Master Plan Update (pdf) - Lansing/Capital City Airport

1.10 Business Aspects
Capital Region Airport Authority
Capital City Airport Master Plan Update
Responsive airport master planning must examine the fiscal environment under which airport
improvements may be undertaken. Key aspects of the fiscal environment are the airport’s basic
business model, operating revenues and expenses, and sources and uses of capital funds. The
following sections summarize this information for Capital City Airport.
1.10.1 Business Operating Model Overview
The Capital Region Airport Authority owns and operates the Capital City Airport and Mason Jewett
Field (a general aviation airport) located in Mason, Michigan. The Authority is organized under and
exists pursuant to Act 73, Public Acts of Michigan of 1970, as amended. The Authority is
authorized to, among many other things, issue self-liquidating revenue bonds, levy up to 0.75 mill
(or $0.00075) on each dollar of the taxable value of Ingham County and a small portion with the
City of Lansing in Eaton County, and enter into leases and contracts with tenants and users of the
Airport.
The basic business model in place at the Airport relies on two principal sources of operating
revenue: charges to airport tenants and users (in the form of rentals, fees, and charges) and local
taxes (based on the tax levy). Principal capital project funding sources are federal grants in aid,
passenger facility charges, and revenue bonds.
As part of the annual budget process, the Authority determines the amount of expected revenues
from the airlines, other tenants of the two airports, other miscellaneous revenue sources, and the
local tax revenues projected. The Authority also examines its projected operating and
maintenance expenses, debt service for its outstanding bonds, and other expenses for the year.
Each year’s budget must have sufficient revenues (plus any surplus from a previous year) to cover
all operating and debt service expenses for the budget year 2 . If the budget does not, the Authority
must revise the budget to bring it into balance by raising fees and charges (within the context of the
leases with the tenants of the two airports), cutting expenses, or increasing the tax levy (within the
context of its taxing authority).
Exhibit 1-20 provides a summary of revenues and expenses for the Airport for fiscal year (FY)
2003. Capital grant funding is not addressed in this table but is examined in more detail in the next
section.
Of the approximately $7.0 million in revenues for FY 2003, approximately 73.9 percent are
associated with the passenger and cargo service at the Airport (terminal rentals, landing and apron
fees, parking, and concessions), 17.5 percent are from various land rentals (including general
aviation and non-terminal building air cargo rentals), and the remaining 9.6 percent are tax levy
revenues. Note that the Authority could increase these revenues by increasing user fees and the
tax levy (currently set at 0.15 of the 0.75 mill limit). However, current revenues are sufficient to
address both operating expenses and capital needs.
2 In addition to any balanced budget requirements associated with the Capital Region Airport Authority’s
charter, state law, and prudent fiscal management, Section 604 of the Bond Resolution for its outstanding
revenue bonds requires the Authority to set, charge, and collect rates, fees, rentals, and charges to ensure
sufficient revenues to cover all costs of operating the airports and to pay all debt service. For a
2 detailed description of the exact wording of this requirement, see the Capital Region Airport Authority
Airport Revenue Refunding Bonds, Official Statement, March 15, 2002.
Inventory 1-45 Final