Title
Airports, a division of the Chief Administrative Office, recommending the Board approve the Final Passage (Second Reading) of Ordinance 5212 amending Title 18 of the El Dorado County Ordinance Code, Airports, to incorporate updated Airport Minimum Standards and other revisions in compliance with the Federal Aviation Administration’s current recommendations for federally obligated airports. (Cont. 11/5/2024, Item 32)
FUNDING: Federal Aviation Administration Grant funding, Caltrans Division of Aeronautics Grant Funding, Fees for Service, Lease Charges, General Fund.
Body
DISCUSSION / BACKGROUND
On November 5, 2024, the Board heard Ordinance 5212 and Continued the matter to November 12, 2024 for Final Passage Second Reading. Also, on November 5, 2024 the Board heard Ordinance 5213 and Resolution 188-2024 and Continued to December 10, 2024 to allow staff the opportunity to meet with stakeholders.
The County currently owns and operates two Federally-obligated General Aviation Airports: Placerville and Georgetown. Small General Aviation Airports are unique as public facilities in that they are used primarily by the aviation industry and flight enthusiasts, but they are also part of the overall transportation system, and thus regulated and protected from closure by the federal government through the FAA. The County Airports are used most importantly for the benefit of the general public during wildfire events as staging, fueling, and operating areas for emergency response teams. The Airports are both to remain publicly accessible and restricted for use for aviation purposes only.
Airports Ordinance - Title 18
The FAA requires the County to establish reasonable minimum standards that are reasonable for aeronautical activity, not unjustly discriminatory, and with the goal of promoting safety in all airport activities, protecting airport users from unlicensed and unauthorized products and services, maintaining and enhancing the availability of adequate services for all airport users, promoting the orderly development of airport land, and ensuring efficiency of operations. The current Minimum Standards for Airports are in Board of Supervisors Policy F-10 and have not been revised since 1994. In addition, the Title 18 of the El Dorado County Code of Ordinances, Airports, details rules for public use of the Airports. Ordinance 5212 is a first step for reviewing, amending, and reorganizing rules and minimum standards for airports to ensure that any relevant rules for the general public are easy to access and review. The changes update references to state and federal laws and provide details for aircraft parking and storage. A new Chapter 18.30, Airport Minimum Standards, provides requirements for personal use, fixed base operator (FBO), single-service operator (SSO) and off-site operator leases and agreements. These requirements will ensure that the County is allowing for safe and efficient commercial aeronautical activities. A new section for flying club standards has been moved from Policy F-10 to the ordinance to ensure that prospective members have easy access rules for flying clubs. Changes to Policy F-10 to complete the organization of Airport rules and provide more details for commercial operation at the Airports are forthcoming and will be provided to the Board for consideration on December 10, 2024.
Airport Division Finances and Fee Schedule
Airport rates and charges are imposed on general and commercial aviation users of certain Airport services, other commercial business conducted on Airport property as well as the lease of Airport-controlled property. The airport fees are not considered a tax under the California Constitution, Article XIIIC, 1(e), and fall into the category in exception four: “a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property.” Charges qualifying under this exception do not include the “reasonable costs limitation” found in the first three exceptions, and the local government can charge what the market will bear.
The FAA requires Airports to be as self-sustaining as possible. The El Dorado County Airports program is funded through the Airport Enterprise Fund (Fund 5114), as well as the Special Aviation fund (1105). Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that the program is self-supported and financed or recovered primarily through user charges. Airports also receive state and federal funding, which varies year to year based on projects. The FAA and Caltrans provide grant funding for Airport Improvement Projects, as identified in the County’s ACIP. These improvement projects help minimize maintenance costs for airport grounds and equipment. Grant funds cannot be used for ongoing operations. As an industry standard, Airports should set rates for leases at market rate to provide the most revenue for operations through overall airport use. Other fees for services should be calculated to cover the cost of those services. Fuel sales at the airport average $400,000 per year, however due to the high cost of bulk fuel the net revenue is approximately $60,000 each year. The largest source of revenue for ongoing operations costs is from lease revenue; approximately $41,000 at Georgetown and $245,000 at Placerville.
The gap between airport expenditures and operating revenue is approximately $630,000 each year. This gap is covered with General Fund contributions towards operations, maintenance, and lease administration. In order to support the long-term viability of the Airports, the County can pursue changes to lease rates and administration, utilization of federal funding, and adjustments to fees.
Airport rates, with a few exceptions, have not increased since 2016. In 2015, when Airports was under the Community Development Agency (CDA), CDA conducted a Fee Study (Legistar file 15-0587). The fee study documented the cost of providing services. The Board approved the fees by Resolution 079-2016. On May 21, 2019, the Board approved a correction increasing the fee for rectangular hangar ground leases from $.055 to $.082 per square foot per month, and increasing the commercial use and commercial undeveloped land lease fees from $.110 to $.164 per square foot per month, as this fee increase was inadvertently left off the 2016 resolution.
Following the restructure of the Departments within CDA, on October 22, 2019, the Board adopted Resolution 186-2019, which established the Planning and Building Department Fee Schedule and Policies and Procedures, including Airports, with no changes to fees.
In 2023, the Planning and Building Department completed a fee and nexus study to determine the County’s current costs for providing services including indirect and overhead costs, equipment, and other reasonable fees to close the gap on recovering the costs of those services (Legistar file 23-1487). The Board delayed approval of the fee increases at that time in order to consider the outcome of the Economic Study, which was in process, to determine whether any other opportunities existed to close this funding gap and fund airports through means other than fee increases. At that time the Board adopted a $0.10/gallon fuel flowage fee, which has resulted in some additional revenue due to recent emergency response.
According to the U.S. City Average for All Urban Consumers Consumer Price Index from June 2016 to June 2023, costs have increased by 30.4%. The rate for California specifically was 34.2%, and the rate for the San Francisco area was 32%. Airports is proposing cost increases for most fees at 30%, based on inflationary pressures over the last eight years. It should be noted that the fees proposed for increases account for approximately 8% of the revenue at Placerville and 2% of overall operating revenue at Georgetown.
The proposed fee adjustments would not affect the fuel sales net revenue or the ground leases, but would produce an increase in revenue for hangar leases and tie-downs. With the fee adjustments, the total Increase in revenues at Placerville is estimated at $16,000/year, and $1,000/year at Georgetown. The proposed rate increases for the upcoming fiscal year will partially cover operating costs, regulatory compliance and future Airport improvements.
The exceptions to the 30% fee increase includes rates for personal and commercial ground leases, access device charges, the fuel flowage fee, and several new fees. These rates were determined based on the operational costs (labor, maintenance, escalating cost of materials for hangars, terminal facilities, runway pavement) as well as current market prices for comparable airports. Several new charges are also proposed to recover existing costs for which we currently have no fee in place. The Ordinance and Resolution amending the fees will take effect (30) days from execution. The second reading and final passage of the ordinance is scheduled for November 12, 2024.
New Fees
Commercial Landing Charges: The Airport is proposing a new Commercial Landing charge for non-local flights into the airports. Aircraft traffic impacts airfield pavement which requires maintenance and ongoing capital investment. These proposed rate increases will help recover maintenance costs incurred due to aging pavements and increased use of pavements. Consistent with industry standard, the Airport will not charge locally based, noncommercial aircraft landing fees given that non-commercial aircraft are charged rent to use the facility.
Gate Access Card Loss: This fee is to be charged to airport users who report a lost gate access card.
Application Fees: Currently the division charges for reassignment of ground leases upon sale of private hangars. However, there is currently no charge for new private or commercial leases or for new offsite operator access agreements, which take a substantial amount of staff time. These new fees were calculated based on the approximate number of hours staff spend to review applications, communicate with the applicant, and issue a new or revised lease. Commercial lease applications are more complex and may vary in the amount of staff time for each application, so the application fee is structured as a deposit plus time and materials charge.
Fuel Truck Surcharge: For some large aircraft, access to the stationary fuel pumps at the Placerville Airport is unsafe, difficult, or impossible. The County maintains and operates a fuel truck to dispense Jet A fuel for these customers. Use of the fuel truck requires staff time that is not needed for self-fueling at the stationary pump. A surcharge is proposed to recover costs for staff time and maintenance of the fuel truck.
Oil and Deicer: Airports maintains a small stock of deicer and oil for aircraft. A markup of the cost of these goods is proposed to recover costs for the Airport to stock and sell these goods.
Oil Disposal: The County maintains a used oil disposal site for the convenience of Airport customers and to ensure environmental compliance. This fee will defray the costs of bulk disposal of the used oil.
Lease Rate Appraisal and Market Study
Ground Leases apply for use of the airport grounds to place a privately-owned hangar for commercial or personal use. In the past, many tenants have had expired leases or purchased a hangar or made other deals with previous tenants to take over existing leases. This has resulted in lost revenue for the airport and has created a lack of control over access to airport grounds. Over the last several years, Airports staff have made substantial progress toward personal hangar leases for both airports. A majority of tenants with personal hangars now have current leases. Most commercial leases are currently expired. In order to ensure that Airports is charging enough for lease rates, staff is recommending direction from the Board to engage in an appraisal and fee study for hangar and ground leases, using funding from unanticipated revenue to the airports from emergency response operations. In addition, the Airports Ad Hoc Committee is currently engaging with staff on a forthcoming new lease policy for the Board’s consideration.
Economic Study
In coordination with staff, Strategic Planning Services (SPS) provided an economic study with airport development options and a feasibility analysis. The study assessed the current state of Placerville and Georgetown Airports. It also identified and evaluated potential economic development opportunities aimed at increasing the airports' cost recovery potential, financial sustainability, and preserving the public role related to life safety and emergency services.
The comparative analysis concluded that Placerville and Georgetown airports share similar characteristics as over 3,200 airports nationwide. The number of annual operations (landing of aircraft) at both airports is above average when compared to other airports with similar numbers of based aircraft. Placerville airport ranks high in terms of annual operations and based aircraft while Georgetown airport ranks lower for based aircraft. Services offered at Placerville and Georgetown airports are similar to those offered at the majority of candidate airports. The facilities requirements analysis concluded that because 2023 FAA Terminal Area Forecasts (TAF) for the next 20 years show flat projections for both airports, limited additional facilities are recommended to pursue.
Opportunities to enhance economic development at both airports include additional hangar development to accommodate demand for space while ensuring financial viability, full utilization of federal and state funding for safety improvements and maintenance projects, leveraging the unique characteristics of the surrounding region to market the airports as destination gateways, and partnering with businesses for development opportunities.
In addition to safety feature and maintenance updates, the top recommendation for County consideration was to add 15,000-25,000 square feet of T-Hangar facilities at the Placerville Airport as an investment for ongoing revenue, to provide opportunities for private investment, and to utilize Chamber of Commerce partnerships to promote the Airports.
As a result of these recent efforts to evaluate Airports, the following overall goals have materialized:
1) Achieve Self-Sufficiency for Operations. To achieve this, the County should establish market rate lease rates and adjust fees for the services already provided to a level that covers costs. Going forward, the airports will be sustainable if we can attract tenants with the desire to improve the airport in exchange for the valuable access it affords.
2) Utilize FAA and Caltrans funding to the maximum extent possible for Capital Projects. Outside of operational costs, the Airports have capital improvement needs. To use FAA and State funding to the fullest extent, the County can focus capital spending on safety needs including obstruction removal, new beacon, and pavement repair, and strategically pursue development of the East End of the Placerville Airport for eventual revenue generation.
3) Provide Value to the Community. County airports are valuable in providing an integral part of the overall transportation system. Most importantly, the Airports fill a need during wildfire or other emergency events when air operations are necessary. Airports also provide an alternative option for travel to the region, and the County could utilize existing partnerships to promote the Airports to bring activity to the surrounding local economy.
Staff will continue to pursue changes to the Airports program with these goals in mind. The updated Airport Capital Improvement Program (ACIP) also puts these goals into action.
Airport Capital Improvement Program (ACIP)
In order to accurately plan for improvements to airports to access federal and state airport funding, airports are required by the Federal Aviation Administration (FAA) to prepare cost estimates for proposed construction projects. The FAA funds 90% of eligible project costs. Through the State of California, California Department of Transportation (Caltrans) Division of Aeronautics provides airports with 4.5% of total project costs. Currently the Airports do not have funds available for capital improvements. To fund capital improvement projects to 100%, General Fund contributions of 5.5% of the project costs are received as grant matches at both airports.
The revised 2024 ACIP updates several project cost estimates based on recent bid prices received for similar projects at other airports and refined engineering costs based on quotes from subconsultants. Other changes include adjustments to project funding sources and total costs and removing projects that are not immediately necessary. The update removes restroom rehabilitation and tree removal projects that are costly to implement as ACIP projects, but that can still be accomplished through routine maintenance. In addition, a new project to develop County-owned hangars at the Placerville Airport was added to the ACIP. Hangars are typically not allowed to be constructed with FAA Airport Improvement Program (AIP) funding. However, a limited one-time Airport Infrastructure Grant (AIG), which funds a broader scope of projects than AIP funding and is available through 2026, has been scheduled for this project. The first phase of this project is a feasibility study that will consider the environmental and constructability constraints of the “east end” of the Placerville Airport. The updated CIP also makes use of all existing grant funds. In total, combined for both airports, $300,000 of entitlement AIP funds expire in 2025. If pursued as scheduled, the recommended ACIP will allow Airports to utilize all funding available.
Details on each project, the funding sources, and the annual schedule can be found in Attachment D, 2024 Airports Capital Improvement Plan.
ALTERNATIVES
The Board could make changes to the proposed Ordinance 5212, Airports, and direct staff to bring revisions forward at a later date. The Board may choose to provide alternative direction to staff regarding the proposed recommendations for an updated fee schedule. The Board could also provide alternative direction for projects within the ACIP. If the Board does not approve the updated ACIP projects phases for completion in FY 2024-25, the division will not be able to utilize all grant funds.
PRIOR BOARD ACTION
Legistar file 15-0587 (Version 5) - 05/03/2016 Approval of Resolution 079-2016 Establishing the Consolidated Fee Schedule for the El Dorado County Community Development Agency, Adopting Fees for Agency Services as revised, and Adopting Community Development Agency Fee Policies and Procedures as revised, with consideration of the Board’s prior comments, including incorporation of the Airport fees at the full cost recovery rate.
Legistar file 19-0749 - 05/21/2019 - Adopted Resolution 080-2019 that corrected mistakes on the previous fee resolution by increasing the fee for rectangular hangar ground leases from $.055 to $.082 per square foot per month, and increasing the commercial use and commercial undeveloped land lease fees from $.110 to $.164 per square foot per month. Minor changes were also made to clarify Tie Down rates.
Legistar file 19-0663 - October 22, 2019 - Adopted Resolution 183-2019 replacing 080-2019 with no changes to the fees.
Legistar file 23-1487 - August 15, 2023 - The Board received the Planning and Building Department Final Fee Study Report. Staff recommended increases to Airport fees that would result in full cost recovery. The Board provided direction to add $0.10/gallon Fuel Flowage fee during emergencies and a new fee for Commercial landing, and to table remaining increases until the completion of the Economic Development Study, with no other changes to the fees.
Legistar file 23-1672 - October 24, 2023 - The Board adopted Ordinance 5185 which superseded Resolution 183-2019 and included Exhibit B - Airports Division Fee Schedule which added an hourly rate of $171 and the $0.10 fuel flowage fee and removed the Airports Division Additional Fees which were moved to Exhibit A - Planning and Building Department Policies and Procedures.
Legistar file 23-2157 - January 23, 2024 - The Board approved the reassignment of the Airports program to the Chief Administrative Office, effective July 1, 2024.
Legistar file 24-1090 - June 25, 2024 - The Board appointed an Ad Hoc Committee on Airports, composed of Supervisors Thomas (District III) and Parlin (District IV)
OTHER DEPARTMENT / AGENCY INVOLVEMENT
Chief Administrative Office, Community Development Finance and Administration
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
The proposed rates are based on previous fee studies, updated to account for inflationary pressures. The total existing gap between airport expenditures and operating revenue is $630,000 each year. With the fee adjustments, the total Increase in revenues at Placerville is estimated at $16,000/year, and $1,000/year at Georgetown. The gap between Operating Revenues and Expenditures is expected to be $613,000 each year, even with these increases.
The budget amendment adjusts revenue and expenses related to the ACIP for FY 2024-25. For this fiscal year, the changes result in an overall decrease in the use of general fund of approximately $5,000. The budget amendment also adds approximately $70,000 in revenue from public agency use of the Placerville Airport during fire events, and appropriates an additional $4,000 for airport repairs and $50,000 of that revenue for Professional Services to complete hangar appraisals and a rent rate study.
CLERK OF THE BOARD FOLLOW UP ACTIONS
1) Obtain the Chair’s signature on each of the original Ordinances 5212 and 5213.
2) Publish a summary of Ordinances 5212 and 5213 pursuant to Government Code Section 25124(b)(1).
3) Once received by the Chief Administrative Office, obtain the Chair’s signature on the original copy of the Budget Transfer, and forward it back to the Chief Administrative Office, Attention: Jeanette Salmon, once signed.
4) The Clerk of the Board will obtain the Chairs signature on Resolution XXX-2024 and forward one copy to the Chief Administrative Office.
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Jennifer Franich, Deputy Chief Administrative Officer/Airports Director