Charles M. Schulz Sonoma County Airport Status Report for the Board of Supervisors February 9, 2016
Summary Purpose is to outline the Airports five year needs for development, construction and staffing. Airport Background/Governance/Updates Airline Industry Overview Airport Developments Proposed Capital Improvement Projects Financial Analysis Airline Rates and Charges Proposed Funding Options Staffing and Aircraft Rescue and Firefighting (ARFF) Analysis
Airport Governance Aviation Commission Advisory Only Guides Policy Board of Supervisors Transportation and Public Works US Department of Transportation American with Disabilities Act Civil Rights Act Passenger Rights Charles M. Schulz Sonoma County Airport Caltrans Airport Permit Airport Loan Program Airport Land Use Commission Compatible land use planning around Airport Does not govern on Airport land uses Federal Aviation Administration Grant Assurances Advisory Circulars Operating Certificate Master Plan Airport Layout Plan Land Use Navigational Aids Air Traffic Control Grants Transportation Security Administration (TSA) Airport Security Badging Requirements Airline Security Threat Assessments
Airport Background The County of Sonoma purchased the land for the Airport in 1939 and opened in 1941. The Airport was used as a US Army base from 1942 to 1946, the Airport was enlarged to include the first hangars and the second runway. The Airport encompasses approximately 1,200 acres. The Airport had air service between 1947 to 2001, returning in 2007, with Horizon Air providing flights to Los Angeles and Seattle. Since 2007 Horizon Air/Alaska has carried over 1.8 million passengers. The Board approved the Airport s Master Plan in January 2012. Estimating 81,000 annual flight operations (take off or landings) at STS in 2015 - airline (5%) and general aviation (95%) flights. There are 385 aircraft based at STS. The tenants of the Airport generate over $1.5 million in possessory taxes annually. 4 non-profit operators (PCAM, EAA, CAFÉ, 99 s) at the Airport. 29 volunteer ambassadors, 6 of which work alongside therapy dogs.
Current Organizational Chart The Airport has 15 employees on staff 8 operations, 5 administrative and 2 managers.
Airport Enterprise Fund The Airport is an enterprise fund and receives no General Fund contribution. The two largest revenue generators for the Airport are: Hangar rental income is over $1.4 million annually Parking lots generating over $1 million in fees in 2015 29 based businesses (with approximately 250 based employees) including: 2 full service fixed base operators 6 rental car agencies 3 flight schools 2 aircraft repair operations 4 governmental agencies (Cal Fire, FAA (2 divisions), CAP) Air ambulance service (REACH) Restaurant 9 commercial/industrial companies (in the Airport s business park) United Parcel Service (UPS) air freight operations The Airport has received almost $58.7 million in federal grant funding since 2008 and another $11 million in pending grants.
Airport Enterprise Fund FY 15-16 Revenues and Expenditures Revenues - $4,949,005 Expenditures - $4,737,120 Industrial Park $222,100 4% PFC's $498,750 10% Utilities Misc $239,540 $252,115 Wages & 5% 5% Benefits $1,916,170 Prof Svcs 40% $551,370 12% Non-Aero Operations $1,513,560 31% County Svcs Aero $690,745 Operations 15% Maintenance $2,714,595 $1,087,180 55% 23%
Airport Master Plan The FAA recommends master plan updates be completed on a 10 year cycle in order to reflect changes in FAA standards, the aviation market, and local regulations. The Airport s Master Plan process gets FAA buy-in on Airport development and helps with funding eligibility. County/Airport input Public Input * FAA-approved element
Airfield Layout Plan Land Use and Boundaries
Airport Update
Airport Update Fuel (Gallons Sold) 3,000,000 60.00% 2,500,000 50.00% 2,000,000 40.00% Gallons 1,500,000 30.00% 1,000,000 20.00% 500,000 10.00% 2010 2011 2012 2013 2014 2015 0.00%
Airport Update Parking Revenues $1,000,000 50.00% $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ 2010 2011 2012 2013 2014 2015 Actuals Projected Percentage Change 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%
Airport Update Rental Cars Revenues $6,000,000 45.00% $5,000,000 40.00% 35.00% $4,000,000 30.00% $3,000,000 25.00% 20.00% $2,000,000 15.00% $1,000,000 10.00% 5.00% $ 2010 2011 2012 2013 2014 2015 Actuals Projected Percentage Change 0.00%
Airport Updates Passenger Levels
Airport Update - Horizon/Alaska Airlines STS is an integral part of the Horizon Air/Alaska Airlines market strategy. 6.5% of Horizon Air s total capacity operates out of STS. STS is the 14 th busiest Airport in the Horizon network (out of 45 destinations). STS is the 6 th largest market by available seat miles flown (Seattle, Portland, Boise, Spokane, Reno, Santa Rosa). Each new flight added by Horizon has quickly sold at near seat capacity. Other airlines have noted STS s ability to absorb new seat capacity.
Airline Economic Impacts of STS Alaska s seven daily flights represents approximately: $161 million economic impact 490 jobs in the community Anticipate 14 to 16 commercial flights per day by summer of 2021. 16 daily flights represents approximately: $368 million economic impact 1,120 jobs in the community Every new flight, generates approximately a $23 million economic impact and 70 jobs in the community. The average visitor to Sonoma County spends $442.98 per day.
Fare Comparison for STS and Other Airports in the Region. STS San Francisco Oakland San Jose Sacramento Destination Avg Fare Avg Fare % Diff Avg Fare % Diff Avg Fare % Diff Avg Fare % Diff Los Angeles $120.96 $111.67-8% $117.54-3% $110.30-9% $129.50 7% with travel costs $184.67 34% $223.54 46% $185.30 35% $239.50 49% Seattle $165.48 $143.79-13% $132.48-20% $142.89-14% $147.04-11% with travel costs $216.79 24% $238.48 31% $217.89 24% $257.04 36% Portland $129.52 $122.40-5% $122.89-5% $133.42 3% $113.02-13% with travel costs $195.40 34% $228.89 43% $208.42 38% $223.02 42% San Diego $121.74 $116.89-4% $124.03 2% $137.03 13% $128.95 6% with travel costs $189.89 36% $230.03 47% $212.03 43% $238.95 49% Fare comparison based on 2013 Department of Transportation data. Horizon/Alaska airfares are competitive with other regional airports. Add the cost to travel to and from other bay area airports (IRS $0.54/mile) and the fares from STS save the average traveler 24-49%.
Current Passengers and Growth Potential Market Annual Actual Total Round Trip Current Growth STS Passengers Passengers Capture Rate Potential STS-LAX 85,213 372,030 22.9% 63,599 STS-SAN 40,265 143,161 28.1% 31,316 STS-SEA 39,711 113,852 34.9% 17,215 STS-PDX 29,638 82,057 36.1% 11,391 Passenger data for YE June 30, 2014
Airline Industry Overview Potential Markets Airport Outbound Round Trip Total Round Trip Potential STS Passengers Passengers Passengers Guadalajara 135,268 193,433 52,227 Denver 76,720 153,440 41,429 Las Vegas 64,080 76,244 30,498 Honolulu 55,918 111,836 35,788 Phoenix 50,224 100,448 32,143 Maui 43,290 86,580 27,706 Salt Lake City 34,894 69,788 24,426 New York - JFK 157,972 315,944 85,305 Chicago 120,596 241,192 65,122 Boston 99,644 199,290 53,808 New York - EWR 91,834 183,688 49,596 Atlanta 88,256 176,514 47,659 Mexico City 80,080 106,500 28,755 Dallas-Fort Worth 78,548 157,096 42,416 London 71,760 143,520 38,750 Puerto Vallarta 68,766 88,020 23,765 Houston 64,970 129,940 35,084 Paris 63,510 127,020 34,295 Washington DC 62,780 125,560 33,901 Fort Lauderdale 57,086 114,172 30,826 Kona 53,364 106,728 34,153 Kauai 42,486 84,972 27,191 Bookings data for YE 6-30-14
Airports Used by Sonoma County and Surrounding Area Residents. % Share of Passenger Bookings All Airlines Oakland Sacramento 7% 5% STS 2% San Francisco 85% San jose 1%
Percentage Share Of Passengers For Bay Area Airports By Airline Other U.S. Alaska/Horizon 3% American Airlines 6% 13% International 13% Delta Air Lines 8% Southwest Virgin America 5% 4% United Airlines 48%
Airline Industry Overview 4 Airlines (United, Delta, American and Southwest) control 83% of the domestic airline capacity. Low cost carriers (LCCs, such as Allegiant and Spirit) are growing at a faster rate than legacy carriers like Delta and United. Recent pilot regulations have increased the need for mainline pilots, reducing the number of pilots available for regional markets like STS. Aircraft manufacturers are shifting production away from small (under 60 seat) jets. Non-hub airports similar to STS has seen a reduction in capacity (seats) to a point 17% below 2008 levels. STS has beat the trends compared to other non-hub airports and has increased available seats by over 17% of the 2008 levels.
Departing Seats: STS vs Similar Airports Indexed to CY 2008 20% 17.0% 15% 10% 5% 0% -5% -6.3% STS -5.2% -3.7% 0.1% 4.6% 8.1% 10.4% -10% -15% -13.6% -16.4% -11.6% -17.0% -15.4% -15.1% -16.9% -20% 2008 2009 2010 2011 2012 2013 2014 2015 2016
Airport Developments
Development at STS In October 2015, Board approved new lease with Sonoma Jet Center, allowing for significant improvements and expansion of their current operations. The Airport has four (4) signed term sheets three (3) new leases to current leaseholders (VineJet, PropJet, and the Pacific Coast Air Museum) a new lease with TruAir for the lease of the former Airport shop area, for corporate aircraft, charter service, and flight school operations. In negotiations with Kaiser Air for a new lease to add a third hangar. Proposed improvements total over $13 million. Proposed improvements will generate between $200,000 and $300,000 in additional annual revenue for the Airport. In addition, tenants pay 1.1% possessory interest taxes ex $10,000,000 based aircraft would pay $110,000 per year.
Airfield Layout Plan Developable Parcels
Capital Project Needs
Completed Projects Remodeled existing terminal in 2010 adding 5,000 square feet. Runway Safety Area Project added 885 feet of runway for a 6,000 foot long runway. Rehabilitated the airline parking apron. Expanded rental car staging areas. Reconfigured the current long-term parking lot to expand parking spaces. Reconfigured and expanded the rental car return lot to double the parking spaces. Installed a new rental car wash system and vehicle detail area.
Future Capital Projects Runway Safety Area Phase II Service Roads The service road portion of the project was removed from the main contract to match availability of federal funding. Construction is early FY16-17 Project was bid in August 2015, waiting for federal funding to award Project estimate is $2 million. 90.66% federally funded.
Runway Safety Area Phase II Service Roads
Aircraft Rescue and Firefighting Building The current ARFF building was constructed in 1972 and no longer meets current standards for either ARFF or ADA regulations. Location of current facility is in the way of long-term terminal expansion needs. A new location has not been selected, conceptually studied in 2012 Airport Master Plan. The Airport plans to begin environmental studies for a new ARFF facility in FY 16-17 and the design phase could begin as early as FY 17-18. The Airport is waiting for FAA determination on NEPA documentation requirements. Preliminary project estimate is $7 to $8 million. Federal funding (90%) should be available for this project. The funds to complete environment studies will be requested in the FY 16 17 Airport Enterprise Budget request and for grant funding from the FAA.
Aircraft Rescue and Firefighting Building
New Long-term Parking Lot Preliminary design was completed by Transportation and Public Works (PW) engineering staff for a new lot southeast of the terminal. Final design will be completed by PW on-call Professional Engineering Service Providers. The current long-term lot exceeded capacity 5 times in 2015. Increasing to 8 daily flights in 2016 the long-term lot is expected to exceed capacity every weekend and holiday until the second lot can be constructed. Each new flight creates the need for approximately 50 parking spots per day. The proposed parking lot would add approximately 440 parking spaces. Total cost estimated to be $3.8 to 4.6 million. Can be built in one or two phases, if constructed as one phase it would save approximately $650,000. Staff is recommending construction as a single phase project.
New long-term parking lot Site location Terminal
Proposed Terminal Enhancement Project Terminal design objectives included: Meeting immediate and near-term needs. Establish a project budget for near-term improvements that is affordable for the Airport. Design character that signifies its role as a gateway to the region. Phase expansion that does not impact current operations. Anticipating future needs and establish a pattern of design for future expansions. Proposed option contemplates less space versus FAA optimal space recommendations in order to match Airport financing ability and to maximize future expansion potential. Anticipated cost is $7.4 to $10.2 million and may be eligible for future FAA funding.
Existing Terminal
Terminal Renovation Phases I and II
New Holdroom (Phase II) East Elevation New Holdroom (Phase II) South Elevation
New Holdroom Interior Looking North New Holdroom Interior Looking East
Flex Space Tent Option View from Airfield Flex Space Conventional Construction View from Airfield
Existing Terminal View from Airfield Side
Phase 1 Build Flex-space (either tent or conventional construction) and move hold room and security areas into the new facility. Staff is recommending conventional construction. (also shown is Phase 2a - move existing hold room north). Tent option Phase I
Phase 2 - Build new hold room and security area, make connection to flex space and existing terminal, and move hold room and security to new facility. Phase 3 - Relocate car rental agency booths and baggage claim to flexspace and construct canopy and circulation gallery at previous baggage claim area. Phase 4 - Remodel existing car rental agency booths and baggage claim area into new airline ticketing area and add new baggage drop-off belt system. Phase 5 - Remodel existing airline ticketing area into concession and office space and create new terminal vestibule.
Future Expansion Estimated 2025
Future Expansion Estimated 2050
Financial Analysis
Financial Forecast In 2014, the Airport hired a firm specializing in airport business and financial operations to prepare a financial forecasting model. This model forecasts operational levels and costs; capital plan funding capacity; sustainable airline fees; and projects revenues for the next five years. The model converted the Airport s budget into an industry standard format allocating costs to the appropriate cost centers. This model confirmed the Airport s assumption that the current airline rates and charges are insufficient to be sustainable and calculated the appropriate fees. The model incorporates revenue impacts as passenger volumes change and included projected other airport developments. The model includes expenditure impacts from the Airport s Capital Improvement Plan (CPP) and staffing growth as outlined in the staffing analysis.
Airline Rates & Charges
Recommended Airline Fees The financial report recommended airline rates and charges approximately double current levels. Airlines use a Cost Per Enplaned (CPE) passenger as their metric for airport costs (current CPE ~ $1.49, proposed CPE ~ $2.95). The proposed fee increase has been discussed with and is acceptable to Alaska Airlines. Some airlines operate less than daily or irregular schedules and prefer a set per turn. A set fee enables them to better budget station costs. With the potential for adding new, less than daily service, a new fee has been proposed for less than daily providers which includes a premium over daily rates and charges (consistent with industry standards). Current Airline fees are $1.63 per square foot/per month for lobby (ticket counters and queue) and office space, as well as, a monthly fee of $363 for use of the security/hold room. These fees will be deleted and a new fee structure will be established.
Recommended Airline Rates and Charges Terminal Preferential Space Rental assigned (NEW) Daily Service $2.50 per square foot/per month Non-daily Service $3.25 per square foot/per month Ticket Counter and Queue rental - unassigned (NEW) Daily Service $0.28 per Enplaned Passenger Non-daily Service $0.36 per Enplaned Passenger Joint Use Space (NEW) Daily Service Non-daily Service $1.60 per Enplaned Passenger $2.08 per Enplaned Passenger Per Turn Charge (NEW) Per turn charges are the sum of applicable non-daily rates and charges, including landing fees, use of applicable terminal spaces and equipment. Calculated on aircraft weight and 90% of the seating capacity. The proposed fees are anticipated to increase revenues by $250,000 annually. Staff agrees with the consultant s recommended airline rates and charges.
Funding Options
Current Airport Debt Maturity 2016 2016 2017 2018 2019 2020 2021 Airport Debt Summary Date Balance Payment Payment Payment Payment Payment Payment GAN RSA* Mar-16 1,000,000 14,000 Hangar Construction Jun-16 109,527 109,527 Treasury Note Apron* Jul-16 2,000,000 28,000 28,000 GAN - RSA Mitigation* Sep-17 3,500,000 49,000 49,000 Hangar Construction Jan-18 266,693 122,268 122,268 30,012 GAN - RSA II* Apr-18 3,000,000 40,000 40,000 40,000 Building Acquisition May-20 618,809 147,009 147,009 147,009 147,009 59,135 Runway Extension May-29 4,359,747 406,935 406,935 406,935 406,935 406,935 406,935 Total Annual Payment 916,739 793,212 623,956 553,944 466,070 406,935 * Interest only payments. Principal paid by grant funds Total debt service costs will decrease by $362,795 in 2019 and by $509,804 in 2021. Funding Needs $10-14 million in long-term debt is needed for both the terminal and parking lot projects. The Airport is not able to absorb new debt payments until 2019 and will need either financial assistance or interim short-term financing (treasury notes).
Funding Options Long-term In working with Auditor Controller Treasurer Tax Collector (ACTTC) staff and their consultant, KNN Public Finance (KNN), the Airport has explored several options for funding. Department of Transportation Local Airport Loan Program The California Economic and Infrastructure Development Bank (IBank) Infrastructure State Revolving Fund (ISRF) Program Airport Revenue Bonds County investment in the future (General Fund Contribution) A variable rate loan A conventional fixed rate loan staff recommended option The KNN report identified the most viable option for funding is a conventional fixed rate loan, using the County s credit. Staff is recommending this option and requests direction from the Board to allow further analysis on this option. The Airport will return to the Board with final recommendations for both short-term and long-term funding solutions.
Staffing Analysis
Staffing Report The Airport, working with the Human Resources Department (HR) conducted an assessment of staffing for current needs and forecasted Airport growth over the next five years. This assessment identified the need for four additional positions in the shortterm and more staff positions in the long-term. The specific job classifications still need to be coordinated with HR. The Airport will address the recommended short-term staffing changes, as part of the budgetary process and as funding allows. ARFF coverage is currently provided by the Airport Operations staff, who meet the FAA training requirement for those duties. Future information gathered regarding contracting ARFF services will assist with the needs assessment for long-term staffing. If ARFF services are contracted, fewer dedicated Airport staff will be needed.
Aircraft Rescue and Firefighting (ARFF) Services Airport staff dedicates 8.25 hours per day to meet FAA and TSA stand-by requirements, spending approximately $220,000 annually to provide ARFF coverage and training. There are four different alert levels Alert 1 is a standby only alert - majority of alerts Alert 2 involves small aircraft Alert 3 involves large aircraft Alert 4 miscellaneous category The Airport averaged two alerts per month over the last six years (with one alert 3 over this period). Two informal estimates were obtained for contracted ARFF services, for $600,000 and $1.2 million per year. A Request for Information will be released in early 2016 and information brought to the Board for direction during preparation of the FY 17-18 budget.
ARFF Services at Comparable Airports Airport staff researched comparable California airports on ARFF coverage. Determined each airport handled and covered costs for ARFF in a manner most fitting for their circumstances. Most airports similar to or larger than STS have contracted ARFF services. Contract ARFF services can be provided by private contractors, local governments, local fire district, or Cal-Fire. Airport Operations Budget 2014 Enplanement 2014 Airport Staff Contract Fire Fire Contract Cost Monterey $7,700,000 205,000 38.0 Contracted $1,200,000 Bakersfield $9,000,000 143,200 21.0 Contracted Equip. cost only San Luis Obispo $4,055,000 140,000 14.0 Contracted $600,000 Sonoma County $4,471,144 120,000 14.0 In-house $0 Stockton $3,497,000 71,800 12.0 Contracted $170,000 Arcata $5,500,000 56,700 12.0 In-house $0 Santa Maria $4,183,000 51,400 12.0 Contracted $634,000 Redding $2,861,000 24,900 9.0 Contracted Equip. cost only
Request for Feedback Long-term Parking Airport Terminal Improvement Conceptual Plan Funding/Financing Options
Future Board Items February 9, 2016: Fee Hearing and Airline Rates and Charges adoption. Engineering Services Master Agreement. Spring 2016: Parking Lot Design Services Agreement. Task Order for Terminal Design Services. Interim Funding Agreements (Short-term funding options for terminal design services, long-term parking lot design services and long-term parking lot construction). Master Agreement for Construction Management Services. Contract Amendment with Electronic Innovations for design assistance and integration for security systems in the proposed terminal space. Alaska Airlines new Airline Operating Agreement. Fall 2016: Long-term Debt Solution. Terminal Construction Contract.
Charles M. Schulz - Sonoma County Airport 2290 Airport Boulevard Santa Rosa, CA 95403 (707) 565-7243 www.sono macou ntya irport.org Follow STS on (j Facebook Im Linkedln ~ Twitter