1	DEPARTMENT OF AVIATION FINANCIAL OVERVIEW TRANSPORTATION AND ENVIRONMENT COMMITTEE January 9, 2006
2	Purpose of the Briefing
3	Financial Goals of the Department of Aviation
4	FY06 Adopted Operating Budget
5	Historical Operating Budget Expenses and Revenues Illustrates Surpluses and Shortfalls
6	CAFR Data FY00-FY04 (Revenues, Expenses, and Changes in Fund Equity (Net Assets)
7	Debt Background and Current Status Favorable interest rates and desire to maintain strong cash position led to decision to issue bonds. Strong cash position is desirable to: Fund planned capital projects (see pages 38 & 39) Retain financial flexibility Prepare for emergencies Debt assumed in 2001 Annual payments approximately $7.6 million Debt obligation until 2011 $38.3M Outstanding as of September 30, 2005 Bonds have been downgraded to BBB/Baa2 with Stable Outlook by Moody’s and S&P No further debt anticipated
8	DFW Debt Comparison
9	Finances Aviation finances have been a concern Fee and rate changes Increased lease rates in 2001 and 2003 Increased parking rates in 2003 Increased fuel flow fees in 2003 In the spring of 2005, indicated to the major carrier that a landing fee increase would be required in the near future
10	Rates And Charges
11	Leases Rental payments received from tenants for leased property and improvements Includes improved, unimproved ground rent and improvements Major source of revenue given facilities that have been built over the years Majority of leases contain escalation provisions Rates are reviewed each year as part of budget Adjustments recommended to cover operating costs or meet capital needs Adjusting rates have mid (3-5 years) and long term impact
12	Lease Philosophy Generate revenue to cover operating costs and capital needs – now and in the future Ensure airport maintains self-sufficiency pursuant to DOT/FAA grant assurances Provide opportunity, through competitive rental rates, for private development and/or redevelopment of airport facilities Create/Generate economic development opportunity Create job opportunities Broaden the City’s tax base
13	Lease Rate Comparison
14	Last Lease Rate Increase Established New Prevailing Rate March 2003 Staff recommended establishing new prevailing ground annual rent rates at Dallas Love Field Previous Current Improved Ground (per sf) $ .26 $ .46 Unimproved Ground (per sf) $ .20 $ .32 New rate is at the mid-point of other comparable airports Most leases adjusted to prevailing rental rates every three years not to exceed 12%
15	Parking Parking revenue consists of fees collected for utilization of Love Field parking garages Rates are established by ordinance Dallas Love Field rates $10.00 per day Garage A $7.00 per day Garage B Rates were last adjusted in April 2003 from $7 to $10 for Garage A, and from $5 to $7 for Garage B
16	Parking Rate Comparison
17	Concessions Contracts obligating businesses to pay to operate a business on property including food and beverage services, retail stores, advertising, car rental agencies, etc. Concession contracts awarded through competitive process Pay either a percentage of their monthly gross revenues or a guaranteed minimum payment Adjusting rates through new contracts has a 3-5 year impact
18	Concessions Comparison
19	Landing Fees Fees paid by commercial aircraft owners to conduct operations at Dallas Love Field Base rate is $.55 per 1,000 pounds. Rates were amended in 1987 to encourage commercial airlines to use their quieter Stage III Aircraft at Love Field for $.35 per 1,000 pounds Current rate is $.35 per 1,000 pounds of landing weight for Stage III aircraft (now federally mandated) Adjusting rates would have immediate impact on revenues
20	Landing Fee Comparison
21	Fuel Flow Fees Generated through General Aviation activity only Fees collected from operators selling aircraft fuel at airports $.07 cents per gallon, increased from $.04 in April 2003 Adjusting rates have immediate impact
22	Fuel Flow Fee Comparison
23	Revenues (FY06 Budget)
24	FY06 Updated Revenues (Add 24 Flights)
25	Updated Revenues (Add 24 Flights)
26	Landing Fees - Recommendation Return To Single $.55 per 1,000 Pound Landing Fee $.35 Stage III incentive no longer applicable Allows for a slightly better than "break even" annual financial projection
27	FY06 Updated Revenues (24 Flights + $.55 Landing Fee)
28	Updated Revenues (24 Flights + $.55 Landing Fee)
29	Next Steps Brief Council on Wright Amendment January 18, 2006 (background and history) Council Action on Landing Fees February 22, 2006 (to be Effective April 1, 2006) Review Rates and Charges to consider additional changes to be recommended with the FY2007 Budget
30	Appendix Aviation Department Cash Balances (p. 30) City Auditor’s Report on Lease Practices (p. 31) Report of Real Estate Task Force (p. 33) City Auditor’s Report on 9-1-1 Emergency Service Fee (p. 34) Funding Options For Improved Transit (p. 35) Capital Improvement Plan (p. 38) Enplanements (p. 40)
31	Aviation Cash Balances
32	City Auditor’s Report on Lease Practices City Audit on “Aviation Lease and Rental Agreements” released January 14, 2005 Overall Conclusion: “… staff adequately ensured that lease/rental payments were in accordance with contract provisions, that rental payments were paid on a timely basis, and that the rental revenues are properly accounted for and recorded”
33	City Auditor’s Report on Lease Practices Opportunities for Improvements Length of month-to-month leases Council review of month to month leases Council committee briefed March 7, 2005 Standardize lease form Developed and being used Accounting of all leasehold improvements Staff agreed Rental rates should be set to sustain airport Staff sets rates to sustain the airport Agreed to annual review of rates and charges
34	Real Estate Task Force Report Task Force reviewed leasing procedures of the department Council briefing included as an attachment Council briefed on March 2, 2005 General findings “The committee was generally impressed with the polices and procedures related to the Aviation Department” A high quality standard lease form is currently being used “… it seems that the existing airports are in a good consolidated economic position” Recommendations Recommended several technical changes to standard lease form Established material lease provisions Annual review of month-to-month leases Annual review of rental rates
35	City Auditor’s Report on 9-1-1 Emergency Service Fee City Audit on released May 13, 2005 Review covered sources, uses and restriction of fees in the administration of 9-1-1 services. Recent media report highlighted loan of $2.3 from Aviation Construction Fund Did not adhere to policy related to transfer of funds Staff Response: Met the requirement of AD 4-5 Loan was not an expenditure of funds Loan was fully documented between departments Loan was recommended to the City Council in a briefing prior to it execution Payment identified in FY 2004-05 Budget document Funds are being repaid with interest Staff agrees to bring to Council
36	Funding Options for Improved Transit
37	Funding Transit Access Issues regarding transit access to Love Field Mode and Alignment Cost Benefit Cost sharing Ease of Access
38	Funding Transit Access Funding options “Pay As You go” Approach Bond Financing Passenger Facility Charge Construct Station Pledge for financing Present funding plan once mode of transit and alignment is determined
39	Aviation Capital Improvement Plan
40	Aviation Capital Improvement Plan Continued -
41	Enplanements: FY 1998 – FY 2005