Proposed Des Moines Airport Authority

Proposed Des Moines Airport Authority
Council Workshop – October 25, 2010

Why a New Direction Air service issues Air cargo business decline Master plan update Terminal building age Economic growth potential Focus City Council Workshop -- October 25, 2010

Creating an Airport Authority Governing Law – Iowa Code chapter 330A. Following is a summary of the statutory scheme, some of the major issues that arise in establishing an authority and recommendations on how, where there is leeway, they might be resolved. All aspects of the transaction are subject to FAA concurrence. City Council Workshop -- October 25, 2010

Creating an Airport Authority State statute requires an initial public hearing to be held by the City Council Airport authority is created by ordinance and can be dissolved by ordinance Staff recommendation: Council should conduct the required public hearing and if, afterward, it wishes to continue, direct staff to: Draft the ordinance creating the airport authority and its Board of Directors Draft the documents necessary to transfer airport assets and furnish City of Des Moines services to the authority City Council Workshop -- October 25, 2010

Composition of Airport Authority Board Iowa statute requirements: Authority Board must consist of at least three members, Members must be appointed by City Council Note: Statute is silent on how nominees are presented to Council Authority Board members serve four year terms “at the pleasure of the municipality” Note: Half of the initial board members serve a two year term Authority Board members must be residents of the City of Des Moines Statute requires gender-balanced appointments after Jan 1, 2012 City Council Workshop -- October 25, 2010

Composition of Airport Authority Board Staff recommendations: Board should consist of five members Current board has seven Board members should be nominated by the Mayor and appointed by the Council Current approach is that each councilperson appoints one board member Beginning in 2012, no more than three Board members may be of the same gender Authority Board would act as a policy making entity and hire an executive for day-to-day operations Retain qualifications of current City code §22-47 for Board members – “Members should have expertise in aviation, business, accounting, finance, marketing, engineering, law, real estate development, management or other fields of value to the operation of the airport.” City Council Workshop -- October 25, 2010

Powers of Airport Authority Board State statute outlines the Board’s powers: Airport authority is a “public instrumentality and public body corporate” Authority has plenary power over airport – “To do all acts and things necessary or convenient for the promotion of its business” Authority has the power to buy, sell, and lease property Authority has the power to borrow money and issue bonds It has no taxing authority See §330A.8 for full list of powers City Council Workshop -- October 25, 2010

Ownership of Land, Buildings, and Property Staff recommendations: City will transfer all current airport property to the authority – will not otherwise function as the statute intends City will retain ownership of land and enter into a long-term lease with the authority, probably 50 or more years, unless FAA requires differently City will grant the authority the right to buy additional property in the City’s name, which would then fall under the lease. Selling of any property would require Council approval City will transfer all buildings to the authority so it can insure, maintain, repair, and demolish them as necessary City will transfer all other equipment and personal property that was purchased with airport revenue to the authority City Council Workshop -- October 25, 2010

Reporting There is nothing in the statute requiring the authority to report operations or activity to the Council. Staff recommends that one of the agreements between the City and the authority provide that the authority report annually to the Council much like the Aviation Department does today. The most appropriate place to include such a term would be within the lease of real property to the authority since it is a long-term arrangement. The annual report would contain a description of finances, significant changes at the airport such as the addition of buildings and master plan updates, and a statistical summary of operations and activity. City Council Workshop -- October 25, 2010

Master Plan Under the statute, the authority has control over all aspects of airport governance and development. Federal Aviation Administration would look to the airport authority, as the airport sponsor, to develop the master plan. However, the development of a master plan requires a public input program. Specifically, the input of public and elected officials. City Council Workshop -- October 25, 2010

Existing Contracts Since all agreements, leases, and contracts are in the name of the City, the City would assign its interest in each of them to the authority. The authority would honor all employee union contracts. City Council Workshop -- October 25, 2010

Impact on City Finances The authority, through 28E agreement, would continue to obtain services from the City much like it does today. Federal Aviation Administration regulations require that the airport pay the City no more than the value of services received, and the City operates under those rules today. Consequently, the formulas and amounts paid to the City in lieu of property taxes (PILOT) and other charges for services would be unaffected by the governing structure of the airport. City Council Workshop -- October 25, 2010

Proposed Des Moines Airport Authority