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SR-04-30-2013-11ACity of City Council Report Santa monied City Council Meeting: April 30, 2013 Agenda Item: ( (-A To: Mayor and City Council From: Martin Pastucha, Director of Public Works Subject: Resolution Amending the Santa Monica Airport Landing Fee Program Recommended Action Staff recommends that the City Council: 1. Adopt the attached resolution to change the landing fee program from the current $2.07 per thousand pounds of certificated maximum gross landing weight to $5.48 and apply the fee to itinerant and based aircraft at the Santa Monica Airport (Airport), effective August 1, 2013. 2. Approve the budget changes as outlined in the Financial Impacts and Budget Actions section of this report. Executive Summary Based on the results of a fee study, staff recommends increasing the landing fee at the Santa Monica Airport (SMO) from $2.07 to $5.48 per thousand pounds of certificated maximum gross landing weight and applying the fee to all aircraft including SMO -based aircraft. The proposed rate would provide net revenue to recover the cost to maintain and operate the public -use aviation areas (runway, taxiways, taxilanes and ramps) of the Airport. Background The Airport Fund began taking loans from the General Fund in 1988 to make up operating deficits. As shortfalls continued, numerous additional loans were required from the General Fund to enable the Airport Fund to meet its obligations. The most recent General Fund loan of $3.3 million was made in FY 2011 -12 so that the Airport Fund could cover part of the following operating overruns: 1 Fiscal Year Chanae in Net Assets FY 2007 -08 $ (597,434) FY 2008 -09 $ (1,419,257) FY 2009 -10 $ (564,558) FY 2010 -11 $ (2,117,933) FY 2011 -12 $ (1,137,065) * As per the Comprehensive Annual Financial Reports (CAFR) As of June 30, 2012, the Airport Fund's outstanding loan obligation to the General Fund was $13.3 million. With the loss of Redevelopment, the City's General Fund has assumed a greater responsibility for the costs of needed infrastructure improvements citywide. This requires Enterprise Operations such as the Airport Fund to achieve financial self- sufficiency. To that end, the City has undertaken a landing fee study to determine the cost recovery charge for aviation operations at the Airport. Landing fees are used to maximize safety and efficiency by providing the necessary resources to maintain and operate the public -use airfield areas at the Airport. On June 21, 2005, Council adopted Resolution No. 10047 setting the current landing fee at $2.07 per 1,000 pounds of certificated maximum gross landing weight as published by the aircraft manufacturer. This resolution exempted aircraft that were based at the Airport for a period of 30 days or more from the fee requirement. The fee exemption ends when an aircraft ceases to be based at the Airport. The Federal Aviation Administration (FAA) Airport Sponsor Assurances requires that the City maintain a fee and rental structure for Airport facilities and services that allow the Airport to operate as a self- sustaining enterprise fund. Capital projects required in the public -use aviation areas have been completed consistent with the provisions contained in the 1984 Settlement Agreement and FAA Airport Sponsor Assurances that require the City to maintain the Airport in good working order as prescribed by applicable federal, state, and local agencies. 2 Discussion During the May 8, 2012, Council meeting, as part of Phase III of the Visioning process, staff was directed to conduct fee studies that included landing fees. Staff retained aviation consultants WJ Advisors, LLC, to develop a financial model providing a basis each year that monitors the financial performance of the Airport and provides a consistent framework to determine an airport landing fee that should be applied to achieve cost recovery for the public -use airfield areas at the Airport. This study was conducted in accordance with the federal guidelines to make the aviation operations financially self- sustaining. Staff examined the Airport's historic costs to determine the amount allocable to public - use aviation areas as defined in Chapter 18 of the FAA's Airport Rates and Charges policy. This definition includes runways and taxiways, public aircraft parking ramps and aprons, and associated aeronautical land, such as land used for navigational aids. Capital expenditures dating back to 2002 that are allocable to these areas were amortized over the useful life of the asset. Staff calculated the annual gross landed weight for all aircraft using the Airport. The annual historic operating and amortized capital expenditure were divided by annual gross landed weight for all aircraft using the Airport to determine the fee per 1,000 lbs. of landed weight. The goal of the study was to establish and charge a landing fee rate that is fair and equitable across all users, including itinerant and SMO -based aircraft making the operation financially self - sustaining. The proposed landing fee rate and financial projections are in Attachment 2. The results of the landing fee study recommended that the landing fee be increased from the current $2.07 per thousand pounds of gross landed weight to $5.48. Staff recommends that this rate be effective August 1, 2013, and applied non - discriminatorily to both itinerant and SMO -based aircraft. Staff examined landing fee programs at other airports, focusing on airports that charge a landing fee to based aircraft. Additionally, the City's current landing fee structure and rate were reviewed to determine if the revenue from the airfield portion recovered the full cost of aviation expenditures in order to maintain the public -use airfield areas of the 3 Airport. The result of this analysis determined that the airfield side was not self - sustaining and required significant abatements from landside operations. This loss substantially contributed to the Airport Fund acquired debt of $13.3 million from the City's General Fund and has required the deferral of several capital improvement projects to the Airport's aircraft operations areas, which include the runway, taxiways, aircraft parking areas, helipad, and service road, as well as the deferral of non - aviation capital improvements. Staff has had to balance the need of maintaining the safety and integrity of the public -use airfield areas of the Airport to meet federal standards with inadequate funding. In recent years, staff has expended capital improvement funds to perform the minimum repairs necessary to meet federal guidelines in lieu of full scale pavement rehabilitation projects. Additional revenue generated from the landing fee will be used to make the airfield operations financially self- sustaining and to create an Airport Improvement Account to be used for the renewal and replenishment of assets, the construction and repair of facilities, the acquisition of equipment, and other related uses. Commission Action The results of the study were presented to the Airport Commission during its A ril 1 2013, special meeting. The Commission heard comments from members of both the aviation and neighboring communities. The Airport Commission made a motion to defer any decision on whether to recommend this matter to the City Council until its April 22, 2013, regular meeting. A report on the Airport Commission's April 22, 2013, meeting will be incorporated into staffs oral presentation at the April 30, 2013, Council meeting. Public Outreach In March and April 2013, staff had two meetings with personnel of the Western- Pacific Region of the FAA and reviewed the methodology and the findings of the study. Staff also held several meetings and shared the results of the study with various aviation interest groups including the Santa Monica Airport Association; Friends of Santa Monica Airport; local Fixed Based Operators; and flight schools. Staff disseminated notices to 2 all airport tenants and posted them in public areas at the Airport advising of the proposed change to the current landing fee program. This notice was also posted on the Airport's website. Financial Impacts & Budget Actions Staff projects that the new landing fee structure will result in additional annual revenue to the Airport Fund of approximately $1.4 million in FY 2013 -14 and $1.5 million in FY 2014 -15. Should Council adopt the proposed Resolution revising Santa Monica Airport landing fees, staff will include this revenue in the FY 2013 -14 and FY 2014 -15 proposed budgets in account 33431.402170; revenue increase is contingent upon Council budget adoption. Prepared by: Stephanie Manglaras, Principal Administrative Analyst, Public Works Approved: Forwarded to Council: Attachments: 1 — Resolution 2 — Proposed Airport Landing Fee Model, March 13, 2013 0 ATTACHMENT 2 Financial Projections -- Proposed Landing Fee Calculation Santa Monica Municipal Airport City of Santa Monica March 13. 2013 This financial model calculates a proposed landing fee rate based on a projection of historic costs, revenues, and the landed weight forecast. Principles Used by the City to Calculate the Proposed Landing Fee Rate The rate was calculated based on the following principles: • Historic costs allocable to the airfield area as defined in section 18.4.a in the FAA's Chapter 18 Airport Rates and Charges. Defined as runways and taxiways, public aircraft parking ramps and aprons, and associated aeronautical land, such as land used for navigational aids. Cost recovery principles • A basis for establishing and charging the rate — landed weight —that is fair and equitable across all users, including itinerant and based aircraft. Costs that are Recovered through Proposed Landing Fee Rate Costs recovered through the landing fee rate include the following: Operating expenses of the Airport, including expenses for City- provided services such as insurance, risk management, accounting support, etc. Capital expenditures that are allocable to the airfield area. Costs are recovered (amortized) from users over the useful life of the asset at an interest rate provided by the City for the year when the project was placed in service for its intended use, and included in the landing fee rate base. Calculation of the Proposed Landing Fee Rate The elements of the landing fee exhibit: Total operating expenses and amortization charges allocable to the airfield Specific credits are applied against airfield costs, which are airport fuel sales and noise abatement revenues The resulting "net costs" are divided by landed weight of aircraft using the SMO airfield to derive the proposed landing fee rate. List of Exhibits E1 Operating Expenses EIA Operating Expenses Detail E2 Capital Project Amortization Charges (Completed Airfield Projects since 2002) E3 Summary of Landed Weight Page 2 of 9 LANDING FEE CALCULATION Financial Projections -- Proposed Landing Fee Calculation Santa Monica Municipal Airport (For Fiscal Years Ending June 30) Exhibit Reference AIRFIELD COSTS Operating expenses (a) Exhibit 1 Amortization of City funded assets Exhibit 2 TOTAL AIRFIELD COSTS AIRFIELD CREDITS Airport Fuel Sales Noise Abatement - Airport TOTAL AIRFIELD CREDITS NET AIRFIELD COSTS Airport abatement of Airfield Costs ADJUSTED NET AIRFIELD COSTS LANDED WEIGHT (1,000 -lb. units) Based aircraft Itinerant TOTAL LANDED WEIGHT (1,000 -lb. units) LANDING FEE (1,000 -LB. UNIT) (b) LANDING FEE REVENUES (c) Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC [A] [B] [C =A +B] [D] [E =C +D] Exhibit 3 Exhibit 3 [F] [G = -E/Fl [H =F *G] Actual Actual Budget Forecast FY 2010 -2011 FY 2011 -2012 FY 2012 -2013 FY 2013 -2014 - FY 2014 -2015 FY 2015 -2016 $ 1,297,167 $ 1,278,361 $ 1,504,733 $ 1,505,386 $ 1,544,726 $ 1,583,818 178,862 . 335,192 340,575 ` `.442,081: 468,671 502,740 $ 1,476,029 $ 1,613,553 $ 1,845,308 $ 1,947,467 $ 2,013,397 $ 2,086,558 $ (206,437) $ (186,404) $ (199,200) $ $ (208,264) $ (213,470) (8,000) (33,075) (23,214) (23678) (24,270) (24,877) (930,265) $ (1,092,119) $ (1,322,894) 119,026 119,026 119,026 195,010 195,010 195,010 314:036. 314.036 314 036 NOTES: (a) Expenditures limited to components of airfield and for aeronautical use as identified by the Federal Aviation Administration's Policy Regarding the Establishment of Airport Rates and Charges. (b) It is assumed that for the forecast period, a landing fee rate that is based on full cost recovery is charged to all aircraft (based & itinerant). (c) Landing fee revenues historically and for the FY 2012 -2013 Budget are based on charging a landing fee to itinerant aircraft only. It is assumed that all aircraft are charged a landing fee for the forecast period, including based & itinerant aircraft. Page 3 of 9 Financial Projections -- Proposed Landing Fee Calculation Exhibits Santa Monica Municipal Airport City of Santa Monica March 13. 2013 Exhibit 1 OPERATING EXPENSES Financial Projections -- Proposed Landing Fee Calculation Santa Monica Municipal Airport (For Fiscal Years Ending June 30) OPERATING EXPENSES Salaries & wages Indirect cost allocation Security Maintenance Utilities Supplies & equipment Insurance Other TOTAL OPERATING EXPENSES Annual growth rate (a) OPERATING EXPENSES BY COST CENTER Airfield Non-airfield TOTAL OPERATING EXPENSES Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC $ 3,839,753 $ 3,902,489 $ 4,491,575 $ 4,252,457 $ 4,367,319 $ 4,480,586 NOTES: (a) Salaries & wages were lower in FY 2011 -2012 by 5.0 percent primarily due to savings from a partial position vacancy. The FY 2012 -2013 Budget estimate and the forecast is based on the assumption that there is a return to full and level staffing. The FY 2012 -2013 Budgeted expenses are estimated to be only .7 percent higher than in FY 2010 -2011. (b) The FY 2012 -2013 Budget estimate for the indirect allocation is 5.0 percent higher than FY 2011 -2012 primarily due to additional staff for Airport visioning processes. The FY 2013 -2014 estimate is 32.9 percent lower due to revised assumptions and cost analyses to be incorporated beginning that fiscal period. (c) In FY 2011 -2012, security expenses were 9.8 percent lower than in FY 2010 -2011 due to savings from vacancies in security positions. The FY 2012 -2013 Budget estimate is 21.2 percent higher than in FY 2011 -2012 (or 9.2 percent higher than FY 2010 -2011) primarily due to the Police Department's request to increase airport security. (d) The estimate for Budget FY 2012 -2013 for maintenance is 54.0 percent higher than in FY 2011 -2012 due to deferral of major maintenance items. While efforts continue to minimize maintenance expenses, the budget must account for maintenance costs. (e) The estimate for Budget FY 2012 -2013 for utilities is 55.1 percent higher than in FY 2011 -2012. This is a result of incorporating tenant reimbursements into the actual amounts shown. Utility lighttpower increases applied to the budget and forecast period do not include reimbursements from tenants. These will now be recorded as revenue. (f) Supplies & equipment and "other" expenses increased in FY 2011 -2012 by 33.8 percent and 25.5 percent over FY 2010 -2011, respectively. In the FY 2012 -2013 Budget, these expenses are projected to increase at approximately 112 of the growth rates that occurred in FY 2011 -2012. These increases are reflective of professional services and are not projected to occur during the forecast period. (g) Insurance expenses increased in FY 2011 -2012 by 33.1 percent over FY 2010 -2011. The increases were due to a revised allocation of property insurance to more accurately reflect actual costs. In the FY 2012 -2013 Budget, these expenses are projected to increase by approximately 12.8 over FY 2011 -2012. This was primarily due to the General Liability insurance being overstated and a budget adjustment was made at midyear. The forecast period assumes steady growth at the rate provided by the City's Risk Management Division. This rate is based on broker estimates and evaluations insurance markets. Page 5 of 9 Actual Actual Budget Forecast FY 2010 -2011 FY 2011 -2012 FY 2012 4013 FY 2013 -2014 FY 2014 -2015 FY 2015 -2016 (a) $ 1,373,493 $ 1,304,704 $ 1,382,652 $ 1,410,305 $ 1,445,582 $ 1,481,741 (b) 868,449 894,503 939,228 630,226 645,982 662,131 (c) 535,708 482,970 585,128 596,831 611,751 627,045 (d) 290,797 286,532 441,293 450,119 461,372 472,906 (e) 199,126 201,334 312,289 320,550 329,721 339,657 (f) 89,952 120,346 140,210 143,014 146,590 150,254 (9) 91,800 122,227 137,872 137,452 148,262 154,340 (f) 390,428 489,873 552,903 563,961 578,060 592,512 $ 3,839,753 $ 3,902,489 $ 4,491,575 $ 4,252,457 $ 4,367,319 $ 4,480,586 1.6% 15.1% -5.3% 2.7% 2.6% $1,297,167 $1,278,361 $1,504,733 $1,505,386 '.. $1,544,726 $1,583,818 2,542,586 2,624,128 2,986,842 2,747,071 2,822,593 2,896,767 $ 3,839,753 $ 3,902,489 $ 4,491,575 $ 4,252,457 $ 4,367,319 $ 4,480,586 NOTES: (a) Salaries & wages were lower in FY 2011 -2012 by 5.0 percent primarily due to savings from a partial position vacancy. The FY 2012 -2013 Budget estimate and the forecast is based on the assumption that there is a return to full and level staffing. The FY 2012 -2013 Budgeted expenses are estimated to be only .7 percent higher than in FY 2010 -2011. (b) The FY 2012 -2013 Budget estimate for the indirect allocation is 5.0 percent higher than FY 2011 -2012 primarily due to additional staff for Airport visioning processes. The FY 2013 -2014 estimate is 32.9 percent lower due to revised assumptions and cost analyses to be incorporated beginning that fiscal period. (c) In FY 2011 -2012, security expenses were 9.8 percent lower than in FY 2010 -2011 due to savings from vacancies in security positions. The FY 2012 -2013 Budget estimate is 21.2 percent higher than in FY 2011 -2012 (or 9.2 percent higher than FY 2010 -2011) primarily due to the Police Department's request to increase airport security. (d) The estimate for Budget FY 2012 -2013 for maintenance is 54.0 percent higher than in FY 2011 -2012 due to deferral of major maintenance items. While efforts continue to minimize maintenance expenses, the budget must account for maintenance costs. (e) The estimate for Budget FY 2012 -2013 for utilities is 55.1 percent higher than in FY 2011 -2012. This is a result of incorporating tenant reimbursements into the actual amounts shown. Utility lighttpower increases applied to the budget and forecast period do not include reimbursements from tenants. These will now be recorded as revenue. (f) Supplies & equipment and "other" expenses increased in FY 2011 -2012 by 33.8 percent and 25.5 percent over FY 2010 -2011, respectively. In the FY 2012 -2013 Budget, these expenses are projected to increase at approximately 112 of the growth rates that occurred in FY 2011 -2012. These increases are reflective of professional services and are not projected to occur during the forecast period. (g) Insurance expenses increased in FY 2011 -2012 by 33.1 percent over FY 2010 -2011. The increases were due to a revised allocation of property insurance to more accurately reflect actual costs. In the FY 2012 -2013 Budget, these expenses are projected to increase by approximately 12.8 over FY 2011 -2012. This was primarily due to the General Liability insurance being overstated and a budget adjustment was made at midyear. The forecast period assumes steady growth at the rate provided by the City's Risk Management Division. This rate is based on broker estimates and evaluations insurance markets. Page 5 of 9 Exhibit 1A 2,994,897 TOTAL OPERATING EXPENSES $ 3,839,753 $ 3,902,489 $ 4,491,576 $ 4,262,457 $ 4,367,319 $ 4,480,586 Airfield 1,297,167 1,278,361 1,504,733 '1,505,386. 1,544,726 Non - airfield 1,583,818 2,642,586 2,624,128 2,986,842 2,747,071 2,822,593 2,896,767 TOTAL OPERATING EXPENSES $ 3,839,753 It 3,902,489 $ 4,491,575 $ 4,262,457 $ 4,367,319 $ 4,480,586 Source: City of Santa Monica Actual Actual Budget Utility light/power increases applied to the budget and forecast period do not in elude reimbursements from tenants. These will now be recorded as revenue. Forecast (b) Property insurance annual percent Increases applied over the forecast period are base d on revised assumptions provided by the City's Risk Management Division. Cost Center Allocation Non. Line item designation FY 2010.2011 BY 2011.2012 BY 2012 -2013 FY 2013 -2014 BY 2014 -2015 FY 20152016 Airfield airfield OPERATING EXPENSES Salaries & wages 33203 (Airport - City Manager) semdes &,rases $ 960,866 43.8% 56.4% 3.431 (Airport - Public Works) eelenesswemts 895,330 998,655 1,018,628 1,044,094 1,070,196 1 43.61/. 68.4% 33457 (Airport Maintenance - Public Wo eeisr'cssvraeee 353,063 353,958 387,717 395,471 405,358 415,492 20.0% 80.0% Total Salaries & Wages $ 1,313,929 $ 1,249,288 $ 1,386,372 $ 1,414,099 $ 1,449,452 $ 1,486,688 Supplies & expense U01- Light/Power(a) Jore", $ 44153 $ 36,924 y 99,819 $ 105,509 $ 111,523 $ 117,879 100% 90,0% Utll - naturalGes ut", 10,789 9,581 11,433 11,433 11,433 11,776 0.0% 100.0% Utll - Water umlties 42,365 59,146 102,647 104,700 107,317 110,000 10,0% 90,0% Stormwater M9mt Utilities 75,773 78.790 77,317 77,317 77,317 77,317 25.0% 75.0% Transfer Station fee utiisies 1,590 3,339 1,748 1,783 1,828 1,873 0.0% 100.0% Back Fees ,mar 986 685 625 638 653 670 0.0% 100.0% bit - Telephone unr.gee 24.456 15,554 19.325 19,808 20,303 20,811 436% 56.4% Office Supplies 1 Expenses suppums & eq, im,cAt 13,462 12,844 13,000 13,260 13,592 13,931 416% 56.4% Metered Postage supplies a eyuipmeni 3,360 3,698 5,400 5,508 5,646 5,787 5.0% 95,0% Inventory Issues r iles a egmpment 933 1,437 5,000 5,100 5,228 5,358 500% 50.0% Community Outreach Onh , 11,666 5,390 13,000 13,260 13,592 13,931 90.0% 10.0% Equipment Rental SWpries&oquipmenc 7,336 8,446 12,760 13,015 13,341 13,674 50.0% 50,0% Mileage rnh, - - 550 561 575 569 0,0% '1040% Conference /Migs/Frsva1 on,or 10,003 9.733 5,500 5,610 5,750 5,894 50.0% 50.0% Food purchases oiner 1,519 1,655 1,500 1,530 1,568 1,607 50.0% 50.0% Membership Dues other 1,090 2,509 2,750 2,806 2,875 2,947 65.0% 35.0 °l0 Vehicles - Fuel ecpniiess eycipmem 1,948 1,357 2,500 2,560 2,614 2,679 (1 100.6% Vehicles - TlresiTubes sopp8aa seympment - 600 612 627 643 50.0% 50.0% Vehicles - insurance .. 9.500 - - 50.0% 50.0% CNGFuei $,,peas s egu'pment 2,772 975 3,950 4,029 4,130 4,233 10,0% 50,0% Van Mgmt Fund - plaint hlin;enanoe 27,292 26,656 48,734 49,709 50,951 52,225 5.0% 96,0% General' lability f Auto inseren.r 82,300 172 9,696 130 130 130 50.0% 500% Property Insurance (b) tnsurar,, 74,273 77,987 87,552 96,927 101,773 25.0% 75.0% Special insurance Insueoc. 45,575 47,854 47,826 49,261 50,493 25.0% 75.0% Airport Security Guard trans secumv 535,708 482,970 585,128 596,831 611,751 627,045 60.0% 40.0% Special Equip Malrt r iMenance 3,384 2,629 - - - 00% 100.0% Audio Equip Ma;nt Melnrraao,e 461 - 17,700 18,054 18,505 18,968 100.0% 00% Bldg /StNeture March ces"i"t'n, 4,000 4,080 4,182 4,287 0.0% 100.0% Special Department Supplies supplies anqurpmeot 2.300 475 6,300 6,426 6,587 6,751 0.61 100.0% indlrect COS( Allocation ind3eat case aim °otlan 799,455 623,439 864,611 435,173 446,052 457,204 11.0% 89.07 Other Costs ome, 19,752 18,941 39,000 39,780 40,775 41,794 0.0% 10( 1 Professional Services ,mar 331,817 441,817 460 „000 469,200 480,930 492,953 r 36.5% 63.6% Reimburse Engineering Office amen 2,963 106 3,353 3,420 3,606 3,593 25.0% 75.0% Airport Field Maintenance Malnienecce 340 483 3,600 3,672 3,764 3,858 43,6% 56,4 °% Property Taxes_ ,;tier 8916 8,827 26,625 27,158 27,836 28,532 26,0% 75.0% Bad Renovation /Maintenance Mamteneme 956 60000 61,200 62,730 64,298 10.0% 90.0% raise Eauiprr,ont suppnes & 34,865 59,974 70,000 71,400 73,185 75,015 90.0% 10,0% Office Supplies /Expenses ibiat"s &ayvepmeM 1,207 1,634 700 714 732 750 50.0% 50,0% Inventory Issues suppice &egmpmeot 16,375 26,004 17,400 17,746 18,192 18,646 50.6% 50.0% Conferences an iings7 Gavel Amer 120 - - - 50.0% 50.0% Food purchases spar 22 Vehldes - Fuels sopplae a or, nem 208 - - 50,0% 50.0% CNGFuei sugpeee &alulpr nt 1166 1,482 - - - - - 40% 10.0% 100.0% 90.0% General debility ineo =encei 2207 , 2,335 1,944 1,944 1,944 250% 75.0% Noe- Aviiatlon Maint Memienonuo 151,046 151,212 132,459 135,108 138,486 141,948 0.0% 100.0% Aviation Maint Momtennms 76,841 72906 139,400 142,188 145,743 149,386 950% 50% Landscape plant Mammoznce 20,633 20,890 24,600 25,092 25,719 26,362 10.0% 90.0% UNfonc l Proboilve Genre soppilea &egoipmem 4,226 1,612 2,600 2,652 2,718 2,786 20.0% 80.0% Indlrect Cost Allocation indirect ACS eunra iou 68,994 71,064 74,617 195053 199,929 204,928 19.1% 80.9% Aimed Field Malnt o,Wt,,.r v 10,800 10,800 10,800 11,016 11,291 11,574 50.0 °% 500% Retirement - MicroErupt Salad,, 8wesris 59,564 55,416 - - - - 43,6% 56,4% Interest Exp- Bands and Other Loans Omer 1,492 - - _ C6i° 1000% PERS peydown ocursawaoes - - (3,720) (3,794) (3,870) (3,948) 43.6% 56.4% Total supplies and expense $ 2,625,824 § 2,663,201 $ 3,105,203 $ 2,838,368 $ 2,917,867 § 2,994,897 TOTAL OPERATING EXPENSES $ 3,839,753 $ 3,902,489 $ 4,491,576 $ 4,262,457 $ 4,367,319 $ 4,480,586 Airfield 1,297,167 1,278,361 1,504,733 '1,505,386. 1,544,726 Non - airfield 1,583,818 2,642,586 2,624,128 2,986,842 2,747,071 2,822,593 2,896,767 TOTAL OPERATING EXPENSES $ 3,839,753 It 3,902,489 $ 4,491,575 $ 4,262,457 $ 4,367,319 $ 4,480,586 Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisers LLC (a) The estimate for Budget BY 2012-2013 for utilities is 55.1 percent higher than in FY 2011 -2012. This is a result of incorporating tenant reimbursements into the actual amounts shown. Utility light/power increases applied to the budget and forecast period do not in elude reimbursements from tenants. These will now be recorded as revenue. (b) Property insurance annual percent Increases applied over the forecast period are base d on revised assumptions provided by the City's Risk Management Division. Page 6 of 9 Exhibit 2 AMORTIZATION CHARGES -- COMPLETED CAPITAL PROJECTS Financial Projections — Proposed Landing Fee Calculation Santa Monica Municipal Airport (For Fiscal Years Ending June 30) NOTE: Includes capital expenditures that are allocable to the airfield area. Costs are recovered (amortized) from users over the useful life of the asset at an interest rate provided by the City for the year when the project was placed in service for its intended use, and included in the landing fee rate base. Includes expenditures for completed airfield capital projects beginning in 2002. Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC Page 7 of 9 Actual Actual Budget Forecast FY 10 -11 FY 2011 -2012 FY 2012 -2013 FY 2013 -2014 FY 2014 -2015 FY 2015 -2016 AMORTIZATION CHARGES Airfield $ 178,862 $ 335,192 $ 340,575 $ 442,081 $ 468,671 $ 502,740 Non - airfield 387,915 410,552 443,261 460,191 476,378 463,942 TOTAL AMORTIZATION CHARGES $ 566,777 $ 745,744 $ 783,836 $ 902,273 $ 945,049 $ 966,683 NOTE: Includes capital expenditures that are allocable to the airfield area. Costs are recovered (amortized) from users over the useful life of the asset at an interest rate provided by the City for the year when the project was placed in service for its intended use, and included in the landing fee rate base. Includes expenditures for completed airfield capital projects beginning in 2002. Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC Page 7 of 9 Exhibit 3 SUMMARY OF LANDED WEIGHT Financial Projections -- Proposed Landing Fee Calculation Santa Monica Municipal Airport (For Fiscal Years Ending June 30) LANDED WEIGHT FORECAST (1,000 -lb- units) Based aircraft Itinerant TOTAL LANDED WEIGHT (1,000 -lb. units) Annual growth rate Based aircraft Itinerant Total annual growth rate Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC Estimated Actual (a) Actuals (b) (2011-2012 FY 2012 -201 116,986 119,026 119,026 119,026 119,026 191,124 195,010 195,010 195,010 195,010 308,110 314,036 314,036: 314,036 314,036 0,0% 0.0% 0,0% 0.0% 0.0% 0.0% 1.9% 0.0% 0.0% 0.0% NOTES: (a) Based on actual data provided by the City of Santa Monica. (b) Based on actual data for July 1 through December 31, 2012 and forecasted data for January 1 through June 30, 2013 provided by the City of Santa Monica. (c) Forecasted levels, provided by the City of Santa Monica, to remain flat. Page 8 of 9 REVENUES Financial Projections- Proposed Landing Fee Calculation Santa Monica Municipal Airport (For Fiscal Years Ending June 30) REVENUES Landing fee revenues Annual growth rate Airfield revenues (excluding landing fee revenues) Airport Fuel Sales Noise Abatement - Airport Total Airfield revenues (excluding landing fee revenues) Annual growth rate Non - airfield revenues Airport - Hangar Rental Sales Airport - Office / Shop Rental Airport - Land Lease Airport - Tie Down Charges Airport - Misc Rev Filming Receipts Parking Receipts Int Dep /investments Unrealized Gain Loss Accrued Investment Income Amort/Accret Total Non - airfield revenues Annual growth rate TOTAL REVENUES Annual growth rate Source: City of Santa Monica Prepared by: City of Santa Monica and WJ Advisors LLC (d) (e) (f) 633,996 538,358 1,878,612 159,944 3,026 15,450 91,349 29,568 (8,858) (4,870) 6,492 Revised 748,177 642,030 1,920,022 152,400 5,336 8,177 65,694 97,647 (72,138) (47,386) 60,877 763,141 654,871 1,958,422 155,448 5,442 8,340 67,008 99,600 (73,580) (48,334) 62,094 782,219 671,242 2,007,383 159,334 5,578 8,549 68,683 102,090 (75,420) (49,542) 63,647 Actual Actual Budget (a) Forecast (a) FY 2010 -2011 FY 2011 -2012 FY 2012 -2013 FY 2013 -2014 FY 2014 -2015 FY 2015-2016 (b) $ 331,327 $ 301,955 $ 300,000 $ 1,720,605 $ 1,780,863 $ 1,848,211 -8.9% -0.6% 473.5% 3.5% 3.8% $ 206,437 $ 186,404 $ 199,200 $ 203,184 $ 208,264 $ 213,470 (c) 8,000 33,075 23,214 23,678 24,270 24,877 [A] $ 214,437 $ 219,479 $ 222,414 $ 226,862 $ 232,534 $ 238,347 2.4% 13% 2.0% 2.5% 2.5% (d) (e) (f) 633,996 538,358 1,878,612 159,944 3,026 15,450 91,349 29,568 (8,858) (4,870) 6,492 687,305 616,224 1,952,985 146,843 7,602 11,650 93,599 8,628 (6,374) (4,187) 5,379 748,177 642,030 1,920,022 152,400 5,336 8,177 65,694 97,647 (72,138) (47,386) 60,877 763,141 654,871 1,958,422 155,448 5,442 8,340 67,008 99,600 (73,580) (48,334) 62,094 782,219 671,242 2,007,383 159,334 5,578 8,549 68,683 102,090 (75,420) (49,542) 63,647 801,775 688,023 2,057,568 163,318 5,718 8,762 70,400 104,642 (77,305) (50,781) 65,238 [B] $ 3,343,067 $ 3,519,654 $ 5.3% 3,580,835 $ 1.7% 3,652,452 $ 2.0% 3,743,763 $ 2.5% 3,837,357 2.5% [C =A +B] $ ___..3,888,831 $ 4,041,088 $ 4.103.249 S 5.599.919 S A 797 inn 4 4 091 o1G NOTES: (a) Certain budgeted and forecasted revenues are allocated based on percentages from FY 2011 -2012 actual revenue amounts. (b) Landing fee revenues are estimated to increase substantially in FY 2013 -2014 based on the assumption that the City begins charging a landing fee to based aircraft. (c) Airport noise abatement revenues increased in FY 2011 -2012 primarily due to increases in fines. The FY 2012 -2013 Budget estimate reflects the level at which is expected to be maintained over the forecast period. (d) Hangar sale revenues increased by 8.4 percent in FY 2011 -2012 primarily due to six months of new hangar lease revenue and revenues are expected to increase by 8.9 percent in FY 2012 -2013 to reflect the entire year of lease revenue for the new rental. The forecasted amount is expected to be maintained over the forecast period. (e) Office /shop rental revenues increased by 14.5 percent in FY 2011 -2012 primarily due to increased rentals and are expected to increase at 4.2 percent in FY 2012 -2013 due to additional anticipated occupancy. (f) Land lease revenues are budgeted to decline by 1.7 percent in the FY 2012 -2013 Budget however revenues estimated to be received in FY 2012 -2013 will likely not result in a decline and forecasted estimates reflect continued growth over the forecast period. Page 9 of 9 Reference Resolution No. 10744 (CCS)