September 2022 Budget Workshop Meeting Minutes

BOARD BUD­GET WORK­SHOP MINUTES

PANA­MA CITY – BAY COUN­TY AIR­PORT AND INDUS­TRI­AL DISTRICT

Open­ing:

The Board Bud­get Work­shop of the Pana­ma City-Bay Coun­ty Air­port and Indus­tri­al Dis­trict was called to order at approx­i­mate­ly 9:00 a.m., Sep­tem­ber 2, 2022 by Chair Hol­ly Melzer. 

The invo­ca­tion was giv­en by Chair Hol­ly Melzer.

The Pledge of Alle­giance was led by Vice Chair Mark Sheldon.

Board mem­bers present includ­ed: Chair Melz­er, Vice Chair Shel­don, Mr. Cramer, Mr. McDon­ald and Mr. McFat­ter. Mr. John­son and Mr. Algar­in were not present. 

Mr. Park­er McClel­lan intro­duced Ms. Bon­nie Ossege, Vice Pres­i­dent and avi­a­tion finan­cial con­sul­tant of 26 years with the firm of Ricon­do & Asso­ciates. She pre­sent­ed a snap­shot of the his­to­ry of the air­line indus­try both before and after dis­rup­tors such as ⁹⁄₁₁, the 2008 Finan­cial Cri­sis, the 2010 Deep­wa­ter Hori­zon Oil Spill, Hur­ri­cane Michael in 2018, the 2022 Chipo­la Com­plex Wild­fire, and the COVID-19 Pan­dem­ic and how the indus­try has been affect­ed. She explained rea­sons why the indus­try had dis­rup­tions, highs and lows and what to expect in the future as the trav­el indus­try adapts and moves for­ward. She said that the approach for the future is to col­lab­o­rate with air­port stake­hold­ers, be flex­i­ble with phys­i­cal plan­ning, and be ready to revis­it and update the Mas­ter Plan.

FY22 Oper­at­ing & Cap­i­tal Budget

The draft FY23 Oper­at­ing & Cap­i­tal Bud­get was pre­vi­ous­ly pro­vid­ed to the Board for their review in prepa­ra­tion for this discussion.

Mr. Park­er McClel­lan and Mrs. Dar­lene Gor­don reviewed the pro­ject­ed oper­at­ing rev­enues and expens­es for the cur­rent FY22 Bud­get and for the pro­posed FY23 Budget.

Oper­at­ing rev­enues include funds that are gen­er­at­ed by the users of the Air­port and include air­line, con­ces­sions, pub­lic park­ing, car rentals, gen­er­al avi­a­tion, space rentals and building/​land leases. 

The total oper­at­ing rev­enues in FY22 are pro­ject­ed to be $18,457,160 before set­tle­ment, which equates to $3,242,159, or 21.3%, over bud­get. The major­i­ty of the increase in total rev­enue is attrib­ut­able to high­er ter­mi­nal con­ces­sion fees, rental car con­ces­sion fees, and park­ing revenues.

Over­all, FY23 bud­get­ed oper­at­ing rev­enues are increased by $139,908, or 0.8%, from the FY22 pro­ject­ed rev­enues. When com­par­ing rev­enues of FY23 Bud­get to FY22 Bud­get, there is an increase of $3,382,067, or 22.2%, which is pri­mar­i­ly due to addi­tion­al air­line land­ing fees and ter­mi­nal rentals, rental car con­ces­sion fees, and increased park­ing revenue.

Oper­at­ing expens­es include salaries and ben­e­fits, pro­fes­sion­al ser­vices, sup­plies and mate­ri­als, util­i­ties, insur­ance, and oth­er expens­es nec­es­sary to main­tain the Airport’s operations. 

The FY22 pro­ject­ed oper­at­ing expens­es are $790,358, or 7.6%, less than bud­get. The oper­at­ing expens­es in the FY23 Bud­get rep­re­sent an increase of $2,052,412, or 21.2%, over the pro­ject­ed FY22 operating 

expens­es, with the increase in per­son­nel costs, pro­fes­sion­al ser­vices, com­put­er ser­vices, util­i­ties and jan­i­to­r­i­al costs being the largest fac­tors in the increase. The FY23 Bud­get reflects an amount which will pro­vide for the effi­cient oper­a­tion of the Air­port, and pro­vide the nec­es­sary resources to meet the estab­lished goals for the upcom­ing year. When com­par­ing FY23 Bud­get to FY22 Bud­get, there is an increase of $1,262.804, or 12.1%, with the larg­er increas­es being attrib­uted to per­son­nel costs, jan­i­to­r­i­al costs, and utilities. 

Pas­sen­ger vol­umes for FY22 are antic­i­pat­ed to be up approx­i­mate­ly 3.2% over FY21. Bud­get­ed pas­sen­gers for FY23 total 1,388,582, which reflects a decrease of 9.3% from the FY22 Bud­get of 1,531,731.

Pas­sen­ger traf­fic in FY22 will set a record for total pas­sen­ger activ­i­ty; how­ev­er, FY23 bud­get­ed pro­jec­tions are below the expect­ed total pas­sen­gers for FY22 due to the Pan­dem­ic and indus­try unknowns. A sig­nif­i­cant por­tion of the pas­sen­ger activ­i­ty at ECP is due to dis­cre­tionary trav­el. How­ev­er, with the eco­nom­ic down­turn, infla­tion, crew/​aircraft resources, and the ris­ing cost of trav­el, Staff has includ­ed these con­sid­er­a­tions in the devel­op­ment of our pas­sen­ger activ­i­ty forecast.

The Airport’s annu­al debt ser­vice pay­ment to the Flori­da Depart­ment of Trans­porta­tion – State Infra­struc­ture Bank (“SIB Loans”) in pre­vi­ous years totaled $3,089,574. In July 2021, ECP suc­cess­ful­ly nego­ti­at­ed with the State of Flori­da for an inter­est rate reduc­tion for the two out­stand­ing SIB Loans. The debt ser­vice pay­ment for 2023 and years going for­ward will be $2,614,217. The debt ser­vice pay­ment is fund­ed with Pas­sen­ger Facil­i­ty Charge (“PFC”) funds for 52% of the pay­ment, or $1,359,393 for FY22. The bal­ance is a cost that is charged to the Airport’s four cost cen­ters cal­cu­lat­ed in the Rates and Charges cal­cu­la­tion. I should be not­ed for FY23, funds from the COVID-19 Grants are being used to pay the bal­ance that is nor­mal­ly fund­ed with Air­port dol­lars in an effort to reduce rates and charges to our Air­line part­ners and oth­er tenants. 

The main focus of the Cap­i­tal Pro­gram cen­ters on Ter­mi­nal relat­ed projects. The cap­i­tal require­ment for projects and equip­ment from Air­port funds for the FY23 Bud­get is $5,006,854, while FAA funds are bud­get­ed at $21,943,012, FDOT funds equal $2,140,609, and Fed­er­al Relief Grant Funds are $3,505,886.

The total cap­i­tal pro­gram is bud­get­ed at $32,596,361 for FY23, but the com­mence­ment of some projects is depen­dent upon receiv­ing fund­ing from spe­cif­ic grants. 

FY22 rec­og­nizes the com­ple­tion an approval of the updat­ed Air­port Mas­ter Plan, the repair of the Ter­mi­nal Apron (Gate 7), the receipt of a new Air­craft Res­cue and Fire­fight­ing (“ARFF”) vehi­cle, the com­ple­tion of the design of the Ter­mi­nal and Bag­gage Make-up projects, the approval of the design project for a future expan­sion to the Ter­mi­nal Build­ing, and the announce­ment of a new fixed base oper­a­tor that will begin con­struc­tion in ear­ly FY 2023.

The Dis­trict has sev­er­al projects planned for the Air­port includ­ing envi­ron­men­tal mit­i­ga­tion efforts, addi­tion­al vehi­cle park­ing design and con­struc­tion, Ter­mi­nal Build­ing facil­i­ties expan­sion includ­ing the relo­ca­tion of the TSA Check­point and bag­gage claim, the con­struc­tion of expand­ed out­bound bag­gage facil­i­ties and relat­ed equip­ment, and eco­nom­ic devel­op­ment projects to attract busi­ness­es to the Airport.

The Bud­get Work­shop pro­vid­ed for a review and dis­cus­sion of the pro­posed FY23 Oper­at­ing & Cap­i­tal Bud­get and required no for­mal action by the Board. 

There was Board dis­cus­sion regard­ing new employ­ee posi­tions request­ed, the need for employ­ee pay rates to increase and con­sid­er­a­tion of peri­od­ic bonus­es ahead of infla­tion to avoid turnover. Addi­tion­al­ly, there was dis­cus­sion on cap­i­tal equip­ment, cap­i­tal devel­op­ment projects, eco­nom­ic devel­op­ment projects, debt ser­vice, look­ing into addi­tion­al grants from oth­er fund­ing resources such as COVID-19 Grants and oth­er grants and the use of lob­by­ing ser­vices to aid in future grant acquisition.

There was also Board dis­cus­sion regard­ing the jan­i­to­r­i­al con­tract and the need for a new jan­i­to­r­i­al com­pa­ny. It was deter­mined the best way to move for­ward was to go month-to-month with RESPECT/​Goodwill and devel­op and RFP for Jan­i­to­r­i­al Ser­vices. There was dis­cus­sion regard­ing the over­flow park­ing lot and whether to pave the entire lot rather than using a com­bi­na­tion of grav­el and asphalt road­ways. The RFP for con­struc­tion of the expand­ed long-term park­ing, employ­ee park­ing, and cell phone lot will be mod­i­fied to include the improved over­flow park­ing lot. Future Ter­mi­nal plan­ning will include plans of a Pet Relief Sta­tion and a Sen­so­ry Room. Regard­ing Gen­er­al Avi­a­tion, there was dis­cus­sion of the upcom­ing open­ing of South­ern Sky Avi­a­tion, a new Fixed Base Oper­a­tor (FBO) and its rev­enue effect on the FY23 Budget.

For­mal approval of the final Bud­get will be con­sid­ered at the Sep­tem­ber 28, 2022 Board Meeting.

Adjourn­ment:

The Bud­get Work­shop was recessed at approx­i­mate­ly 10:45 a.m. to attend the Reded­i­ca­tion of the Mil­i­tary Wel­come Cen­ter and recon­vened at approx­i­mate­ly 11:30. The Bud­get Work­shop was con­clud­ed and adjourned at approx­i­mate­ly 12:15.

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Lisa Brady, Exec­u­tive Assis­tant Hol­ly Melz­er, Chair