Airport Enterprises Making them Fit

Airports In addition to being overseen by the local government The FAA is the real boss

Airports In addition to being overseen by the local government The FAA is the real boss

How does an airport make $ For Mercer About 50% of operating revenue comes from Parking About 34% from rentals of buildings land etc The remainder comes from fuel, service and landing fees

What does it spend on Security about 50% of the costs of the airport is security Fire fighting and emergency response Administrative Staff Indirect Cost Allocation Plan – reimburses the county for all the support services of the airport The FAA provides the screeners The response vehicle we have is super cool

Does the Federal Government help? They provide the air traffic controllers TSA screeners Substantial grants – 10% match by the county

What do grants pay for ? Capital items Paving runways and taxiway The State of New Jersey also provides capital grants EMAS Explain what EMAS is

How is working with the FAA? The FAA is generally good to work with Their staff is knowledgeable They can be flexible or forgiving They help We get $ fast – all via draws generally done in a day Note they got back very quick on their purchasing rules They researched cost allocation plans and asked detailed but relevant questions And considered our input

Passenger Facility charges Commonly called PFC’s Charge passengers $4.50 Airlines collect. Charge airport 11 cents per. Airport receives $4.39 Charge on the first two original departing legs Generally for Capital – can be used indirectly as match for capital projects Expound on the match issue PFCs can not be used for operating expenses – generally for large capital projects

How do other Airports generate unrestricted revenues? Most states have a much larger array of permitted taxes Local income taxes Local sales taxes Hotel taxes (towns can counties can’t) Rental Car taxes None of these count for the FAA as operating revenues thus are unrestricted But as you are aware many of these are not available to Mercer County

How procurement laws differ FAA allows up to 100K as opposed to 40K for local units with a limited procurement procedures (Think get Quotes) Professionals are selected for 5 years FAA prohibits the “asphalt” escalator

Threats/problems More than once due to budget fights at federal level the air traffic controller staff were potentially going to be eliminated FAA wants GAAP reports they have been flexible but… FAA was not thrilled with the Cost Allocation Plan All airport land is encumbered and we need to pay “rent” to ourselves – Library Golf Course Public Works Garage Soccer Fields Any non airport use must pay land rent

Trenton Mercer Airport Improvements Problem Frontier Airlines comes to us to start service But our EMAS system construction will run into their busy season Our terminal is not up to par Parking lots are not adequate and in poor condition No parking system ie no revenues Expand on how airlines come in

EMAS Before

EMAS After

Parking Before

Parking During

Parking After

Terminal Before

Terminal After

Hold Room Before

Hold Room During

Hold Room After

Barriers to Improvements Convince elected officials that spending $4 million to improve airport that has never had a service level this high is a good idea Trusting that Frontier was serious Procurement time frames are an issue Its May and Frontier wants to start operations in November Will they really come back Had to “re-federalize” the airport Airlines can just pull out

Solutions Accelerated the EMAS construction by having the contractor work nights and weekends – about $1 million 8% change order – ultimately received FAA funding to pay 90% Designed additional parking lot awarded bid Redesigned terminal to install counters, baggage shoot removed old baggage carousel and converted that room to additional seating build new bathrooms Build exterior baggage building inside an existing footprint to avoid time delays for permitting Purchased parking system All contracts awarded via bid – no emergencies

Source of Funds Freeholders approved capital budget allocation Prior approved PFC allocations On the back end, some funds from FAA

RESULTS Through the efforts of Director Watson and County staff we got it done in 60 days Construction started in late August and was done before the facility re opened Nov 3 Last thing installed was the parking system – the equipment was 3 weeks late

How did this get done? Everyone pulling in the same direction Purchasing Finance Staff Elected Officials Contractors

Bottom line Each enterprise that you participate in will have nuances Embrace them Work with the department that run them and try to meet their needs Finance needs to be flexible as well – see things from the users perspective find a way to say yes We at the end of the day are on the same team Questions?