Consideration and Approval of Application: Between the City of Flagstaff and the Federal Aviation Administration for the 2020 Passenger Facility Charge (PFC) Application.

Authorize the notification to the FAA of the Flagstaff Airport’s intent to impose the current PFC in the amount of $4.50 per enplanement for the City match for multiple projects, as attached herein, for a total of $3,012,249.

The City has numerous Airport capital projects planned with the FAA and will initiate, and in many cases complete, these projects within 6 years (FY 2019-2020 to FY 2024-2025). The City's share of these projects is projected to be $3,012,249. Utilizing PFCs for the City's match on these projects would help reduce the annual General Fund transfer to the Airport Fund. Based on the airport’s enplanement projections, the estimated time to recover the total City match of $3,012,249 is by October 31, 2030. The project costs, once recognized, will have the PFCs applied against the required City match. If any of the projects change or projects are deleted, the City would initiate an amendment process as outline by FAA PFC regulations.

There are no anticipated policy impacts.

City Council Goal of Economic Development: Grow and strengthen a more equitable and resilient local economy.

1.  June 16, 2009 - Approval for PFC collections in the amount of $1,157,023.
2. February 9 & 10, 2012 - Budget Retreat. Direction to pursue an increased PFC level.
3. June 5, 2012 -  Approval for increased PFC level of $4.50 per enplanement from $3.00 per enplanement.
4. May 19, 2015 - Approval for PFC collections in the amount of $588,713.
5. February 6, 2018 - Approval for 2018 FAA Passenger Facility Charge (PFC) Grant Application to impose the amount of $4.50 per enplanement for a total of $713,623.

Option 1: Approve as presented. This option continues the $4.50 charge per enplanement for passengers boarding at the Pulliam Airport and authorizes the City Manager to make non-substantive adjustments as necessary to address FAA requests.
 
Option 2: Disapprove. This option would reduce the PFC revenues used to offset the City's match on capital projects and require the General Fund to increase revenue transfers for funding the Airport Capital Plan. PFCs are collected by most airports that use FAA grant funding.

The Passenger Facility Charge (PFC) Program allows the collection of PFC fees, up to $4.50, for every enplaned passenger at commercial airports controlled by public agencies. Airports use these fees to fund FAA-approved projects that enhance safety, security, or capacity; reduce noise, or increase air carrier competition. The Airport must submit a PFC application to the FAA to obtain authorization for the imposition and use of  PFC revenue for a specific eligible project. To qualify for the $4.50 PFC fee, the FAA requires we meet the following criteria:

1. Preserve or enhance safety, security, or capacity of the national air transportation system;
2. Reduce noise or mitigate noise impacts resulting from an airport; or
3. Furnish opportunities for enhanced competition between or among air carriers. For example, expanded terminal capacity and access, additional aircraft services and facilities.
4. The project costs requested for collection at $4.50 cannot be paid for from funds reasonably expected to be available for the programs referred to in 49 U.S.C. 48103; and the rate is not being increased at this time.
5. In the case of a surface transportation or terminal project, the public agency has made adequate provision for financing the airside needs of the airport, including runways, taxiways, aprons, and aircraft gates.

The Flagstaff Airport projects meet the criteria as set forth by the FAA.

The City is applying under the Streamlined PFC Application Procedures for Non-Hub Airports. The Streamlined Procedures may not be available at the exact time this application is presented to the FAA, in which case, the full PFC Application will be submitted. In January 1991, the City Council approved the use and collection of PFC revenue to pay for a portion of the Terminal Building and associated infrastructure. The City had been collecting $3.00 per enplanement PFC since 1992. In 2012, the PFC level was increased to $4.50 per enplanement. The current FAA-approved application for $522,703 which is expected to be fully collected by Jan. 1, 2021. This application requests a new authorization to collect PFCs totaling $3,012,249.
 
As the FAA has not yet approved the application, there is a possibility that minor changes might be requested regarding the application. Changes might include: presentation changes, removal of a specific future project in the event additional environmental studies are required, or some other FAA request as a part of this submission. Due to this possibility, it is requested that the City Manager be granted authority to sign any such changes without returning to the Council for approval. All changes are strictly restricted to reimbursement of PFC expenditures by the City of Flagstaff.

In the event this agenda item is declined, the City's General Fund will need to provide the City match for the Airport capital projects.

This action allows the Airport to continue to collect PFC revenue which is used to help pay for Airport capital projects and reduce the General Fund contribution.

Inform.

The City is required as part of the application process, to provide written notice to the air carriers and hold a consultation meeting with the air carriers. This meeting will occur on February 10, 2020, at 10:30 AM in the City Hall East Wing Conference Room.