Cherry Capitol Airport GOVERNANCE: TVC History, Overview of Models, & FAA Application Process January 8, 2019

Today’s Discussion

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• Governance history of TVC • Governance models

• Trends in airport governance models • Benefits of available models

• Process to change governance model • Airport Governance Advisory Committee • Schedule for transfer application • Discussion

Governance History of TVC 1935 - 1971

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1935 • Traverse City opens current airport location

1942 • Airport transferred to the U.S. Government (Navy) for WWII efforts

1949 • U.S. Government transferred the Airport back to Traverse City

1971

• Traverse City identified the Airport as a regional asset and wanted to work with the Counties to help make improvements to the Airport

• Northwestern Regional Airport Commission is formed, includes Traverse City, Grand Traverse County, Leelanau County

Governance History of TVC 1972 - Present

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1990

• Traverse City leaves the Northwestern Regional Airport Commission • The City no longer wanted to take part in the NRAC and conveyed the property over

to Grand Traverse and Leelanau Counties via a quitclaim deed • Grand Traverse County and Leelanau County remain with NRAC

1995 • Leelanau County inquired about alternative governance models

(Authority, Commission, Money Contribution)

1995 – N0W

• NRAC has operated the Airport in essence independently from the Counties by means of an appointed Airport Commission Board

Forms of Governance

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City, 36%

County, 12% State, 7%

Port Authority, 9%

Airport Authority,

35%

Privatized, 1%

Forms of Governance Virtually all major commercial service airports in the U.S. are publically owned, and they are operated along distinct governance models:

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Ownership Administration Examples PUBLIC: Government Entity

• City • County • State

Operated as a governmental department/unit

SFO, LAX, ATL, ORD/MDW, MIA, PHL, IAH/HOU, DIA, BWI, AUG, MHT, THL, HNL, SNA

PUBLIC: Authority or Regional Body

• Airport Authority (joint and otherwise)

Operated as an independent authority reporting to an appointed governing board

DFW, MCO, IAD/DCA, SAN, CMH, CVG, BDL, DTW, SYR, ALB, ROC, DSM, GRR

• Multi-modal Authority A larger authority which may include, port, road, and mass transit facilities

OAK, SEA, JFK/EWR/LGA, BUF/IAG, BOS, PDX

Privately Held

• Private sector management Contract management; FAA Privatization Program

HPN, TEB, Luis Muñoz Marín – San Juan International, Branson (MO)

Top Michigan Airports and Their Governance Models

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AIRPORT CODE FAA 2017

ENPLANEMENTS GOVERNANCE

MODEL

Detroit Metro Wayne County International Airport (Detroit)

DTW 17,036,092 Authority

Gerald R. Ford International Airport (Grand Rapids)

GRR 1,412,132 Authority

Bishop Int’l Airport (Flint)

FNT 393,549 Authority

Cherry Capital Airport (Traverse City)

TVC 235,137 Commission (2 Counties)

Capital Regional Int’l Airport (Lansing)

LAN 196,617 Authority

Kalamazoo/Battle Creek Int’l Airport

AZO 146,314 Commission

(County)

MBS Int’l Airport (Saginaw)

MBS 110,964 Commission

(County/2 Cities)

Commissions (typical) Authorities (typical)

Based on owner’s power of authority Based on State law

Representation based on owner’s desire

More regional in scope

Advisory power Binding resolution

Subject to existing policy Can make own policy

Financing subject to parent organization

Can issue debt

Assume risk Able to share risk (depending)

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Commissions v. Authorities

General Benefits of a Regional Authority

• To Provide a Singular Airport Enterprise Focus. This allows more flexibility to develop policies and procedures specifically attuned to meet the needs of an increasingly competitive environment, as opposed to trying to comply with the sponsor’s broad-based general policies and procedures.

• To Strengthen Regional Coordination and Economic Contribution. TVC is a regional economic asset, and being governed by an Authority Board with regional representation and participation would reinforce and strengthen its position as such.

• Create a Stronger Platform for Economic Development. A singularly business-focused governance Board with commercially-oriented policies will encourage a more entrepreneurial, business, and hospitality management focus, which will in turn be more conducive to customer service and future air service development.

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Airport Governance Transitions 1993 - 2017

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AIRPORT OPERATOR EST.

Asheville Regional Airport (Asheville, NC)

Greater Asheville Regional Airport Authority

2017

Gerald R. Ford International Airport (Grand Rapids, MI)

Gerald R. Ford International Airport Authority

2016

Syracuse Hancock International Airport (Syracuse, NY)

Syracuse Regional Airport Authority 2014

Bradley International Airport Connecticut Airport Authority 2013

Tulsa International Airport Tulsa Airport Improvement Trust 2013

Des Moines International Airport Des Moines Airport Authority 2011

Stewart International Airport (Newburgh, NY)

PANYNJ (prior authority, commission, private)

2007

San Diego International Airport San Diego International Regional Airport Authority

2003

Detroit Metropolitan Wayne County Airport Wayne County Airport Authority 2002

Jacksonville International Airport Jacksonville Airport Authority 2001

Pittsburgh International Airport Allegheny County Airport Authority 1999

Harrisburg International Airport Susquehanna Area Regional Airport Authority

1997

T.F. Green Airport (Providence) Rhode Island Airport Corporation 1993

Albany International Airport (NY) Albany International Airport Authority 1993

TVC Governance Alternatives

Alternative 1 — NO CHANGE: Continued County governance as is with Commission

Alternative 2 — Modified Commission: Continued County Commission governance, with specific changes

Alternative 3

Alternative 4

— Airport Authority pursuant to Act No. 95 of MI Law (2015)

— New legislation specific to TVC passed to form an Airport Authority different from conditions in Act No. 95

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Governance Alternatives Evaluation Summary

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Governance Alternatives Evaluation Summary (con’t.)

TVC Governance Review Conclusions

1. To date, the current duel sponsor governance model has provided a consistent and effective framework for the development of TVC as a commercial service/GA airport, but not as efficient as capable.

2. An Authority would provide greater flexibility to develop Airport-specific, commercially-orientated policies and procedures, which will better enable the Airport to compete and grow in the future.

3. Such a transition should be implemented in a manner that is a “win-win” for all stakeholders:

• Commission – Long-term increased economic contribution. Control retained of all Board appointments by joint sponsors.

• Airport – Single-purpose entity configured expressly to optimize results for Airport enterprise. Stronger business/commercial focus.

• Airport Staff – All employment and pension benefits would stay the same under the Authority.

• Regional Interests – Increased regional Board representation.

• Business Community/Economic Development – Stronger business focus for future board appointees.

The principal conclusions from the review of governance alternatives are:

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The Transfer Process: Fundamental Components

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• Transition committee • Clear goals • Structured discussions

The Transfer Process: Other Components

• Develop Governing Documents • Articles of Incorporation • Property conveyance • Services agreement, if desired • Assignment and Assumption Agreement • FAA Part 139 Application • Supporting resolutions

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The Transfer Process: Michigan Example (GRR)

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Major GRR Governance Transition Milestones • Board of Director’s retreat • Airport governance analysis — December 2013 - June 2014 • Governance Steering Committee recommendation • Airport Board recommendation to move forward • County Board of Commissioners • Approval of concept & recommendation to draft Enabling Legislation • County Board of Commissioners — approval of Enabling Legislation • State Legislature creation of Enabling Legislation • Signed into law by Governor • County Board approval of Articles of Incorporation • County approval of Airport Operating & Lease Agreement • Services Agreement • County Board appointment of Airport Authority Board members • Part 139 Application submission to FAA • FAA review (and possible revisions) • FAA approval • Establish Board • Transfer employees

NOTE: For TVC, the State enabling legislation already exists. There would be no need to pass new legislation unless TVC wanted changes to the existing legislation for its particular circumstances.

Airport Governance Advisory Committee

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• Committee made up of approx. 6 members from Grand Traverse County, Leelanau County, and the NRAC

• Meetings throughout the duration of the process leading to formal actions by the County Boards via formal resolution(s).

• Members will meet to discuss ongoing research into governance models, assist with coordination among County governments and administrative bodies, and provide input to required Airport transition documents.

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SAMPLE TRANSFER SCHEDULE

Questions / Comments / Discussion