
• A total of $183,280 was spend by 16 La Porte Municipal Airport users on their aircraft in 2015. • Fourteen Airport users reported an estimated 2,514 annual operations at La Porte Municipal Airport in 2015. • Eleven users averaged 323 miles per trip (904 trips) in 2015. • In 2015, 38.5 percent of flights flown were for business reasons (965 operations), 61.2 percent of flights flown were for personal reasons (1,533 operations), and 0.34 percent of flights flown were for other reasons (8 operations). • The three main issues/comments that Airport Users reported on the survey were the need for low cost hangars/more hangar space, competitive fuel prices, aging/disrepair of Airport facilities.
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AIRPORT EMPLOYER/BUSINESS SURVEY
The Airport Employer/Business Survey (shown on the following page) generated four responses from employers that have a location at La Porte Municipal Airport and three responses from businesses that did not indicate a location.
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1. Type of Business Product or Service
The following businesses responded to this question:
• Fixed Base Operator • Custom Airframe Repair • Aircraft Operator • Tippit?
2. Is this business Aviation-related?
Of the six businesses that responded to this question, four considered themselves aviation related, and two identified themselves as non-aviation related.
3. Total number of employees at this location in 2015:
Four aviation related businesses answered this question, and contribute the following employment at the Airport:
• Full-time Employees: 4 • Part-time Employees: 4
4. Please estimate what percent, if any, of your company's employment and sales is related to the availability of La Porte Municipal Airport:
All three businesses that responded to the question indicated that 100 percent of their sales and 100 percent of their employment (3 full-time and 4 part-time jobs) were generated by the availability of the Airport.
5. Please describe the nature of your business dependence upon La Porte Municipal Airport, if any:
Airport employers indicated that they rely on the use of the La Porte Municipal Airport for:
• Location and convince for their business needs • FBO services to local businesses and local private aircraft owners
6. If your company uses La Porte Municipal Airport, please estimate the number of aircraft flights per month:
The three businesses that responded to this question estimated a combined total of 61 flights per month were the result of business-related activities.
7A. Do any of your clients or vendors use La Porte Municipal Airport?
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All three respondents indicated that their clients or vendors use La Porte Municipal Airport.
7B. If yes, please estimate the number of flights per month:
It was estimated that 108 flights per month were the result of clients or vendors.
8/9. What new facilities or services would cause you to use the Airport more frequently? / Comments:
The following are summarized comments of Airport Employers/Businesses:
• A True FBO • Opportunity to build hangars and expand. • N/A but, an ILS would be nice • Longer and better maintained runway • Weather reporting station • Better rotating beacon
AIRPORT STAKEHOLDER SURVEY
The Airport Stakeholder Survey (shown on the following page) was intended for anyone in the local community with an interest in the success of La Porte Municipal Airport, and generated 33 responses.
1. Suggested Airport Improvements:
The following are the summarized suggested improvements from Airport stakeholders:
• The Airport needs a restaurant • Additional hangars • Open buildings on Spencer Highway to attract businesses • More community involvement- airshows etc. • Concerns about aircraft noise • Half the comments had to do with upkeep at the Airport. o The National Guard facilities appearance o Airport is not maintained very well o At a minimum landscape the side that faces spencer highway and put in sidewalks o Needs a clear and marked entrance o General upkeep o Improved drainage at the Airport
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1. Suggested Airport Improvements:
No Responses: 3
"Widen (at least One), Runway to 100' accommodate Mid -Sized Corporate Jets... And Lengthen it, at least, 6,000', or more..."
"Improve drainage. Open buildings on Spencer Hwy to business. Rentals are a good source of income. Get PHI or LifeFlight back here to rent a space and utilize the airport access. That would also be good for Emergency Services for the people in the community."
"Enjoyed the runway airport. The sir show and antique car show was fun. Air shows? Balloons?"
"I'm all for improvements and keeping the airport but do not like low flying aircraft (helicopters) flying over Fairmont Park. It's noisy and intrusive. We like our peaceful neighborhood. More car and plane shows as well as better cosmetics would be a great start."
"Take the time to encourage restaurants and eateries to line spencer to encourage plane watching and traffic"
"More T-hangers."
"Renew and restore the buildings on the property. Have a "welcome" gate, signage for exposure for those trying to gain access for pick up or drop off. Fix drainage."
"Needs a Clear and marked entrance. Beautification of grounds - perhaps roadside landscaping/sidewalk - it never looks mowed/maintained. The Nat'l guard facilities appearance is bringing it down. Need more interaction with the community - it never looks like anything is going on over there. Public viewing spot and a restaurant for the public to feel "in touch" with facility is needed."
"Additional commercial development at periphery of property."
"-Any noise abatement -Flood water / rain water control -Restrict helicopter use during evening and early morning if possible. (Provide businesses with a document explaining good neighbor policies.) -Have a La Porte intermediary with the FAA so citizens can contact the intermediary and the intermediary can follow up with the business first (to see if just a suggestion would fix a problem) and then with the FAA (and any other powers that be) if the problem couldn't be solved amicably. -As the airport becomes busier it will need better traffic control. Reserve a significant buffer around the perimeter for future access lanes and parking. -Don't allow high noise businesses to come in. -All in all, we don't pay a lot to keep it going. If improvements are expensive the money should be generated from the businesses and the planes (landing fees and the like.) -environmental concerns should be addressed. Fuel spills and leaks, fumes, waste disposal, etc... Any construction should not impact the roads. Make sure the crews know to clean debris from their vehicle tires!"
"Upgrade airport to accommodate flights in and out of city to owners of aircraft within the city limits."
"Close it."
"NONE! The grass doesn't even stay mowed down."
"I would like to see some indoor boat storage (similar to the plane hangars). I would also like to see something with the national guard building. I've always thought it would be a great idea to use it for cub scouting, boy scouting, girl scouting, sea scouting etc."
"Would like to see runways, hangers, and control tower in operating condition and up-to-date."
"The overall look needs to be updated"
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"Looks run down. Needs grass cut regularly and maybe some curb appeal to the area that faces Spencer road and Farrington. A newer bigger sign would help as well"
"What is going to happen to the military reserve base that has been abandoned? Let it rot?"
"Sidewalks circling the outer property line so folks can walk around and exercise and enjoy. This was once planned, money set aside but never done."
"Use part of the interior land as flood detention ponds and improve the overall drainage in the area. At a minimum landscape the side that faces Spencer Highway and put in sidewalks. Make it a linear park. Permit residential use businesses along the "linear airport park.""
"I think there should be more things for people in the community to take part in."
"Beautify the exterior (landscaping, fencing, to make it look appealing), and attract businesses that could utilize the airport."
"Drainage on the north side of airport."
"1. Better Drainage 2. Noise Restrictions 3. Pay to play charges (if possible)"
"A designated gate of entry. Worried about noise level since we live so close."
"Using empty areas to cultivate hay for sale (I heard larger airports are implementing this.) of-course, we may be too small"
"Build a Main Terminal with offices for lease either by using tax dollars or by private business."
"The north fence line. Control the drainage so the grass can be mowed to control the rats, coyotes and mosquitos."
"Upkeep needs improvement"
"Bulldoze it and build homes and businesses. Get some tax dollars for that prime property"
2. Other Comments:
No Responses: 22
"There are a number of private, East & West Coast, carriers, that would be interested, in "Identifying", a "Mid- Country", Hub, with a (less crowded), easy access, to The Greater Houston/ Texas Medical Center Metroplexes. They looked at several locations, when they were here. Hobby is very crowded, and Hooks, and Conroe, are too far away from Downtown & The Med Center."
"It seems industry could use it more whether going off shore to the rigs or industry execs quick in and out. Cliff Hyde had a flight school there for years. Seems we lost a valuable tenant."
"Thanks for listening."
"Do not let developers take this present and future plot to become more homes! The present and future economic opportunities will never be realized if we lose this large plot of future aviation opportunity by putting more houses in its place"
"The airport is an important community asset...especially during times of emergency (such as a hurricane) when it can be used to deliver emergency supplies (food and water) to the local area."
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"Maybe a nice coffee shop or small cafe that customers and community could use to watch the planes take off and land."
"All in all, I like our local airport. I hate to see funds spent to make it more commercial or industrialized. Thanks for doing a study. Hope you'll keep us in mind."
"Keep it."
"It's a nuisance and too many small planes fly too low over the neighborhood."
"Especially with Ellington being open to the public there is no need to continue to keep La Porte citizens unsafe with planes flying right over homes, school and churches within blocks of the airport. There are crashes and emergency landings that are not successful and we don't want it happening or increasing the chances in our neighborhoods. Tear down the airport and build roof tops. Make money instead of wasting it!"
"I love the airplane and car show!"
"The airport is too closely surrounded by residential housing for large aircraft. However, it needs to be suitable for company and private aircraft."
"Something needs to be done with it."
"A commuter line to IAH and Hobby? Metro bus drop off point for those wishing to commute it Houston."
"Most of the perimeter of the airport, which I strongly support continuing being an airport, is underutilized. Have some meetings on what can and should be on the perimeter."
"So I don't miscommunicate; I'll be blunt and to the point. As I've stated before; The first and foremost requirement by residents near the airport; is that any proposed changes do no harm to our quality of life. That means no Farringdon extension; no increase in noise, odors, vibrations, or negative vision impacts; no increase in danger of airborne objects falling onto our homes, our property, or ourselves; and no increase in traffic through our neighborhoods, etc. As part of this requirement; I expect full transparency from the City and its' contractors on this issue; Unlike the lies, deceptions, and crooked maneuvers pulled by City insiders the last time we fought this attempted destruction of our neighborhoods and our quality of life. I find it despicable and unacceptable that a few City insiders are willing to destroy our quality of life for their benefit, and when we challenge them through the democratic process; they try to minimize our input by using lies, deceptions, and crooked maneuvers. The sooner you state to us in writing that the City will not pursue the harmful items above, the sooner you will start to regain our trust on this issue. Until that happens and based on what I've experienced so far; I have to conclude that your intensions are the same as the City insiders we have dealt with in the past.... And if my phrasing seems blunt, I'd be glad to communicate about all the City insider lies, deceptions and crooked maneuvers pulled on us, that justify my bluntness. I've spent over 500 hours and a lot of money fighting for justice and fairness on this issue and I have boxes of records, notes...and recordings."
"Concerned about increased traffic with elementary so close." "The airport does not look that secure"
"I do not want to see increased air traffic. I really see no reason to have the airport and with our area being close to the refineries, I should think it would profit people coming into the country with destruction of the refineries or port on their agendas more than it profits La Porte home owners like me who never, ever use the place. I would lock the place up, increase security, limit flights in and out, since I understand the reasons La Porte has for keeping it open."
"I recommend encouraging aviation businesses or to move to the airport with tax incentives and attractive lease agreement. I believe the airport is one of La Porte's greatest asset and it isn't being fully utilized."
"The city of Pearland is doing this same renovation. They are starting phase two 15 miles from here. The city permit system is so bad business and contractors avoid La Porte. Ask anyone!!"
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4. BASELINE FINANCIAL PROJECTIONS
HIS SECTION IDENTIFIES HISTORICAL REVENUES AND EXPENSES at La Porte Municipal Airport and projects those revenues and expenses to 2021. This projection only considers a baseline Tscenario with no new revenue enhancements included. This projection of financial performance is designed to answer the question, "How will the Airport perform if no significant changes are made?" However, in a later section, alternative projections of financial performance will be presented based upon business plan recommendations and marketing pro-formas. To address baseline projections, this section is organized as follows:
• Historical Revenues and Expenses • Baseline Forecast of Revenues and Expenses
4.1 Historical Revenues and Expenses
La Porte Municipal Airport is owned by the City of La Porte and is operated by its Public Works Department. The Airport operates as an enterprise fund and revenues generated from use are dedicated by Federal, State, and local law to fund the Airport’s operations, maintenance, and capital costs. All airports that are recipients of Federal grant funding are obligated to establish a fee and rental structure that makes the Airport as financially self-sufficient as possible under airport specific circumstances.
Information concerning historical revenue and expenses for the Airport was provided by the Public Works Department for fiscal years 2011 through 2015. For purposes of this analysis, the most recent five-year data history was used because it represents the relevant historical financial performance of the Airport. In addition, this data is most applicable for financial forecasting because it gives some indication of the recent trends. Table 4-1 shows the historical revenues and expenses as documented in the statements of revenues and expenses provided by the Public Works Department. These revenues are derived from the following:
• Rental Income: Revenue from ground leases. • Tie-Down Revenue: The Airport receives a percentage of revenue from tie downs fees. • Interest and Investments: Revenue earned on Airport investments.
There is currently no fuel flowage fee charged by the City to its FBOs at the Airport.
Airport expenses were made up of the following cost items:
• Personnel Services: This includes salaries and benefits of Airport maintenance workers. • Supplies: This includes gas and oil, chemicals and any other supplies needed. • Repairs and Maintenance: This category is primarily from motor pool lease fees and fleet maintenance for equipment used to mow the 300 acres at the Airport. • Services and Charges: This category includes other machinery/tools/equipment, radios/base stations, professional services, electrical, and all other expenses.
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Table 4-1 - Revenues and Expenses: Five Year History Operating Revenues 2011 2012 2013 2014 2015 CAGR1 Charges for Services Land Leases $42,361 $43,600 $44,435 $45,073 $45,510 1.8% Tie-downs $14,068 $15,363 $11,811 $11,085 $13,671 -0.7% Total Operating Revenue $56,429 $58,963 $56,246 $56,158 $59,181 1.2%
Operating Expenses Personnel Services $0 $17,102 $21,251 $23,918 $23,483 11.1%2 Supplies and Materials $0 $0 $0 $0 $16,941 N/A Repairs and Maintenance $0 $13,521 $4,896 $6,536 $0 N/A Other Services and Charges $27,989 $14,966 $16,442 $31,415 $21,848 -6.0% Total Operating Expense $27,989 $45,589 $42,589 $61,869 $62,272 22.1%
Net Operating Revenue $28,440 $13,374 $13,657 ($5,711) ($3,091) N/A
Non-Operating Revenues 2011 2012 2013 2014 2015 CAGR1 (Expenses) Capital Contributions Transfers In $29,7753 $0 $0 $385 $586 -62.5% Transfers Out ($518) ($518) ($518) ($518) ($518) 0.0% Interest and Investments $1,087 $722 $538 $593 $1,354 5.6% Total Non-Operating Revenues $30,344 $204 $20 $460 $1,422 -53.5%
Change in Net Revenue $58,784 $13,578 $13,677 ($5,251) ($1,669) N/A Source: City of La Porte Statement of Revenues, Expenses and Changes in Fund Net Position 1CAGR: Compound Annual Growth Rate 2011-2015 2CAGR 2012-2015 3State Grant
Also included in Table 4-1 are the non-operating revenues and expenses associated with the Airport. These include interest revenue from Airport investments, a State grant for capital improvement (2011), and capital contributions with transfers in for pay adjustments and transfers out to the insurance fund for liability insurance and workers comp. It should be noted that non- operating revenues costs are just that – they are not generated from Airport operations. To determine what the Airport itself is generating, the analysis will focus on and compare operating revenues with operating expenses.
For purposes of the Business Plan, the ability of the Airport to generate revenues and cover operating costs is the primary concern. In this regard, surplus operating revenues can be used to pay the local share of capital development or other non-operating costs. Even if shifts or increases to the revenue base can be made, there still may be forecast shortfalls for capital improvement needs. Therefore, it is important for this Plan to anticipate the scope of financial need and present
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that to the City as far in advance as possible.
The Airport’s revenue comes from four long term ground leases that encompasses 18 acres of land and 94 tie-down spots. The airport charges an average of $.057 per square foot for the land and collects 30 percent of gross revenues from rental of tie-down spaces (minimum of $144 per year per tie down space).
Personnel services is the largest Operating Revenues and Expenses expense at the Airport and accounted for 37.7 percent of expenses in 2015 and have grown $70,000 $60,000 by 37.3 percent since 2012 (11 percent per $50,000 year). Total Operating Expense grew from $40,000 $27,989 in 2011 to $62,272 in 2015- a total $30,000 increase of 122.5 percent (22.1 percent annual $20,000 growth rate). In 2015, Operating Expenses $10,000 were 29.57 percent above the 5-year average $0 of $48,062. 2011 2012 2013 2014 2015 Operating Revenue Operating Expense Table 4-2 presents a summary and comparison of operating revenues and expenses. As shown, the Airport has had positive net revenues from 2011-2013 and had a combined surplus of over $55,000. However, increased expenses in 2014-2015 caused a combined loss of $8,800. While operating revenues have increased by 4.8 percent since 2011, (1.2 percent annual growth rate) operating expenses have increased by 122 percent (22.1 percent annual growth rate). In 2015, net operating revenues were $31,531 lower than in 2011.
Table 4-2 – Comparison of Operating Revenues & Expenses FY Year Operating Revenues Operating Expenses Operating Net Gain/(Loss) 2011 $56,429 $27,989 $28,440 2012 $58,963 $45,589 $13,374 2013 $56,246 $42,589 $13,657 2014 $56,158 $61,869 ($5,711) 2015 $59,181 $62,272 ($3,091) % Change 4.8 % 122% N/A
It is against this historical backdrop that the Baseline Forecast of revenues and expenses for La Porte Municipal Airport is developed. It should be noted that most public-use general aviation airports in the United States do not cover expenses with revenues and must be subsidized by their owners/sponsors.
4.2 Baseline Forecast of Operating Revenues and Expenses
The Baseline Forecast presents a status quo look at revenues and expenses, influenced primarily by historical financial activity. The projection does not consider all the potential changes
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at the Airport that might occur through the implementation of this Business Plan or in the City's economy that might change the historical trend. Primary assumptions used in developing the Baseline Forecast included the following:
• Rate of Inflation/Consumer Price Index (CPI): Historically, the rate of inflation/CPI has been used to escalate prices when making forecasts of revenues and expenses. For this Baseline Forecast, a rate of 1.2 percent was used to forecast tie-down fees.
• Rental Revenues: The Baseline Forecast utilized existing rental rates for tenant leases. These rents then were increased by individual lease escalations and escalation histories.
• Personnel Services: While historical growth has been 11 percent per year in this category, the Baseline Forecast assumes growth will slow to 5 percent growth per year.
• Operating Expenses: All other operating expenses were increased by 2 x CPI throughout the period to reflect the historical growth.
Table 4-3 presents the Baseline Forecasts of revenues and expenses for La Porte Municipal Airport. As shown, baseline operating revenues are anticipated to grow from $59,181 in 2015 to $63,572 by 2021 - an average yearly increase of 1.2 percent and an overall increase of 7.4 percent for the period. Baseline operating expenses are expected to increase from $62,272 in 2015 to $76,190 in 2021 - an overall growth of 22.4 percent or 3.4 percent per year. The result is a growing projected deficit in net revenues, assuming the status quo situation into the future.
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Table 4-3 - Baseline Forecast of Operating Revenues and Expenses OPERATING REVENUES FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 CAGR Historical Forecast Charges for services Land Leases $45,510 $46,056 $46,609 $47,168 $47,734 $48,307 $48,887 1.2% Tie-downs $13,671 $13,835 $14,001 $14,169 $14,339 $14,511 $14,685 1.2% Total Operating Revenue $59,181 $59,891 $60,610 $61,337 $62,073 $62,818 $63,572 1.2%
OPERATING EXPENSES FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Personnel Services $23,483 $24,657 $25,890 $27,185 $28,544 $29,971 $31,469 5.0% All other Services and changes $38,789 $39,720 $40,673 $41,649 $42,649 $43,673 $44,721 2.4% Total Operating Expense $62,272 $64,377 $66,563 $68,834 $71,193 $73,643 $76,190 3.4%
Net Operating Revenues (Loss) ($3,091) ($4,486) ($5,953) ($7,497) ($9,119) ($10,825) ($12,618) 26.4%
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* * * * * * * The results of this Baseline Forecast indicate that under the status quo scenario, where no new revenue-generating strategies are undertaken and no negative economic impacts are considered, La Porte Municipal Airport will have operating deficits from 2016-2021. While these deficits are relatively small ($12,620 or less), they are trending in the wrong direction. In the next section of this Business Plan, a set of strategic initiatives will be examined that are anticipated to increase aviation activity and improve the financial performance of the Airport.
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5. BUSINESS PLAN ALTERNATIVES
HIS SECTION EXAMINES ALTERNATIVE SOLUTIONS FOR SPECIFIC issues and needs of La Porte Municipal Airport. These alternatives identify potential markets, strategies, funding T sources, and potential activity forecasts. The intent is to develop hands on material that may be implemented by the City and Airport to ultimately increase aviation activity and financial performance for the Airport. This section of the report is organized as follows:
Application of SWOT Findings Revenue Enhancement Impact of Revenue Enhancement Strategies on Potential Demand
5.1 Application of SWOT Findings
Results of the SWOT Analysis Workshops, conducted in April, 2016, were used in developing business planning alternatives. The SWOT identified a number of area-wide factors supporting growth and development of the Airport, as well as the obstacles to Airport performance and goal attainment. This subsection was organized to first examine opportunities for growth, followed by a look at the potential obstacles that will have to be overcome.
Opportunities for Growth
The strengths of the Airport, as documented in the SWOT, provide a basis for optimistic growth projections in some areas. These factors are descriptive of the Airport asset and why it may be a desirable location for businesses or based aircraft tenants. Without repeating all that was written about the Airport's Strengths and Opportunities, the following summary focuses these factors toward the generation of business planning strategies:
Hangar Development: There appears to be a demand for the development of additional conventional and T-hangars. Partnering with Colleges: Opportunities exist to increase flight training with potential partners and educational institutions. It is believed that area universities, colleges, and technical schools could support a flight school and possibly an aircraft maintenance program. San Jacinto College in Pasadena has an aviation program that is staffed by vendors at local airports. Bidding for these positions occurs every three years. Support for Local Industry: There is an opportunity to attract support businesses for the local petro chemical industry and other businesses. Airport Branding: The Airport can improve its brand. As infrastructure and services are improved, efforts must be made to rebrand the Airport. Development Opportunities: The Airport has ample acreage and infrastructure to accommodate both aviation and non-aviation related development. There is land on the Airport that could be developed for compatible non-aviation use. National Guard Armory: The Texas Air National Guard and Texas Army National Guard are considering reactivating the Armory at the Airport. Opportunity to Renegotiate Leases: When leases expire, renegotiations could work
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greatly in the Airport's favor and provide increased revenues. Opportunity to Partner with Emergency Service Providers: The Airport serves as a base of operations and staging area for local law enforcement, fire protection, and other emergency services. Opportunity to Gain New Tenants: It was reported that Ellington Airport is not business- friendly to small general aviation operators. It may be possible for the Airport to attract some of these users. New Technologies: It was suggested that there may be compatible openings in the realm of drone piloting and instruction. Need for New Terminal: It was suggested that a new terminal building would be an asset in the development and growth of the Airport. Opportunity to Improve Communications: There is a distinct opportunity to improve communications between the City, the tenants and users of the Airport, and the Airport neighbors. This option was expressed by more than one speaker, and strongly endorsed by many. It was acknowledged by many that recent changes in City staff and policy have resulted in improved communications, which are greatly appreciated. Potential to Develop a Compatible Restaurant: An opportunity exists to develop a viable restaurant. Although there are several nearby restaurants, none have an airport or aviation theme. Ground Transportation: There is adequate space to improve ground transportation at the Airport: ‒ Satellite Location for Rental Cars ‒ Courtesy Cars ‒ Taxi & Limousine Services Airport Events: The Airport has hosted the La Porte Texas Airplane & Auto Show as recently as October, 2015. This event and similar events attract non-aviators to the Airport. Other events such as 5K runs, radio controlled aircraft events, school and scouting group outings, etc., are used by some airports to attract public participation and promote good community relations. Independent Website: The lack of awareness about the Airport and its value to the community may indicate a need or opportunity to develop a website and other social media to increase public awareness. Business Aviation Growth: Business aviation is forecast to grow faster than any other aviation segment in the near-term future. Business aircraft constitute a stable growth segment of general aviation that would be ideal marketing objectives for the Airport. The Airport has an opportunity to increase based and transient customers.
Obstacles to Airport Performance and Goal Attainment
In addition to factors that support growth and development of La Porte Municipal Airport, there are a number of factors that present challenges to such growth. Issues that were identified during the SWOT that may present obstacles to growth include the following:
Land Use Compatibility: The Airport is located amid residential development which is typically the least compatible with Airport operations.
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No Main Entrance: The Airport lacks a sense of entry. The Airport has numerous gates to access the Airport, but no main entrance. There is no clear focal point or terminal building for the Airport. Visitors flying into the Airport do not know where to taxi and deplane because of the lack of a terminal building. Poor Drainage: The lack of good drainage is a significant issue, with large areas of moist ground and standing water on the Airport. This problem is shared by neighbors of the Airport, particularly to the north in the Lomax neighborhood. Limited Runway Length: The primary runway length is too short to attract the majority of corporate aircraft. Thus, there is a limit on how much business aviation can be attracted to use the Airport. Branding/Marketing: Every airport has a brand. Some are good and some are not. For La Porte Municipal, there is no consistent brand for the Airport and its facilities need a facelift. The lack of upkeep and general aging of facilities creates a negative brand from an appearance standpoint. The Airport currently does not have a stand-alone website, or a significant social media presence. Lack of Hangars: Some individuals would like the option to construct hangars on leased property, rather than rent hangars from hangar developers/operators. Lack of Public Attractions: The Airport does not have on-airport attractions such as restaurants, an aviation museum, or other features that would serve to draw the public to the Airport. Lack of Public Awareness: There are too few people in the community who know what goes on at the Airport and what its value is to the community. The lack of an independent website may contribute to this issue. Facilities Maintenance: Airport maintenance from lighting to mowing to the upkeep of various structures is a constant demand. Without ongoing maintenance, the Airport viability suffers. Competitive Pressure: Within a 30-mile radius, competition from other airports of similar size or larger exists. This competition could reduce aviation demand if businesses on the Airport do not monitor overall pricing and service norms in the service area. Access to Funding: Given that the Airport must rely upon the City to supplement income, it is important for the Airport to maintain financial support, generate new revenues, and operate as efficiently as possible. Without this support, future projects and development at the Airport could be jeopardized. National Economy and Fuel Prices: General aviation activity is dependent upon a good national economy. It is unpredictable and, as such, may pose a threat to future private and corporate activity if there are economic downturns. Higher fuel prices could have an adverse effect on Airport operations., as well.
5.2 Revenue Enhancement
The discussion of positive growth factors and obstacles to growth helps to frame strategies for increasing aviation activity and financial production at La Porte Municipal Airport. Thus, this section focuses on revenue enhancement initiatives and similar suggested strategies that will increase aviation activity at the Airport. Some of these strategies are already contemplated by the City of La Porte, while others are new concepts for the Airport:
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Hangar Development Partnering with Local Colleges for Flight Training Branding Initiatives Attraction of UAS Activities Non-Aviation Property Development Alternatives for Crosswind Runway Airport Events Rates & Charges Adjustments
Other non-revenue producing recommendations will be made in Section 6 of this report. They include items such as infrastructure improvements (drainage, pavement, etc.), better communication with tenants and neighbors, Airport manager and staffing options, and administrative and policy issues.
Hangar Development
Revenues for airports can come from two primary sources: airport operations (fuel sales, aircraft maintenance, etc.) or airport landlord activities (hangar rents, terminal rents, other land leases). Until now, all hangar development at the Airport has been undertaken by third party developers or existing FBOs. There is a waiting list and more hangar space is required to fill that need. Although there are other building opportunities for the Airport, this subsection will focus on the need for hangar space.
Potential Demand
Table 5-1 shows the potential demand for general aviation activity without any changes to current management policies or marketing efforts and includes the baseline forecast from the FAA's Terminal Area Forecasts. As shown, the FAA predicts a slow growth of six additional based aircraft for the short-term future at La Porte Municipal Airport.
Table 5-1 - Baseline Forecast of Based Aircraft and Operations Forecast Indicator 2015 2017 2019 2021 Aircraft Operations 81,286 85,123 89,142 93,350 Based Aircraft 85 87 89 91 Source: FAA Terminal Area Forecasts (2016) for Operations and Based Aircraft.
It should be noted that between three of the FBOs, there are currently 36 aircraft owners on waiting lists at the Airport. In addition, a third FBO indicated that there are 6 conventional hangar storage spaces available within their leased area. Many times, waiting lists are heavily influenced by pricing and thus do not materialize unless the desired pricing point is reached. For the forecast, any increased activity over and above the static growth would be those that are generated by accommodation of the waiting list aircraft, along with the impacts of branding and marketing strategies within the service area. It is believed that the FAA’s predicted natural growth of six based aircraft over the next five years could easily be tripled to 18 if new hangar
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Needed Additional Facilities
The primary facilities needed to accommodate more general aviation demand are hangars at the Airport. In this regard, it is assumed that 18 new based aircraft within the next five years will require hangar space. To accommodate this demand, 18 T-hangars (18,000 square feet) is needed. It should be noted that this additional hangar need is for based aircraft and does not fill any potential needs for additional FBO space that may occur in the future.
Financial Factors
Revenue and expense factors associated with the development of new hangar space will have an impact on Airport financial production. Depending upon whether or not the Airport or private enterprise funds the construction of new hangars, the revenue streams will differ significantly. Initial discussions with the City indicate that most of the new hangar development for aircraft storage will need to come from private funding sources. This means that the Airport would receive land lease revenues, with the reversion of hangar improvements at the expiration of the leases.
Land Lease Revenues: Ground lease rates for new hangar facilities would likely range between $0.15 and $0.20 per square foot. (They currently average $0.057 per square foot). For site-ready parcels with utilities present, etc., the rates would be $0.25 per square foot. The ground lease should include more land than just the building envelope. In some cases, an additional 15 to 25 percent is added to account for hangar apron and auto parking. Fuel Sales: The addition of new based aircraft brings new fuel sales. The fleet mix of new based aircraft determines the average fuel consumption for single engine, multi- engine, and jet aircraft. While individual utilization rates may differ, estimated local airport fuel consumption could range as follows: - Single engine aircraft - 200 to 500 gallons annually - Multi-engine aircraft - 3,000 to 5,000 gallons annually Fuel flowage revenues to the Airport can be estimated from total projected fuel sales. It should be noted that flight school aircraft averages are significantly higher than the above ranges for single engine aircraft. Private Investment: In addition to the existing FBOs who have indicated a desire to invest in additional hangar space, private investment in hangar development can be solicited on a larger scale using the Request for Proposal (RFP) method.
Other financial factors associated with new based aircraft and activity include the need for additional aircraft maintenance services and the potential for City investment in public/private partnerships in hangar development. These and other impacts will be assessed in the Recommended Plan pro formas associated with this aviation demand segment.
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Partnering with Colleges
San Jacinto College in Pasadena had an aviation program that was staffed by vendors at local airports. Although this program recently was scaled back, it is possible that other colleges or institutions could benefit from using La Porte Municipal Airport as a flight training facility.
Potential Demand
La Porte Municipal Airport offers extensive flight training options including:
Harvey & Rihn Aviation Flight School Ascent Aviation La Porte Flying Club La Porte Aviation Services
Currently, there are two main college-based aviation programs in the Houston area – Embry Riddle University and San Jacinto College. In addition, there are notable flight schools in the region, some of which have affiliations with on-line universities. These include the Flying Tigers Flight School (Ellington Field Airport), The Flight School (Weiser Airport), and Solo Flight Training (Ellington Field Airport).
An estimate of the potential number of student pilots was developed for Harris County to determine the overall potential market for La Porte Municipal Airport. Using FAA data from 2015 for the number of student pilots in Texas, along with the population of Texas, an estimate of per capita student pilot activity was made. This per capita figure was multiplied by the population of Harris County to yield an average number of student pilots for the County.
Student Pilots in Texas: 9,970 Population of Texas: 27.47 million Population of Harris County: 4.538 million Using these numbers, it was estimated that Harris County would currently generate an average of 1,647 student pilots. If a portion of those student pilots could be captured at La Porte Municipal Airport, it would increase overall flight training activity.
Needed Additional Facilities
Depending upon whether or not the Airport is able to affiliate itself with a college program, the number of students and the size of the program may vary. For this analysis, it is assumed that the Airport and/or its FBOs are successful in winning one of the three vendor contracts with San Jacinto College or similar flight school program. There are already three flight schools and one flying club established at the Airport. Thus, no additional facilities would be needed. If there was an influx of new students, then the flight schools may need to acquire more aircraft and more instructors for training purposes. However, those are decisions made by private enterprise and would not require any City resources.
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It is assumed that the additional facility needs at the Airport may be as small as hangar space for two aircraft. Typically, a flight school with 20-25 students would be the minimum necessary to support a college program. Assuming this number, an independent flight school operator could support a university/college student component and accept non-university students as well. Because each of the existing flight schools already have aircraft, a minimal two additional aircraft are assumed.
A flying club is sometimes used for flight training. Often, flight lessons are given using aircraft that belong to the club. In other cases, members rent club aircraft for personal flying. The La Porte Flying Club provides aircraft flight training at the Airport, but would not likely compete for vendor status for a college flight training program.
Financial Factors
The financial benefit to the Airport from attracting additional flying club or flight school activity would flow from several sources including:
Additional Fuel Sales Hangar Rentals Potential Ground Leases Licensing Fees
Assuming the flight school needed two additional aircraft, each aircraft would be used between 800 and 1,600 hours per year, depending upon the number of students. This would add between 4,000 and 6,000 annual operations to the Airport’s total. Fuel sales associated with this number of operations could total between 8,000 and 12,000 gallons.
Hangar rentals would generate the going rate for the area or roughly $3,600 per aircraft per year. If a private operator were to develop hangars, the Airport would receive income from the ground leases, which should be approximately $0.20 per square foot for new leases.
Two other potential sources of revenue resulting from the attraction of a flight school or flying club involve possible licensing fees (if specified in minimum standards) and additional on- field aircraft maintenance work. Typically, license fees are nominal, but a medium-size flight school can keep an aircraft maintenance operator busy.
Branding Initiatives
In developing a unique identity for La Porte Municipal Airport within its market area, any branding process should consider the existing brand equity. Currently, the Airport’s brand sends a mixed message to Airport users and stakeholders. When considering the strengths of the Airport and its natural brand, several factors come to mind:
An Airport Community that is very much like a family. Extensive Aircraft Training activity that characterizes the Airport
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Four FBOs that offer a wide variety of services
From an appearance standpoint, the Airport will need some cosmetic changes, with new paint, continued mowing, and improved drainage. In addition, inoperative aircraft should be moved off the airport operations area. However, the greatest need is for a terminal building that provides a central focus to the terminal area and an entrance to the Airport.
Other branding issues involve the current Internet presence of the Airport, as a page within the City’s website. While there are links from this page to FAA information and other City material, the links stay within the City’s website and do not sufficiently demonstrate the Airport’s unique character and personality that set it apart from other airports.
Potential Demand
Decisions to locate at the Airport by potential users are largely influenced by the Airport’s brand perception. As new infrastructure and services are added, the need to expand efforts to increase the communication of the Airport brand also increase. In so doing, there is an opportunity for based aircraft and itinerant general aviation activity to increase, and non-aviation development to be augmented.
Assuming that the Airport will not expand its runways, the brand enhancement will focus on better defining the strengths of the Airport and the vision of its future interaction with the City of La Porte. This would include an emphasis on small general aviation aircraft, flight training, and itinerant aircraft operations in the Houston area. A name change is not usually recommended if the Airport does not expand its facilities or services. However, there may be some benefit to having the community rename the Airport for good public relations.
Online Presence
Competition among area airports includes digital marketing efforts. In this regard, an effective online presence can be used to promote brand awareness. Listed below are the branding efforts that airports within the service area of La Porte Municipal Airport have put into their online presence.
La Porte Municipal One dedicated webpage on City Website No airport-run social media Ellington Airport Dedicated webpages on fly2houston.com (7 pages) Facebook: 816 likes, 7 reviews (4.7-star average) Baytown Airport Independent website (18 pages) No airport-run social media William P Hobby Dedicated webpages on fly2houston.com (24 pages)
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Facebook: 4,434 likes, 11 reviews (4.2-star average) Twitter: 7,891 followers RWJ Airpark Independent website (7 pages) No airport-run social media Pearland Regional Independent website (11 pages) Facebook: 250 likes, 1 reviews (5-star) Twitter: 136 followers Chambers County One dedicated webpage on City Website Facebook: 20 likes, 0 reviews Houston Southwest Independent website (8 pages) Facebook: 242 likes, 0 reviews George Bush Int./Houston Dedicated webpages on fly2houston.com (31 pages) Facebook: 211 likes, 1 reviews (4.0-star average) Twitter: 15,800 followers Scholes International at Galveston Independent website (18 pages) Facebook: 808 likes, 15 reviews (4.7-star average) Twitter: 79 followers Sugar Land Regional One dedicated webpage on City Website No airport-run social media Liberty Municipal Dedicated webpages on City Website (9 pages) Facebook: 5 likes, 0 reviews
Financial Factors
While branding may not add directly to the bottom line, it will influence it indirectly. Decisions to locate at or use the Airport will be made, based upon the Airport’s perceptible brand. As such, the development of a unique selling point and identity in the market for La Porte Municipal Airport can be beneficial to the future growth of the Airport. From a financial standpoint, enhancing branding efforts would incur upfront costs. A number of initiatives that can be funded including: an upgraded website, a new promotional brochure, and a marketing campaign including direct mail, printed materials, and PowerPoint presentation. A video is being developed as a part of this Business Plan.
Attraction of UAS Activities
UAS or unmanned aerial systems (drones) are becoming one of the fastest growing
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segments of the aviation industry. The Economic Impact of Unmanned Aircraft Systems Integration in the United States report1 predicted the economic benefit of UAS integration. The Association for Unmanned Vehicle Systems International’s (AUVSI’s) findings show that in the first three years of integration more than 70,000 jobs will be created in the United States with an economic impact of more than $13.6 billion. This benefit will grow through 2025 when a forecast of more than 100,000 jobs will be created along with an economic impact of $82 billion. For this reason, many states and regions have been proactive in trying to attract drone industries, manufacturers, and test sites. In Texas, one of six nationally selected UAS test sites is operated by Texas A&M University along the Gulf Coast near Corpus Christi. These six sites were chosen by the FAA to conduct testing and research into the integration of UAS into the National Airspace System (NAS). Texas A&M is working to develop system safety requirements for UAS vehicles and operations with a goal of protocols and procedures for airworthiness testing.
In the first and largest demonstration of its kind in April of 2016, nearby NASA and operators from the FAA’s UAS test sites across the country flew 22 drones simultaneously to assess rural operations of NASA’s UAS traffic management (UTM) research platform. This and other research and testing was part of the FAA’s mandate to integrate UAS into the NAS by 2015. While that date has slipped somewhat, the integration efforts have accelerated. On August 29, 2016, the new FAR Part 107 rules for UAS went into effect for certification of commercial drone pilots. These certifications, called remote pilot in command certificates, will slowly replace a cumbersome system of Section 333 Exemption certificates for business operators. No longer required are manned aircraft pilot certificates in the commercial operation of drones. However, the need for training and operational proficiency is increasing rapidly with the new remote pilot in command certifications.
Potential Demand
Estimates of drone sales in the U.S. vary because manufacturers are not willing to publish specific sales data. However, the FAA estimated the sale of more than 1 million drones for Christmas 2015.2 For 2016, that number is surely to increase. As of July, 2016, there were more than 406,000 registrations by drone owners with the FAA. The number of drones are expected to grow from 2.5 million in 2016 to 7 million in 2020 - a 180% increase, according to a report from the Federal Aviation Administration.3 All of this signals a robust market for UAS throughout the country for the next several years.
Current demand in the business arena is for drone operator training and certification. In addition, there is a need for recreational space for drone operator practice and proficiency. However, due to FAA regulations, these drone operations, for the most part, are restricted at airports due to the possible negative interaction with manned aircraft. One method used to avert potential conflicts is to fly drones indoors or within a netted space (see Figure 5-1). This type of “drone park” is not a part of the NAS because of the netting, but does permit GPS signals to reach UAS operating within them.
1 Source: Association for Unmanned Vehicle Systems International, March 2013. 2 Source: http://fortune.com/2015/09/29/drones-holiday-sales/ 3 Source: http://fortune.com/2016/05/25/drones-ndp-revenue/
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It is uncertain how much UAS demand could be attracted to La Porte Municipal Airport. This would require branding in that area. However, there are currently 65 registered UAS in Harris County, TX. These are owned by businesses that have used the manned aircraft registration process to register their aircraft. The number of drone owners in the Houston area that have registered on-line with the FAA is likely to be significantly larger because it includes hobbyists, but that number is not known. Also, because this is such a new industry, it is difficult to estimate the specific demand for training facilities and services. Much of the initial flight training for hobbyists can occur in the backyard of a home. Thus, coordination with Texas A&M’s UAS team on this issue would be a good first step to gauge business demand for drone operational training and pilot certification.
Needed Additional Facilities
To become a training center or recreation center for UAS businesses or hobbyists, an enclosed facility is needed. This facility can be either a large hangar or a netted outdoor area. The hangar facilities need to be available with a high ceiling (20 feet or more) to permit range of flight for UAS. If an outdoor netted area is used, it can be the size of the Figure 5-1 – UAS Pavilion at Kansas State University Kansas State facility (300-feet-long by 200-feet-wide and 50-feet-tall) or smaller.
In addition to the actual drone operational area, a “ground school” classroom area is needed to teach the FAR Part 107 material. This space is already available at two of the FBOs that offer pilot training.
Financial Factors
The most significant financial factor involves the fees that drone owners are willing to pay for training and/or certification. Already, online materials are available for the FAR Part 107 exam that can be purchased for less than $20. Thus, the operational training portion of a program would be the most valuable. Some UAS pilot training courses cost up to $3,500 per person.4 For use of an outdoor park with skill training facilities, a fee per hour would be appropriate. As a comparative reference, a roller skating rink costs roughly $300 per hour to rent privately. Thus, 50 recreational users paying $6.00 per hour could approximate these revenues.
Ultimately, the financial factors would depend upon the type of facilities available (indoor or outdoor), the skills and/or recreational activities (pilot proficiency, drone racing, etc.) and the number of users in the area willing to participate. A key selling point is the safety factors which will not physically allow drones to violate FAA airspace and any potential associated penalties or fines.
4 Source: Unmanned Vehicle University, http://www.uxvuniversity.com/product-category/uvu-uav-pilot-training/
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For the Airport, the revenue production would be limited to land lease rents for hangar space or outdoor netted arena property. It is assumed that unimproved property used for these purposes would lease for $0.20 per square foot per year – the going rate for Airport land.
Non-Aviation Property Development
For purposes of this Business Plan, non-aviation land use describes areas without runway and taxiway system access. For these areas, development possibilities should consist of appropriate entities that are compatible with an airport environment. For airports, industrial development (manufacturing, warehousing, distribution, assembly, or production activity) is considered highly compatible for non-aviation airport property development, partially due to the capability of these entities to absorb the noise impacts from airport activity. Commercial/Retail development (office buildings, commerce parks, restaurants, franchise and specialty goods outlets) are also considered compatible development for airport activities, although these areas are impacted more by airport-related noise than industrial development due mostly to the human activities there.
Non-compatible development would include anything characterized as a residential area. This includes homes, schools, churches, community centers, recreation/sports facilities, daycare centers, nursing and assisted living facilities, and other uses that are generally enjoyed as quality- of-life-enhancing amenities. These areas are the least compatible with airport-related noise because people live and sleep in these buildings.
Developable Land
La Porte Municipal Airport covers a total area of 300 acres, and is surrounded by a mixture of residential and commercial land uses, and the local animal shelter. For land classified as non-aviation use, there are three areas on the Airport available for development. Figure 5-2 depicts areas available for non-aviation development on Airport property. As shown, there are approximately 57 acres of land or more available for non-aviation development (depending upon how much land is reserved for aviation related development). The triangular property on the north side can be accessed via Buchanan Street, while the property on the east side can be accessed by an extension of Airport Boulevard. On the west side, non-aviation property can be accessed through Farrington Drive. It should be noted that the Buchanan Street access is through residential area, which precludes heavy truck traffic, and thus, would limit the types of non- aviation land uses on the north side of the Airport.
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Figure 5-2 – Existing Potential Non-Aviation Airport Property
Demand for Non-Aviation Property
To assess market value of non-aviation property, it is important to know the demand for developable land in the area. For this analysis, two measures, vacancy rate and absorption rate, are used. The vacancy rate is the percentage of all available units within a given area, and is the opposite of the occupancy rate. High vacancy rates indicate that an area is not renting or leasing property well, whereas a low vacancy rate indicates a high level of occupancy of available space. The absorption rate of a specific area refers to the total change in occupied space over a given period. To create a schedule outlining possible future non-aviation development for La Porte Municipal Airport, it is important to take note of the area's market conditions to assess the demand for developable property.
Market Conditions
The Houston MSA commercial real estate market is predominantly based on industrial land use, including warehouse/distribution, office/service center, and manufacturing space. As such, developable non-aviation land use on the Airport would most likely focus on these
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La Porte Municipal Airport Business Plan June 2017 compatible market segments. Recent analysis by CBRE5 indicates a mixed future of development, attributable mainly to the oil glut and lower petroleum prices. The result of this market reality has been significant including:
Industrial Space: A booming downstream petrochemical market on Houston’s east side has been created. The Ship Channel, Port of Houston (POH) and Gulf Coast industrial areas are at the epicenter of this petrochemical boom. For the east side of Houston, this submarket is already benefiting: industrial vacancy sits at 3.4 percent with expectations for additional decreases over the next two years. Office Market Vacancies: The oversupply of oil has created vacancies in Houston’s office market as energy companies seek to right size their operations. From late-2014, Houston’s office sublease inventory has spiked 179 percent, soaring to 8.5 million square feet. This newly added space represents about 4.8 percent of the total market and is projected to reach a historic high of 10.1 million square feet by the end of 2016. For perspective, Houston’s 15-year average for sublease space is 3.8 million square feet, with the previous record high of 5.2 million square feet set back in 2004. New Office Space: Compounding an already gloomy picture for area landlords, almost 6.8 million square feet of new office space is being constructed in 2016, adding another 3.3 million square feet of vacant space. Houston’s future office space availability - which includes sublease - will jump from 17.6 percent to 21.3 percent in 2017, a rate not seen this high since the mid-1990s. Retail Space: Retail space is in demand in Houston. Since 1980, Houston’s retail market averaged about 37 million square feet of new construction per decade. However, in the last six years only 10 million square feet of new retail space has hit the market - during record population and job gains. And nearly all that new retail space was quickly absorbed, resulting in a record high retail occupancy rate of 93.9 percent by year-end 2015. Further, Class A properties have virtually no availability with only 2.4 percent vacancy.
The upshot of this analysis for La Porte points to areas of potential growth. For the east side of Houston and particularly, the POH area, industrial space is at a premium. Also, depending upon location, retail space is also in demand. However, one indicator was clear – there will not be any significant demand for new office space for several years. Of course, these are area-wide indicators and specific needs may occur because of geography and access that go against the trend.
For this Business Plan, the development of non-aviation Airport property has a better chance with industrial types of uses rather than office or retail. This could include light industrial businesses or commercial space. Although retail space is needed in Houston, it is unclear whether compatible area exists on the Airport for such development. Local residents have already indicated a dislike of any warehousing or industries that require truck traffic on Spencer Highway.
5 Source: “What’s Ahead for Houston in 2016?”, CBRE, Robert Kramp, February, 2016
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Development Schedule
Although there are a high number of active construction projects within the submarket, due to Houston’s progress as an international logistical hub, the heightened levels of commercial real estate activity are likely to continue into the foreseeable future. Over the next 10 years, it can be assumed that property on the Airport will be in demand, both for aviation and non-aviation development purposes. Depending upon the approach desired by the City, the development process could take one of two basic approaches. These include self marketing and turnkey developer operation. The Recommended Plan will examine each of these options and identify revenue streams to the Airport that would be possible under each scenario.
Solar Panel Field
Another potential use of non-aviation land, described earlier, is for solar power generation. Airports in other states have successfully developed solar panel farms that produce revenue for the airport sponsors. For example, in Florida, Sun Edison power company will construct the solar panels and pay the owner $0.02 per kilowatt hour for electricity generated by the panels. No investment is needed by the airport in Florida under this arrangement.
Because of deregulation, La Porte has multiple electricity providers. Research in the local area indicated that Green Mountain Energy, 4Change Energy, and Bounce Energy are the companies most dedicated to renewable power generation, including wind and solar. Green Mountain Energy’s sister company NRG Solar, can help with design, installation and financing of on-site solar (photovoltaic) generation projects. Their ownership models include power purchase agreements (PPA), corporate ownership, and solar leasing. A Power Purchase Agreement (PPA) is a long-term contract between NRG and the entity buying the electricity generated by the project. Customers may elect to purchase the solar system directly or finance the system under a lease. However, PPAs provide a number of benefits over the course of a typical contract term, usually 20 years or more.
For 1 gigawatt hour per year, approximately 3.7 acres of solar farm is needed (actually 2.8 acres of panels, but the total area is 3.7 acres). If net earnings from a solar panel farm are assumed to be 2 cents/kilowatt hour, that translates into earning power of $5,400 per acre of solar farm per year. The City may be able to negotiate an indexed credit amount that would go up as the price of electricity increases. Under these assumptions, the Airport could develop a 40-acre solar panel farm which produces $216,000 per year.
Alternatives for Crosswind Runway
One of the questions posed at the outset of this Business Plan involved the consequences and/or potential benefits of closing crosswind Runway 5-23. There are a number of pros and cons associated with this potential action.
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Potential Benefits Potential Costs Ability to Develop Aviation and Non-Aviation Property Concentration of Aircraft on new that is now Reserved for Runway 5-23. Approach/Departure Path - Possible Noise Impacts Loss of Wind Coverage on Runway System - May Lower Pavement Maintenance Costs Impact Airport Use Potential Revenue Production from Land Pilot Preference of Runway 5-23 in Some Cases Additional Landside Capacity - Hangars and Aircraft May Open Airport to Non-Aviation Uses not Storage Space Desired by Neighbors Better Access to Northern Parcel Repay Pro-rated Grant Funding for Runway
On the positive side, the closure of the crosswind runway would lower pavement maintenance costs and open up land for development that is currently part of the runway system. That development could produce revenues from both aviation and non-aviation sources. For aviation development, the runway closure could open space for more landside capacity and additional based aircraft.
On the negative side, there is a strong sentiment among local pilots that crosswind runways are beneficial for pilot training and airport usage. If the crosswind runway were to be closed, it would lower the overall percentage of crosswind coverage now experienced at the Airport. That is, crosswinds above 10 or 15 knots would occur more of the time because of the loss of the coverage. From a community standpoint, the runway closure would concentrate all the landing and takeoff activity on one runway - primary Runway 12-30. This may or may not increase noise impact on some areas in the approach paths to the Runway. Also, if areas on the northeast side of the Airport are opened to non-aviation development, such development may not be desired by neighbors on the north side of the Airport. Finally, if the runway were closed, pro- rated grant funding for that runway would have to be repaid to TxDOT/FAA.
Figure 5-5 presents a graphic display of areas that would be open to development if Runway 5-23 were closed. Conservatively, there are roughly 84 acres of non-aviation property development potential on the northeast side of the Airport (allowing a buffer between Runway 12-30 and any development). On the southwest side, an additional 10 or more acres of aviation development would be available if the crosswind runway were closed. However, there is at least 20 acres of existing aviation development area that can be developed now without the closure of crosswind Runway 5-23.
Potential Demand
The demand for aviation and non-aviation property in La Porte is governed by growth factors in the respective industries, along with the availability of investment capital for infrastructure development. For this analysis, the potential demand was divided into aviation versus non-aviation land use.
Aviation Land Use
Additional aviation land use for the closed crosswind runway would not be as significant as that for non-aviation land use. Aviation land use can be divided into the following categories:
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Hangar Space: It is assumed that 10 T-hangars with associated apron and taxiway access will require a minimum of one acre of land. At La Porte Municipal Airport, there are 20 T-hangars on two acres of property on the west side. For larger hangars, it is assumed that one acre will accommodate 20,000 square feet of conventional hangar space and associated hangar apron. Apron Area: It is assumed that one acre of land will accommodate 12 tie-downs for aircraft, assuming up to 400 square yards per space, including access taxilane.
Figure 5-5 – Potential Airport Land Use with Crosswind Runway Closure
Given the above assumptions, an additional 10 acres of landside property available for aviation could yield space for up to 100 to 120 additional aircraft. This is in addition to the existing area, which can accommodate up to 240 additional aircraft.
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Non-Aviation Land Use
Additional non-aviation land use on the Airport could be employed for a number of airport-compatible uses including the following categories:
Light Industrial Businesses: Compatible uses at an airport include those for light industry because aircraft noise is not intrusive to work places with high levels of ambient noise. Light industries that do not require tractor-trailers would be targeted. Office/Commercial: Office and commercial buildings could be developed near an airport, however, demand for these types of business parks in Houston are is several years from recovery. These types of development often require fee simple purchases rather than long-term leases for the developers. Agricultural: Agricultural uses for non-aviation property are no longer recommended by the FAA because of potential wildlife hazards. Solar Panel Farm: Many airports are shifting unused property to solar panel farm development. This often requires incentives from the state in order to cover infrastructure development costs.
Given that impervious cover can only be 55 percent of the development in La Porte, the effective building space is reduced to a maximum of 46 acres (from 84).
Needed Additional Facilities
The potential closure of crosswind Runway 5-23 could create space for additional aviation and non-aviation facilities. The potential demand for these facilities includes:
Potential Aviation Demand: Even if all 30 aircraft on the waiting list were to be accommodated in T-hangars, it would only use three of the 10 acres of available property. Given that this is a part of a larger area (20 acres) of existing aviation development property, there is no constraint to aviation demand expansion within a 20-year timeframe. Potential Non-Aviation Demand: Needed additional facilities for non-aviation development vary, depending upon the type of businesses that locate at the Airport. These facilities could include warehouses, office buildings, or commercial/retail space. With up to 46 acres of land (2.0 million square feet) available for buildings, the demand for facilities would be based upon the absorption rate of new development in the La Porte area for a particular industry type. A solar panel farm of 84 acres could be developed because the solar panels are constructed on pervious surfaces.
Financial Factors
Airports generate revenues from two primary sources: aviation activity and landlord activity. The development of more aviation and non-aviation property for revenue purposes falls into the landlord activity category.
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For potential aviation demand, the short-term development of three acres for T-hangars would likely occur via private investment. The lease of property for this activity should involve market rates, which are estimated at $0.20 per square foot per year. Applying the rates to the potential development of three acres of property yields more than $26,000 annually. Of course, additional aviation development is likely to occur in the intermediate and long term future, increasing revenues from this source.
For potential non-aviation property development, there are a significant number of unknowns, including which type of development would be approved, and the speed at which developed property can be absorbed into the local market. However, the total potential revenues for 46 acres at $0.20 per square foot is $400,800 per year. This assumes that the lessee tenants would be charged only for the building space and not for the non-impervious space which is required by zoning. The Recommended Plan pro formas in Section 6 will estimate potential absorption rates and resulting revenues from non-aviation property development.
Finally, a solar farm could general significant revenues, depending upon the incentives offered by local energy companies. With net revenues of $0.02 per kilowatt hour, up to $5,400 per acre of solar panels could be generated. With 84 acres, up to $453,600 could be generated from solar panel energy sales.
Airport Events
The first La Porte Texas Airplane & Auto Show was held in September, 2011. It was originally planned to be an annual event. The purpose of the event was to showcase hundreds of antique cars and planes, seeking to educate and entertain the community of La Porte, Texas. This event helps educate youngsters about aviation while also fostering an interest in the Airport.
The most recent show was October 3, 2015. The intent of this event was to honor and support our troops with care packages. Organizers of the even worked with The American Legion Post 490 Auxiliary Unit to send these items to the troops. In addition, this event helped La Porte Municipal Airport gain promotion as the “Aviation Gateway” to the City of La Porte and to its industrial neighbors.
Other Events
Other events at the Airport, such as 5K runs, radio controlled aircraft events, school and scouting group outings, etc. can be beneficial to the Airport and would not require the significant efforts that are needed to host an airshow. Educational outreach with schools should be implemented to draw youth to the Airport and into aviation related jobs and careers. Such an event could be coordinated with any college that may decide to implement an aviation flight training program at the Airport.
Potential Demand
In 2015, it was estimated that there were more than 1,000 attendees to the La Porte Airplane and Auto Show. For the future, this level of demand could be increased with better
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organization, parking, and event features. Given the space on the apron area ramp, additional spectators could be accommodated if Airport tenants unite in this effort. It is likely that the City would need to get involved in the show to grow the attendance. Until now, the event has been organized and operated through volunteers. That process cannot handle a large-scale undertaking. Thus, if the City were to get involved, it is possible to grow the event to 5,000 paying attendees. This would require more than static displays of aircraft and cars.
Other Airports have combined music festivals, static aircraft and antique car displays, food trucks, and live air show events to draw spectators. If the current event (which was not held in 2016) is to continue and grow, the City will need to participate. Requirements such as event insurance, food vendor licenses, and paid parking can be handled better through a municipal government process that partners with private interests at the Airport. Some of these events donate the proceeds to charity. Others use the money to support airport operations.
Facility Needs
The current area used for the Airplane and Auto Show is in the approach area to Runway 5. The surface of this area is turf, and so it will not hold up well under wet conditions. If it were possible, the use of ramp area at the intersection of the runways could accommodate heavier loads. With remote parking, the Airport can accommodate up to 5,000 spectators. No additional facilities are needed. However, shuttles to and from any remote parking areas would be needed for an event this size.
Financial Factors
Of the various events mentioned, the Airplane and Auto Show is the only potential money-making operation. The current show is a breakeven operation, financially. Because it relies upon public participation, any significant interest shown from the public can have a major impact on the financial feasibility of the event.
For the future, the City may desire to take an approach similar to a county fair, where parking fees are charged by the owner of the property, but there is a separate ticketing process to enter the fair or ride the rides. If up to 3,000 cars show up for the event throughout the day, a $5 parking fee would generate $15,000 for the Airport. Another option would be to institute a permitting process, where a set fee for use of the Airport would be paid, similar to the renting of City Park areas for private events.
Rates and Charges Adjustments
One method to potentially increase revenues is to examine rates and charges at the Airport and adjust those to be competitive with the service area and regional market prices. For La Porte Municipal Airport, some of the lease rates may not be in line with market values and could be corrected over a period of years. The schedule of fees will be examined to see which ones can be changed relatively quickly. Currently, the land lease rates are low, relative to the industry. Current rates are $0.02 to $0.20 per square foot. These should be in the range of $0.15 to $0.20.
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Another area that is not producing revenue for the City involves fuel sales at the Airport. Most airports across the country collect a fuel flowage fee from their FBOs for the privilege of selling fuel on the airport. Nationally, the fuel flowage fees range between $0.02 and $0.20 per gallon, with a reasonable range between $0.06 and $0.10 per gallon. In Arizona, a statewide average of $0.088 was found through surveys. For La Porte Municipal, it is recommended that an $0.08 per gallon charge be levied by the Airport. Fuel sales at the Airport were estimated to total 50,000 gallons annually (plus or minus), between the two fuel sellers – Harvey & Rhin and Tri- Star Aviation. An $0.08 per gallon fuel flowage fee could generate $4,000 annually, based upon estimated current levels of activity.
5.3 Impact of Revenue Enhancement Strategies on Potential Demand
The first step in determining the impacts of the revenue enhancement strategies is to predict the change in aviation demand that would occur if each strategy were implemented. To summarize the material presented above, Table 5-2 shows a listing of the potential demand changes along with the assumptions used in estimating demand changes. As shown, if all activity-generating strategies are undertaken, aviation demand could be anticipated to grow by 20 based aircraft and 27 percent of current aircraft operations by the year 2021. However, aviation demand is only one component of the overall growth strategy for the Airport. There are a number of activities that are anticipated to increase financial production at the Airport that do not involve increased aviation demand.
Table 5-2 - Impact of Revenue Enhancement Strategies on Potential GA Demand Based Component Strategy Operations Aircraft Current Activity 82 29,050 Hangar Development Develop new hangar space for rental purposes 18 10% Proactively seek University student base for College/University Partnership 2 17% Flight School This activity will aid in the attraction of new Airport Branding 0 0% tenants to the Airport. Attract training and technical programs to the UAS Activities 0 0% Airport. These options will produce revenue but not Non-Aviation Revenue Options 0 0% necessarily add to the aviation activity. Potential Closure of Crosswind Runway opens Alts for Crosswind Runway 0 0% development options for more non-aviation use. Adjusting rates and charges may increase Rates and Charges 0 0% revenues but not impact aviation activity. Additional Growth from Plan 20 27% Total Activity - Year 2021 102 36,900
Some of the strategies listed in Table 5-2 work together and cannot be adequately separated, such as the effects of branding versus other marketing efforts for the attraction of general aviation aircraft or more hangar rentals. In addition, there are several activities that may impact revenues, but will not impact overall aviation activity levels, including Non-Aviation Property Development, Rates and Charges adjustments, and any new UAS activities.
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6. FINDINGS AND RECOMMENDATIONS
HE RECOMMENDED BUSINESS PLAN FOR LA PORTE MUNICIPAL Airport focuses on methods that the City of La Porte can use to chart the future course and maximize future opportunities Tand operational efficiencies for the Airport. As mentioned in Section 5 of this Business Plan, the Airport has opportunities to develop future revenue and to improve its brand. This Business Plan outlines the possible steps the City can take to improve revenues by increasing aviation activity, better utilizing Airport property, encouraging a partnership with area colleges, or developing new revenue producing facilities at the Airport. This section of the Business Plan is organized to address the following topics:
• Recommended Administrative and Policy Actions • Revenue Enhancement Recommendations • Impact on Revenues and Expenses • Summary Recommendations
6.1 Recommended Administrative and Policy Actions
Administrative and policy actions may have no immediate financial return, but instead, address the practical issues of operating La Porte Municipal Airport. Recommendations for this section deal with staffing, lease policy, retention of existing clientele, and public outreach. Each of these action areas are discussed in the following subsections.
Airport Staffing
As discussed in Section 2, the City Manager and the Assistant City Manager have responsibility for all City Departments, including the Public Works Department, in which the Airport is classified. The Public Works Director is shown in the line of authority over the full-time Public Works staff position working part-time maintaining the Airport.
While there is no Airport Manager from the City, the FBOs serve as de facto managers and contact points for the flying public. Because the City is not represented at the Airport on a day-to- day basis, the FBOs at the Airport represent the default brand of the facility. Any impression that a visitor has will be made by the interactions with these public businesses. That can be an asset or a liability to the brand, depending upon the quality of the FBO interactions involved.
While the Airport is open 24/7 and attended from 8:00 am to 6:00 pm throughout the week, no City staff are represented there. The City staff maintenance technician works part-time on Airport matters, as needed for mowing and other maintenance. The Public Works Director has responsibility for administrative tasks, code enforcement issues, and meetings with stakeholders. The overall responsibilities of the City are to keep the Airport operating, groomed/mowed, secure, and administratively functioning.
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Future Staffing
For the future, the question is whether or not an Airport Manager position is needed, and if so, when? From a business planning standpoint, that position would be filled when revenues increased and could pay for the added expense. Both the City and the Airport patrons agree that any new Airport management position should not create deficits at the Airport.
Therefore, the options for Airport management discussed included the following:
• Part-Time Manager: Continue to use City staff on a part-time basis to monitor Airport operations. Under this option, the primary staff resource could get training as an Airport manager and “grow” into the position. This person could be selected from City staff or brought in via a candidate search from the aviation industry. • Third Party Management: This option would consider bringing in an Airport management firm to operate the Airport. • Full-Time Manager: This option would represent the natural evolution of Airport activity and revenue growth to the point of being able to afford full-time management.
It is the view of this Business Plan that the Part-Time Manager scenario would be the better option until the revenues are the Airport grow large enough to support a full-time position at the Airport. A slight modification of this option would include part-time office hours for a designated point of contact at the Airport, once a new terminal building is constructed (a new terminal building is recommended as a part of this plan).
Third party management of airports is usually reserved for airports that make money and have significant revenue options. Because the City of La Porte does not own any of the Airport’s hangars and no fuel concession, there is very little revenue to entice a third-party company to take over airport management. In these cases, the airport owner must pay a substantial fee for management services if that option is invoked. A better fit occurs when the owner is also the FBO and has a significant amount of hangar and tie-down revenue.
The Airport is not yet ready for a full-time manager, nor is there sufficient funding for one. That need would occur once the financial activities of the City at the Airport increased to the point of being able to support this position without incurring deficits. That means the City would have to have more hangar rentals and some activity income, such as fuel sales to keep a full-time manager busy. Therefore, it is recommended that:
The City should work toward having City staff stationed at the Airport on a part- time basis.
To achieve a full-time Manager, this process may take several years, and could grow organically. For example, there could be a transition to a part-time manager located at the Airport, 20 hours per week (with posted hours). This employee could be an existing City staff member, who could undergo training to receive accreditation as an Accredited Airport Executive (AAE) within a
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Airport Manager Responsibilities
The Airport Manager role is to plan, direct, and coordinate the overall operations, maintenance, administration, and development of the Airport, including review of budget and fiscal matters, public infrastructure management, contract and lease review, compliance with federal, state and local policies, rules, and regulations, security, and operational safety. The Airport Manager would perform based aircraft counts and submit N-numbers to the FAA on a periodic basis.
Given the limited staffing at La Porte, the Airport Manager functions are carried out by the chief maintenance technician at the Airport and the head of Department of Public Works. The chief maintenance technician is under direction of the Public Works Director, and would perform the physical tasks at the Airport, including maintenance and mowing activities, while the Public Works Director would address the administrative side. The Public Works Director would identify needed grants for capital projects and coordinates matters related to financial assistance programs with the Federal Aviation Administration and TxDOT. In addition, the Public Works Director would perform other duties such as marketing and organizing and managing special events. Within the City, the Public Works Director represents the Airport with internal and external stakeholders, tenants, federal and state agencies, and others. This division of functions would continue until the City could support a full-time professional Airport Manager.
For the future, it is important to note that the Airport Manager needs to be a diplomat, with a sensitive ear toward the Airport community and the City Council. Many at the Airport believe that the existing management approach is working well and that the best path for the City would be a “hands off” policy. Thus, the defined duties of an Airport Manager should be focused on significant issues such as lease compliance, facility infrastructure, financial issues, and FAA requirements.
Lease Policy, Minimum Standards, and Rules and Regulations
Currently, the Airport has a lease policy, minimum standards, and rules and regulations incorporated into Chapter 18 of the City Code.
Lease Policy
The current lease policy is very short and only addresses four issues: 1) Site development meeting or exceeding City zoning, building, and environmental regulations; 2) Operators desiring to provide more than one service must meet minimum standards for those other services; 3) Fees are established by City Council; 4) Lease preparation fees are not refundable. Typically, the lease policy should address a number of other topics including: ground lease terms, hangar reversions, renewals, FBO provisions, and other issues. The lease policy should place an emphasis on removing any existing lease provisions that grant exclusive rights.
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Minimum Standards
The purpose of developing minimum standards is to reduce the amount of “boilerplate” language in the leases standardize practices for aeronautical businesses on the Airport. At La Porte, the minimum standards include the lease policy within the standards. Thus, the term of a lease is addressed in the minimum standards to be not less than five years and not more than 30 years, with other terms and conditions to be negotiated, commensurate with the operator's financial investment in his facility. Some airports have a scale of 40 years for a lease, which permits large investments in Airport infrastructure to be rewarded.
One option for the City to consider would be to revise the current procedure for granting lease terms for new and existing lessees. One approach would be the development of a method whereby new leaseholders could purchase additional 5-year renewal options by paying additional fees at the beginning of their leases. With the institution of investment thresholds for lease term lengths, an investment which did not meet the threshold for a desired lease term could be augmented by purchasing additional terms. One method used at other airports involves the valuation of additional terms via net present values of future investment amounts. This would provide the Airport with more revenue and the leaseholder with a desired longer lease term.
Existing minimum standards include provisions for the following types of operators and activities:
• Aircraft Sales • Aircraft Airframe, Engine and Accessory Maintenance and Repair • Aircraft Lease and Rental • Flight Training • Aircraft Fuels and Oil Service • Radio, Instrument, or Propeller Repair Station • Aircraft Charter and Air Taxi • Aircraft Storage • Specialized Commercial Flying Services - Nonstop Sightseeing Flights that Begin and End at the Same Airport; - Crop Dusting, Seeding, Spraying and Bird Chasing; - Banner Towing and Aerial Advertising; - Aerial Photography or Survey; - Power Line or Pipeline Patrol; - Firefighting; and - Any Other Operations Specifically Excluded from Part 135 of Federal Aviation Regulations • Fixed Base Operators • Flying Clubs • Operators Subleasing from Another Commercial Operator • Other Aviation-related Operator
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This list is comprehensive, in that any operator not specifically mentioned is covered in the last group. Of note, there is no mention of parachute or skydiving operators. This is due to the exclusion of sky diving operations on the Airport within the rules and regulations. However, it should be noted that there is case law and precedent for these operators to gain entrance to airports that do not desire their activity.
The City should consider revising their Minimum Standards to clarify lease term length and future renewal options.
Another important item missing from both the Lease Policy and the Minimum Standards is a reversion clause that reverts all leasehold improvements to the City upon expiration of the lease. Reversion clauses are common in the aviation industry and permit the airport to charge market rates for property and buildings, once the ownership has reverted to the airport owner. Currently, the leases provide for the lessee to remove all improvements to the property within 120 days of the expiration of the lease. Therefore, it is recommended that:
The City should consider adding a reversion clause to their Minimum Standards to clarify ownership of leasehold improvements upon expiration of the lease.
Rules and Regulations
The Airport’s rules and regulations are standard for airports of this size and activity level. One item mentioned above, was the prohibition of skydiving activity at the Airport. The City needs to be aware that this rule could be challenged in the future, and a FAA safety study may be required. Other than that, no changes are recommended to the rules and regulations.
Airport Advisory Board
Existing tenants represent the largest part of Airport activities, as well as sources of revenues at La Porte Municipal Airport. Looking forward, it is important for the Airport to retain these operators and based aircraft as a baseline to preserve current revenue streams. The retention of existing clientele requires care and communication, particularly in a competitive economic environment. Airport management uses email communication to alert Airport users of issues, airfield work, NOTAMS, etc. This outreach practice should continue. Therefore, it is recommended that:
The City should continue to engage existing Airport Users (clients and tenants) to solicit feedback on Airport issues.
At one time, there was an Airport Advisory Board, appointed by City Council to advise staff and the City Council on all matters relating to the Airport. This Board has been dormant for a number of years. Eligibility requirements include:
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• Position 1: shall be a Fixed Base Operator lessee at the City of La Porte Municipal Airport. • Position 2: shall be a licensed pilot with an aircraft housed at the City of La Porte Municipal Airport. • Position 3: shall be a licensed pilot who is a resident of the City of La Porte with an aircraft housed at the City of La Porte Municipal Airport. • Position 4: shall be a resident of the City of La Porte. • Position 5: shall be an individual in a leadership position approved or suggested by the Chancellor of the San Jacinto College. • Position 6: shall be the City of La Porte Municipal Airport Manager.
According to the City’s website:
“the Airport Advisory Board advises the City Council on matters relating to the most desirable and efficient operation of the City Municipal Airport. The Airport Advisory Board shall review, from time to time, the City Airport Master Plan, and recommend up dating or revisions to such Airport Master Plan. The Board may also make recommendations on such matters as rules and regulations for operations at the Municipal Airport, and for any needed improvements to the facilities at the airport, including such matters as navigational aids, ordinances, zoning requests, height restrictions, development, as well as any other improvements which the board feels would enhance the utility of the City Municipal Airport.”
To increase the communication and trust between the City and the Airport users and tenants, it may be time to reactivate the Airport Advisory Board once this Business Plan is completed. It is believed that this would be a good initiative for the City to show the Airport community that it is committed to improving conditions at the Airport. It may also help garner support for implementation actions from this Business Plan. Therefore, it is recommended that:
The City should consider reactivating Airport Advisory Board meetings to at least one per quarter, or more as needed.
These meetings are not meant to be "gripe" sessions, but rather, sessions where issues can be discussed and resolution can be pursued. The empowerment of tenants is one way to keep them at the Airport. In addition, the part-time Airport Manager can function as a dedicated point of contact within the City government for Airport tenants, again, with an emphasis on better client relations. These practices are designed to better engage the tenant base and solve problems before they result in the loss of a tenant.
Public Outreach
Given the future need for funding and capital development at the Airport, it is likely that subsidies of some sort will continue to be needed from the City. For this reason, it is important to convey to the public the full value of the Airport to the community. Using the metric, Airport Community Value (ACV), the job production, asset value, and total economic output of the Airport
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can be described in understandable terms. Section 7 presents a summary of the ACV results for La Porte Municipal Airport. Our study referred to the TxDOT economic impact assessment of 2011, which indicated the Airport generated an average of $4.2 million per year in total economic output (in current $). Of this total, roughly $2.71 million is generated on the Airport (the direct economic impact), while $1.5 million is generated by the respending of Airport dollars until they are exported from the region (the induced economic impact). This component of the Airport’s value was quantified as a part of the airport economic activity portion of the analysis, and represent the “income statement” for La Porte Municipal Airport.
A second measure of the value of the Airport involves the current asset value. In this regard, a method was used that first estimated the current replacement value of the facility and then reduced that value by the useful life remaining on each specific asset. This procedure resulted in a replacement value estimate of $82.1 million and a current value of $55.4 million. Taken as a snapshot in time, the total value of the Airport could be estimated to include its annual economic activity ($4.2 million) plus its current asset value ($55.4 million). Adding these two numbers, it can be shown that the overall value of the Airport to the community is $59.6 million.
It is important to broadcast the value of the Airport to the community at every appropriate venue and online through various website and social media connections. Stakeholders from the La Porte must understand the value of the Airport if they are to support it during budget negotiations each year. Not only is the return on investment significant, the Airport's role in supporting jobs should be communicated. Therefore, it is recommended that:
The City should publicize the Airport’s Community Value through its Economic Development Department and its online presence.
Airport Brand Concept
The concept of the Airport Brand includes both administrative actions and revenue growth. As an administrative action, establishing the Airport Brand involves the look and “feel” of the Airport. Is it a place that gives users the sense that there is unity of management and attention to details? At any successfully branded attraction (Disneyland, Universal Studios, etc.), there is great attention to every detail, color scheme, and management action. The brand reinforces confidence and builds loyalty.
At La Porte Municipal Airport, the administrative or management aspect of branding involves the establishment of visible evidence of sound management. This includes a visible point of contact, a quick response to complaints or issues, and a notion that caring people are in charge. The brand should move people to think that there is a unifying set of principles at work. This unity will translate into an overall “look” of the Airport and can be evidenced by a common color scheme for buildings and vehicles, a professional Airport entranceway, and uniformed Airport workers (both FBO and City workers).
In short, the management side of branding involves discipline. It requires that a vision of the future be carried out in daily actions and reliable management structure over time. If there is
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spending on Airport improvements, that spending should advance the brand. Improvements in customer service should be focused on conformity to the Airport brand. This approach requires Airport management to repeatedly ask the question, “Is this action in conformity with our vision for the future of the Airport?” Therefore, it is recommended that:
The City should adopt a future brand for the Airport and then weigh all spending and service actions against this vision.
The recommended Airport brand will be discussed in the next section of these recommendations.
6.2 Revenue Enhancement Recommendations
Revenue enhancement options for La Porte Municipal Airport are based upon the Business Plan’s recommended business response to aviation demand growth in the region. The subsections that follow describe how a number of options might improve revenues for the Airport. The projected levels of enhanced revenues, which are presented in tables at the end of this section, reflect the financial impacts of these and other specific initiatives recommended by this Business Plan. These initiatives include the following:
• Hangar Development • Partnering with Local Colleges for Flight Training • Branding Initiatives • Attraction of UAS Activities • Alternatives for Crosswind Runway • Non-Aviation Property Development • Airport Events • Rates & Charges Adjustments
Hangar Development
To adequately plan for the future, hangar demand at La Porte Municipal Airport was estimated to include 18 T-hangars hangars over the next five years. Confirmation of this demand would be required in the form of waiting lists and pre-construction deposits for new hangar space. Currently, there are 36 aircraft on waiting lists for hangar space at the Airport. Many times, waiting lists are heavily influenced by pricing and thus do not materialize unless the desired pricing point is reached. However, by reducing the demand by half should produce a realistic picture of actual based aircraft demand. As such, it is recommended that:
The City should seek the development of T-hangars as demand warrants.
New hangar demand can be accommodated through a variety of methods. The primary methods analyzed in this Business Plan include the following:
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• City Development of New Hangars • Ground Lease with Private Hangar Developer • Combination of City and Private Hangar Development
These methods were used in evaluating potential net revenues to the Airport, based upon demand forecasts through the year 2021. Examination of the existing airport layout shows that there is adequate space for this development in areas along the existing flight line.
For this analysis, it was assumed that the site preparation for the hangar development, the construction of the hangars themselves, and the need for additional hangar apron or taxiways would result in a total cost of near $75 per square foot of T-hangar space. In total, an investment of roughly $1.35 million would be needed over the next 5 years to develop all the hangar space projected by this analysis.
City Development of New Hangars
Depending on funding availability, a National Plan of Integrated Airport Systems (NPIAS) general aviation airport (La Porte is a NPIAS airport) can use their FAA non-primary entitlement funds over a three-to-four-year period to build on-airport, revenue-producing capital improvements such as hangars and fuel farms. To make a T-hangar affordable/competitive, grant funding is needed. For example, if grant funding were available from FAA for 50 percent of a 10- unit T-hangar ($375,000), the City’s share could be repaid over a 10-year period for $362 per unit, per month at 3 percent interest (Table 6-1). With prices this low, the hangars could be adapted for climate-control, bi-fold doors, etc., without incurring above-market rents.
Table 6-1 - Ten Unit T-Hangar Breakeven with FAA Grant Payback Period 10 yr. Payback 20 yr. Payback Cost of Hangar (City Share) $375,000 $375,000 Total Cost with debt @ 3% $434,523 $499,138 Breakeven/Unit/Month $362 $208 Breakeven/Unit/Month with lease $323 $162 escalation @ 2.5% annually
Therefore, it is recommended that:
If grant funding is available and waiting lists can be established, the City should consider constructing T-hangars.
The key to this recommendation is the availability of grant funding. If there are airfield needs that require grants, the FAA and TxDOT will generally not permit an airport’s non-primary entitlement funding to be used for revenue-producing projects until these other airfield needs have been corrected. Currently, the City has plans through 2019 for these funds. However, after the pavement rehabilitation projects, these monies can be accrued for hangar development.
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It should be noted that in many cases, financial returns on the development of T-hangars are generally below the private sector desired rate of return. At some airports, the role that the airport sponsor has taken involves funding needed facilities and services that the private sector will not fund. This is due to an ability to accept less-than-market rates of return on investments as a trade-off for providing the infrastructure needed for overall success. By constructing T-hangars, for example, the entire Airport could benefit through increased operational activity, increased fuel sales (supporting the City through flowage fees), increased aircraft maintenance activity (supporting on-airport businesses), and eventually paying off the investment through rents.
Private Development of New Hangars
If the City does not desire to develop new hangars or cannot identify the needed capital for development, private development of all new hangars may be necessary. This type of development occurs at many general aviation airports. Prior to this initiative, a new lease policy is needed that includes guidelines for ground leases that ensure the City's rights to the reversion of leasehold improvements at the expiration of the lease. Once a hangar reverts to City ownership, it is incumbent upon the City to seek rental rates as close to market value as can be negotiated. It is understood that this may be difficult with tenants who have constructed their hangars and now must pay more for them after many years of leases. However, the value of the hangar or other property is that it adjoins the Airport runway system. Thus, its location is functional to its value. Likewise, extending the lease should have some value above prevailing ground lease rates. Table 6-2 presents the pro forma for private development of new hangars at La Porte Municipal.
Table 6-2 - Private Development of Hangars 10 Unit T-Hangar Conventional Hangar Hangar Square Feet 10,000 s.f. 10,000 s.f. Cost of Hangar (2/3 cost of City) $500,000 $666,667 Term 20 years 20 years Total Ground Lease @ $0.20/s.f. $53,740 $53,740 3% annual escalation Total Cost (hangar + ground lease) $553,740 $720,407 Private Developer Breakeven $230/Unit/month $3.60/s.f.
Therefore, it is recommended that:
If private development of new hangars is desired by the City, a lease policy that includes reversion clauses should be implemented beforehand.
T-Shade Development
FBOs have indicated a desire to develop aircraft shade facilities on existing parking ramps. Given the hot weather, occasional hail storms, and damaging sunlight, these structures may attract additional based aircraft tenants to the Airport. If the FBOs will undertake the development at no
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cost to the City, it should result in higher levels of based aircraft, fuel sales, and overall airport viability. Additional revenue could come to the City through fuel flowage fees associated with new based aircraft. Therefore, it is recommended that:
The City should encourage the development of aircraft shade structures on existing ramp by the FBOs.
To ensure there is incentive to build these structures, it is recommended that no additional charges (other than existing land leases) be imposed by the City.
Flight School/Partnering with Educational Institutions
Discussions with the FBOs on the Airport that offer flight training services indicated an inability to accommodate a college flight training program because of a lack of Certified Flight Instructors and other equipment and facility constraints. Therefore, this recommendation was withdrawn from consideration.
Airport Branding Initiatives
Airport branding from a managerial side was discussed in the previous section. From an implementation standpoint, there are several actions that can be undertaken as funding becomes available, including: development of a main entranceway and terminal building1, landscaping, a common paint scheme, City representation at the Airport in the form of an Airport Manager, a stand-alone website, a new promotional brochure, and a marketing campaign including direct mail, printed materials, and video/multimedia.
In addition, the City should consider the development of a unique logo for the Airport that relates to the City’s logos and brand. However, a name change for the Airport is not recommended. Strengthening of the brand will permit the City to better market the Airport to customers in its service area. This is particularly important for increasing market share or attracting aircraft from other general aviation airports in the region.
It is recommended that the focus of Airport branding for La Porte Municipal should be twofold. The primary direction should be toward aviation customers and aviation-related businesses. The secondary focus of branding should be toward stakeholders and neighbors within the City who may be called upon to pay for some portion of capital development projects in the future. Both groups are important and strategic for the long-term viability of the Airport. Therefore, it is recommended that:
The twofold Airport brand should be focused toward aviation customers and local stakeholders.
1 Local discussion about a main terminal building focused on the possibility of re-purposing the unused National Guard facility or building a new facility to the east of the existing animal shelter.
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For the primary brand, the continued attraction of aviation activity is paramount in improving the revenue picture for the long term. The recommended branding targets have been described to include the following:
• Flight Training/Educational Partnering • Personal Flying • Business Aviation
While the business aviation component may attract twin engine propeller aircraft and some small and very light business jets, the primary activity at the Airport will be from single-engine, fixed wing aircraft.
The City must give attention to existing clientele and grow those segments. Small general aviation aircraft and other existing aviation activity at the Airport are important to keeping the operational numbers strong and capable of supporting the revenue base. In addition, the attraction of an expanded flight training, discussed later, would help increase overall aircraft operations and fuel sales.
Regarding stakeholders, the Airport brand should focus on improving the awareness of the value of the Airport to the community. The more that citizens know and appreciate about the Airport, the more they will be willing to support it both politically and financially. In this regard, the branding process would focus on public outreach, community involvement, and education about the economic impacts and asset value of the Airport.
Communicating the Brand
Communication of the improved Airport brand can utilize the normal channels of media, including direct mail, print media, and industry conferences (Texas Aviation Conference and the American Association of Airport Executives (AAAE) conferences). In addition, an effective online presence would enhance the promotion of the Airport brand. Tools for enhancing online awareness can include a stand-alone Airport website and social media platforms. In this regard, the Airport has one page on the City’s website but no Airport-run social media.
The use of Facebook, Twitter, YouTube, LinkedIn, and Instagram is growing as a means for airports to stay in touch with their users. These sites offer an opportunity for the Airport to connect directly with users and potential stakeholders on their terms and in ways these users already connect with other brands. Because individual airport users have immense power to broadcast feedback online, it is important that the Airport engage in online reputation management to promote the brand in a positive manner. Utilizing such tools is becoming commonplace in the aviation industry. Therefore, it is recommended that:
The City should develop social media outlets and an individual website as part of its branding strategy for La Porte Municipal Airport.
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Strategic social networking content strategy for communicating the Airport brand requires regular attention, therefore the media utilized should be updated regularly (at least once per week). If staff is to be added at the Airport, one of the duties that could be assigned would involve coordinating with City marketing/PR person for the updating of social media.
Other Public Outreach
In supporting the secondary branding focus toward stakeholders, there are several functions that can be included within a marketing and public relations program. These functions are meant to raise the awareness of the value of the Airport to the community. The first and most obvious portion of this process would be to broadcast any studies of the economic impact of the Airport. That would include the Airport Community Value metrics mentioned earlier.
Secondarily, the public can be engaged through events such as the Airplane & Auto Show (as they currently do) or through a speakers’ bureau program at the various civic associations and clubs (La Porte-Bayshore Chamber of Commerce, Optimists, Kiwanis Club, etc.). The La Porte Economic Development Corporation should have a role in promoting these outreach activities. Therefore, it is recommended that:
The City should partner with the Chamber of Commerce and other civics clubs to promote the Value of the Airport to the Community.
Attraction of UAS Activities
As mentioned in Section 5, the number of drones are expected to grow from 2.5 million in 2016 to 7 million in 2020 - a 180 percent increase, according to a report from the Federal Aviation Administration.2 Current demand in the business arena is for drone operator training and certification. In addition, there is a need for recreational space for drone operator practice and proficiency. Drone racing would require a 3-dimensional race course that would permit training and proficiency. However, due to FAA regulations, these drone operations, for the most part, are restricted at airports due to the possible negative interaction with manned aircraft.
One method used to avert potential conflicts is to fly drones indoors or within a netted space (see Figure 6-1). This type of “drone park” is not a part of the national airspace system (NAS) because of the netting, but does permit GPS signals to reach UAS operating within them. Figure 6-1 – UAS Pavilion at Kansas State University It is uncertain how much UAS demand could be attracted to La Porte Municipal Airport. This would require branding in that area. Also, because this is such a new industry, it is difficult to estimate the specific demand for training
2 Source: http://fortune.com/2016/05/25/drones-ndp-revenue/
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facilities and services. Much of the initial flight training for hobbyists can occur in the backyard of a home. However, if the drone park were to incorporate drone racing, the facility could include a race course and would likely attract a significant following. If an outdoor netted area is used, it can be the size of the Kansas State facility (300-feet-long by 200-feet-wide and 50-feet-tall) or smaller. In addition to the actual drone operational area, a “ground school” classroom area would be needed to teach the FAR Part 107 material. This space is already available at two of the FBOs that offer pilot training.
The most significant financial factor involves the fees that drone owners are willing to pay for racing venues, along with training and/or certification. Some UAS pilot training courses cost up to $3,500 per person.3 For use of an outdoor park with skill training facilities, a fee per hour would be appropriate. As a comparative reference, a roller skating rink costs roughly $300 per hour to rent privately. Thus, 50 recreational users paying $6.00 per hour could approximate these revenues. For drone racing events, third party organizers, such as the Drone Racing League (DRL) are looking for new racing venues to complement their existing sites. Therefore, it is recommended that:
The City should consider the development of a drone park on Airport property. This park could accommodate remote pilot training and drone racing.
If a third party developed the park, the revenue production would be limited to land lease rents for the outdoor netted arena property. It is assumed that unimproved property used for these purposes would lease for $0.20 per square foot per year – the going rate for Airport land. If the City developed the park, they could charge the market rates associated with park usage and drone racing venue charges.
Potential Closure of Crosswind Runway
The decision to close the crosswind runway (Runway 5-23), impacts the recommendations for non-aviation property development. Therefore, recommendations on this issue are presented before those for non-aviation property development. When considering the potential benefits and costs, several items were identified in both columns. They included:
Table 6-3 - Potential Benefits and Costs of Runway Closure Potential Benefits Potential Costs Ability to Develop Aviation and Non-Aviation Property Concentration of Aircraft on new that is now Reserved for Runway 5-23. Approach/Departure Path - Possible Noise Impacts Loss of Wind Coverage on Runway System - May Lower Pavement Maintenance Costs Impact Airport Use Potential Revenue Production from Land Pilot Preference of Runway 5-23 in Some Cases Additional Landside Capacity - Hangars and Aircraft Changes May not Be Preferred by Neighbors Storage Space Better Access to Northern Parcel Repay Pro-rated Grant Funding for Runway
3 Source: Unmanned Vehicle University, http://www.uxvuniversity.com/product-category/uvu-uav-pilot-training/
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Analyzing these items from a financial standpoint, the costs must be weighed against the benefits. From a cost standpoint, there is the need to repay the pro-rated grant funding for the Runway, going back 20 years. On the positive side the lower pavement maintenance costs and potential revenue production from the extra land and land in the approach zones that would be free of restrictions, must be considered. Table 6-4 presents a listing of costs for the decision analysis. As shown, the City would likely have to repay roughly $382,400 in pro-rated grants to close the runway.
Table 6-4 - Costs for Decision Analysis Item Pavement sq. ft. Last Grant Grant Amount Cost Runway 5-23 224,850 2005 $388,800 $213,840 Parallel Taxiway 142,400 2008 $421,500 $168,600 Subtotal 367,250 $810,300 $382,440 Maintenance Costs @ $0.10/yr. $36,725
On the positive side, the closure of the crosswind runway would lower pavement maintenance costs by roughly $36,700 per year. If capital maintenance is fundable with TxDOT grant money, only 10 percent of that total (roughly $4,000 annually) would be required from the City. Using these local pavement maintenance costs against the required grant repayment, it would take over 90 years to pay off the debt. Even if the maintenance costs were shared at 50 percent, it would still take more than 20 years of savings to repay the grant obligation.
There may be additional land rentals that could be gained from the runway closure. It was estimated that an additional 18 acres of aviation-related property and 27 acres of non-aviation property could be developed with Runway 5-23 closure. If the entire 27 acres of non-aviation property could be leased, for either solar panel field development or some other compatible use, the return would range between $120,000 and 150,000 annually. However, it may take several years to develop the property successfully.
Table 6-5 - Revenues for Decision Analysis Item Year 1 Year 2 Year 3 Year 4 Year 5 Revenues $0 $33,750 $67,500 $101,250 $135,000 Cost Savings $4,000 $4,000 $4,000 $4,000 $4,000 Total $4,000 $37,750 $71,500 $105,250 $139,000
Table 6-5 presents a very optimistic picture of potential revenues available for non-aviation Airport property. The cumulative revenues and cost savings over the five-year period is $357,500, which is roughly one year away from what it would take to pay back the grants. And this assumes full development of the non-aviation property and that the property released is needed above and beyond the existing 57 acres of non-aviation property that is already available.
Given that there is now no significant development of existing non-aviation property, it may be over-optimistic to believe that the conversion of Runway 5-23 restricted property to
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revenue producing property could occur within a short period of time. In addition, the need to immediately repay TxDOT and the FAA for the runway closure, along with the user desire to keep the runway open makes it difficult to recommend such action. Therefore, it is recommended that:
Runway 5-23 and its associated taxiway should not be closed as a means for non-aviation property development at the Airport.
Non-Aviation Property Development
The recommendation to keep Runway 5-23 and its associated taxiway open helps to define the amount of non-aviation property available for development. In this regard, Figure 5-2, presented earlier, shows the layout of the potential non-aviation property that could be developed. As shown, access to the north 20 acres is constrained and would likely have to be passively developed with a use that did not require frequent access.
Land uses for non-aviation property development considered by this Business Plan included the following:
• Light Industrial Businesses: Compatible uses at an airport include those for light industry because aircraft noise is not intrusive to work places with high levels of ambient noise. Light industries that do not require tractor-trailers would be targeted. - Example NAICS Codes: Certain Manufacturing in the 321xxx, 332xxx, 333xxx, 334xxx, 335xxx, and 337xxx codes; 488190 (Aircraft Maintenance and Repair Services); and others. • Office/Commercial: Office and commercial buildings could be developed near an airport, however, demand for these types of business parks in Houston are is several years from recovery. These types of development often require fee simple purchases rather than long- term leases for the developers. - Example NAICS Codes: 531120 (Full Service Office Space); Certain Office types in 531xxx, 541xxx, 551xxx, 561xxx, and 921xxx codes. • Solar Panel Farm: Many airports are shifting unused property to solar panel farm development. This often requires incentives from the state in order to cover infrastructure development costs. - Example NAICS Code: 221114 (Solar Electric Power Generation).
Light Industrial Businesses
Light industry can be defined as a manufacturing activity that uses moderate amounts of partially processed materials to produce items of relatively high value per unit weight. A section of an economy's secondary industry characterized by less capital-intensive and more labor- intensive operations. Products made by an economy's light industry tend to be targeted toward end consumers rather than other businesses. Consumer electronics and clothing manufacturing are examples of light industry.
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Because of the Airport location, light industry could involve a machine repair or overhaul shop, technology company, automobile repair, or some type of small assembly shop. In all of these, the size of operation is smaller than for heavy industry and there is no need for tractor-trailers. The attraction of such companies would occur primarily on the demand side. That is, the businesses would have to come to the City, simply because there is not enough good marketing information on where the businesses are and what their needs include. While this land use remains an option if it occurs, no forecast for this activity is included in the pro formas.
Office/Commercial
As mentioned in Section 5, there is an overabundance of office and commercial space available in the Houston area. However, there may be a specific need for office or commercial space that is tied to geographic proximity to La Porte. These individual needs are not part of a trend, but, like the light industrial businesses, must self-identify to the City if they desire a location at the Airport. While this land use remains an option if it occurs, no forecast for this activity is included in the pro formas.
Solar Panel Farm
Of all the potential non-aviation options, the solar panel farm or photovoltaic (PV) electric generation may have the highest potential for success. There are quite a few airports in the United States that are implementing PV to earn additional revenue. For solar power generation, there are several steps needed to implement a solar PV site. These steps include: • Site Selection: Choosing the best sites that are consistent with the long-term Airport development plans. The site selection must also consider the environmental constraints, wetlands, drainage, etc., on and near the Airport. • Glare Analyses: Given the concern for potential glare impacts, the solar glare hazard analysis tool (SGHAT) should be used as an analytical screening tool. • Grant Funding Opportunities: A full analysis of grant funding opportunities in Texas should be examined, which would include any local, state, federal, or private grants or incentives for solar PV sites. Some federal grant programs require energy assessments, which involve complex ROI analyses and comprehensive audits of energy consumption and solar energy production and allocation. • Operational Incentives: Net Energy Metering, or "NEM" is a special billing arrangement that provides credit to customers with solar PV systems for the full retail value of the electricity their system generates. Customers that generate a net surplus of energy at the end of a twelve-month period can receive a payment for this energy under special utility tariffs, which may vary by utility company. In Texas, Net Energy Metering is permitted but not required of energy companies.
Because of deregulation, La Porte has multiple electricity providers. Research in the local area indicated that Green Mountain Energy, 4Change Energy, and Bounce Energy are the companies most dedicated to renewable power generation, including wind and solar. Green Mountain Energy’s sister company NRG Solar, can aid with design, installation and financing of on-site solar (photovoltaic) generation projects. Their ownership models include power purchase agreements (PPA), corporate ownership, and solar leasing. A Power Purchase Agreement (PPA)
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is a long-term contract between NRG and the entity buying the electricity generated by the project. Customers may elect to purchase the solar system directly or finance the system under a lease. However, PPAs provide a number of benefits over the course of a typical contract term, usually 20 years or more.
For 1 gigawatt hour per year, approximately 3.7 acres of solar farm is needed (actually 2.8 acres of panels, but the total area is 3.7 acres). If net earnings from a solar panel farm are assumed to be 2 cents/kilowatt hour, that translates into earning power of $5,400 per acre of solar farm per year. The City may be able to negotiate an indexed credit amount that would go up as the price of electricity increases. Under these assumptions, the Airport could develop a 40-acre solar panel farm (Figure 6-2) which produces $216,000 per year. Regardless of the type of development agreement, it is recommended that:
The City should investigate the potential for developing solar generation panels at the Airport on non-aviation property.
Because the solar panel field does not create impervious surfaces, the entire 40 acres within the two parcels shown on Figure 6-2 should be able to be developed. This would leave 17 acres on the east side of the airport for future non-aviation or aviation development, depending upon the need. If desired, this remaining 17 acres could also be developed for solar panel use, but would eliminate the flexibility of attracting other non-aviation revenue sources to the Airport. With 57 acres of PV generators, a potential for more than $300,000 per year in revenue exists (assuming $5,400 in net revenues per acre).
Airport Events
As mentioned, the first La Porte Texas Airplane & Auto Show was held in September, 2011. It was originally planned to be an annual event. The purpose of the event was to showcase hundreds of antique cars and planes, seeking to educate and entertain the community of La Porte, Texas. This event helps educate youngsters about aviation while also fostering an interest in the Airport. The most recent show was October 3, 2015. The intent of this event was to honor and support the military with care packages. In addition, this event helped La Porte Municipal Airport gain promotion as the “Aviation Gateway” to the City of La Porte and to its industrial neighbors.
It is possible that a continued annual Airplane & Auto Show would attract a following and provide good public relations for the Airport. These events can grow, adding music, food vendors, and other popular side attractions. Currently, the event is a static show. Given the low, 2,000-foot floor of Houston's Class B airspace over La Porte Municipal Airport, it may be difficult to conduct
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Figure 6-2 – Non-Aviation Property Development Options
an air show with flight teams and aerobatics performers. That is a technical issue that must be worked out by any potential flight team performers.
Other events at the Airport, such as 5K runs, radio controlled aircraft events, school and scouting group outings, etc. can be beneficial to the Airport and would not require the significant efforts that are needed to host an airshow. Educational outreach with schools should be implemented to draw youth to the Airport and into aviation related jobs and careers. Such an event could be coordinated with the University of Houston, if they decide to implement an aviation flight training program at the Airport. Therefore, it is recommended that:
The City should continue to use the Airport as a venue for Airplane & Auto Show and should encourage other events that are compatible with the Airport’s operation.
For the Airport to benefit financially from these events, it is believed that an administrative permitting process needs to be developed. This process should be similar to the process used by
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the City in renting its two recreation centers, wave pool and two municipal pools, the La Porte Livestock/Rodeo Arena, the Sylvan Beach Pavilion, and various ball fields, which are available for rent for any special occasion.
Section 50-10 of the La Porte Municipal Code "establishes park use permitting provisions regulating the issuance of park and facility special use permits for all city parks, park areas, park related facilities and rental facilities in the City of La Porte park system. Special use permits refer to the process required to conduct events, public gatherings, meetings, activities, rentals of facilities and other special uses of the parks system. Special use permits issued to the public for nonrestricted use and restricted use of each park, park area, park related facility or rental facility in the city park system shall be governed according to the provisions described herein." The park permit process allows citizens to schedule and reserve a public park or rental facility for special events.
For the future, the City may desire to take an approach similar to a county fair, where parking fees are charged by the owner of the property, but there is a separate ticketing process to enter the fair or ride the rides. If up to 1,000 cars show up for the event throughout the day, a $5 parking fee would generate $5,000 for the Airport. More attendees would produce more revenues. Another option would be to institute a permitting process, where a set fee for use of the Airport would be paid, similar to the renting of City Park areas for private events.
FAA Grant Assurance #24 – Fee and Rental Structure – states that an obligated airport will maintain a fee and rental structure for the facilities and services at the airport which will make the airport as self-sustaining as possible. Because the Airport is not considered a City park, events such as the Airplane & Auto Show must be approved through the City Council each year. To simplify this process and to attach fees to it for the City, the following recommendation is made:
The City should develop an administrative permitting process for sanctioned events at the Airport.
Rates & Charges Adjustments
From our analysis, there are two areas where the City could adjust prices upward and remain competitive:
• Fuel Flowage Fee: The Airport does not currently charge a fuel flowage fee. Most airports across the country collect a fuel flowage fee from their FBOs for the privilege of selling fuel on the airport. For La Porte Municipal, it is recommended that an $0.08 per gallon charge be levied by the Airport. Fuel sales at the Airport were estimated to total 50,000 gallons annually (plus or minus), between the two fuel sellers – Harvey & Rhin and Tri- Star Aviation. An $0.08 per gallon fuel flowage fee could generate $4,000 annually, based upon estimated current levels of activity. In addition, all fuel used at the Airport should be subject to this fee, including non-commercial tenants who have their own tanks. Article IV, Section 7 of the FBO lease provides for charging fuel flowage fees. Thus, an amendment to the City’s fee ordinance would be needed.
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• Land Lease Rates: Current land lease rates are low, ranging from $0.02 per square foot to $0.20 per square foot. These should be increased to a range of between $0.15 to $0.20 per square foot (with CPI adjustments) when leases expire or are renegotiated.
Therefore, it is recommended that:
The City should raise selected rates and fees for new leases or as permitted by existing lease agreement terms.
State Grant Revenue
La Porte Municipal Airport is eligible for State grants for non-operating costs from TxDOT Aviation. The Routine Airport Maintenance Program (RAMP) grants are offered on a 50%-50% matching basis, where State funding is up to $50,000 match per airport for each fiscal year. The State fiscal year begins September 1st. The local government match is 50 percent of actual costs plus any excess of $100,000 total costs.
The program includes “lower cost” airside and landside airport improvements. These items can be more than just maintenance and may be new or additional items of work. Examples are: construction of airport entrance roads; pavement of airport public parking lots; installation of security fencing, replacement of rotating beacon, etc. TxDOT will determine the eligibility of specific items. Airside improvements are of first priority before requesting assistance with landside maintenance and improvements. Mowing and equipment purchase costs are not eligible.
The City has taken advantage of this program in 2011, 2014, and 2015. Therefore, it is recommended that:
The City should continue to take advantage of the matching $50,000 TxDOT annual grant program to fund minor capital costs at the Airport, where needed.
6.3 Impact on Revenues and Expenses
The revenue enhancement strategies recommended for La Port Municipal Airport represent opportunities to improve the financial performance of the Airport. These strategies are designed to impact baseline projections of revenues and expenses. For this process, a number of assumptions for each strategy must be made, along with the resulting impact on net revenues. Table 6-6 presents an optimistic forecast of how these enhancement strategies could impact the revenue and expense picture for La Porte Municipal Airport, if the assumptions for each scenario are met. The estimates in the projection of revenues and expenses are based on the following assumptions:
• Hangar Development: Demand for 20,000 sf of hangar space over the next 5 years is assumed.
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− Private Development of (2) 10,000 sq. ft. T-hangars; T-hangars constructed in 2018 and 2020. Assumes ground leases rates are $0.20 per sq. ft. and increase annually by 2.5 percent. (Table 6A-2 in Appendix 6A compares financials for the different construction options). • Flight School/Partnering with Educational Institutions: Program is projected to start in 2019 with the addition of two single engine aircraft (over and above existing training aircraft). • Attraction of UAS Activities: Assumes the Airport will lease land for a UAS park in 2019 around the same time the flight school is getting started. Another option, not included, would be for the City to run the park as a part of its Parks and Recreation program. • Fuel Flowage Fees: Assumes the City will begin charging an $0.08 per gallon fuel flowage fee starting in 2018. • Solar Farm: Assumes annual revenues of $216,00 will start in 2021; 40 acres at $5,400/acre. • Land Lease Rates: Assumes new land lease rates of $0.20 per square foot. • Airport Events (Optional): Example Airplane and Car show; $5 parking fee; 1,000 cars; 10% in Airport expenses. • Additional Airport Staffing: It is assumed that 2021 will be the first year that the City can afford a full-time airport manager. Salary and benefits were estimated at $75,000 in addition to existing staffing.
Table 6-6 - Recommended Forecast of Operating Revenues and Expenses Operating Revenues 2016 2017 2018 2019 2020 2021 Land Leases $46,056 $46,609 $47,168 $47,734 $48,307 $48,887 Tiedowns $13,835 $14,001 $14,169 $14,339 $14,511 $14,685 Additional Land Lease Revenue $0 $0 $2,627 $17,692 $20,894 $21,416 Additional Fuel Revenue $0 $0 $6,752 $7,248 $7,808 $7,808 Solar Field Revenues $0 $0 $0 $0 $0 $216,000 Airport Events Revenue $0 $0 $4,500 $6,750 $9,000 $13,500 Total Operating Revenue $59,891 $60,610 $75,216 $93,763 $100,520 $322,296
Operating Expenses 2016 2017 2018 2019 2020 2021 Personnel Services $24,657 $25,890 $27,185 $28,544 $29,971 $31,469 Additional Personnel Expense $0 $0 $0 $0 $0 $75,000 All other Services and charges $39,720 $40,673 $41,649 $42,649 $43,673 $44,721 Total Operating Expenses $64,377 $66,563 $68,834 $71,193 $73,643 $151,190
Net Operating Revenues (Loss) ($4,486) ($5,953) $6,382 $22,571 $26,877 $171,106
Table 6-7 includes non-operating expenses and shows the net revenues/deficits projected for each year of the forecast. This optimistic table assumes that all revenue enhancement initiatives
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are undertaken and produce according to their forecasts. As such it represents the highest potential revenue production for La Porte Municipal Airport as envisioned by this Business Plan.
Table 6-7 - Recommended Plan Net Revenue (Deficit) Fiscal Year Operating Revenues Operating Expenses Non-Operating Expenses Net Surplus/ (Deficit) 2016 $59,891 $64,377 $11,327 ($15,813) 2017 $60,610 $66,563 $65,000 ($70,953) 2018 $75,216 $68,834 $30,000 ($23,618) 2019 $93,763 $71,193 $199,500 ($176,929) 2020 $100,520 $73,643 $0 $26,877 2021 $322,296 $76,190 $0 $171,106
Capital Improvement Program
The Airport has a capital improvement program (ACIP) for 2016 to 2019, which is mostly concerned with the rehabilitation of runway and taxiway pavements. The engineering for this process will begin in 2018, after drainage issues have been addressed. In 2019, the rehabilitation work is scheduled to begin.
The non-operating costs of the overall program are $305,827 for the local share (Table 6- 7) and $2,452,443 for the State and Federal share. These amounts include 2016 expenditures for this business plan. Without those costs, the remaining costs for the local share are $294,500 and the State and Federal share total $2,350,500. Table 6-8 presents the entire ACIP for 2016-2019.
The local, state, and federal governmental agencies utilize the ACIP as a reference document for future funding. The main source of funding for many airports is grants through the FAA’s Airport Improvement Project (AIP). Texas is designated as one of ten states in the U.S. that serves as a “block grant state.” As such, TxDOT acts, by law, as the agent for political subdivisions for applying for, receiving, and disbursing federal funds for GA airports. TxDOT also funds 50 percent of non-federal airfield maintenance projects up to a maximum participation amount of $50,000.
Improvements related to enhancing airport safety, capacity, security, and environmental concerns are eligible through the AIP program. Typical AIP eligible projects include: airport master plans and airport layout plans; land acquisition and site preparation; airfield pavements, e.g. runways, taxiways, and transient aprons; lighting and navigational aids; safety, security, and snow removal equipment; selected passenger terminal facilities; and obstruction identification and removal. In addition, some revenue producing projects can be funded from an airport’s entitlement grants if there are no runway or safety projects at that airport. These items can include hangars, fueling facilities, automobile parking facilities, private use areas of terminal facilities, and other revenue generating facilities. Highest funding priority according to FAA’s rating procedure is generally offered those projects that are safety related such as obstruction removal, runway safety area improvements, and facility improvements to meet current FAA Airport Design Standards.
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Table 6-8 - Airport Capital Improvement Program 2016-2019
Project Costs FY Year Project Description Total Federal State Local
2016 Business Plan 113,270 0 101,943 11,327 Project Totals: $113,270 $0 $101,943 $11,327
2017 Install AWOS III 200,000 0 150,000 50,000 Engineered Drainage Study (NPE 14) 150,000 135,000 0 15,000 Project Totals: $350,000 $135,000 $150,000 $65,000
2018 Engineering /Design - Pavement Rehabilitation (NPE 15-16) 300,000 270,000 0 30,000 Project Totals: $300,000 $270,000 $0 $30,000
2019 Rehabilitate TXY "A" (25,000 sy) 240,000 216,000 0 24,000 Rehabilitate TXY "B" (17,000 sy) 180,000 162,000 0 18,000 Rehabilitate RW 12-30 (4,165 x 75) 270,000 243,000 0 27,000 Rehabilitate northwest HAT @ RW 12 (11,500 sy) 90,000 81,000 0 9,000 Mark RW 12-30 (NPI - 29,000 sf) 70,000 63,000 0 7,000 Rehabilitate TXY "C" (3,900 sy) 40,000 36,000 0 4,000 Rehabilitate RW 5-23 (2,998 x 75) 190,000 171,000 0 19,000 Mark RW 5-23 (VIS - 3700 sf) 10,000 9,000 0 1,000 Rehabilitate TXY "D" (1,000 sy) 5,000 4,500 0 500 Install Airport Drainage Improvements 300,000 270,000 0 30,000 Construction administrative services; contingency 230,000 207,000 0 23,000 Rehabilitate & mark apron #3 (20,100 sy) 165,000 148,500 0 16,500 Rehabilitate & mark apron #2 (13,600 sy) 115,000 103,500 0 11,500 Rehabilitate & mark apron #1 (10,200 sy) 90,000 81,000 0 9,000 Project Totals: $1,995,000 $1,795,500 $0 $199,500
2016 - 2019 Project Totals $2,758,270 $2,200,500 $251,943 $305,827
Local funding of capital projects for La Porte Municipal Airport can be accomplished either through the City’s enterprise/reserve/capital funds or in some cases, the local general fund. This expenditure may be offset by airport-generated revenues. The City can also issue general obligation (GO) or revenue bonds. These bonds are usually reserved for large capital projects. Independent underwriters must evaluate revenue bonds, and the proposed bonds must demonstrate a reasonable expectation of repayment. As some Airport projects do not generate revenue surpluses, they may not always meet this test.
Private Enterprise Funding
Private investors are also a potential source of funds for revenue producing development. Tenants and/or investors may finance the construction of facilities from which they derive income. While the direct revenues to the Airport are usually limited to the lease charges for the land underlying the facilities, the City would not need to obtain its own funding for these improvements. For leases with reversion clauses, the private investment in improvements will eventually revert to the local sponsor, who can then charge market rates for the remaining useful life of the facility.
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Additionally, the increased activity resulting from the airport improvements often increase the number of based aircraft, which in turn, generate additional revenue associated with fuel sales and other aviation services.
6.4 Summary Recommendations
The purpose of this Business Plan for La Porte Municipal Airport is to assess potential means to improve the Airport’s financial performance, economic development, and operation. To do this, several potential operational and development scenarios were evaluated, providing the City of La Porte with decision-making information. The Business Plan is founded upon an understanding of current activities at the Airport and sets forth options to address a number of key issues: defining the Airport brand, the possible need for new hangar space, the development of non-aviation property, and the continued engagement of the City with its Airport users and tenants. The recommended actions from this report rest, in large part, on five primary strategic initiatives:
1) Strengthen the Airport Brand: This initiative begins with a vision of what the Airport can become in the future. From a branding standpoint, there are a number of actions that can be undertaken including: the establishment of a main Airport entranceway and terminal, City representation at the Airport in the form of an Airport Manager (part time at first), a stand-alone website and social media platform, and a new video/multimedia promotion. Strengthening of the brand will permit the City to better market the Airport to customers in its service area and can increase business aviation use. The recommended branding targets include: Flight Training/Educational Partnering; Personal Flying; and Business Aviation.
2) Increasing Revenues: The City has not been able to afford a full-time manager because of a lack of positive net revenues at the Airport over the last several years. To increase revenues and serve aviation demand, the City should consider the possibility of developing hangars for aviation use and a solar farm for non-aviation Airport property. The development of hangar lease revenue can occur through the construction of hangars with either borrowed funding or grant funding. Private investment for hangar development can also be sought, which will generate ground lease revenues.
3) Engaging the Community: There is always a need to institute better communications and trust between the City and its Airport users and stakeholders. Engagement activities recommended in this Plan included events such as the Airplane & Auto Show, the establishment of a drone park, the reactivation of the Airport Advisory Board, and the eventual hiring of a full-time Airport Manager. These actions are designed to engage the Airport users and the public, providing a better overall experience at the Airport.
4) Non-Aviation Land Uses: Non-aviation land uses apply to areas on the Airport that will not ever conceivably be needed for aeronautical usage. The Business Plan identifies these areas on the Airport that can be used for revenue generation, including up to 40 acres of land for solar panel farm use and 17 additional acres for other non-aviation use.
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5) Other Recommendations: There were more than 20 specific recommendations made by the Business Plan. Some of these other initiatives covered by the Business Plan included the potential partnering with colleges or universities to add flight training at La Porte Municipal Airport to their existing aviation curriculum. Also, the Business Plan recommended an update to the existing rates and charges schedule, based upon CPI escalations. Other recommendations involved the continued use of the crosswind runway (5-23), increased business aviation use, and continued support and expansion of public outreach programs.
Specific recommendations by timeframe and priority are presented as follows:
On-Going Initiatives Prior to This Study • Priority #1 – Airplane & Auto Show: The City should continue to use the Airport as a venue for Airplane & Auto Show and should encourage other events that are compatible with the Airport’s operation. • Priority #2 – Annual RAMP Grant: The City should continue to take advantage of the matching $50,000 TxDOT annual grant program to fund minor capital costs at the Airport, where needed. • Priority #3 – Airport Drainage: The City should continue to work with TxDOT in solving the drainage issues at the Airport. • Priority #4 – Runway 5-23: Runway 5-23 and its associated taxiway should not be closed as a means for non-aviation property development at the Airport.
Immediate • Priority #1 – Engage Airport Users: The City should continue to engage existing Airport Users (clients and tenants) to solicit feedback on Airport issues. - The City should consider reactivating Airport Advisory Board meetings to at least one per month. • Priority #2 – Publicize ACV: The City should publicize the Airport’s Community Value through its Economic Development Department and its online presence. - The City should partner with the Chamber of Commerce and other civics clubs to promote the Value of the Airport to the Community. • Priority #3 – Minimum Standards Revision: The City should consider revising their Minimum Standards to clarify lease term length and future renewal options. - The City should consider adding a reversion clause to their Minimum Standards to clarify ownership of leasehold improvements upon expiration of the lease.
Remainder of 2017 • Priority #1 – Airport Brand: The City should adopt a future brand for the Airport and then weigh all spending and service actions against this vision. - The twofold Airport brand should be focused toward aviation customers and local stakeholders. - The City should develop social media outlets and an individual website as part of its branding strategy for La Porte Municipal Airport. • Priority #2: Rates and Charges: The City should raise selected rates and fees for new
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leases or as permitted by existing lease agreement terms. • Priority #3 – Flight Training Partnership: The City should initiate a direct dialogue with the Provost of the University of Houston to discuss the potential of adding flight training at La Porte Municipal Airport to their curriculum. • Priority #4 – Permitting Process: The City should develop an administrative permitting process for sanctioned events at the Airport. • Priority #5 – Hangar Development: The City should seek the development of T-hangars as demand warrants. - The City should encourage the development of aircraft shade structures on existing ramp by the FBOs.
Short Term: 2018 – 2019 • Priority #1 – Solar Panel Farm: The City should investigate the potential for developing solar generation panels at the Airport on non-aviation property. • Priority #2 – Hangar Development: The City should seek the development of T-hangars as demand warrants. • Priority #3 – Drone Park: The City should consider the development of a drone park on Airport property. This park could accommodate remote pilot training and drone racing. • Priority #4 – Airport Manager: The City should work toward having City staff stationed at the Airport on a part-time basis. Longer Term 2020 – 2021 • Priority #1 – Hangar Development: The City should seek the development of T-hangars and conventional hangar space as demand warrants. - If grant funding is available and waiting lists can be established, the City should consider constructing T-hangars. - If private development of new hangars is desired by the City, a lease policy that includes reversion clauses should be implemented beforehand. • Priority #2 – Airport Manager: If the Airport net revenues can afford it, the City should consider a full-time Airport Manager position.
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Appendix 6A – Revenue and Expense Work Sheets
Table 6-A-1: Itemized Revenue Enhancements Year 2016 2017 2018 2019 2020 2021 T-Hangar Ground Lease Demand: 2016 2017 2018 2019 2020 2021 SE Aircraft 0 0 10 0 10 0 100LL (gallons) 0 0 7,000 7,000 14,000 14,000 Fuel Flowage 0 0 $0.08 $0.08 $0.08 $0.08 Ground Lease sq. ft. 0 0 12,500 12,500 25,000 25,000 T-Hangar Size 0 0 10,000 0 10,000 0 T-Hangar Units 0 0 10 0 10 0 Revenues: 100LL 0 0 $560 $560 $1,120 $1,120 Ground Lease 0 0 $2,627 $2,692 $5,519 $5,657 Total Revenue 0 0 $3,187 $3,252 $6,639 $6,777
Flight School Demand: 2016 2017 2018 2019 2020 2021 SE Aircraft 0 0 0 2 0 0 100LL (gallons) 0 0 0 6,200 6,200 6,200 Fuel Margin 0 0 0 $0.08 $0.08 $0.08 Revenues: 100LL 0 0 0 $496 $496 $496 Ground Lease 0 0 0 $0 $0 $0 Total Revenue 0 0 0 $496 $496 $496
UAS Activities Demand: 2016 2017 2018 2019 2020 2021 Ground Lease sq. ft. 0 0 0 75,000 75,000 75,000 Lease rate 0 0 0 $0.20 $0.21 $0.21 Total Revenue 0 0 0 $15,000 $15,375 $15,759
Solar Panel Field Demand: 2016 2017 2018 2019 2020 2021 Acres 0 0 0 0 0 40 Revenues/Acre 0 0 0 0 0 5,400 Total Revenue 0 0 0 0 0 $216,000
Fuel Flowage Fee Existing Based Aircraft 2016 2018 2019 2020 2021 2022 100LL (gallons) 0 0 75,900 75,900 75,900 75,900
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Table 6-A-1: Itemized Revenue Enhancements Year 2016 2017 2018 2019 2020 2021 Jet A (gallons) 0 0 1,500 1,500 1,500 1,500 Revenues: 100LL 0 0 $6,072 $6,072 $6,072 $6,072 Jet A 0 0 $120 $120 $120 $120 Total Revenue 0 0 $6,192 $6,192 $6,192 $6,192
Airport Event 2016 2017 2018 2019 2020 2021 Demand: Attendance (cars) 0 0 1,000 1,500 2,000 3,000 Price/per 0 0 $5 $5 $5 $5 Revenues: Admission/Parking 0 0 $5,000 $7,500 $10,000 $15,000 Expenses: Misc. Expenses 0 0 $500 $750 $1,000 $1,500 Total Revenue 0 0 $4,500 $6,750 $9,000 $13,500
Airport Manager Salary 0 0 0 0 0 $50,000 Benefits 0 0 0 0 0 $25,000 Total Expense $0 $0 $0 $0 $0 $75,000
Table 6-A-2: Hangar Construction Options: 20 Year Net Revenues Options City City/Grant Ground Lease Hangar Size/ lease footprint 10,000 sf 10,000 sf 12,500 sf Cost $750,000 $375,000 $0 Additional Maintenance@ $0.25/sf $63,862 $63,862 0 Total Cost with debt (20yr@ 3%) $1,062,137 $562,999 0 Breakeven/unit/month $442.56 $234.58 $0 with annual escalation @ 2.5% Opportunity Costs Airport rates (escalation @ 2.5%) $300/month $300/month $0.20 /sf 20 Year Net Revenues -$142,530 $356,608 $63,862
Table 6-A-3: Recommended Plan Demand Changes Category 2016 2017 2018 2019 2020 2021 Based Aircraft: Single Engine 0 0 10 0 10 0 Multi Engine 0 0 0 0 0 0
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Table 6-A-3: Recommended Plan Demand Changes Category 2016 2017 2018 2019 2020 2021 Jet 0 0 0 0 0 0 Helicopter 0 0 0 0 0 0 Total 0 0 10 0 10 0 Accumulative 0 0 10 10 20 20
100 LL (gallons) 0 0 7,000 13,200 20,200 20,200 Jet A (gallons) 0 0 0 0 0 0
Non-Aviation Related Development: Non-Aviation Ground Lease (sf) 0 0 0 75,000 75,000 75,000 Solar Panel Field (acres) 0 0 0 0 0 40 Aviation-Related Development Ground Lease sq. ft. 0 0 12,500 12,500 25,000 25,000 Hangar Construction: Corporate Hangar sq. ft. 0 0 0 0 0 0 T-hangar units 0 0 10 0 10 0
Employment 0 0 0 0 0 1
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7. AIRPORT COMMUNITY VALUE
N RECENT YEARS, THE VALUE OF AIRPORTS has come under closer examination from both government officials and the general public. In many communities, this has resulted in higher Iexpectations of financial performance and economic benefits. Measuring this performance and some type of return on investment is critical to the argument for future capital improvement projects. For the City of La Porte, the value of the Airport to the community may be important in the decision-making process surrounding funding support of operations or capital improvements. Therefore, the documentation of the Airport's economic impact and contribution to the local economy is the first half of this work. The other half of the equation is the determination of the asset value of the Airport, to equip decision makers with information about the value of any capital investment at the Airport.
When examining the economic health and well-being of a business, it is customary to examine both the income statement and the balance sheet. Similarly, the Airport Community Value (ACV) measurement examines the “income statement” (as measured by IMPLAN economic modeling) and the “balance sheet” (as measured by the depreciated or useful life value of La Porte Municipal Airport assets). Most economic impact studies have focused only on the “income” side of an airport's economic value. For a full picture, the existing value of airport facilities should also be included in the airport’s economic impact. This would take the form of an estimate of replacement costs or existing facility worth (including useful life depreciated values of facilities). With a baseline value, such as this, measurement of the total value of an airport is possible.
Given these analytical needs, this section is organized to address the following topics:
• Economic Activity Generated by La Porte Municipal Airport • Existing Value of Airport Property and Facilities • Summary of Airport Community Value
7.1 Economic Activity Generated by La Porte Municipal Airport
The economic activity of La Porte Municipal Airport was measured by estimating the number of direct jobs, income, and output generated at the Airport. In addition, there is a ripple effect of these jobs and income on the community. Just as the nation experiences multiplier effects of job creation or cutbacks, individual communities experience similar processes - both positive and negative - only at a smaller scale.
The Multiplier or Ripple Effect
Previous economic impact studies show the multiplied effects of spending money on an enterprise. As an example, if a new firm comes into an area and employs 50 people and also purchases some local goods and services, the economic impact is attributable to the company's direct outlays plus the respending of these outlays by firms supplying goods and services to the new firm. There are generally two types of ripple effects: (1) those associated with firm-to-firm transactions, and (2) those derived from the wages and salaries allocated to employees in these
R.A. Wiedemann & Associates, Inc. 7-1 La Porte Municipal Airport Business Plan June 2017 firms. The wages and salaries paid to the 50 new employees are spent and respent several times within the community. Retail establishments that have nothing to do with the nature of the new firm's business are affected by its presence as the new employees spend their income on clothes, automobiles, restaurant meals and so forth. Thus, for every dollar of new wages and salaries, an additional 25 to 75 cents of income might be generated elsewhere in the area. As supplier companies providing inputs to the new firm expand their own production and allocate more resources to wages and salaries, a further consumption-generated ripple effect occurs.
When all the effects are taken in the aggregate, a new job often generates the equivalent of another job (summed up over many partial jobs in different parts of the area's economy) if the community is large and has a sophisticated consumer retail base. In smaller communities, a new job can generate between one-third and two-thirds additional jobs. Ripple or multiplier effects work in both a positive way (when an existing airport expands) and in a negative manner (when an aviation enterprise moves to another airport or goes out of business).
Numerous studies have been conducted to establish respending multipliers for various geographic areas and segments of the economy. Sector-specific, input-output multipliers are usually developed to estimate the respending impacts of wages and salaries and other related expenditures. For impacts relating to airport employment, construction, and local business use, multipliers from a number of different sectors are used.
Annual Economic Impact
Annual economic impacts are estimated by taking all the direct impacts and subjecting them to the multiplier effect analysis, and then adding the direct and induced impacts together. Definitions of these terms are as follows:
• Direct Spending: Includes on-airport spending on employment, operations, and capital projects. It also includes off-airport spending by air travelers for rental cars, hotels, restaurants, etc. Thus, direct spending is associated with both the providers and the users of airport services. • Induced Benefits: Multiplier effect impacts above the original direct spending created by the successive rounds of spending in the local economy until the original direct impact has been incrementally exported from the local area. • Total Output in Dollars: The combined impacts of direct and induced spending.
Thus, the economic impacts of aviation can be felt in parts of La Porte's local economy that are far removed from aviation. Regions that are more economically self-sufficient have higher respending "multipliers" than do regions that are more dependent on regional imports since less of the money is siphoned out of the community for goods and services.
The quantified direct and induced impacts from La Porte Municipal Airport were taken from the 2011 statewide economic impact study conducted by the Texas Department of Transportation. That study indicated La Porte Municipal Airport created and sustained total of $4,211,700 in annual economic output activity. Of this total, roughly $2.71 million is generated on the Airport (the direct economic impact), while $1.5 million is generated by the respending of
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Airport dollars until they are exported from the region (the induced economic impact). This component of the Airport’s value was quantified as a part of the airport economic activity portion of the analysis, and represent the “income statement” for La Porte Municipal Airport.
7.2 Existing Value of Airport Property and Facilities
Two estimates of existing airport asset values are helpful in describing the overall Airport Community Value. The first value of an existing airport is the replacement cost of the facility. While this is not the current value of the facility due to depreciation of assets, it gives an idea of the resources needed to replicate the facilities at the local airport. The Airport replacement value can be estimated by multiplying unit costs of construction times the existing quantities of facilities to derive an approximate infrastructure investment total. Land values are added to the facility development costs, yielding a total replacement value. Not included in this mix are the potential difficulties of actually replacing the airport due to environmental issues, land use constraints, and property availability. A second important descriptor in the ACV involves the “depreciated” or “useful life” value of the existing airport facilities. Both are described in the following sections.
Airport Replacement Value
When considering the value of an airport, its economic impact is usually identified, but rarely are the assets identified or valued. At La Porte Municipal Airport, a significant value of the facility is related to its replacement value and current asset worth. The replacement value of La Porte Municipal Airport is an estimate of the construction value of the individual facilities at the Airport. This estimate uses the dimensions of the major assets, multiplied by the unit costs of construction to obtain an approximate total value for the cost of the Airport. Table 7-1 shows the estimation of those costs, including the value of the property on which the current Airport is located. Replacement of the Airport would cost about $82.1 million (Table 7-1).
Thus, one method of valuing the facility would be to consider the equivalent costs of replacement. Since many of the existing facilities are aging, they have lost a portion of their value in accordance with their useful life. In this regard, a second measure of Airport value was made - Current Value of Airport Facilities.
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Table 7-1 - Airport Replacement Value Airport Replacement Value Description Units Cost/Number Amount Land Value Acres from 5010 300 Cost/Acre$ 122,600.00 $ 36,780,000
Pavement Runway Length x Width 537,225 Cost/sq.ft.$ 15.00 $ 8,058,375 Taxiway Length x Width 467,100 $ 15.00 $ 7,006,500 Apron Area Estimated 455,900 Cost/sq.ft.$ 15.00 $ 6,838,500
Hangars Conventional Hangars Total Square Footage 113,900 Cost/sq.ft.$ 100 $ 11,390,000 T-Hangars Total Units 50 Cost/Unit$ 75,000 $ 3,750,000
Fuel System 0=None, 1=12,000 gals, 2=More than 12,000 gals. 2$ 500,000
Navigational Aids 0=None, 1=Nonprecision 2=Precision 1$ 500,000
Internal Roadways Total Linear Feet 3,500 Cost/l.f. 140$ 490,000 Auto Parking Lots Total Square Footage 74,800 Cost/sq.ft. 8$ 598,400
Perimeter Fence Total Linear Feet 15,700 Cost/l.f. 20$ 314,000
Non-Hangar Buildings Estimated 25,700 Cost/sq.ft.$ 230 $ 5,911,000
Total Replacement Value $ 82,136,775
Current Value of Airport Facilities
The current value of Airport facilities was estimated using the calculated replacement value along with the age of various facilities and their estimated useful life. The ACV metric includes the following assumptions:
• Paved Area Value Reductions: The replacement costs of paved areas were reduced by applying the following percentages based on estimated facility age: - Good (0-5 years): -12.5% - Fair (6-10 years): -37.5% - Poor (11-20 years): -75% - Over 20 years: -100%
• Hangars and Non-Hangar Building Value Reductions: Using a 40-year life as a reasonable benchmark, the following percentages were applied to estimated replacement values for each facility: - 0-5 years: -6.25%. - 6-10 years: -18.75% - 11-20 years: -37.50% - Over 20 years: -67.00%
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• Other Facilities: Other facilities such as fuel systems and instrument approaches were not reduced in value, since their replacement costs are assumed to increase at the same rate as their depreciation.
• Land Value: The land value used for the ACV metric was taken from an average of recent listings of property near the Airport. For the ACV metric, both the existing and replacement land values are the same since land typically does not depreciate.
Table 7-2 - Depreciated/Existing Airport Value Age of Existing Facilities Land Value N/A $ 36,780,000 Good Fair Poor Pavement Square Feet 0-5 years old SF 6-10 yrs SF 11-20 yrs SF Over 20 yrs Runway 537,225 $ 2,014,594 Taxiway 104,000 363,100 $ 2,336,625 Apron Area 344,000 84,000 27,900 $ 3,540,000 Auto Parking Lots 37,400 37,400 $ 74,800
Hangars Conventional Hangars 38,500 6,750 44,650 $ 5,023,450 T-Hangars 24 10 16 $ 2,327,250
Fuel System $ 500,000
Instrument Approaches $ 500,000
Internal Roadways 3,500 $ 161,700 Linear Fence 15,700 $ 196,250
Non-Hangar Buildings 25,700 $ 1,950,630
Existing Facility Value $ 55,405,299
To account for the remaining useful life in terms of replacement costs, the replacement values listed in Table 7-2 were decreased in accordance with the age and remaining useful life of each facility. No depreciation was assumed for the land or the fuel system since they hold their original value by function. As an asset to the City, the Airport’s existing facility value based upon useful life estimates is approximately $55.4 million. This is roughly two-thirds (67.5 percent) of its replacement value as estimated with land costs.
One measure of return on assets (ROA) is an airport's ability to use its assets to generate operating revenues. Assets include cash and cash equivalents, as well as physical items of tangible value, such as buildings, equipment, pavement, and land owned by the airport. For the most part, the ROA measurement should be used historically for the industry being analyzed. If peer airport comparisons are made, it is imperative that the airports being reviewed are similar in size and aircraft activity. For airports, ROA is measured using operating revenues, which is an acceptable variable for ratio comparison. Information from our database indicates that reasonable ranges for this ratio are between 0.1 percent and 2.2 percent. La Porte Municipal Airport has an
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ROA from operating revenues of 0.1 percent, which is in the lowest range of the production scale.
Another measure of ROA involves the use of economic output in the ratio. As such, La Porte Municipal Airport is producing economic output equal to 7.6 percent of its current asset value each year. This is within the mid-range for airports of similar size and characteristics. Unlike a school system that requires funding for salaries, maintenance, and equipment to produce jobs and economic output, the Airport provides a significant economic output in addition to producing a net positive operating return on investment (prior to depreciation expense). Large capital investments do require participation by the City, and then, only on a 10 percent matching basis in most cases. Thus, even the capital investments are leveraged 9 to 1. This means that the City can invest a small amount and have it matched by TxDOT/FAA by a factor of 9. There are very few investments with that type of return.
It is recognized that economic benefits are not the only reason to invest in projects. There are quality of life factors, safety, and other issues that are worthy of a community's investment. However, in comparing economic benefits, these ROA measures are very useful.
7.3 Summary of Airport Community Value
The value of La Porte Municipal Airport has been estimated in this analysis, using two very different measures. The first was the economic activity metric, which assesses the job creation, income, and output, generated at the Airport. This value was estimated using RIMS II economic modeling. Our study referred to the TxDOT economic impact assessment of 2011, which indicated the Airport generates an average of $4.2 million per year in total economic output.
A second measure of the value of the Airport involves the current asset value. In this regard, a method was used that first estimated the current replacement value of the facility and then reduced that value by the useful life remaining on each specific asset. This procedure resulted in a replacement value estimate of $82.1 million and a current value of $55.4 million. Taken as a snapshot in time, the total value of the Airport could be estimated to include its annual economic activity ($4.2 million) plus its current asset value ($59.6 million). Adding these two numbers, it can be shown that the overall value of the Airport to the community is $59.6 million.
There are a number of non-monetary benefits of aviation that have not been mentioned in this analysis, including law enforcement, aeromedical evacuation, recreation, and business. All of these factors point to a value of an airport that is not easily quantified. The impacts that were estimated within the body of this report are only one facet of the overall picture. The economic activity generated by the Airport along with its current asset value represent the monetary value of the facility, while other non-monetary factors describe other features of its intrinsic worth.
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