Conway Regional Airport. Business Plan

Transcription

1 Conway Regional Airport Business Plan April 2013

2 TABLE OF CONTENTS Page SWOT Analysis 3 Executive Summary 4 Vision Statement 8 Chapter 1 Introduction and Overview 11 Chapter 2 Context 15 Chapter 3 Federal Requirements 22 Chapter 4 Arkansas Code Annotated 33 Chapter 5 Airport Governance 59 Chapter 6 Airport Revenues 62 Chapter 7 Self-sustainability 69 Chapter 8 Airport Finance and Insurance 74 Chapter 9 Airport Marketing and Advertising 92 Chapter 10 Glossary of Terms 97 2

3 Conway Regional Airport SWOT Analysis Strengths The City of Conway will provide all aviation services Land available for development of aviation businesses 5,500 foot runway with all weather access Strong cash reserve Located in a strong and vibrant growth area Excellent year-round weather Excellent access No congestion Weaknesses New Airport Initial confusion with old Airport facility Initial length of runway [5,500 feet] Experience in operating an Airport Start-up difficulties [FBO operation, leasing, management] Opportunities Funding from Federal and State Governments Strong aircraft ownership base Aggressive community leadership Capitalize on enthusiasm for new Airport Sale of old Airport Threats Economy Competition Oil prices Aircraft pricing Product Liability and the Court System 3

4 EXECUTIVE SUMMARY Every successful business operates with a business plan. Businesses develop plans to target their desired market in order to sell products and services by recognizing operational techniques that positively affect the bottom line. A vibrant community, like a successful business, adopts a comprehensive plan addressing the needs of the current citizenship and planning for future growth. General aviation Airports provide public services with a high degree of service at a fair and reasonable cost, with little to no subsidy; it provides a host of benefits to the local community. As the Airport continues to grow, more businesses locate at the Airport and the surrounding areas to provide both direct and indirect support to the aviation industry, including non-aeronautical services such as restaurants, catering, hotel/motel services, and rental car businesses that cater to Airport patrons. Above and beyond the service aspects derived, the Airport also impacts the community by increasing jobs and the local tax base. This translates directly into more general fund revenues that can be applied toward education, police and fire protection. This document is designed to assist the City of Conway better clarify the concept of services provided and describe the process for further development. It will also address how to enhance, as well as sustain revenues and provide a detailed description and clarification of the need for capital investment. The completed document will be a planning tool and a checklist designed to assist the City of Conway in tracking objectives. As a marketing tool, the Airport Business Plan will discuss the perceived market place, the extent of the market, and explanations of each segment of the market. Business strategy will be addressed to include marketing, promotion, leasing, pricing, customer support, and financial management. With the multitude of changes that have taken place in the aviation industry within the past few years, in conjunction with the normal difficulties of making projections 20 years into the future, this analysis examines the opportunities and challenges that will exist with the opening of the new Conway Regional Airport. The Conway Regional Airport in Context The Conway Regional Airport is an essential component of the City of Conway. The Airport is also an essential element of the economic development efforts of the Conway Development Corporation and Faulkner County. The importance of the Conway Regional Airport, as a vital component of the national transportation system, is recognized by the federal government, by and through the Federal Aviation Administration, and the State of Arkansas, by and through the Arkansas Department of Aeronautics. These agencies require the City of Conway to take the steps necessary to 4

5 protect and maintain the Airport so that it can be used safely and efficiently by the general public. Further, the City of Conway has an obligation to the federal government to operate the Airport in accordance with Federal Grant Assurances and Airport Compliance Requirements, as described in FAA Order B, dated September 30, At the same time, the vibrant Conway community is concerned about noise impacts on neighborhoods and the need for compatible land use and zoning surrounding the Airport. The Conway Regional Airport The Conway Regional Airport will ultimately be a fully developed general aviation Airport. Tenants of the Conway Regional Airport will be involved in a broad spectrum of general aviation activities; i.e., flying clubs, flight schools, aircraft maintenance, rentals and charters, as well as other services available to the flying public. The Airport will also be home to a large number of private and corporate hangars for storage of privately owned aircraft. The City of Conway will operate and manage the Airport, to include fuel sales, hangars and ground leasing. Aviation Activity Trends The Conway Regional Airport is part of the Arkansas State Systems Plan and the National Plan of Integrated Airport Systems. The Conway Regional Airport, through its close proximity to Little Rock, fulfills a critical role in the system. The existing Airport, known as Dennis Cantrell Field, is currently home to 49 of the 77 aircraft registered in Faulkner County. Each year, almost 16,000 flight operations are conducted at the Airport. During the next 20 years, both the number of aircraft and the number of operations are projected to grow significantly, reflecting a fully leased Airport with unlimited growth potential. Context for Leasing and Management Airports are an unusual public-private partnership, with the public and private sector sharing many of the responsibilities of a functioning Airport, since the service companies must be on the Airport facility. The public sector tends to focus on the public infrastructure of the Airport, while the private sector may, and typically does, provide facilities for the services required by the aviation community. There is a broad range of different types of leases, dependent on the type of leased property (land or facility) and the level of investment that is required from private sector tenants. Airports across the nation typically use a wide variety of approaches to addressing leasing issues. As long as all tenants are treated equally, most are viable options for the City of Conway. 5

6 Reversion and Direct Management of Airport Facilities The City of Conway will be taking an active role in leasing property on the Airport. At the existing Airport, the City has a long-term lease with the fixed base operator, who then operates the Airport as a control over all of the leasable area on the Airport, which is then in turn leased to the fixed base operator. All future land leases on the Airport will contain a reversion clause giving ownership of any improvements made by the tenant to the City. Greater control and direct management of the Airport can only come if the City assumes responsibility for all leaseholds at the new Airport. It should be noted, however, that if the City of Conway should universally invoke the reversion clause contained in its land leases, without the possibility for re-negotiation at some future time, tenants may elect to not make significant capital investments in their facilities in the later years of their lease. Lease Duration, Sub-Leasing and Lease Rates The Conway Regional Airport, like most airports, will have different lease durations for undeveloped land versus building sites. The duration for land leases will generally be much longer than that for facility leases; typically years instead of 5-10 years, thus enabling tenants to amortize their investments and recognize a reasonable return on investment. There are various options for lease terms and for the extension of land leases. Lease terms can be fixed for a specific number of years, tied to the level of investment or based on the time-frame required to amortize the investment. Land leases to tenants of the existing Airport should be granted only if the tenant is in good standing and has met all obligations, serves the broad public interest and it is willing to make a substantial investment in the new leasehold. The City of Conway will develop a comprehensive Leasing Agreement Policy in advance of opening the new Airport. Environmental Requirements and Minimum Standards As a municipality that owns and operates an Airport, the City of Conway has legal responsibilities to protect the environment (for both its residents and Airport users) and legal obligations to keep the Airport open to all aviation users. This means that the City will manage the Airport to minimize hazardous materials contamination of the Airport and adjacent water bodies. To achieve this goal, the City of Conway will develop Airport Rules and Regulations and Minimum Standards for Commercial Service Providers as the baseline for achieving Airport tenant standards and for treating all tenants equally. This also means the City will not screen potential tenants or penalize existing Airport tenants on the basis of noise. 6

7 Recommendations Recommendations have been developed to assist the City of Conway in achieving compatibility with its planning goals, minimizing impacts on the community, meeting tenant and user market demands and needs, providing for sufficient Airport infrastructure improvements and revenues and addressing FAA grant assurances and Airport compliance requirements. The recommendations focus on actions that can be taken to encourage the mix of Airport activities and the leasing policies that best support the City of Conway s community and economic goals. 7

8 Vision Statement The Conway Regional Airport will be Arkansas's premier regional Airport supporting general aviation as a whole, in conjunction with viable business opportunities for both aviation and non-aviation uses. Goals of the Conway Regional Airport The Conway Regional Airport will: Become a regional leader in providing competitive general aviation services to the public, including corporate flight activities, pilot training, and personal aviation; and provide outstanding opportunities as an investment engine for aeronautical related business, including diversified aircraft services, vertical facility investment, hangar operations, aeronautical operation, and aircraft manufacturing and sales; and be a catalyst for economic development opportunities, both on and off the Airport, through support of investment zones and appropriate corporate incentives that will support the mission of the Airport and the city of Conway; and attract forward thinking investors and industry leaders with sound business models; attract investment and employment opportunities to the region; and work with existing businesses to retain, expand and attract opportunities for economic growth and vitality; and be a good neighbor with the surrounding community by working actively with regional jurisdictions to secure appropriate adjoining land uses and support public disclosure of aircraft activities and nearby residential development. The Airport will seek to operate within all industry-standards and institute noise abatement procedures and expect all operators to safely and responsibly operate within those parameters, following AOPA noise awareness steps and Airport abatement procedures when consistent with aircraft safe operating procedures; and comply with all regulations by ensuring that all federal, state and local funds received or generated will be expended in support of a long-term capital and financial plan to maintain the highest standards of Airport infrastructure, in 8

9 accordance with FAA regulations, and to grow the Airport as self-sustaining enterprise fund; and work with the FAA to improve the safety of air travel; the Department of Agriculture and the Environmental Protection Agency to promote an environmentally friendly Airport in support of community goals. Business Plan Proposed Actions Fixed Base Operator (FBO) - the FBO functions as the service station at an Airport. The FBO is the entity providing aeronautical services such as fueling, maintenance, storage, ground and flight instruction, etc., to the public. In addition, the FBO assists with aircraft tie-down and may rent or lease aircraft hangars for transient and based aircraft. The FBO typically sells flight publications and supplies, as well as processes rental car transactions. As the Airport operator, the City of Conway may exercise the exclusive option to: Assume all responsibility for the fixed base operation services; and construct a functional FBO facility, with appropriate office space, meeting rooms and waiting areas; and construct new fuel storage facility meeting all safety and environmental standards; and evaluate fuel cost at competing Airports; and manage all Airport leasing functions, to include all hangar and ground leases; and implement a fee structure based on cost of services; with an appropriate return on investment; and implement appropriate agreements for all Airport users, i.e., hangar tenants, land leases, farm leases, minimum standards, and rules and regulations; and implement restrictions on through the fence operators and residential aircraft hangars. Economic Development Retain Conway Economic Development Council to list on-airport properties; and develop marketing materials for on-airport opportunities; and 9

10 develop economic development focused website for the Airport; and implement a capital improvement plan (different from the master plan) to facilitate on-airport aviation related businesses/uses. Conway Regional Airport Finances Adopt the goal of Airport financial self-sufficiency by 2020; and adopt an enterprise fund model for the Airport - implement by 2015; and adopt a five (5) year financial plan for the Airport by January

11 CHAPTER 1 INTRODUCTION AND OVERVIEW Public use Airports are a significant asset, not only to the cities and counties that they serve, but also to the national and regional aviation system. Despite their contributions to the local economy, Airports frequently impact the neighborhoods surrounding them. This Business Plan was prepared at the direction of the Federal Aviation Administration [FAA], in concurrence with the City of Conway, Arkansas. Its primary purpose if to enable the Conway City Council to review the business potential for Conway Regional Airport and develop a plan for the management and operation of the Airport that addresses the needs of the aviation community and the neighborhoods surrounding the Airport. This Business Plan provides an analysis of the alternative management approaches Conway can take to manage the Airport in a fashion that supports the community s vision and goals. It attempts to answer the following questions: What is the City of Conway s best use of its Airport asset over the next 20 years and how should growth be addressed? What role does Conway Airport play in the regional aviation system and what are the implications of the City choices for the Airport, made through this Business Plan, for the rest of the system? What is the community s vision for the Airport over the next 20 years and why? What does the Conway Regional Airport consist of in terms of available space and types of usage? What is the City s best approach to managing that usage and growth; for example, what are the pros and cons of the City managing facilities directly instead of through tenants? What does the City need to do to ensure that available sites and tenancies are operated in a non-discriminatory manner as prescribed by federal law? How can the highest standards of tenancy be assured through City procedures? In answering these questions, the Business Plan recognizes that the City of Conway will construct and operate a new Airport to replace Dennis Cantrell Field. 11

12 With the multitude of changes that have taken place in the aviation industry within the past few years, in conjunction with the normal difficulties of making projections 20 years into the future, this analysis examines the opportunities and challenges that will exist with the opening of the new Conway Regional Airport. WHAT THIS BUSINESS PLAN IS: It is a management alternatives study: This analysis addresses the daily operation and management of the Airport. The spectrum of options considered ranges from maintaining the status quo of Dennis Cantrell Field to the City of Conway operating the Airport and all of its facilities and services, to include the acquisition and sale of aviation petroleum, oil and lubricants. Within this scope, the scenario that is addressed in detail is City management of all publicly funded facilities and operation of the fuel concession, ground leases and hangars developed by the City of Conway. It is a study of the possible future activity mix: In the 20-year time-frame, Airport activity could stay at the same level and the same mix [unlikely because of outside growth pressures]; it could grow evenly across existing activity areas, or some areas could grow more than others. While some of this is controlled by the strength of the various sectors of the aviation market, the City, as owner of the Airport and provider of the basic infrastructure, can shift priorities to encourage or discourage certain types of activity and to attract certain types of tenants more than other types. While the City is bound by non-discrimination requirements as imposed by the Federal Aviation Administration [FAA] meaning that it cannot and must not favor one tenant or aviation business over another it can focus on and take steps to encourage certain types of aviation business more than others, provided that no single potential tenant or type of business is favored more than another of the same type. Finally, it is a study on leasing standards, policies and procedures: Uniform standards, policies and procedures must be developed and implemented for all Airport users and facilities, to include unimproved land. Such policies, rules, regulations and minimum standards for aeronautical services governing the activities of tenants and transient aircraft must be fair, reasonable and not unjustly discriminatory. To the maximum extent possible, the City should implement policies that will result in the Airport being financially self sufficient, given the particular circumstances that exist at the time of implementation. Further, all standards, policies and procedures must be drafted in accordance with applicable federal guidelines and regulations. This will ensure compliance with all federal grant assurances and Airport compliance requirements (FAA Order B Airport Compliance Requirements). In addition, such standards will enable the City of 12

13 Conway to operate the Airport in a professional manner while ensuring tenants and visitors meet performance and facility standards as required. About Business Plans in General: While unusual for a general aviation airport to prepare a business plan, the FAA has recently begun to emphasize the preparation of business plans at all new Airports, regardless of size. This business plan addresses many of the areas that a private sector plan would address, for example, an industry overview and market analysis about trends and competition, a discussion about products and services and possible future changes, a review of the legal and regulatory context, and the management policies and procedures being used in the conduct of the business. Most company business plans would not be quite as broad in scope as this project; for example, they may project business activity such as sales and revenues for a maximum of three years. Such a plan would address some topics that were not part of this scope, such as a personnel plan, a business facilities plan, and sources of financing for any business expansion. This Plan is scoped to be more of a strategic plan than a business plan per se. Since new leases may be structured based upon capital investment, the recommendations contained herein may well have implications far beyond the 20-year timeframe. The recommendations for the first 5 years are likely to be strongest, with the longer term actions dependent upon numerous economic factors. Accordingly, it is recommended that the Plan be updated within one year of the opening of the Airport and then as conditions change. WHAT THIS BUSINESS PLAN IS NOT: It is not an Airport Master Plan: The Airport Master Plan was published in May Somewhat different from most Airport Master Plans, it focused on the role of the proposed new Airport, activity forecasts and future physical facility requirements, without the projected costs of needed improvements. Its primary contributions are an Airport Layout Plan (ALP) depicting the future uses on the Airport and a capital needs plan. This Business Plan is not a Master Plan update; it focuses on how to manage the assets that will be developed at the new Airport while ensuring compliance with federal regulations. It is not a Noise Study: The Business Plan touches on Airport noise as a consideration. It is not, however, a formal noise study. The usual Airport noise study, commonly known as a Part 150 study, since its guiding procedures stem from the Code of Federal Regulations, 14 CFR Part 150. Part 150 studies examine the mix of activity at an Airport, and make projections years into the future. The Part 150 study can then be utilized to develop present and future noise contours and offer noise remediation policies. 13

14 It is not an engineering or facility assessment study: In order to have a complete assessment of the buildings and infrastructure on Cantrell Field, it would be necessary to inventory all utilities and buildings with their locations and conditions. This data is currently available in other forms sufficient for development of a re-use plan. This study does not include any new engineering fieldwork to identify the locations and conditions of sewer, water and electrical infrastructure, or building condition. It is not an economic impact study: Many Airports and regional aviation systems have undertaken studies to identify the financial impact and intangible benefits from an Airport to the local and regional economy. This is usually measured in direct and indirect jobs and gross regional product resulting from the presence of the Airport. This study recognizes some of the businesses that may operate at the Conway Regional Airport; their contributions to the economy can be inferred, but it is not intended to be an economic impact or benefits study. Industry Consultations: The study approach has tapped the expertise and on-line libraries of such entities as: Federal Aviation Administration (FAA) American Association of Airport Executives (AAAE) National Air Transportation Association (NATA) the Airport businesses professional group National Business Aviation Association (NBAA) the association of corporations and businesses who depend on air transportation to conduct business Aircraft Owners and Pilots Association (AOPA) National Association of State Aviation Officials (NASAO) Arkansas Airport Operators Association [AAOA] representing Airports, Airport-based businesses and pilots Arkansas Department of Aeronautics 14

15 CHAPTER 2 CONTEXT This Chapter provides background information about the aviation, regulatory, and community environment in which Conway Regional Airport operates in order to set the Airport Business Plan in context. General aviation is an important component of the transportation system; it takes pressure away from other transportation modes and provides business and recreational access to many communities. General aviation, and in particular Airports that are part of the National Plan of Integrated Airport Systems [NPIAS], serve a unique function in the air transportation system by relieving commercial service Airports of general aviation traffic. State and federal obligations constrain the City in its management of the Airport. The City is obligated by Federal Grant Assurances to maintain and operate the Airport in a non-discriminatory fashion to serve all its aeronautical users and allow for its safe use. State laws require the City to protect the Airport as an essential public facility. Within the community, issues surrounding the Airport and its operation will focus on its noise impacts on surrounding neighborhoods, the limits on noise mitigation due to the airspace constraints above the Airport, and compatible land use and zoning in areas surrounding the Airport. The Role of General Aviation: The following provides an overview of general aviation today. It also outlines the role of general aviation Airports such as Conway in the national and regional air transportation system. What is General Aviation? General Aviation (GA) is defined as all civilian aviation except scheduled passenger airline service. Like commercial aviation, it includes flights designed to travel between two locations. However, a great deal of GA flight activity is to accomplish a specific purpose from the air, including aerial photography or crop dusting. It also includes flight instruction and business and personal travel. 15

16 General aviation includes flying as diverse as overnight package delivery, emergency medical evacuation, inspection trips to remote construction sites, aerial crop-dusting and airborne law enforcement. An estimated 65% of general aviation flights are conducted for business and private transportation purposes that require transportation more flexible than the airlines can offer. That flexibility can be a hometown business-person flying his own small airplane to see four clients on a one-day, 700-mile circuit, or it can be a CEO and five staff members working privately at 30,000 feet while enroute to a meeting. By scheduled airline, the first could take four days and three hotel bills; the second would be virtually impossible. A common misperception by many citizens is that personal or small business aircraft are only used by, or available to, the extremely wealthy. In fact, many people of middle-class incomes fly airplanes less costly than a new family car. Moreover, learning to fly a small general aviation airplane is well within the capabilities of the average person both intellectually and physically. The general aviation fleet is very large in terms of numbers (less so in terms of passenger seats). More than 92% of the approximately 225,000 civil aircraft registered in the United States are general aviation aircraft, meaning that only 8% of the civil aircraft fleet is in scheduled airline service. In addition, of the nation s 635,000 pilots, over 500,000 fly general aviation airplanes. General aviation is an important component of the nation s economy, as well as the nation s transportation system, for the following reasons: Takes pressure off other transportation modes for a significant portion of business and corporate travel. Provides business and recreational access and, sometimes, food and medical supplies, to small communities and remote resorts that otherwise could not survive. Provides emergency travel services and facilities: medical evacuation, flood and earthquake relief, military. Provides many key functions from the air that cannot effectively be performed from the ground e.g.: fish spotting, fire fighting, fire patrol, pipeline/power-line inspection, remote logging, and remote construction. What is a General Aviation Airport and Why is it Important? According to the National Aviation Capacity Enhancement Plan (FAA, 2000), there are more than 19,000 airports and landing strips in the United States, of which more than 5,000 are open to the public. The FAA considers 3,364 of these public-use airports to be significant to the capacity of the National 16

17 Airspace System (NAS). They are included in the National Plan of Integrated Airport Systems (NPIAS) and are eligible to receive Federal grants under the Airport Improvement Program (AIP). Within the NPIAS, the airports are divided into two major categories: commercial service (CS) airports and general aviation (GA) airports. Conway is a general aviation NPIAS airport, that is, an airport of national significance. Commercial service airports are public airports receiving scheduled passenger service and having 2,500 or more enplaned passengers per year. An enplaned passenger is a passenger on a scheduled or unscheduled commercial flight. Of the 546 commercial service airports in the U.S., the 422 airports that have more than 10,000 annual enplanements are classified as primary airports. Those commercial service airports enplaning from 2,500 to 10,000 passengers annually are classified as non-primary or other commercial service airports. General aviation airports are those that have less than 2,500 annual enplanements or do not receive any scheduled commercial service. They are included in the NPIAS if they account for enough activity (currently defined as having at least ten based aircraft) and are at least 20 miles from the nearest NPIAS airport. The 2,847 NPIAS general aviation airports are further divided into reliever (274) and general aviation (2,573) airports. Reliever airports are high capacity general aviation airports in major metropolitan areas that provide general aviation pilots and aircraft with alternatives to using congested commercial service airports. As discussed previously, the Conway Regional Airport is an airport of national importance which is listed in the NPIAS. Within the region, Conway serves as a General Aviation (GA) airport. While not designated as a reliever airport by the Federal Aviation Administration (FAA), the Conway Airport will, by its location and size, serve as a non-dedicated reliever for the Little Rock National Airport. Airports such as Conway, whether formally designated as a reliever, fulfill an important role for the nation s air transportation system as a whole. They help maintain the capacity of commercial airports such as Little Rock National. Because of the differences in speed between large and small aircraft, and the potential impact of large jet wake turbulence on smaller aircraft, it is not safe for them to be mixed closely. Separation adequate to achieve safety would vastly reduce Little Rock s capacity if it had to handle more of the region s GA flights, including Conway s flight operations. In 2009, 1,780 general aviation airports had some enplanements, but totaled only 0.1 percent of total passenger enplanements. Due to its proximity to Little Rock National Airport, the probability of Conway being served by scheduled airline service is extremely remote. 17

18 The Local Context: Citizen and Community Issues Related to the Airport: The foregoing provided the national and regional context. This section provides the local context in which Airport management and business decisions about Conway Regional Airport must be made. The Airport s future, and its business development opportunities, will be impacted by the City s decisions regarding the following issues. Issues include Airport noise and steps tenants must take to combat noise; airspace constraints that affect the ability of FAA to effectively Manage air traffic within Conway s airspace; and zoning and land use issues. Noise: Noise from aircraft is an issue at almost every urban area airport nationwide, and has been for the past 30 years. In many cases, the airport was there first, before the community settled around it; indeed, there were efforts to site airports in undeveloped areas for just this reason, as well as for safer approaches. However, a person owning or buying land or a home near the airport may be unable to visualize how the facility will develop and expand. The development and availability of less expensive jet aircraft, in concert with an aggressive economic development program for the City of Conway and Faulkner County, will result in increased demand for the Airport and corresponding increase in aircraft noise. As the population grows, Airport activity will continue to grow, aided by increased reliance on general aviation aircraft. As the population grows, encroachment around the Airport will continue to grow, unless the City of Conway take steps to zone the land around the Airport so that sensitive uses such as housing, parks, daycares, senior centers, nursing homes and similar facilities would not be permitted nearby. Airport tenants and aircraft operators must be made aware of the noise concerns and undertake steps on a voluntary basis to address and minimize them. The Conway Regional Airport will be one of many airports in the country that will implement a voluntary noise abatement or fly friendly program. Pilots using the Airport will comply with take-off and landing procedures that are specifically designed to minimize noise impacts on neighbors, while ensuring the safety of both pilots and people on the ground. All Airport tenants will be encouraged to follow these procedures whenever possible. In addition to the voluntary noise abatement program, many Airport tenants use other means to minimize noise impacts on neighbors. Figure 1 outlines some of these measures. 18

19 Figure 1: A Sample of Voluntary Noise Abatement Measures by Airport Tenants Tenants Charter Operators Maintenance operators Corporate operators All operators Charter operators Voluntary Measure (in Addition to Noise Abatement Techniques) No engine run-ups between 6 PM and 8 AM, except when operationally necessary, but no later than 8 PM. No maintenance on aircraft between 6 PM and 8 AM. Voluntary restriction on jet operations during the night and on the number of flights. Lead in developing and using voluntary noise abatement techniques to avoid neighborhoods to the fullest extent, consistent with safety. As a provider of air taxi and charter services with helicopters, the company shall implement stringent pilot training requirements. Airspace Constraints: The Conway Regional Airport is surrounded by flat terrain that is sparsely developed and mostly agricultural land. Many times, aircraft not utilizing the Airport will frequently traverse the airspace above the City of Conway. This makes it difficult to determine whether noise issues are actually related to the Conway Airport. Zoning and Land Use: Increasing conflicts between the need to protect the viability and safe operation of an Airport and the need for new housing and other noise-sensitive development near Airports are a common problem throughout the U.S. Like many Airports around the country, the Conway Airport has seen, and will continue to witness, significant growth in the surrounding areas. It is imperative to ensure that all newly developed land uses in the vicinity of the Airport are compatible with Airport operations, thereby minimizing noise and safety concerns. In addition to noise, the safety of both Airport neighbors on the ground and pilots taking off or landing at the Airport is an important issue. It needs to be addressed to ensure that the Airport area is kept safe and to minimize the City s liability if an aircraft accident were to occur in the approach zones. Currently, the Airport and the surrounding areas are zoned industrial/agricultural. To ensure adequate protection of the Airport and its 19

20 environs, the City should ensure compatible zoning regulations to enable the Airport to function within the industrial zone. Funding at the Local Level: The Conway Regional Airport will be a financially self-sufficient element of the City of Conway. It is not anticipated that the Airport will require funds from the General Fund. The Airport s funding will come exclusively from Airport revenues, state and federal grants. All revenues generated on the Airport must be used for operations, maintenance and continued development of the Airport. The FAA requires that all Airports that have received federal funding use all their revenues for aviation purposes to ensure that the use and leasing of their Airport property is priced to reach the highest level of self-sufficiency possible and to minimize the investment required of scarce FAA/AIP fund. In addition, the Arkansas Department of Aeronautics evaluates an Airports financial self-sufficiency when awarding state Airport aid. Lease income will be adjusted periodically based on the Consumer Price Index (CPI), or such other approved formula, for the Conway Metropolitan Statistical Area (MSA). Expenditures The Conway Regional Airport will fund all operations from revenues derived primarily from land and facility leases, fuel flowage fees, and interest income. Capital improvements will typically be funded through federal or state grants, with the Airport s matching share (typically 5-10%) being paid from the Airport s operating fund. Depending upon the circumstances, the Airport may enter into other types of agreements for revenue generation; i.e. mineral production leases. Between 2009 and 2013, Airport grants under AIP were or will be expended on the following types of projects: Runways, taxiways, and aprons; and land purchases; and safety and security; and buildings; and Airport roads; and miscellaneous projects such as lighting and planning. 20

21 The Conway Regional Airport is part of the National Plan of Integrated Airport Systems, and as such, it is eligible for federal AIP funds. Conway has received funding for capital improvements from this funding source for capital improvements such as land acquisition, runway and taxiway pavement construction and associated lighting systems, as well as aircraft parking ramps. Like most other smaller Airports, Conway will depend heavily on federal funding for the majority of its capital improvement program. 21

22 CHAPTER 3 FEDERAL REQUIREMENTS The Airport compliance function is a contractually-based program. It does not attempt to control and direct the operation of Airports. Rather, is a program to administer valuable rights obtained for the people of the United States at a substantial cost in direct grants of funds. Such grants and donations are made in exchange for binding commitments designed to ensure that the public interest would be served. The FAA bears the important responsibility of ensuring that these commitments are met. With the receipt of federal funds, the obligations that the City of Conway assumes in consideration of federal aid stem from various agreements and statutes, including, but not limited to: Grant agreements issued under the Federal Airport improvement program (AIP), or amendments. Section 308 (a) a Federal Aviation Act of 1958, dealing with exclusive rights. Title VI of the Civil Rights Act of FAA order A, Airport Compliance Requirements. Airport Grant Assurances. Under the Federal Grant Programs, the City of Conway, as sponsor of a project, agrees to assume certain obligations pertaining to the operation, use and maintenance of the Airport. These obligations are embodied in the application for federal assistance as sponsor s assurances and become a part of the grant offer, and bind the City upon acceptance. The Grant assurances may be modified from time to time; therefore, each grant agreement must be reviewed in order to determine the Airport owner s obligations. Obligations relating to the use, operation, and maintenance of the Airport remain in full force and effect throughout the useful life of the facilities developed under the project grant, but in no event to exceed 20 years. However, there shall be no limit on the duration of the assurance against exclusive rights or the terms, conditions, and assurances with respect to real property acquired 22

23 with federal funds. These provisions remain in effect so long as the Airport is used as an Airport. The Chief Counsel of the FAA has indicated that the useful life of an Airport may be determined to have expired if it is no longer used or needed for the purpose for which it was developed, as well as if the physical life of the facility has expired. Furthermore, the duration of the Civil Rights assurances shall be specified in the assurance. The physical, useful life of the facility extends only for the period of time which it is serviceable and usable with ordinary day-to-day maintenance. Reconstruction, rehabilitation, or major repair of facility without federal aid does not extend the duration of its useful life within the meaning of the term as used in grant agreements. Once a facility needs reconstruction, rehabilitation or major repair in order to continue to serve the purpose for which it was developed, its useful life has expired. The Regional Airports office, located in Fort Worth, Texas, will make such determination, if necessary. If new grants are issued for reconstruction, rehabilitation, or major repair, a new useful life period begins. Airport Grant Assurances: Section 49 USC (a) of the Federal Reauthorization Act of 1996 requires Airport sponsors to provide a series of assurances as condition for receiving a federal grant under the Airport Improvement Program (AIP). Once the Airport has accepted an AIP grant, the assurances become a binding contractual obligation between the City of Conway and the federal government. The assurances are designed to ensure that the federal government s investment in the Airport is protected and that the Airport can function safely and effectively over the life-time of the improvements supported by the federal grant that was received. Since Conway has accepted Federal grants for the construction of a new Airport, it is required to comply with these assurances. As a condition of the federal grant program, Conway must: Take appropriate action, including the adoption of zoning laws, to the extent reasonable, to restrict the use of land adjacent to or in the immediate vicinity of the Airport to activities and purposes compatible with normal Airport operations, including landing and takeoff of aircraft; and comply with all relevant federal laws and regulations; and take no action that would negatively impact the Airport s ability to fulfill 23

24 the terms of the contract it entered with FAA without prior approval of FAA; and be reasonably consistent with local plans; and consider local interest; and consult with users and hold public hearings before making major decisions about the Airport s runways and taxiways and its operations; and comply with applicable clean air and water standards; and operate and maintain the Airport and all its facilities as necessary to serve the aeronautical users of the Airport and allow for safe use; and take appropriate action to prevent, remove, and mitigate any hazards to aviation in the approach paths and runway terminal areas of the Airport; and be non-discriminatory and allow any qualified enterprise or individual to use the Airport for legal aviation activities; and ensure that all Airport property, including surplus property, is used or available for use to the public under fair, equal, and nondiscriminatory conditions according to the conditions of the contract with FAA; and use any revenues generated by the Airport or local taxes on aviation fuel for Airport purposes only and keep adequate records to that effect. The FAA is responsible for ensuring that Airport sponsors who have given these assurances are, in fact, complying with them. The agency uses the Airport Compliance Program to enforce the contractual obligations of Airports that received AIP funds. Regional FAA Airport Offices are responsible for maintaining an individual record for each Airport under their jurisdiction that accurately reflects the extent to which the Airport owner is complying with its obligations and lists the actions carried out by the FAA to monitor compliance. What Is the Airport Improvement Program? The Airport Improvement Program (AIP) provides grants to public agencies and, in some cases, to private owners and entities, for the planning and development of public-use Airports that are included in the National Plan of Integrated Airport Systems (NPIAS). The Conway Regional Airport is listed in the NPIAS. 24

25 How Much of the Project Cost Does the Grant Cover? For small primary, reliever, and general aviation Airports (such as Conway), the federal grant covers 90 percent of eligible costs. For large and medium primary hub Airports, the grant covers 75 percent of eligible costs (or 80 percent for noise program implementation). What Airports are Eligible? AIP grants for planning, development, or noise compatibility projects are at or associated with individual public-use Airports (including heliports and seaplane bases). A public-use Airport is an Airport open to the public that also meets the following criteria: Publicly owned; or privately owned but designated by FAA as a reliever; or privately owned but having scheduled service and at least 2,500 annual enplanements. Further, to be eligible for a grant, an Airport must be included in the NPIAS. The NPIAS, which is prepared and published every 2 years, identifies public-use Airports that are important to public transportation and contribute to the needs of civil aviation, national defense, and the Postal Service. Recipients of grants are referred to as "sponsors." The description of eligible grant activities is described in the authorizing legislation and relates to capital items serving to develop and improve the Airport in areas of safety, capacity, and noise compatibility. In addition to these basic principles, the City of Conway must be legally, financially, and otherwise able to carry out the assurances and obligations contained in the project application and grant agreement. Other Airport related expenses, such as salaries, routine maintenance services, equipment, and supplies are not eligible for AIP grants. What Types of Projects Are Eligible? Eligible projects include those improvements related to enhancing Airport safety, capacity, security, and environmental concerns. In general, sponsors can use AIP funds on most airfield capital improvements or repairs except those for terminals, hangars, and non-aviation development. Any professional services that are necessary for eligible projects, such as planning, surveying, and design are eligible, as is runway, taxiway, and apron pavement maintenance. Aviation demand at the Airport must justify the projects, which must also meet Federal environmental and procurement requirements. 25

26 Projects related to Airport operations and revenue-generating improvements are typically not eligible for funding. The following table lists typical examples of eligible and ineligible projects; the list is not exhaustive. Questions about AIP eligibility should be directed to the Regional Airports District Office in Fort Worth, Texas. Examples of Eligible versus Ineligible AIP Projects Eligible Projects Access roads only located on Airport property Runway construction/rehabilitation Taxiway construction/rehabilitation Apron construction/rehabilitation Airfield lighting Airfield signage Airfield drainage Land acquisition Weather observation stations (AWOS) NAVAIDs, such as REIL s and PAPI s Planning studies Environmental studies Safety area improvements Airport layout plans (ALP s) Ineligible Projects Maintenance equipment or vehicles Office and office equipment Fuel farms Landscaping Artworks Aircraft hangars Industrial Park development Marketing plans Training Improvements for commercial enterprises General aviation terminal buildings Automobile parking lots Maintenance or repairs of buildings Removing, lowering, moving, marking, and lighting hazards In addition, the following sponsor (City of Conway) certifications must also apply before the FAA will consider a project for AIP funding: The project sponsorship requirements have been met; and the project is reasonably consistent with the plans of planning agencies for the development of the area in which the Airport is located; and 26

27 sufficient funds are available for the portion of the project not paid for by the Federal Government, typically five percent (5%) of the project amount; and the project will be completed without undue delay; and the Airport remains included in the current version of the NPIAS; and the project involves more than $25,000 in AIP funds; and the project is depicted on the current Airport Layout Plan (ALP) approved by the FAA. What Are the Obligations for Accepting AIP Funds? With the acceptance of a grant offer, The City of Conway is also accepting conditions and obligations associated with the grant assurances. These include obligations to operate and maintain the Airport in a safe and serviceable condition, not grant exclusive rights, mitigate hazards to airspace, and use Airport revenue properly. Essential Phases of Grant Completion: Acceptance and Execution Progress management Completion and Closure To enter into the Grant Agreement, the City of Conway must do the following: Enact a Resolution accepting the grant not later than the date indicated in the transmittal letter; and be signed by the mayor and then by the city attorney; and imprint the city s seal on the signature page; and return the grant marked ORIGINAL to the FAA (not to the consultant or the Department of Aeronautics); the SPONSOR copy is for the Airport s files. If more than $250,000 in paving costs is anticipated, the Airport must submit a Construction Management Plan for FAA approval prior to starting construction. 27

28 Grant Progress and Management: For all AIP grants payment requests (Request for Reimbursement), a Letter of Credit (LOC) Account must be on file with the FAA s Oklahoma City Finance Office. The individual making the request must be authorized by the City of Conway to act on behalf of the City for all transactions. Ms. Felicia Garnand may be contacted at telephone (405) for guidance and assistance. The Airport must make a LOC drawdown for incurred costs not less than every 30 days. After each LOC draw, the Airport must disburse those funds within 72 hours; federal funds (AIP Grants) may not be deposited into interest bearing checking or savings accounts. Make draws in whole dollars only -- do not draw down pennies. Construction Progress Reports (FAA Form ) are due every two weeks. A signed and dated Statement of Distribution of Project Costs for the preceding quarter s financial activity. A signed and dated SF Form 425 for preceding quarter are due every January, April, July, & October 15 detailing activity of previous quarter. Pre- and post-construction photos of the project(s); (electronic pdfs are OK). Sponsor Certification for Final Project Acceptance (or Land Acquisition). Summary of all change orders and test results. Signed/dated SF 425 (Federal Financial Report). Final signed and dated Statement of Distribution of Project Costs. Ensure that all parties have a copy of the grant transmittal letter and understand their responsibilities for grant documentation. Know sponsor responsibilities and coordinate with all entities to meet report content data and deadlines. Contact the FAA program manager and ask for assistance, if needed. 28