long term strategic plan for cic - … term strategic plan for cic: ... prospects for chico...

Corporate Delivery: Corporate Mailing:

45025 Aviation Drive, Suite 100 PO Box 16860 Dulles, VA 20166 Washington, DC 20041

LONG TERM STRATEGIC PLAN FOR CIC: A PROPOSAL FOR THE MANAGEMENT, OPERATION,

DEVELOPMENT AND MAINTENANCE OF THE CHICO MUNICIPAL

AIRPORT

SUBMITTED TO THE: CITY OF CHICO, CALIFORNIA

October 2015

ITEM 4.2. ATTACHMENT 1

TABLE OF CONTENTS

Proposal for: The Management, Operation, Development and Maintenance of the Chico Municipal Airport City of Chico, California

i

Section A: The Value Proposition ........................................................................ 1

A1. Mission Statement .................................................................................................................... 1 A2. Executive Summary .................................................................................................................. 1 A3. SWOT Analysis .......................................................................................................................... 2 A4. Strategic Vision ......................................................................................................................... 3

Section B: Strategic Approach ............................................................................. 4

B1. Maintain Compliance ................................................................................................................ 4 B2. Staffing for Success ................................................................................................................... 5 B3. Aggressively Pursue Revenue Enhancement Opportunities..................................................... 5 B4. Foster Open, Fair and Transparent Business Practice and Operations .................................... 6 B5. Expand Community Engagement ............................................................................................. 6

Section C: Facility and Land Development Plan .................................................... 7

C1. Airport Property Map ............................................................................................................... 7 C2. Facility and Land Development Opportunities ......................................................................... 8

Section D: Return of Passenger Service ............................................................. 10

D1. Background ............................................................................................................................. 10 D2. Summary of Market Opportunities ....................................................................................... 10 D3. Accommodating TSA ............................................................................................................... 12 D4. Terminal Development Plan ................................................................................................... 12 D5. Parking Plan ............................................................................................................................ 14 D6. Providing and Enhancing ARFF ............................................................................................... 14

Section E: Business Development & Marketing Plan ......................................... 16

E1. Importance of Marketing ........................................................................................................ 16 E2. Passenger Air Service Marketing Plan .................................................................................... 16 E3. Corporate/General Aviation and Overall Marketing Plan ...................................................... 18

Section F: Management Plan ............................................................................. 20

F1. Operations ............................................................................................................................... 20 F2. Staffing .................................................................................................................................... 20 F3. Capital Improvement Plan ...................................................................................................... 22

Section G: Financial Model ................................................................................ 23

G1. Key Operations Assumptions ................................................................................................. 23 G2. Key Staffing Assumptions ....................................................................................................... 23 G3. Key Rental Income Assumptions ............................................................................................ 23 G4. Key General Aviation Assumptions ........................................................................................ 24 G5. Key Passenger Air Service Assumptions ................................................................................. 24 G6. Key Capital Improvements Assumptions ................................................................................ 25


TABLE OF CONTENTS


ii

Section H: Phase Two Proposal ......................................................................... 39

H1. Key Proposal Elements ........................................................................................................... 39

Conclusion ........................................................................................................ 42

Appendix ..............................................................................................................

A. Chico Passenger Leakage Review & Analysis ............................................................................... B. Chico Municipal Airport Marketing Action Plan...........................................................................


Section A: The Value Proposition


1

A1. Mission Statement:

The Mission of AvPORTS at Chico is to manage, operate and develop the Chico Municipal Airport to the highest of professional standards ensuring safety, security, and economic self-sufficiency for the broad disbursement of economic benefit to the City of Chico and surrounding region.

A2. Executive Summary:

We have undertaken a thorough review of the recent history, current state, and future prospects for Chico Municipal Airport and have concluded that the airport is an irreplaceable and underutilized local and regional asset. Further, it is worthy of near term investment with the solid prospect of becoming a self-sustaining Part 139 commercial and general aviation airport that serves the City of Chico and surrounding communities. Only after exhausting all reasonable efforts to pursue the vision presented herein would we consider giving up the Part 139 status and focusing exclusively on general aviation.

Our due diligence process included numerous visits to Chico and the surrounding area, meetings and interviews with local businesses and business leaders, elected officials, professional municipal personnel, current tenants at the airport, the Federal Aviation Administration and air traffic control associated with the airport. We also undertook a broad inquiry with aviation and transportation firms and professionals – including commercial airlines – which we felt would contribute to our development of a long term vision for the ChicoMunicipal Airport.

As evidenced by the process and documentation relating to our existing Consulting Agreement, our goal was to develop a data driven vision and long term management plan that would be a useful planning tool for the City of Chico and which would be the basis for entering into a long term airport management and development agreement between the City of Chico and AvPORTS.

We feel our goal has been achieved and submit these materials as completion of our existing consulting agreement.

The scope of our investigation and the subjective breadth of the materials presented herein is such that we expect, and welcome, interaction and discussion. Collaboration and communication will be the key to a successful long term relationship centered on the Chico Municipal Airport and we look forward to the opportunity to work together to secure a bright future for CIC.




2

A3. SWOT Analysis:

Our initial due diligence, the findings of which were presented in our May 2015 Phase 1 Report, entailed an analysis of the strengths, weaknesses, opportunities and threats of and to the Chico Municipal Airport. An executive summary level list which helped lay the groundwork for our Phase II Proposal formulation and financial model assumptions follows:

STRENGTHS:

Geographic location relative to Redding, Sacramento, and San Francisco

Active, engaged and pro-growth FBO

Large, high profile tenants

Part 139 Certification

Available land for development

Pro-growth City Administration and Airport Commission

Supportive Business Community

Functional aeronautical infrastructure

WEAKNESSES:

Lack of full time on-sight professional staff

Loss of commercial service

Below market rates and charges

FAA compliance challenges

Recent / current lack of aggressive business development effort

Low revenue stream sends negative signal to community on airport’s true value

OPPORTUNITIES:

Underutilized land and facilities

Available large hangar space

Demand for commercial service

Corporate link to Silicon Valley

Collaboration with off airport land development and business investment community

THREATS:

Loss of AIP funding with loss of commercial service

Airline industry consolidation

Regional airport competition

Tenants happy with status quo

Opposition to change, however positive change may be, is easily mobilized




3

A4. Strategic Vision:

Through the establishment of a long term agreement between the City of Chico and AvPORTS, the Chico Municipal Airport will become a highly valued public asset serving the commercial, corporate and general aviation needs of the region.

Realizing this vision will require collaboration between AvPORTS and Chico. With Chico’s support, AvPORTS will be charged with leading the engagement of two distinct elements of the Chico community in an effort to ensure “buy in” on the airport’s mission and the strategic vision.

The first is the airport tenant community. Within 5 years, we envision a significantly different Chico Municipal Airport, one that is busy and prosperous. It will be well maintained, efficiently operated, and professionally managed to the benefit of all on-airport businesses and without placing a non-sustainable burden on the City of Chico’s finances. We expect some longstanding tenants to be resistant to change – both financial and operational – and recognize there will be a challenge in convincing all to embrace the vision and the changes. Yet this challenge is not unique to Chico, and it can be overcome with proper communication, collaboration, and the mutual support of AvPORTS and the City.

The second element is the segment of Chico’s population that can be served by the airport – individually and organizationally. Our work to date has shown overwhelming support for re-energizing the Airport for the benefit of residents and businesses, but we have only touched the surface and we plan to expand our audience in the early months of our engagement. Our vision and goals will only be fully realized if we engage others to share in it and support the effort.


Section B: Strategic Approach


4

B1. Maintain Compliance: To ensure the safety of all Airport users, avoid costly federal fines, and attract additional business, it is critical that Chico maintains compliance. We also view the possession of a Part 139 Certification as a valuable asset, and recommend maintaining that certification to support the strategic vision which includes commercial passenger air service.

As an operator of a FAA Part 139 Certificated Non-Hub Airport, the City of Chico has several responsibilities in order to stay compliant with strict safety and certification requirements. AvPORTS will ensure the operating protocols associated with Part 139 will be diligently implemented including daily inspections, generation of work orders, reporting of abnormal conditions as well as perimeter security checks.

In addition to FAA Part 139 requirements, the Airport is also responsible for:

Storm Water – Maintain compliance to State Storm Water Regulations. Inspect allAirport businesses to confirm best practices are being followed.

Disadvantaged Business Enterprise (DBE) – Maintain the approved DBE program. Minimum Standards – Draft Minimum Standards for Aeronautical Commercial

Operations at the Airport. Passenger Facility Charges (PFCs) – Maintain a PFC program. Upon the return of

scheduled passenger service to CIC, recommend a new PFC application to coincide withthe ACIP.

Airport Capital Improvement Program (ACIP) – Maintain the ACIP and participate inannual FAA Airport District Office (ADO) meetings to assure Airport priorities areunderstood.

Airport Rules and Regulations – Review and Modify Airport Rules and Regulations toconform to Industry Best Practices. Such regulations assist in the daily management andoperation of the Airport.

Caltrans - Division of California – Maintain compliance regarding annual certification andcapital improvement data entry to remain eligible for grants and loans.

FAA Grant Assurances – Confirm Airport compliance to all FAA grant assurances. Letter of Agreements – Maintain (or create new) Letter of Agreements between Air

Traffic Tower and City of Chico for authorized vehicles in movement area, levels ofresponsibility for non-movement areas, helicopter training areas (if any apply) andlighting system.

Unmanned Aerial Systems (UAS) – Provide guidance and advice to UAS operatorsregarding the rules for conducting UAS within the Class “D” airspace surrounding theAirport.




5

Airport Security Program (ASP) – Maintain the ASP pursuant to 49 CFR 1542. Provideproper training for Airport Security Coordinators (ASC) as needed. Establish relationshipfor armed Law Enforcement Officer (LEO) response to the passenger checkpoint oncescheduled passenger service has returned to CIC.

Access Controls – Create and maintain a badging system for the Secure IdentificationDisplay Area (SIDA) as well the multiple vehicle access points. Perform Criminal HistoryRecords Check (CHRC) for SIDA authorized employees.

Emergency Response – Respond to incidents and emergencies as needed and asrequired.

B2. Staffing for Success:

Providing an appropriate level of staffing is critical to ensuring the safe and efficient operation of an airport. Without sufficient dedicated human resources, the airport risks falling out of FAA regulatory compliance, deferring critical maintenance and repair tasks, and forgoing new revenue growth opportunities.

AvPORTS will have the correct staff level predicated upon the level of activity and needs of the airport as a whole. Our vision, after six years and beyond will be a staff level of eight full time employees. At this level, we will be able to properly manage, operate, secure, develop, and maintain the airport. To complement our own staff, service contractors will be utilized to perform various activities to assist in fulfilling the airport’s mission and ensure its success.

B3. Aggressively Pursue Revenue Enhancement Opportunities:

Improving the financial outlook at the Airport will require a multipronged approach to revenue enhancement. We plan to:

Update the existing rates and fee structure to current market rates. Implement a paid parking model for the passenger terminal area. Once scheduled

passenger service returns, passengers will utilize their home town airport and will paycompetitive parking rates. We suggest the Airport utilize a kiosk payment system, andwe have incorporated the costs and forecasted revenues of such a system into ourfinancial model. Passengers will still have the option of coordinating a drop off and pickup to avoid paying the parking fee. Our proposed parking fee as incorporated into ourfinancial model is $8 a day, the same rate Redding Municipal Airport has charged since2013. Parking rates at Sacramento International Airport range from $12-$17 a day.

Restore passenger air service. Air service development is highly desired by Chico andButte County residents. Scheduled passenger service will generate fuel sales, landingfees, vehicle parking revenues, rental car concessions, passenger facility charges andfacility rent. The return of passenger service will be a multiplier for economic impactwith additional jobs and will greatly assist local economic development efforts.

Review self-fueling practices to eliminate the practice of unauthorized self-fuelingoperations. For instance, it has been suggested that during fire season, some contractfirefighting operators are bringing in their own fueling tenders to refuel their aircraft.




6

This practice takes money from the existing FBO and the airport loses the fuel flowage fee.

Market vacant facilities and land for both aeronautical and non-aeronautical operations.CIC has the space, vacant facilities, weather and runway capacity to attract a majoroperation like a maintenance refurbish operator, flight training or Unmanned AerialSystems R&D enterprise to name a few.

Re-evaluate the City’s relationships with the commercial brokerage community orsupport AvPORTS establishment of a process to incentivize brokers to consider airportland and facilities for their clients’ needs.

B4. Foster Open, Fair and Transparent Business Practice and Operations:

We believe it is important to operate the airport facility in a fair, open and transparent way. On a monthly basis we will engage airport tenants in town-hall style meetings to educate them on changes in practices, programs, and future capital projects at the airport. This venue will allow for enhanced communication, improved relationships and increased confidence that positive changes are coming to the airport.

B5. Community Engagement:

AvPORTS intends to make significant efforts to engage the airport and community on major topics like commercial air service, economic development, airport master planning, aerial firefighting as well as the general exchange of information. We believe it is critical to establish and build relationships not only within the airport boundaries but the community as a whole. The community engagement efforts will include town-hall type meetings for certain topics and Q&A opportunities, attending service organizations and timed press releases.


Section C: Facility and Land Development Plan


8

C2. Facility and Land Development Opportunities:

Building on our earlier Phase I work, we extended our outreach to local brokers, investors, and developers with activities on and around the airport.

Our data sources included CoStar / Loop Net, Coldwell Banker Commercial Brokerage, and independent research/proprietary information with regard to commercial and industrial land and facilities.

For airport land and facilities, we used independent research at Redding, Red Bluff, Santa Rosa, Willows, Arcata and Eureka. Real estate / rental information from Redding, Red Bluff, and SantaRosa was used primarily in our analysis with the other airports contributing only to data relating to aviation fuel costs. Our view is that CIC’s “competitive set” is primarily Redding and partially Santa Rosa.

Our conclusion overall is that Chico is underpriced against its competition with regard to aeronautical land and buildings. For non-ramp served buildings at Chico that are in fair to good condition, there is market demand and an aggressive leasing effort (including outreach to the local and regional brokerage community) would be expected to result in occupancy of the currently vacant facilities.

Our view is that industrial and commercial real estate as well as businesses and institutions in Chico that will influence the airport are in full recovery from the most recent low point of 2008 +/-. As such, our forward view of Chico is positive – particularly on airport land and facilities which are a unique asset class that doesn’t always have to compete with the broad commercial industrial land and facilities market; if your business requires immediate access to aircraft, a building across the street from the airport isn’t going to fulfill your need.

Our financial model and detailed/granular assumptions on rents, lease terms, etc. reviews every facility and land tract currently producing revenue, or - in our view - reasonably capable of producing revenue with proper marketing efforts (and potentially, investment supported by the prospective revenue). A summary of our plan/forecast follows:

We have categorized our vision on revenue enhancements possible under a facility and development plan into four primary categories:

1. Vacant or underutilized non-ramp served buildings in fair to good repair

747 Fortress is a prime example of this category. We feel with proper marketing andpossibly some reconfiguration of space, the building could be fully leased. A singleuser would be preferable, but multi-tenant configurations would be considered.

2. Vacant or underutilized buildings with ramp access

100 Lockheed Avenue is a prime example of this category. While in need of somerepair due to its recent vacant state and a limited repair/maintenance program, theland side and air side access of this facility is supportive of a single user that we feel


Section C: Facility and Land Development Plan


9

can be attracted to the site with a proper marketing (and possibly a “clean up” investment relating to deferred maintenance) plan.

3. Vacant land

A number of sites along Fortress represent this class of opportunity and similar to747 Fortress, we feel a focused marketing program will create leasing activities forthese sites. Because we would offer them 30-year land leases, there will not likelybe the activity that fee title sites may offer in non-airport land, but that doesn’tsuggest that there is no opportunity to derive some revenue from these sites.Certain of them have or could have immediate access to the airfield which we wouldexploit in our marketing effort. The land around existing T-hangars also presents agood opportunity to lease land for additional T-hangars or, for the airport to buildand lease T-hangars. This option in the near term would require consideration forpotential competition between the airport and in place tenants, but over the longerterm if the airport desired to go into the T-hangar business as a policy matter, themovement into the T-hangar ownership business could be managed fairly for all.

4. Existing and leased facilities

As mentioned elsewhere, we feel a number of in place leases, both facility and landleases, are under market and there is meaningful opportunity upon expiration of thecurrent leases to bring rents to market. As a policy matter, Chico may decide not toseek 100% of current market rents for in-place tenants who desire to extend theirleases. However, the gap between in place rents and our view of market rents issignificant in certain cases and we feel moving toward market rents is worthy ofpursuit.

The remaining “bucket of assets” includes buildings that appear to be candidates to be razed, agricultural land leases, and aircraft parking ramp. These and any other unique or isolated uses would be considered on a case-by-case basis and do not lend themselves to a standalone strategy at this time.


Section D: Return of Passenger Service


10

D1. Background: In December 2014, SkyWest Airlines (operating as United Express) discontinued passenger air service between Chico and San Francisco (SFO). When the announcement to end service was made in the fall of 2014, there was little reaction from the community as most residents continued to drive to Sacramento or San Francisco when flying to avoid the perceived unreliability of SkyWest’s service at Chico.

Now left without local passenger air service, many in the community are beginning to understand the benefits passenger air service had brought to Chico. Local employers are finding it difficult to convince new employees to relocate to Chico, universities are having more difficulty attracting students and faculty, new employers are less likely to locate new offices in Chico, and manufacturing firms find it more expensive to get service and maintenance for specialized equipment that requires out of state technicians to perform the work. Additionally, the National Yo-Yo Championships, which had been held annually in Chico since 1993 did not return to Chico in 2015, with lack of passenger air service being cited as a contributing factor.

With a lack of passenger air service in Chico continuing to have a negative effect on the community, re-establishing it should become a top priority. Section D2 addresses what air service opportunities exist for Chico, along with how and what needs to be done to bring passenger air service back. Section E addresses the marketing support needed to ensure the success of new passenger air service.

D2. Summary of Market Opportunities:

The Chico Municipal Airport serves the City of Chico and neighboring communities that are closer to CIC than to any other commercial service airport. This service region is referred to in airline terms as the airport’s Catchment Area and for Chico it encompasses all populated land as far north as Los Molinos, as far south as Gridley, and is bordered on the east and west by unpopulated mountain ranges. A geographic depiction of Chico’s Catchment Area is shown here as the blue highlighted region of Exhibit 1 with the blue lines representing the regions that are within 30 minutes’ drive time of either the Chico or Redding airports.

Within the CIC Catchment Area there were 623,388 annual O&D passengers in 20141, which equates to 854 Passengers per Day Each Way (PDEW). This means that every day 854 people leave the Chico Catchment Area to fly somewhere and another 854 people arrive in Chico after flying from somewhere else. By comparison, there are only 725 PDEW in Redding’s Catchment Area making Chico’s air service market 18% larger than Redding.

1 Based on ARC data for calendar year 2014 adjusted with U.S.DOT DB1b O&D Passenger data provided by DataBase Products

Exhibit 1: CIC Catchment Area




11

In the case of Chico, only 5% of passengers actually used SkyWest’s service at CIC with the other 95% driving to one of the surrounding airports. Exhibit 2 quantifies the airport of choice for

Chico travelers.

For an air service market the size of Chico, one normally expects to see least 33% of the passengers flying from the local airport when adequate air service exists2. In the case of Chico where only 5% of passengers were using the local airport, this a clear indication that there is adequate passenger demand, currently using other airports, to support a more robust level of passenger air service at CIC.

This data also provides us with information that we can use to determine which destinations are

most popular with the passengers traveling to and from the CIC Catchment Area. Exhibit 3 identifies the Top 25 Domestic Markets to/from the CIC Catchment Area.

Based on this data the LA Basin is by far the largest O&D passenger market for Chico with 165

PDEW traveling between the two regions. Other markets such as San Diego (SAN), Las Vegas

2 Based on passenger leakage studies conducted by AvPORTS that have quantified passenger demand at the following airports: Akron/Canton Regional Airport (CAK),

Birmingham Int’l Airport (BHM), Erie Int’l Airport (ERI), Ft. Wayne Regional Airport (FWA), Lehigh Valley Int’l Airport (ABE), Reno/Tahoe Int’l Airport (RNO),

San Jose Int’l Airport (SJC), South Bend Regional Airport (SBN), Stewart Int’l Airport (SWF), Tucson Int’l Airport (TUS), Westchester County Airport (HPN) & the

Wilkes-Barre/Scranton Int’l Airport (AVP)

Exhibit 3: CIC Catchment Area Top 25 Domestic Mark ets

Rank Metro Market Destination Code Total O&D PDEW CIC SMF SFO OAK RNO SJC Other

1 LA Basin, CA (BUR, LAX, LGB, ONT & SNA) 120,523 165 1% 85% 4% 6% 2% 2% 0%

2 San Diego, CA SAN 37,943 52 1% 86% 3% 5% 4% 2% 0%

3 Las Vegas, NV LAS 31,795 44 1% 75% 7% 6% 10% 2% 0%

4 Seattle, WA SEA 26,433 36 2% 83% 5% 5% 2% 2% 0%

5 Phoenix, AZ (AZA & PHX) 22,321 31 1% 82% 5% 5% 5% 2% 0%

6 Portland, OR PDX 21,116 29 2% 87% 3% 4% 3% 2% 0%

7 Denver, CO DEN 18,831 26 2% 79% 9% 3% 4% 2% 0%

8 New York/Newark, NY/NJ (EWR, JFK & LGA) 15,832 22 7% 59% 30% 1% 3% 0% 0%

9 SF Bay Area, CA (OAK, SFO & SJC) 13,843 19 93% 3% 0% 0% 3% 0% 1%

10 Kahului, HI OGG 12,839 18 0% 81% 1% 9% 2% 6% 0%

11 Chicago, IL (MDW & ORD) 11,504 16 4% 66% 18% 5% 6% 1% 0%

12 Washington/Balt, DC/MD (BWI, DCA & IAD) 10,041 14 4% 66% 20% 4% 3% 3% 0%

13 Dallas/Ft. Worth, TX (DAL & DFW) 9,198 13 2% 64% 21% 3% 7% 2% 0%

14 Honolulu, HI HNL 8,773 12 2% 63% 9% 13% 7% 6% 0%

15 South Florida, FL (FLL, MIA & PBI) 8,031 11 4% 54% 38% 0% 3% 0% 0%

16 Orlando, FL MCO 7,323 10 5% 58% 32% 2% 2% 0% 0%

17 Boston, MA BOS 6,884 9 9% 47% 37% 1% 2% 3% 0%

18 Atlanta, GA ATL 6,548 9 2% 83% 11% 1% 2% 1% 0%

19 Salt Lake City, UT SLC 6,220 9 1% 81% 2% 9% 7% 1% 0%

20 Houston, TX (HOU & IAH) 6,043 8 4% 73% 8% 8% 6% 1% 0%

21 Minneapolis/St. Paul, MN MSP 5,620 8 3% 83% 9% 2% 3% 0% 0%

22 Austin, TX AUS 5,380 7 3% 72% 14% 5% 2% 4% 0%

23 Detroit, MI DTW 4,511 6 1% 62% 29% 2% 3% 3% 0%

24 Kansas City, MO MCI 4,506 6 5% 79% 3% 7% 5% 1% 0%

25 Nashville, TN BNA 4,138 6 1% 89% 4% 2% 3% 1% 0%

Passengers by Airport

Exhibit 2: CIC Catchment Area Passengers by Airport of Use




12

(LAS), Seattle (SEA) and Phoenix (PHX) help to round out the top 5 most traveled destinations to/from the CIC Catchment Area. These five destinations represent markets that are Chico’s best chance of reinstating passenger air service. There are many airlines that have hubs or other sizeable operations in these markets that could have a strategic interest in serving Chico from one or more of their hubs. These airlines include: Alaska Airlines, Allegiant Air, American Eagle, Delta Connection, PenAir, SeaPort, SkyWest, and United Express.

In order to properly market Chico to the airlines listed above, each airline should be contacted individually regarding the market or markets that it has strategic interest in and then a financial case should be built that proves Chico can support the new service being requested. Prior to the first airline meeting, the airport should design and approve the air service incentive program for the airport that outlines exactly what incentives the airport gives to airlines that choose to start new air service from CIC.

Once an airline shows interest in Chico, the airport should apply for a federal Small Community Air Service Development (SCASD) grant to provide the airline with marketing support and revenue guarantee funds needed to offset losses incurred during the first few months of operations.

To gain a more detailed understanding of airline passenger demand within the CIC Catchment Area, refer to the Chico Passenger Leakage Review & Analysis located in Appendix A of this report.

D3. Accommodating TSA:

The Transportation Security Administration (TSA) would need to return to CIC in support of passenger and baggage screening activities. We have learned from the TSA that it may not be able to simply return to the existing facility, but instead would require a consistent “footprint” for a traditional screening room set-up. It is of our opinion that the existing facility cannot be utilized without modification and as a result we outline in the following section our plan to relocate TSA to a new modular passenger hold room that will be constructed next to the passenger terminal. We suggest that the City engage TSA administrators from the SMF region to obtain feedback regarding the exact requirements for TSA’s return to CIC to ensure a properly managed return to the airport when passenger air service is re-established.

D4. Terminal Development Plan:

The Chico Municipal Airport passenger terminal will need to undergo some sort of expansion to accommodate passenger air service by aircraft with 50 seats or more. The existing passenger terminal lacks sterile passenger hold room space past the TSA checkpoint. In the past, the hold room was noticeably tight for SkyWest Airlines’ operation of 30 seat EMB-120 aircraft. Nowthat most airlines no longer use aircraft of that size, any air service that Chico secures in the future will most likely be on aircraft with at least 50 seats. In the case of Allegiant Air service to Las Vegas, the aircraft will most likely be a 166 seat MD-80.




13

In order for CIC to accommodate passenger volumes of this size, a larger passenger hold room will need to be constructed. To accomplish this as affordably as possible, it is recommended that a temporary modular hold room be constructed next to the existing passenger terminal. The modular building should be large enough to accommodate seating for 150 passengers, restroom facilities, vending machines and a new TSA checkpoint. By moving the TSA checkpoint to the modular building, the footprint of the existing checkpoint can be repurposed for additional ticket counter space and/or baggage claim in the main terminal. Exhibit 4 shows a proposed location for the modular building the City has previously received and that AvPORTS agrees is a logical site for terminal development.

The existing terminal has very limited ticket counter space and has a baggage claim that consists of an outdoor covered area where luggage was unloaded onto benches from baggagecarts for passengers to retrieve. These facilities are adequate when aircraft only have 20passengers; however, large numbers of passengers will require improved facilities. Exhibit 5 shows one way that ticket counter space can be increased to accommodate a second and possibly a third airline depending on the number of check-in positions each airline requires, in addition to installing a baggage carousel in the footprint of the old TSA checkpoint. These improvements would allow the passenger terminal to accommodate the growth in passengers we have forecasted over the next 10 years.

Exhibit 4: New Modular Hold room




14

D5. Parking Plan:

Parking revenue is a very important piece of any airport’s revenue stream. Once passenger air service is re-established at CIC, our forecasts estimate that over 60% of all new airport revenues generated by passenger air service will come from paid parking. In our models we assume that the daily parking rate will be $8.00 and that 1 in 4 enplaned passengers will choose to park a car, with the average trip lasting 4 days. In order for the airport to collect this parking revenue a parking fee collection system must be installed before passenger air service resumes. It will consist of entry and exit gates for both of the existing paved parking lots, curb improvements to close some of the current entry and exit points, and an automated payment kiosk for passengers to pay for their parking in the terminal before walking to their car.

In addition to the installation of a parking fee collection system, eventually we forecast passenger traffic will grow to a point that the existing parking lot will no longer be large enough to accommodate the volume of cars. Once it becomes apparent that the existing lot is reaching maximum capacity, it will need to be redesigned using the empty land to the north.

D6. Providing and Enhancing AARF:

For CIC to accommodate passenger air service operated by either a scheduled or unscheduled passenger air carrier, the provision of ARFF and/or coordination with Chico Fire Department willbe required for the airport to meet FAR Part 139 requirements, which is, the airport must have adequately staffed and trained personnel capable of responding to an accident at the airport. Without such fire and rescue support, air carriers will be unable to serve the airport. It is conceivable compliance can be achieved through temporary manning of the ARFF station by the Chico Fire Department during an air carrier arrival and departure operation.

Exhibit 5: CIC Passenger Terminal Improvements

New Baggage Carousel

New Ticket Counter




15

Our long term Proposal includes leading all of the above elements for a sustainable return of passenger traffic to Chico. Out of pocket expenses, per an approved budget, would be reimbursed to AvPORTS, but no overhead or executive level compensation would be incurred by Chico for air service development. Our compensation for securing the return of passengertraffic will be performance based until such time as passenger service has stabilized at CIC (forecasted at years 7-9). Thereafter we would propose maintenance of service consulting and passenger air services arrangements for Chico to consider, but this Proposal does not obligate Chico to engage us for such services.


Section E: Business Development & Marketing Plan


16

E1. Importance of Marketing

Like any other product or service, airports should always be in a state of constant marketing and advertising to ensure market share does not erode and passenger traffic remains as strong as possible. A lack of effective marketing might cause an airport to lose relevance within its community as potential passengers begin frequenting other airports that have more aggressively marketed to them. This has been the case with CIC in the past. Passenger travel habits are difficult to change and once a passenger stops using your airport it can be difficult to get them to come back without an aggressive marketing campaign in place to re-brand the airport to them.

The purpose of this Marketing Plan is to provide CIC with an outline of important tasks that should be completed to ensure that the airport has the maximum exposure within the community through the most efficient use of available marketing funds.

E2. Air Service Marketing Plan

To ensure the success of new passenger air service at CIC, a Marketing Plan must be implemented. The purpose of the plan is threefold:

Promote the use of passenger air service at CIC: Communicate airlines, destinations,schedules, fares, and other tangible service points to the region for any new entrantairline at CIC.

Communicate the airport’s level of reliability: Provide comparisons to SMF, RDD & SFOand ensure the public knows that CIC’s new air service is far more reliable than whatexisted in the past.

Educate the public about the importance of “Flying Chico First”: The public must knowthat improved air service equals economic growth, more jobs, increased outsideinvestment, and new sources of tax revenue for the city. Driving to SMF or SFO is badfor the environment, expensive, time consuming, and after a long flight, very unsafe. Aconnection must be made that ties the “Fly Chico First” idea to the “Buy Chico First”attitude that has long helped to keep local money in the community.

The messaging used in a marketing campaign must be simple and concise. Consumers only spend a few seconds paying attention to any advertisement which is why we must limit the marketing campaign to five distinct messages that will be communicated individually over time.

CIC Exists: Many local travelers new to the region may not even be aware the airportexists and those that do may have a negative opinion of it that has been instilled inthem by friends and neighbors who are long time Chico residents. In order to get peopleto fly on new air service at CIC we need them to know the airport is there while having aneutral or positive opinion of the airport.

Affordability: Many passengers will pay a small premium to fly from CIC, but not verymuch more. Fares from CIC should be similar in price to other nearby airports and that isa fact everyone in town needs to know. In addition, flying from CIC saves you money ingas, parking and possible hotel costs incurred when flying from SMF or SFO. When




17

people understand how much these savings can be they are more likely to try flying from CIC.

Convenience: Passengers dislike the experience of transiting a large airport. CIC’s sizemakes the travel experience very quick, comfortable and easy and this is a positivefeeling that will resonate with travelers a great deal. In addition to the easy use of CIC,the elimination of the long drive to SMF or SFO is another positive aspect of using CICthat must be communicated as creatively as possible to instill in the public that flyingfrom CIC is far more pleasurable than from any other airport in the region.

Reliability: Business travelers can’t afford for flights to be cancelled or delayed andleisure travelers don’t want their vacation plans ruined. Past reliability issues withSkyWest service at CIC made local travelers weary of using CIC. The marketing messageto the consumer must let them know that new CIC air service is just as reliable as airservice at other airports and that frequent delays and cancellations are a thing of thepast.

Local Pride: Everyone in Chico is proud to “Buy Chico First” whenever possible. We needto capitalize on that mindset so that people know that “Flying Chico First” is just asimportant to the local economy as “Buying Chico First.”

In order to effectively communicate a message to the public through a marketing campaign, the message needs to be transmitted through multiple marketing channels to ensure it reaches a wide audience. The following are the six aspects of the marketing campaign that address the different marketing channels that are intended to be used:

Traditional Media Advertising: The quickest way to get in everyone’s head is to advertiseon TV, Radio, Print, Billboards and sponsor popular events. These forms of traditionalmass media get you exposure to the mass market quickly. Excessive use of these typesof media can be very expensive; however, limited use provides you with enough idearecognition with the average consumer that it primes there attention for larger things tocome.

Social Media: Heavy use of Facebook, Twitter, Pinterest and other social networkingsites plays on the brand recognition built through the traditional media to capture theconsumer’s interest through original, thought provoking, and entertaining content.These resources have little cost and make users fans of the airport with the possibilitythat entertaining content could “Go Viral.”

Partnerships: Other entities in Chico are constantly working to build a better communitythrough messaging and networking. Becoming a member of these associations andworking with them to leverage their existing relationships will help to promote CIC’s airservice to some of the most influential people in Chico. Some examples of potentialpartners would be the Chico Chamber of Commerce and the Downtown Chico BusinessAssociation.

Airport Website: You always need to have a “Home Base” to direct people to wherethey can find specific information about the airport and the airlines serving it.Redesigning the airport website to do this is a must. Furthermore, the flight information,marketing, advertising and other media that should be posted as content on the airport




18

website will make it very difficult for the website to follow the standard formatting of the website for the City of Chico, which is why we recommend that the airport website be completely separate from the City of Chico’s website.

Media Attention: New passenger air service at CIC will be big news and the local mediawill want to cover it as much as possible; however, once the newness wears off mediacoverage will turn to other newsworthy stories. In order to be successful, the airportmust stay relevant in the media. To encourage consistent media coverage or simply as away of keeping CIC in the news, it would make sense for city or airport staff to writeregular editorials for the newspaper to educate the public about all things related toCIC, or possibly contribute content to a “Destination of the Week” column in theEnterprise Record. There is a variety of ways for CIC to provide media outlets withrelevant airport related content that will keep the airport in the news for all the rightreasons.

Community Participation: The Airport should have a presence at local events. The mosteffective way to market something to the public is to hand it to them in person. This iswhy new restaurants often offer free food samples when first opening, this is whybusinesses use mascots to interact with the public, and why musical bands “Go on Tour”when they release a new album. By interacting with the public in a positive memorableway, the airport will be able to instill the “Fly Chico First” message more effectively ineach person we encountered at an event than any other media channel available. Thebest and most effective way to interact with the public is through the use of a mascotthat is both popular and relevant to the airport’s brand.

Keeping with that theme, the airport may consider using a team of mascots dressed as pilotsand flight attendants to interact with the crowd at public events, take pictures and hand outpromotional items. This is only one of many possible mass exposure marketing initiatives that the City could employ to take full advantage of social media. This viral sharing of CIC’smarketing message will be the key to a cost effective and consistent exposure of CIC’s marketing message to the public.

To gain a more detailed understanding of CIC’s marketing needs, refer to the Chico Municipal Airport Marketing Action Plan located in Appendix B of this report.

E3. Corporate/General Aviation and Overall Marketing Plan:

Corporate and General Aviation (GA) airport users are a very small defined group. There are many publications that focus on marketing to this group in addition to several industry tradeshows focusing on serving it. The best and most effective way to market CIC to the corporate and GA community is through advertisement in industry publications, attendance of industry conferences, and direct mail to registered aircraft owners within the surrounding area. Corporations that have a company plane can be contacted directly about locating their corporate aircraft at CIC and fractional ownership companies or chartered aircraft providers can also be contacted directly about increasing their use of CIC.




19

Similar to passenger air service development efforts, our base Proposal includes organization and management of all marketing activities with only third party and out of pocket expenses being reimbursed to AvPORTS. There will be no overhead, staff, or executive compensation associated with these activities.


Section F: Management Plan


20

F1. Operations:

AvPORTS is the industry leader in our ability to manage and operate an airport such as CIC. While efficiency, accommodation, cost effectiveness, and safety are all critical factors that distinguishes us from other operators, it is perhaps the dimension of safety compliance that stands out as the common thread for success. Over the years at our contract-managed airports we have not encountered a situation that would jeopardize the status of the airport’s FAR Part 139 Operating Certificate or continued FAA airport certification. Our obligation is to continually safeguard CIC’s ability to conform to government and industry standards. We recognize minimum safety standards by tailoring our routines so they consistently meet and exceed the standard, whether those of the City of Chico, the state, or federal government. CIC will be operated, managed, and maintained consistent with sound airport operating and safety practices.

F2. Staffing:

All employees employed by and working for AvPORTS will be the best qualified, trained, and competent available in the industry. This will start with our recommendation to the City of Chico for the Airport Manager. We confidently recommend Mr. Rod Dinger, A.A.E. Mr. Dinger possesses an illustrious aviation career spanning over thirty years, which includes his service in the United States Air Force, aeronautics college degree, relevant airport experience, and his distinguished accreditation (A.A.E.) from the American Association of Airport Executives.

Mr. Dinger will have the overall responsibility and oversight for the administration, management, operations, maintenance, budget, airport business and real estate development, and accounting functions at the airport. Additionally, his duties will include, but are not limited to:

Be responsible for the safe and efficient daily operation and maintenance of the airport.

Ensure compliance and enforcement of rules, regulations, and policies affecting the

airport and personnel.

Establish controls as necessary to assure the economic operation of the airport.

Negotiating and administering tenant contracts and agreements.

Maintain readiness to handle airport emergencies, and establish emergency procedures.

Establish and maintain effective working relationships with the City of Chico, the Airport

Commission, airport tenants, and the greater Chico community.

Establish and implement development and marketing programs designed to encourage

the utility of airport facilities by existing and potential airport users; and business

interests.

Reporting to the Airport Manager will be an Administrative Assistant. Duties of this person will include, but are not limited to:

Plan, manage, and coordinate office operations, events, meetings, and communications.




21

Financial controls, accounting systems, and reports.

Record keeping, collection and distribution of funds required for the operation of the

airport.

Maintenance of airport records in accordance with established procedures.

Purchasing

Human resource planning, training, and coordination

Assist in the annual budget preparation

And finally, reporting to the Airport Manager will be the Operations staff. Initially this will be one (1) individual, who will perform the following duties which include, but are not limited to:

Insure the airport maintains operational adherence to the provisions of 14 CFR Part 139.

Perform routine airside, landside, and facility operations and maintenance inspections

and reports.

Maintain and insure compliance with the Airport Certification Manual, Airport

Emergency Plan

Establish and maintain communications with airport tenants as it relates to operational,

maintenance, and security matters.

Prepare and execute operations and maintenance annual budget

Develop written preventative maintenance program for airside and landside airport

facilities.

Develop, implement, and maintain work order and inventory system

Prepare plans for upgrading current airport facilities and infrastructure

Provide oversight for airport construction

Oversight of service contractor (3rd party) assignments, work, and performance

Initial staff requirements for CIC will be three persons; the Airport Manager, one Administrative Assistant, and one Operations/Maintenance staff member. Over the first six (6) years, staff requirements will increase to a total of eight (8) full time employees. This increase in the staff level is predicated upon increased activities at the airport regarding general aviation traffic, commercial air service, development, and an increase focus on facility maintenance. The ultimate staff level of five for Operations/Maintenance will provide year round 24/7 airport presence and support. Additional airport facility support such as security, janitorial, and certain maintenance will be performed with contract (third party) providers. When scheduled passenger service returns to CIC, Aircraft Rescue and Fire Fighting (ARFF) coverage and services will be provided and in place during commercial passenger flight operations.

The full resources of the AvPORTS airport management platform will be available to the CIC Airport Manager with executive leadership and oversight, internal/external training opportunties, and industry leading support services provided as part of our base Proposal.




22

F3. Capital Improvement Plan:

The AvPORTS Engineering and Development team conducted a visual inspection and evaluation of the condition of the facilities at the Chico Municipal Airport. Based on the team’s observations, some modifications and additions are recommended for the published CMA Airport Capital Improvement Plan (ACIP). Some of the recommendations are eligible for funding under the FAA Airport Improvement Program (AIP), while others are not AIP eligible and will therefore rely completely on local funding.

AIP Eligible Projects:

Re-sequence the Rehabilitation work for Taxiway A and Runway 13L-31R: During the visual inspection of the Chico Municipal Airport airfield pavements by the AvPORTS Engineering & Development team on May 05-06, 2015, it was noted that the pavement condition of Runway 13L-31R appeared to be worse than that of Taxiway A and therefore in more urgent need for rehabilitation. It is advisable, therefore, to re-

sequence the rehabilitation work for the taxiway and runway by having the runway work proceed first followed by the taxiway work. That is, undertake the design for the runway rehab in FY 2016 and the construction in FY 2017; the design for the taxiway can take place in FY 2017, and construction in FY 2018.

Install an Emergency Standby Generator for the Main Runway Approach Lighting System: The MRALS on Runway 13L, need to have a permanent Emergency Standby Generator, to avoid closure of the runway when there is a power outage on the City’s electric grid, as occurred earlier this year. We propose that implementation be carried out in FY 2017.

Projects to be funded entirely with local funds:

Car Parking Improvements: This project is intended to provide a safe/secure visitor and

air traveler car parking facility. The facility can be fee based and provide a revenue

stream to the airport, which has been discussed in detail in Section D.

Demolish buildings at 107 Lockheed Ave and at 695 Fortress Street: The demolition of

the buildings is part of an effort to beautify the airport environment.

Repair roof of lean-to building at 100 Lockheed Ave: The hangar and lean-to building at 100 Lockheed Ave is currently vacant and leasable. Repairs to the roof are needed to be ready to accommodate a potential tenant.

The proposed ACIP (CIC-ACIP 150619) incorporates the modifications and additions as discussed above.


Section G: Financial Model


23

In the following pages a detailed financial model is presented with underlying backup. The first page of the model is a summary that draws from underlying pages that provide important details and limiting assumptions.

The expenses are based on historical experiences at Chico itself or based on AvPORTS experience. While we have been vigilant in our expense forecasts and they are representative of our expectations at Chico, we consider there to be some variability risk associated with them given the recent managerial history at the airport and some uncertainty on how the City of Chico would charge the airport for any shared services or allocations.

Therefore, the expenses presented herein are NOT intended to be the final year 1 expense budget for our proposed long term agreement, but a basis for interaction between AvPORTS and Chico on the granular details of an expense budget that ultimately would need to be approved by Chico.

G1. Key Operations Assumptions:

With observation that over the last several years the airport’s overall maintenance program on certain assets has been deferred, we will likely need to address maintenance with additional attention and interest. We suspect certain supplies of standard electrical and mechanical hardware and parts, building maintenance parts and related materials may need to be replenished. Further services provided by contract, such as security, landscape maintenance, janitorial, weed and pest control, and communication equipment repair will be reviewed and potentially renegotiated if they cannot be brought “in house”. When air carrier passenger service is re-established, ARFF services will be provided during these flight operations. If personnel are not provided by the City of Chico Fire Department, our Operations staff will be sufficiently trained and equipped to perform these duties. Each of these factors is reflected in our budgets, but some variability is expected to be experienced during the first year of our management process and input from Chico in certain areas will be required to get to the optimal result for the airport.

G2. Key Staffing Assumptions:

Our initial staff requirement in year one (1) calls for three employees, an Airport Manager, Administrative Assistant and one Operations employee. After this, over the next five years staff will increase to a total of eight employees. A second Administrative Assistant will also be brought on board in year three. Additional Operations personnel will be hired, one per year starting in year 3 and concluding in year six. The goal for having a total of five Operations employees is to provide on-site operations personnel 24/7 at the Airport.

G3. Key Rental Income Assumptions:

The revenues of all in place leases are included in the projections and it is important to note that upon the maturity of the in place leases, they are assumed to be renewed at market rates.




24

We do not intend for any of the existing facilities constructed by third parties to revert to the airport and expect mutually agreeable lease extensions to be negotiated.

As noted in the underlying details, we assume currently vacant land and buildings are eventually leased at market rates. While granular detail is available, this assumption is visually evidenced in the Market Leasing Assumptions tab as revenues phase in over a number of years.

The financial model’s revenues are most sensitive to the assumptions that below market leases are re-priced at market rates, that vacant land and vacant facilities are leased over a period of 5 years, and that passenger service returns to CIC within 5-7 years. Certain buildings that are in poor condition are not assumed to ever be leased with the expectation that they will be razed or redeveloped on an opportunity specific basis.

G4. Key General Aviation Assumptions:

The two primary sources of revenue to the Airport generated from general aviation activity are landing fees (for corporate aircraft) and fuel flowage fees (collected from all general aviation activity). We propose, and modeled accordingly, lowering the minimum landing fee from $11 to $10. We propose, and modeled accordingly, raising the fuel flowage fee from $0.06 per gallon to $0.07 per gallon. Redding Municipal Airport currently charges $0.07 per gallon as a matter of peer comparison.

According to the Airport’s Master Record, CIC had 50,160 total operations for the 12 months ended 8/31/2014. It is believed that number is unusually high due in part to a particularly active fire season, and so for the purposes of this model the base number of Corporate GA operations in year one is 8,000 (4,000 landings). We believe this to be a realistic, but still very conservative, base year estimate. The average number of AvGas gallons sold annually at CIC over the last five years was 84,577 gallons. We conservatively assumed only 69,577 for the model base year (2016). The average number of Jet A gallons sold to general/corporate aviation users annually at CIC over the last five years was 146,558. We conservatively assumed only 131,558 gallons for the model base year.

Our analysis forecasts the total operational revenue (from landing fees and fuel flowage fees) generated from general aviation activity to be $54,079 in Year 1 and $137,042 in Year 10.

G5. Key Passenger Air Service Assumptions:

The Net Passenger Revenue Impact in the Rollup tab of the financial model refers to the operational revenues associated with the passenger service activity less the costs. Revenues include items like terminal rent, parking fees (where we assumed an $8/day charge), landing fees, aircraft overnight fees, fuel flowage fees (where we assumed an increase from $0.06 to $0.07/gallon), rental car concessions (where we assumed an increase in gross receipts fee from 5% to 10% to conform with industry standards), and vending machine concessions (for years 2016 and 2017, the Hertz revenues are included with passenger revenues despite the airport not having air service).




25

Costs associated with the return and expansion of passenger air service include the implementation of an airport marketing plan and air service development initiatives. The full revenue impact is not immediately realized in the first couple years due to the assumption a generous (but industry standard) incentives package that waives most fees during the first two years which will be required in order to secure air service. The largest source of revenue generated from passenger air service is derived from parking, which is common at most commercial airports and an important revenue source Chico should not overlook.

The model assumes a leisure carrier will begin twice weekly service to Las Vegas in 2018, followed by the introduction of twice daily service with 50 seat regional jets to a major network hub by a regional carrier in 2019. Air service is then gradually expanded in the out years until we assume there will be 46 weekly flights to five destinations on three carriers in Year 10.

The Net Passenger Revenue Impact is forecasted to be $71,093 in Year 1 and $1,450,527 in Year 10.

G6. Key Capital Improvements Assumptions:

Whereas an Airport Master Plan is a concept of the ultimate development of the airport which is expressed in the Airport Layout Plan (ALP), the Airport Capital Improvement Program (ACIP) brings that concept into reality. The ACIP provides a schedule of the future development of proposed projects identified in the master plan, over the near, medium and long term.

Among the many assumptions upon which the ACIP is based, demand for air services and funding of improvement projects constitute the top two key assumptions:

Demand: The future development of an airport is driven by forecast demand which governs the scale and timing of the individual development projects. As is true for any business, the feasibility of the airport is largely determined by the demand for its services. At Chico, the provision of reliable, convenient and cost effective air transportation services is crucial in driving and sustaining demand.

Funding: The provision of airport facilities and infrastructure precedes the projected demand. The projects therefore are funded up-front. Funding for airport projects is generally provided from three sources: Federal Funding through the FAA Airport Improvement Program; State grants and loans; and, Local Funding. The allocation of funds from these sources depend on the airport’s ability to satisfy the requisite associated conditions.

Our capital improvements projections are based on our current expectations/forecasts, but it is important to note that the capital improvements expenditures can be advanced or deferred based on actual future demand and funding factors.




26

The following pages in this section contain supporting documentation from the financial model.


Period (Year)---> 1 2 3 4 5 6 7 8 9 10Calendar Year Ending---> 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Operations

Revenues:Rental Income 403,378$ 612,503$ 632,321$ 718,037$ 851,699$ 824,219$ 876,517$ 945,881$ 1,012,268$ 953,954$

Net Passenger Revenue Impact 86,093$ 87,534$ 159,558$ 362,231$ 593,889$ 988,205$ 1,383,612$ 1,422,326$ 1,443,766$ 1,465,527$ General Aviation Revenues 54,079$ 65,255$ 75,623$ 81,933$ 88,857$ 96,453$ 104,790$ 113,940$ 123,986$ 135,017$

Total Revenue: 543,551$ 765,292$ 867,502$ 1,162,201$ 1,534,444$ 1,908,877$ 2,364,919$ 2,482,147$ 2,580,020$ 2,554,498$

Expenses:

Staffing 257,220$ 260,943$ 389,352$ 471,642$ 555,151$ 639,079$ 648,665$ 658,395$ 668,271$ 678,295$ Operations 344,800$ 321,000$ 386,509$ 449,377$ 443,705$ 450,345$ 457,085$ 463,927$ 470,870$ 477,919$ Miscellaneous/Reimbursements 25,000$ 25,375$ 25,756$ 26,142$ 26,534$ 26,932$ 27,336$ 27,746$ 28,162$ 28,585$

Total Expenses: 627,020$ 607,318$ 801,616$ 947,161$ 1,025,390$ 1,116,356$ 1,133,086$ 1,150,068$ 1,167,304$ 1,184,798$

Net Operating Cash Flow: (83,469)$ 157,974$ 65,886$ 215,041$ 509,054$ 792,521$ 1,231,833$ 1,332,079$ 1,412,716$ 1,369,700$

AvPORTS Management Fee (180,000)$ (182,700)$ (185,441)$ (188,222)$ (191,045)$ (193,911)$ (196,820)$ (199,772)$ (202,769)$ (205,810)$

Air Service Development Incentive Fee (50,000)$ (50,000)$ (50,000)$

PROJECTED NET CASH FLOW (263,469)$ (24,726)$ (119,555)$ (23,182)$ 268,009$ 548,610$ 1,035,013$ 1,132,307$ 1,209,948$ 1,163,890$

Capital Activities (subject to annual review/FAA, other funding, timing)

Total Costs (1,025,000)$ (11,225,904)$ (4,597,000)$ (745,703)$ (4,343,441)$ (6,729,633)$ (5,606,000)$ (625,000)$ (5,846,000)$ (1,830,000)$ Local Share (318,500)$ (1,445,904)$ (459,700)$ (414,203)$ (564,341)$ (2,037,933)$ (560,600)$ (62,500)$ (584,600)$ (183,000)$

Inflation factor (if not inflated elsewhere) 1.50%

Notes:*Passenger Revenues include Hertz Concesssion Income


Calendar Year Ending---> 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

MATERIALS & SUPPLIES

OFFICE FURNITURE AND SUPPLIES 2,500$ 1,000$ 2,500$ 1,000$ 1,000$ 1,015$ 1,030$ 1,046$ 1,061$ 1,077$ PAPER AND PRINTING SUPPLIES 300$ 500$ 800$ 1,000$ 1,500$ 1,523$ 1,545$ 1,569$ 1,592$ 1,616$ POSTAGE & MAILING 200$ 250$ 300$ 300$ 300$ 305$ 309$ 314$ 318$ 323$ BOOKS/PERIODICALS/SOFTWARE 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,015$ 1,030$ 1,046$ 1,061$ 1,077$ MATERIALS AND SUPPLIES 5,000$ 6,000$ 6,000$ 6,500$ 6,500$ 6,598$ 6,696$ 6,797$ 6,899$ 7,002$ SMALL TOOLS AND MINOR EQUIPMENT 1,000$ 1,000$ 1,500$ 1,500$ 1,500$ 1,523$ 1,545$ 1,569$ 1,592$ 1,616$ SAFETY EQUIPMENT 500$ 750$ 1,000$ 1,250$ 1,500$ 1,523$ 1,545$ 1,569$ 1,592$ 1,616$ ELECTRICAL HARDWARE AND PARTS 3,000$ 3,000$ 3,500$ 3,500$ 4,000$ 4,060$ 4,121$ 4,183$ 4,245$ 4,309$ PLUMBING SUPPLIES 1,500$ 1,500$ 2,000$ 2,000$ 2,000$ 2,030$ 2,060$ 2,091$ 2,123$ 2,155$ MECHANICAL HARDWARE AND PARTS 4,000$ 4,000$ 4,500$ 5,000$ 6,000$ 6,090$ 6,181$ 6,274$ 6,368$ 6,464$ BUILDING MAINTENANCE/REPAIR 7,000$ 7,000$ 7,500$ 7,500$ 8,000$ 8,120$ 8,242$ 8,365$ 8,491$ 8,618$ CUSTODIAL/CLEANING SUPPLIES 2,000$ 2,500$ 3,000$ 3,500$ 4,000$ 4,060$ 4,121$ 4,183$ 4,245$ 4,309$ LANDSCAPE MAINTENANCE 1,500$ 2,000$ 2,500$ 3,000$ 3,000$ 3,045$ 3,091$ 3,137$ 3,184$ 3,232$

TOTAL: MATERIALS & SUPPLIES 29,500$ 30,500$ 36,100$ 37,050$ 40,300$ 40,905$ 41,518$ 42,141$ 42,773$ 43,415$

SERVICES & CONTRACTS

PROFESSIONAL/CONSULTING SERVICES 20,000$ 20,000$ 25,000$ 25,000$ 25,000$ 25,375$ 25,756$ 26,142$ 26,534$ 26,932$ AUDIT SERVICES 3,000$ 3,000$ 3,500$ 4,000$ 4,000$ 4,060$ 4,121$ 4,183$ 4,245$ 4,309$ LANDSCAPE MAINTENANCE 24,000$ 25,000$ 27,000$ 30,000$ 33,000$ 33,495$ 33,997$ 34,507$ 35,025$ 35,550$ LAUNDRY/UNIFORM SERVICES 600$ 1,200$ 1,800$ 2,400$ 3,000$ 3,045$ 3,091$ 3,137$ 3,184$ 3,232$ SECURITY SERVICES 5,000$ 5,000$ 8,000$ 8,000$ 10,000$ 10,150$ 10,302$ 10,457$ 10,614$ 10,773$ JANITORIAL SERVICES 10,000$ 10,000$ 12,000$ 12,000$ 15,000$ 15,225$ 15,453$ 15,685$ 15,920$ 16,159$ FACILITY/EQUIPMENT MAINTENANCE SERVICES 15,000$ 15,000$ 17,000$ 17,000$ 20,000$ 20,300$ 20,605$ 20,914$ 21,227$ 21,546$ WEED CONTROL 15,000$ 15,000$ 16,000$ 16,000$ 20,000$ 20,300$ 20,605$ 20,914$ 21,227$ 21,546$ PEST CONTROL 500$ 500$ 600$ 700$ 750$ 761$ 773$ 784$ 796$ 808$ HAZMAT DISPOSAL 1,000$ 1,000$ 1,200$ 1,200$ 1,500$ 1,523$ 1,545$ 1,569$ 1,592$ 1,616$ MISCELLANEOUS REPAIRS/SERVICES 7,000$ 7,000$ 10,000$ 10,000$ 15,000$ 15,225$ 15,453$ 15,685$ 15,920$ 16,159$ SOLID WASTE DISPOSAL 1,000$ 1,000$ 1,200$ 1,500$ 2,000$ 2,030$ 2,060$ 2,091$ 2,123$ 2,155$ COMMUNICATION EQUIPMENT SERVICES 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,090$ 6,181$ 6,274$ 6,368$ 6,464$ ELECTRIC 65,000$ 70,000$ 75,000$ 80,000$ 85,000$ 86,275$ 87,569$ 88,883$ 90,216$ 91,569$ WATER 18,000$ 20,000$ 23,000$ 26,000$ 30,000$ 30,450$ 30,907$ 31,370$ 31,841$ 32,319$ SEWER 9,000$ 10,000$ 11,500$ 13,000$ 15,000$ 15,225$ 15,453$ 15,685$ 15,920$ 16,159$ NATURAL GAS 5,000$ 5,500$ 6,000$ 6,500$ 7,000$ 7,105$ 7,212$ 7,320$ 7,430$ 7,541$ VEHICLE MAINTENANCE SERVICES 1,000$ 1,000$ 3,000$ 5,000$ 5,000$ 5,075$ 5,151$ 5,228$ 5,307$ 5,386$ TRAVEL-TRAINING RELATED 5,000$ 5,000$ 6,500$ 6,500$ 6,500$ 6,598$ 6,696$ 6,797$ 6,899$ 7,002$ TRAVEL-NON TRAINING RELATED 10,000$ 12,000$ 13,000$ 15,000$ 15,000$ 15,225$ 15,453$ 15,685$ 15,920$ 16,159$ MEMBERSHIPS/DUES 700$ 700$ 700$ 700$ 700$ 711$ 721$ 732$ 743$ 754$

TOTAL: SERVICES & CONTRACTS 221,800$ 233,900$ 268,000$ 286,500$ 319,450$ 324,242$ 329,105$ 334,042$ 339,053$ 344,138$

OTHER EXPENSES

ARFF TRAINING/PPE/SUPPLIES -$ -$ 25,000$ 25,000$ 25,000$ 25,375$ 25,756$ 26,142$ 26,534$ 26,932$ GA MARKETING AND AIRPORT PROMOTION 5,000$ 5,000$ 5,000$ 5,000$ 5,000$ 5,075$ 5,151$ 5,228$ 5,307$ 5,386$ VEHICLE FUEL/REGISTRATIONS/LICENSES 2,500$ 2,500$ 2,700$ 3,000$ 3,000$ 3,045$ 3,091$ 3,137$ 3,184$ 3,232$ VEHICLES (PURCHASE) 35,000$ -$ -$ 45,000$ -$ PERMITS/LICENSES/FEES 5,000$ 5,000$ 5,000$ 5,000$ 5,000$ 5,075$ 5,151$ 5,228$ 5,307$ 5,386$ COMPUTERS 5,000$ 2,500$ 2,500$ -$ 2,500$ 2,538$ 2,576$ 2,614$ 2,653$ 2,693$ INSURANCE 40,000$ 40,600$ 41,209$ 41,827$ 42,455$ 43,091$ 43,738$ 44,394$ 45,060$ 45,736$ ACI MEMBERSHIP 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ CAPITAL PROJECTS: CITY OF CHICO ALLOCATIONS: CITY OF CHICO

TOTAL: OTHER EXPENSES 93,500$ 56,600$ 82,409$ 125,827$ 83,955$ 85,199$ 86,462$ 87,744$ 89,045$ 90,366$

TOTAL EXPENSES: ANNUAL 344,800$ 321,000$ 386,509$ 449,377$ 443,705$ 450,345$ 457,085$ 463,927$ 470,870$ 477,919$

Assumptions:Security Service costs decrease over the years as Ops/Mx staff level increasesCosts escalated with a 1.5% escalator Years 6-10 ITEM 4.2.

ATTACHMENT 1

Calendar Year Ending---> 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Salary Benefits

Manager 90,000$ 126,000$ 126,000$ 127,890$ 129,808$ 131,755$ 133,732$ 135,738$ 137,774$ 139,840$ 141,938$ 144,067$ Admin. Asst. 1 33,300$ 46,620$ 46,620$ 47,319$ 48,029$ 48,750$ 49,481$ 50,223$ 50,976$ 51,741$ 52,517$ 53,305$ Admin. Asst. 2 33,300$ 46,620$ 48,029$ 48,750$ 49,481$ 50,223$ 50,976$ 51,741$ 52,517$ 53,305$

Operations 1 54,000$ 75,600$ 75,600$ 76,734$ 77,885$ 79,053$ 80,239$ 81,443$ 82,664$ 83,904$ 85,163$ 86,440$ Operations 2 54,000$ 75,600$ -$ -$ 75,600$ 76,734$ 77,885$ 79,053$ 80,239$ 81,443$ 82,664$ 83,904$ Operations 3 54,000$ 75,600$ -$ -$ -$ 75,600$ 76,734$ 77,885$ 79,053$ 80,239$ 81,443$ 82,664$ Operations 4 54,000$ 75,600$ -$ -$ -$ -$ 75,600$ 76,734$ 77,885$ 79,053$ 80,239$ 81,443$ Operations 5 54,000$ 75,600$ -$ -$ -$ -$ 75,600$ 76,734$ 77,885$ 79,053$ 80,239$

Overtime 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,120$ 8,242$ 8,365$ 8,491$ 8,618$ Uniforms 1,000$ 1,000$ 2,000$ 3,000$ 4,000$ 4,060$ 4,121$ 4,183$ 4,245$ 4,309$

TOTAL: 257,220$ 260,943$ 389,352$ 471,642$ 555,151$ 639,079$ 648,665$ 658,395$ 668,271$ 678,295$


Period (Year)---> 1 2 3 4 5 6 7 8 9 10 11 12Calendar Year Ending---> 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Potential Gross Revenue

Base Rental Revenue 1105 Fortress St. 6,793$ 6,793$ 6,793$ 6,793$ 6,793$ 6,793$ 19,581$ 25,975$ 25,975$ 25,975$ 25,975$ 25,975$ 77 Piper Ave 104,509$ 157,325$ 144,215$ 176,262$ 176,262$ 177,554$ 193,696$ 203,220$ 224,494$ 210,875$ 231,279$ 216,666$ 77 Piper Ave (Ramp) 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 6,792$ 5,660$ 5$ 165 Ryan Ave (Museum) 25$ 25$ 25$ 25$ 25$ 25$ 25$ 25$ 25$ 25$ 25$ 25$ 101 Convair Ave 1,710$ 1,655$ 1,655$ 1,655$ 1,655$ 1,549$ 1,783$ 1,783$ 1,783$ 1,783$ 1,657$ 1,921$ 1444 Fortress St 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 11,239$ 109 Convair Ave (FBO) 27,114$ 27,114$ 27,114$ 27,114$ 27,114$ 27,114$ 48,047$ 66,873$ 66,873$ 66,873$ 66,873$ 63,884$ Piper Ave Fuel Farm 3,682$ 3,704$ 3,704$ 3,704$ 3,704$ 3,847$ 3,990$ 3,990$ 3,990$ 3,990$ 4,144$ 4,299$ 100 Piper Ave 2,495$ 2,495$ 2,495$ 10,569$ 13,537$ 13,537$ 13,537$ 13,537$ 13,107$ 14,584$ 14,584$ 14,584$ 108 Boeing Ave 45,190$ 89,352$ 89,352$ 90,409$ 98,628$ 98,539$ 108,383$ 112,276$ 125,617$ 117,680$ 129,413$ 120,911$ 1335 Fortress St. 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 20,997$ 1101 Fortress St 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 2,473$ 110 Convair Ave 21,571$ 30,170$ 28,700$ 33,302$ 31,350$ 36,596$ 34,516$ 42,415$ 38,987$ 43,697$ 40,055$ 45,693$ A Row T Hangars (752SF) 10,883$ 10,739$ 10,739$ 10,739$ 10,739$ 10,739$ 10,739$ 10,739$ 10,739$ 10,739$ 10,882$ 12,463$ B Row T Hangars (805SF) 4,981$ 4,927$ 4,927$ 4,927$ 4,927$ 4,927$ 4,927$ 4,927$ 4,927$ 4,927$ 5,124$ 5,718$ B Row T Hangars (1087SF) 1,495$ 1,478$ 1,478$ 1,478$ 1,478$ 1,478$ 1,478$ 1,478$ 1,478$ 1,478$ 1,538$ 1,716$ B Row T Hangars (1101SF) 757$ 749$ 749$ 749$ 749$ 749$ 749$ 749$ 749$ 749$ 779$ 869$ B Row T Hangars (1169SF) 4,018$ 3,975$ 3,975$ 3,975$ 3,975$ 3,975$ 3,975$ 3,975$ 3,975$ 3,975$ 4,134$ 4,613$ B Row T Hangars (1389SF) 3,820$ 3,778$ 3,778$ 3,778$ 3,778$ 3,778$ 3,778$ 3,778$ 3,778$ 3,778$ 3,930$ 4,385$ C Row T Hangars (580SF) 399$ 394$ 394$ 394$ 394$ 394$ 394$ 394$ 394$ 394$ 410$ 458$ C Row T Hangars (960SF) 660$ 653$ 653$ 653$ 653$ 653$ 653$ 653$ 653$ 653$ 679$ 758$ C Row T Hangars (1116-1177SF) 8,691$ 8,597$ 8,597$ 8,597$ 8,597$ 8,597$ 8,597$ 8,597$ 8,597$ 8,597$ 8,942$ 9,977$ C Row T Hangars (1177SF) 4,855$ 4,802$ 4,802$ 4,802$ 4,802$ 4,802$ 4,802$ 4,802$ 4,802$ 4,802$ 4,995$ 5,573$ C Row Spaces C20-C23 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,749$ 2,990$ 3,715$ C Row T Hangars (1309SF) 941$ 890$ 890$ 890$ 890$ 890$ 890$ 890$ 890$ 890$ 926$ 1,033$ C Row T Hangars (1400SF) 540$ 682$ 966$ 966$ 966$ 966$ 966$ 966$ 966$ 966$ 966$ 1,018$ D Row Spaces D1-7, D23-28 9,993$ 5,870$ 5,870$ 5,870$ 5,870$ 5,870$ 5,870$ 5,870$ 5,870$ 5,870$ 6,106$ 6,812$ D Row Spaces D8-22 12,990$ 12,990$ 12,990$ 12,990$ 12,990$ 11,996$ 7,026$ 7,026$ 7,026$ 7,026$ 7,026$ 7,026$ E1 Hangar 1,345$ 1,345$ 1,345$ 1,345$ 1,345$ 1,345$ 1,345$ 1,395$ 1,465$ 1,465$ 1,465$ 1,465$ E2 Hangar 1,518$ 1,563$ 1,608$ 1,608$ 1,608$ 1,608$ 1,608$ 1,608$ 1,608$ 1,608$ 1,608$ 1,737$ E3 Hangar 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ E4 Hangar 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,072$ 1,143$ 1,143$ E5 Hangar 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,000$ 1,040$ 1,161$ E6 Hangar 959$ 1,127$ 1,462$ 1,462$ 1,462$ 1,462$ 1,462$ 1,462$ 1,462$ 1,462$ 1,462$ 1,540$ E7 Hangar 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,440$ 1,594$ 1,671$ E16 Hangar 1,028$ 1,193$ 1,358$ 1,358$ 1,358$ 1,358$ 1,358$ 1,358$ 1,358$ 1,358$ 1,358$ 1,468$ Bradley & Son Cattle, LLC 11,999$ 14,180$ 20,722$ 20,722$ 20,722$ 20,722$ 21,123$ 22,324$ 22,324$ 22,324$ 22,324$ 22,755$ Airport North Clear Zone Prope 4,092$ 4,092$ 4,092$ 4,092$ 4,092$ 4,276$ 4,408$ 4,408$ 4,408$ 4,408$ 4,607$ 4,749$ Sylvester and Evelyne Willingh 215$ 223$ 223$ 223$ 223$ 223$ 241$ 241$ 241$ 241$ 241$ 259$ 1325 Fortress St (Former Appli 13,500$ 13,500$ 13,500$ 13,500$ 13,500$ 13,531$ 14,761$ 14,761$ 14,761$ 14,761$ 14,482$ 747 Fortress St (Former Aero U 38,850$ 66,600$ 66,600$ 93,040$ 130,579$ 130,579$ 122,183$ 136,544$ 136,544$ 127,244$ 142,781$ 142,781$ 100 Lockhead Ave (Former FedEx 28,489$ 42,826$ 39,998$ 47,272$ 43,722$ 51,947$ 47,618$ 61,110$ 61,110$ 57,711$ 62,957$ 59,297$ 110 Convair Ave (Rest of Hanga 7,134$ 15,958$ 21,724$ 20,853$ 23,979$ 22,771$ 26,350$ 25,202$ 30,540$ 28,149$ 31,463$ 28,921$ Vacant Land by 1444 Fortress 10,500$ 18,000$ 18,000$ 18,000$ 18,000$ 17,196$ 19,391$ 19,391$ 19,391$ 19,391$ 19,391$ 19,391$ Vacant Land B 4,955$ 8,494$ 8,494$ 8,494$ 8,494$ 8,115$ 9,151$ 9,151$ 9,151$ 9,151$ 9,151$ 9,151$ Vacant Land C 3,430$ 5,881$ 5,881$ 5,881$ 5,881$ 5,665$ 6,430$ 6,430$ 6,430$ 6,430$ 6,430$ Vacant Land D 4,955$ 8,494$ 8,494$ 8,494$ 8,494$ 8,253$ 9,427$ 9,427$ 9,427$ 9,427$ Vacant Land E 5,336$ 9,148$ 9,148$ 9,148$ 9,148$ 8,964$ 10,305$ 10,305$ 10,305$ Vacant Land F 1,225$ 2,100$ 2,100$ 2,100$ 2,100$ 2,076$ 2,401$ 2,401$ Vacant Land G 4,375$ 7,500$ 7,500$ 7,500$ 7,500$ 7,287$ 8,324$ 8,324$ 8,324$ 8,324$ Vacant Land by T Hangars 40,833$ 70,000$ 70,000$ 70,000$ 70,000$ 75,165$ 78,854$ 78,854$ 78,854$ CPI & Other Adjustment Revenue 2,994$ 4,850$ 12,490$ 11,551$ 20,656$ 21,604$ 25,095$ 21,490$ 29,934$ 28,649$ 34,427$ 27,037$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Potential Gross Revenue 440,880$ 625,228$ 640,378$ 770,895$ 860,554$ 873,887$ 924,863$ 997,291$ 1,049,092$ 1,022,426$ 1,082,315$ 1,050,555$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Effective Gross Revenue 440,880$ 625,228$ 640,378$ 770,895$ 860,554$ 873,887$ 924,863$ 997,291$ 1,049,092$ 1,022,426$ 1,082,315$ 1,050,555$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Net Operating Income 440,880$ 625,228$ 640,378$ 770,895$ 860,554$ 873,887$ 924,863$ 997,291$ 1,049,092$ 1,022,426$ 1,082,315$ 1,050,555$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Leasing & Capital CostsLeasing Commissions 37,502$ 12,725$ 8,057$ 52,858$ 8,855$ 49,668$ 48,346$ 51,410$ 36,824$ 68,472$ 18,757$ 75,319$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Total Leasing & Capital Costs 37,502$ 12,725$ 8,057$ 52,858$ 8,855$ 49,668$ 48,346$ 51,410$ 36,824$ 68,472$ 18,757$ 75,319$

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________Cash Flow Before Debt Service 403,378$ 612,503$ 632,321$ 718,037$ 851,699$ 824,219$ 876,517$ 945,881$ 1,012,268$ 953,954$ 1,063,558$ 975,236$ & Taxes =========== =========== =========== =========== =========== =========== =========== =========== =========== =========== =========== ===========

Schedule Of Prospective Cash FlowIn Inflated Dollars for the Fiscal Year Beginning 1/1/2016


FINANCIAL MODEL INPUTS:

MLA Categories Large Hangar Land lease<1 acre Land Lease>1 acre Air Museum Fuel Farm Agricultural land Non-Ramp Bldg Pads D,E,F,G Pads A, B, C Land w/o Ramp ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Renewal Probability 50.00% 50.00% 50.00% 100.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%

Market Rent $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/acre/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/Yr $/SqFt/YrYear 1 3.50$ 0.40$ 0.30$ -$ 1.00$ 44.00$ 3.00$ 0.40$ 0.68$ 0.15$ Year 2 3.50$ 3.25$ Year 3 3.75$ 3.50$ Year 4 3.75$ 3.75$ Year 5 4.00$ Year 6 4.00$

Year 7 - end 4.50$ 3.75$

Months Vacant 3.00 3.00 3.00 0.00 0.00 0.00 3.00 3.00 3.00 3.00

Tenant Improvements None "as is" None "as is" None "as is" None "as is" None "as is" None "as is" None "as is" None "as is" None "as is" None "as is"

Leasing Commissions (% of rent) 5.00% 5.00% 5.00% 0.00% 0.00% 0.00% 5.00% 3.00% 3.00% 5.00%

Rent Abatements/Conce None None None None None None None None None None

Rent Changes Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation Yes - CPI / inflation

Reimbursements Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner Rent Net to Owner

Term Lengths (in Years) 2 5 5 10 5 5 3 10 10 10

Chico Municipal AirportChico, CA

LEASING and MARKET ASSUMPTIONS / INPUTS



GA Fuel Flowage Fee Revenue 14,079$ 14,505$ 14,723$ 14,943$ 15,168$ 15,395$ 15,626$ 15,860$ 16,098$ 16,340$ GA Landing Fee Revenue 40,000$ 50,750$ 60,900$ 66,990$ 73,689$ 81,058$ 89,164$ 98,080$ 107,888$ 118,677$

TOTAL: 54,079$ 65,255$ 75,623$ 81,933$ 88,857$ 96,453$ 104,790$ 113,940$ 123,986$ 135,017$

Assumptions:*Note: No RON fee revenue is forecasted due to assumption all GA aircraft will RON on FBO or other tenant controlled ramp



Number of Paid Landings 4,000 5,000 6,000 6,600 7,260 7,986 8,785 9,663 10,629 11,692Landing Fee Revenue 40,000$ 50,750$ 60,900$ 66,990$ 73,689$ 81,058$ 89,164$ 98,080$ 107,888$ 118,677$

Landing Fee: $10.00Growth Escalator 1.015


New Airline Based Revenue: 1 2 3 4 5 6 7 8 9 10Category: 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Public Space (Lobby) Rental Fees-$ -$ -$ -$ 3,875$ 7,866$ 11,976$ 12,156$ 12,338$ 12,523$

CPI Start 6 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Price/Sq. Ft. 31$ 31$ 31$ 31$ 31$ 31$ 32$ 32$ 33$ 33$

Support Space (Backroom) Rental Fees -$ -$ -$ -$ 18,000$ 36,540$ 55,632$ 56,467$ 57,314$ 58,173$

CPI Start 6 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Price/Sq. Ft. 18$ 18$ 18$ 18$ 18$ 18$ 19$ 19$ 19$ 19$

SITA (Security Gate Access) Card Fees -$ -$ 243$ 492$ 749$ 761$ 772$ 784$ 795$ 807$

CPI Start 4 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Price/Card 24$ 24$ 24$ 25$ 25$ 25$ 26$ 26$ 27$ 27$

Landing Fees -$ -$ -$ -$ 15,987$ 47,569$ 83,479$ 133,738$ 135,744$ 137,780$ CPI Start 6 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$

Price/1,000 lb. GLW 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$

Aircraft Overnight Fees -$ -$ -$ -$ -$ 7,891$ 12,867$ 21,189$ 21,507$ 21,830$ CPI Start 7 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$

Price/1,000 lb. GLW 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$

Fuel Flowage Fees -$ -$ -$ 11,498$ 28,341$ 38,919$ 107,632$ 99,949$ 101,448$ 102,970$ CPI Start 5 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$

Price/Gallon 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$

-$ -$ 243$ 11,990$ 66,953$ 139,547$ 272,358$ 324,282$ 329,147$ 334,084$

New Non-Airline Based Revenue: 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Category: 2,016$ 2,017$ 2,018$ 2,019$ 2,020$ 2,021$ 2,022$ 2,023$ 2,024$ 2,025$

Passenger Car Parking $8.00 per day -$ -$ 127,412$ 345,257$ 490,638$ 756,654$ 974,985$ 998,408$ 1,013,385$ 1,028,585$ 4 days per trip

CPI Start 4 1.50% 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Price/Day 8$ 8$ 8$ 8$ 8$ 8$ 8$ 9$ 9$ 9$

Rental Car Concession Fees 10% of Gross Sales 96,093$ 97,534$ 123,718$ 166,480$ 194,392$ 243,914$ 283,304$ 286,465$ 288,065$ 289,688$

Vending Machine Concession Fees20% of Gross Sales -$ -$ 3,185$ 8,504$ 11,906$ 18,090$ 22,965$ 23,170$ 23,170$ 23,170$

96,093$ 97,534$ 254,316$ 520,241$ 696,936$ 1,018,658$ 1,281,254$ 1,308,043$ 1,324,619$ 1,341,443$

Total Commercial Air Service Related Revenue: 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ 2,016$ 2,017$ 2,018$ 2,019$ 2,020$ 2,021$ 2,022$ 2,023$ 2,024$ 2,025$

-$ -$ 243$ 11,990$ 66,953$ 139,547$ 272,358$ 324,282$ 329,147$ 334,084$

96,093$ 97,534$ 254,316$ 520,241$ 696,936$ 1,018,658$ 1,281,254$ 1,308,043$ 1,324,619$ 1,341,443$

96,093$ 97,534$ 254,558$ 532,231$ 763,889$ 1,158,205$ 1,553,612$ 1,632,326$ 1,653,766$ 1,675,527$

Total Airline Based Revenue:

Total Non-Airline Based Revenue:

Total Airline Based Revenue:

Total Non-Airline Based Revenue:

Total Commercial Air Service Related Revenue: ITEM 4.2.

ATTACHMENT 1

Total Commercial Air Service Related Expenses: 1$ 2$ 3$ 4$ 5$ 6$ 7$ 8$ 9$ 10$ Category: 2,016$ 2,017$ 2,018$ 2,019$ 2,020$ 2,021$ 2,022$ 2,023$ 2,024$ 2,025$

Implementation of Airport Marketing Plan:-$ -$ (75,000)$ (150,000)$ (150,000)$ (150,000)$ (150,000)$ (150,000)$ (150,000)$ (150,000)$

Air Service Devel./Airport Marketing Fee:(10,000)$ (10,000)$ (20,000)$ (20,000)$ (20,000)$ (20,000)$ (20,000)$ (60,000)$ (60,000)$ (60,000)$

Base Air Service Devel. Fee -$ -$ -$ -$ -$ -$ -$ (40,000)$ (40,000)$ (40,000)$ Air Service Devel. Travel (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$

Base Airport Marketing Fee -$ -$ -$ -$ -$ -$ -$ -$ Marketing Travel (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$ (10,000)$

(10,000)$ (10,000)$ (95,000)$ (170,000)$ (170,000)$ (170,000)$ (170,000)$ (210,000)$ (210,000)$ (210,000)$

Commercial Air Service Related Profit/Loss:86,093$ 87,534$ 159,558$ 362,231$ 593,889$ 988,205$ 1,383,612$ 1,422,326$ 1,443,766$ 1,465,527$

Assumptions Made in this Plan:

Public Space (Lobby) Rental Fees Waived (First 2 years of new service)Support Space (Backroom) Rental Fees Waived (First 2 years of new service)Landing Fees Waived (First 2 years of new service)Aircraft Overnight Fees Waived (First 2 years of new service)Fuel Flowage Fees Waived (First year of new service)

1 2 3 4 5 6 7 8 9 102016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Levels of Scheduled Passenger Air ServiceAllegiant - LAS - MD-80/A320 2 Weekly 2 Weekly 2 Weekly 2 Weekly 2 Weekly 2 Weekly 2 Weekly 2 WeeklyAllegiant - AZA - MD-80/A320 2 Weekly 2 Weekly 2 Weekly 2 Weekly 2 WeeklySkyWest - LAX - CRJ-200 12 Weekly 12 Weekly 12 Weekly 18 Weekly 18 Weekly 18 Weekly 18 WeeklySkyWest - DEN - CRJ-200 7 Weekly 12 Weekly 12 Weekly 12 Weekly 12 WeeklyPenAir - PDX - Saab-340B 12 Weekly 12 Weekly 12 Weekly 12 Weekly 12 Weekly 12 Weekly

Passenger Car Parking 1 Parked Car per 4 enplanementsRental Car Concession Fees $960,931 in annual gross sales are not air service related (derived from Hertz invoices from the City of Chico)

Annual gross revenue increased by $15.52 per enplanment when Chico has SkyWest (derived from Hertz invoices from the City of Chico)Vending Machine Concession Fees Average of $1.00 in vending machine purchases per enplaned passenger

Total Commercial Air Service Related Expenses:


Years 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Capital Costs (1,025,000)$ (11,225,904)$ (4,597,000)$ (745,703)$ (4,343,441)$ (6,729,633)$ (5,606,000)$ (625,000)$ (5,846,000)$ (1,830,000)$ Federal Funding

Entitlement(1) 706,500$ 443,500$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ 150,000$ Discretionary(2) -$ 9,336,500$ 3,987,300$ 181,500$ 3,629,100$ 4,541,700$ 4,895,400$ 412,500$ 5,111,400$ 1,497,000$

Local Share (318,500)$ (1,445,904)$ (459,700)$ (414,203)$ (564,341)$ (2,037,933)$ (560,600)$ (62,500)$ (584,600)$ (183,000)$

Notes:1 After 2016, CIC receives Entitlement funds for GA Airports ($150,000) only, plus any unused entitlement funds from previous year.2 After 2016, greater reliance on discretionary funds is required. However, discretionary funds are not always assured.

Cash Flow For Capital Projects at Chico Municipal Airport 2016-2025


US Department of Transportation AIRPORT CAPITAL IMPROVEMENT PLAN (FY 2016-FY2033)Federal Aviation AdministrationAirport: CHICO MUNICIPAL AIRPORT 2. State: 3. NPIAS No: 3-06-0041 LOCID: CIC5. Project Description Work

C dFY State Funds Total Shown on

ALPEnvironm'l Impact Start Date Completion Date

(by Funding Year in Priority Order) Entitlement Discretionary Total PFC Other(a) (b) (c) (d) (e) (f) (g) (h) ( i) (j) (k) (l) (m) (n)

1 Reconstruct Runway 13L-31R - Engineering Design D 2016 706,500 706,500 78,500 785,000 Yes Approv 2/25/152 Demolition of Building (B6) at 107 Lockheed Ave. D 2016 82,000 82,000 Yes EA3 Demoliltion of Building (B13) at 695 Fortress St. D 2016 93,000 93,000 Yes EA4 Repair Roof of Lean-to Building at 100 Lockheed Ave. D 2016 65,000 65,000 Yes N/A

2016 TOTAL 706,500 0 706,500 318,500 1,025,000

5 Emergency Generator for Approach Lighting System of Main Rwy

D 2017 100,800 11,200 112,000 Yes N/A

6 Reconstruct Taxiway A - Engineering Design D 2017 355,500 39,500 395,000 Yes Approv. 2/25/147 Reconstruct Runway 13L-31R - Construction D 2017 9,016,200 1,001,800 10,018,000 Yes Approv 2/25/148 Modular Terminal Construction D 2017 300,000 100,000 400,000 Yes EA9 Parking Improvements Phase 1 D 2017 0 290,904 290,904 Yes

10 Baggage Claim Installation D 2017 7,500 2,500 10,000 Yes2017 TOTAL 443,500 9,336,500 9,780,000 1,445,904 11,225,904

11 Reconstruct Taxiway A - Construction D 2018 150,000 3,987,300 4,137,300 459,700 4,597,000 Yes Approv 2/25/142018 TOTAL 150,000 3,987,300 4,137,300 459,700 4,597,000

12 Terminal Area Study with Forecasts E 2019 207,000 23,000 230,000 Yes N/A13 Environmental Studies - Projects 21, 23, 24 and 28 E 2019 117,000 13,000 130,000 Yes EA14 Parking Improvements Phase 2 D 2019 0 375,703 375,703 Yes EA15 Expansion of Terminal Ticket Counter D 2019 7,500 2,500 10,000 Yes

2019 TOTAL 150,000 181,500 331,500 414,203 745,703

16 Reconstruct Aircraft Parking Apron Phase 3 - North Central, Construction

D 2020 3,320,100 368,900 3,689,000 Yes Approv 1/14/13

17 Terminal Expansion - Architectural Design (Project #23) D 2020 333,000 37,000 370,000 Yes N/A

18 Service Road to West Side Development (Project #21) - Engineering Design

D 2020 126,000 14,000 140,000 Yes Submit 2019

19 Parking Improvements Phase 3 Engineering Design D 2020 0 144,441 144,441 Yes2020 TOTAL 150,000 3,629,100 3,779,100 564,341 4,343,441

20 Reconstruct Aircraft Parking Apron Phase 4 (600' x 650') - South, Construction

D 2021 3,542,400 393,600 3,936,000 Yes Approv 1/14/13

21 Service Road to West Side Development - Construction D 2021 1,149,300 127,700 1,277,000 Yes EA

22 Parking Improvements Phase 3 Construction D 2021 0 1,516,633 1,516,633 Yes EA2021 TOTAL 150,000 4,541,700 4,691,700 2,037,933 6,729,633

23 Terminal Building Expansion (12,000 sq. ft.) - Construction D 2022 3,855,600 428,400 4,284,000 Yes EA

24 Automobile Parking Lot Expansion, 130 Spaces - 130,000 sq. ft., - Construction

D 2022 1,189,800 132,200 1,322,000 Yes EA

2022 TOTAL 150,000 4,895,400 5,045,400 560,600 5,606,000

25 Airport Layout Plan Narrative Including ALP Update Plans P 2023 144,000 16,000 160,000 Yes N/A

26 West Side Access Road (36' x 7,700' and 24' x 3,500') Project #28 - Engineering Design

D 2023 337,500 37,500 375,000 Yes EA

27 Update Pavement Maintenance/Management Plan D 2023 81,000 9,000 90,000 Yes N/A2023 TOTAL 150,000 412,500 562,500 62,500 625,000

28 West Side Access Road - Construction D 2024 4,136,400 459,600 4,596,000 Yes EA29 Relocated TVOR - Construction D 2024 1,125,000 125,000 1,250,000 Yes Submit 2023

2024 TOTAL 150,000 5,111,400 5,261,400 584,600 5,846,000

30 Environmental Studies - Projects 33, 35, and 39 E 2025 216,000 24,000 240,000 Yes31 Engineering Design - Projects 32, 33, 34, and 35 -

EngineeringD 2025 1,206,000 134,000 1,340,000 Yes

32 Crack seal New AC Section of Apron & Twy H - (60,000 Sq.ft) Construction

D 2025 225,000 25,000 250,000 Yes

2025 TOTAL 150,000 1,497,000 1,647,000 183,000 1,830,000

33 Taxiway Construction Parallel to Rwy 13R-31L and Cross Twys (50'x7,300') - Construction

D 2026 5,586,300 620,700 6,207,000 Yes

34 Twy 13L North Extension and related Twys (Rwy:150'xd1,878'; Twys: 50'x2,300') Construction

D 2027 10,281,600 1,142,400 11,424,000 Yes

35 Re-mark Airfield Pavements - Construction D 2027 405,000 45,000 450,000 Yes36 Airport Layout Plan Narrative Including ALP Update Plans P 2028 189,000 21,000 210,000 Yes

37 Environmental Studies - Land Acquisition - Projects 40 and 42

E 2028 216,000 24,000 240,000 Yes

38 Engineering Design - Rwy 13R-31L Reconstruction, Widening, Lengthening and Strengthening (Project #39)

D 2029 711,000 79,000 790,000 Yes

39 Runway 13R-31L Reconstruction, Widening, Lengthening and Strengthening (100'x6,000') Construction

D 2030 8,484,300 942,700 9,427,000 Yes

40 Acquire West Side Land - 140 Acres D 2031 3,816,000 424,000 4,240,000 Yes41 Update Pavement Maintenance/Management Plan D 2032 121,500 13,500 135,000 Yes42 Acquire Land - Approach and Safety Area Protection

(Bidwell Ranch) - 750 AcresD 2032 3,690,000 410,000 4,100,000 Yes

43 Engineering Design - Construct Nested Hangars (Project #44)

D 2032 652,500 72,500 725,000 Yes

44 Construction Nested Tee Hangars - 3 Rows - 96 Units - 159,050 sq.ft. Construction

D 2033 8,075,700 897,300 8,973,000 Yes

2026-2033 TOTAL 42,228,900 4,692,100 46,921,000

CALIFORNIAFederal Funds Local Funds


ITEMS Phase 1 Phase 2 Phase 3 CummulativeUnit Unit Cost Quantity Amount Total Quantity Amount Total Quantity Amount Total Total

Roadways 12,250 SF 8$ 99,648$ Excavation 14" CY 25$ 529 13,233$ Sub-base 10" CY 45$ 378 17,014$ HMAC 4" Tons 150$ 306 45,938$ Striping 4" wide LF 1$ 964 964$ Curb/gutter 6" x 24" LF 25$ 900 22,500$

Gates-Tix/Pay Stations 194,000$ 157,000$ Bases EA 3,000$ 3 9,000$ 2 6,000$ Electrical/Communications (Ducts in trench, etc) LF 110$ 500 55,000$ 800 88,000$ Structures EA 25,000$ 2 50,000$ Equipment LS 150,000$ 130,000$ Demolition EA 1,000$ 3 3,000$ Relocation of Equipment LS 10,000$ 1 10,000$

Barriers EA 1,200$ 14 16,800$ 16,800$ 13 15,600$ 15,600$

Parking lot expansion 39,675 SF 421,054$ Excavation 14" CY 25$ 1,713 42,825$ Sub-base 10" CY 45$ 1,224 55,091$ HMAC 4" Tons 150$ 991 148,650$ Striping 4" wide LF 1$ 3,600 3,600$ Curb/gutter 6" x 24" LF 25$ 4,455 111,375$ Storm Sewer SF 2$ 39,675 59,513$

Existing Parking lot resurfacing 130,000 SF 527,624$ Excavation 4" CY 25$ 1,605 40,124$ HMAC 4" Tons 150$ 3,250 487,500$

Landscaping SF 2$ 170,000 255,000$ 255,000$

SUB-TOTAL 210,800$ 272,248$ 1,203,677$ Contingency 20.00% 42,160$ 54,450$ 240,735$

CONSTRUCTION TOTAL 252,960$ 326,698$ 1,444,413$ 2,024,071$

Design 10.00% 25,296$ 32,670$ 144,441$ 202,407$ CM 5.00% 12,648$ 16,335$ 72,221$ 101,204$

GRAND TOTAL 290,904$ 375,703$ 1,661,075$ 2,327,681$

CHICO MUNICIPAL AIRPORTCAR PARK IMPROVEMENTS


Section H: Phase Two Proposal


39

H1. Key Proposal Elements:

Our below proposed long term agreement is based on successful engagements we have undertaken with similar airports. A central theme is clarity of roles and purpose and an alignment of operational and economic interests. Below are the key business elements of our proposal (a draft management services agreement will be provided for Chico counsel for review/negotiations within 5 business days of Chico requesting the full document).

1) Management Services

Subject to the City’s obligations as sponsor of the Airport, AvPORTS (the “Contractor”) will provide daily management, marketing, leasing, and business development services (collectively “management services”) at the Airport in compliance with mutually established and City-approved policies, plans and budgets, as well as local, State and federal laws, rules and regulations.

The management services will consist of the management, operation and maintenance of the Airport as a Part 139 commercial and general aviation airport, including all aeronautical and landside operations and Airport maintenance functions, terminal operations, interactions with air carriers, tenants, oversight of parking lots and revenue control systems, customer service and training of all staff, airfield and related infrastructure maintenance, equipment maintenance, cleaning, landscaping, business administration and marketing, and the preparation for and accommodation of commercial airline services.

The management services will be provided on an approved costs plus an annual management fee basis. No corporate overhead or executive compensation will be included in the approved budgets (see section 5 & 6 below).

2) Management Fee

In return for its management services, Contractor will be paid a Management Fee of $15,000 per month, escalated at 3%, per contract year.

3) Additional Services

Contractor may provide, upon request of the City, certain additional services for an additional fee, including but not limited to the provision of real estate development, engineering, construction management, program/project management and other services pursuant to development and major maintenance undertakings of the Airport. An affiliate of Contractor, AFCO Inc., will be available to the City as a full services developer for new facilities at CIC subject to mutually agreed terms on any particular project.

4) Commercial Airline Start-Up Fee

In an effort to increase the level of activity and improve the financial performance of the Airport, Contractor will undertake steps to attract new regional passenger services at CIC. In return, the City will reimburse Contractor for any related advertising, promotional, and




40

reasonable travel expenses (not to include Contractor overhead or labor costs). Such expenses may be included in the airport Budget. In addition to the Management Fee, the City will pay Contractor a $50,000 success fee (“Commercial Airline Success Fee”) for each airline that initiates service at the Airport provided such service remains for a minimum of 12 months. It is important to note this $50,000 performance-based fee is a fraction of the economic benefit the City will derive as a result of these services.

5) Budget & Compensation Mechanics

Budget. Except for the year 1 budget, Contractor will submit to the City a proposed budget for each contract year on fiscal or calendar year as requested by City. After good faith negotiations, the City will approve the budget before the commencement of that contract Year. The annual funding requirements in the approved budget will become the financial obligations of the City. Contractor will seek pre-approval from the City for any expenses outside of the approved budget. Any budget disputes not resolved amicably after the start of a contract year will be arbitrated, but Contractor may proceed to operate and manage the Airport in accordance with the proposed budget.

Reimbursement. Contractor will incur costs in accordance with the approved budget and/or other pre-approved expenses. By the 15th day of each calendar month, Contractor will submit to City invoices, statements and documentation for operating expenses incurred during the previous month. The City will be obligated to pay within 30 days of the receipt of an invoice. Late payments will bear interest rate at a rate of 1% per month.

6) Expenses in Excess of Approved Budget

If during a contract year Contractor’s expenses exceed the approved budget, except for excesses due to a force majeure event, Contractor:

1st year: Bears no financial responsibility. 2nd year: Is liable for expenses in excess of 30% of budget. 3rd year: Is liable for expenses in excess of 20% of budget. 4th year: Is liable for expenses in excess of 10% of budget.

7) Term of Agreement

The initial term of the Management Agreement will be 10 years, with up to three 10-year extensions, subject to compliance with terms of the Management Agreement and applicable state and federal law, rules and regulations.

The Contractor will have the option, at its discretion and upon 6 month’s notice, to extend the term of the Management Agreement at the end of the initial as well as the first renewed term. For the subsequent renewal terms, both parties have to choose to extend the Management Agreement.




41

If the City fails to hire a replacement manager for the Airport six months prior to any such time as Contractor’s term has elapsed, then Contractor will continue to manage the Airport, but will be compensated 1.5 times of the preceding year’s Management Fee.

8) Process and Timing of Taking over Full Management of Airport:

The Management agreement will be signed on a date known as the Effective Date. Within 30 days of the Effective Date, Contractor and Chico will meet to determine the year 1 annual budget. It is understood that Chico will need to dedicate resources sufficient to permit Contractor to put forth as accurate a budget as is possible and to cooperate with Contractor establishing an office on site. Within 60 days of the Effective Date, Chico and Contractor will agree to the year 1 annual budget. Within 14 days from the date of year 1 annual budget approval/ agreement, Contractor will mobilize its Airport Manager to site for fulfillment of all Management Services from that date forward, which date to be known as the Date of Management Transfer.

9) Termination Provision

The termination provisions contained in the General Terms Agreement will govern after the Date of Management Transfer. However, if the parties cannot agree after good faith negotiations on an initial budget within 60 days after the Effective Date, then the Agreement will terminate and City will pay Contractor a $100,000 fee. This fee is in consideration for airport staffing termination costs, legal, and other costs associated with Contractors good faith efforts to advance the long term agreement to the Date of Management Transfer.

10) General Terms

The provisions of the General Terms Agreement (representations, warranties, indemnity, etc.) will be incorporated by reference and continue to govern.


Conclusion


42

AvPORTS presents our analysis, strategic approach and management proposal with the submission of this document, serving as the final deliverable of our Phase 1 engagement. We are excited about the opportunities for growth, revenue enhancement and improved operational standards available to the City to improve the overall value of the Chico Municipal Airport for the community. We are confident that no other firm is more qualified, prepared, or ready to partner with Chico to implement the strategy we have outlined and we look forward to continue building a lasting and successful partnership.


Appendix A


Chico Passenger Leakage Review & Analysis



Chico Passenger Leakage Review & Analysis For the Complete Year Ending December 31, 2014

July 28, 2015

CIC

30 Minute Drive Time

CIC


Chico Passenger Leakage Review & Analysis - Slide 1

Key Objectives

Define the CIC Catchment Area

Compare Chico’s Catchment to those of Surrounding Airports

Quantify the Travel Habits of CIC Catchment Area Passengers

Determine CIC Air Service Opportunities

Desired Goal:

A thorough, compelling, and data-driven foundation to use when

quantifying air service opportunities for airlines



Defining the Catchment Area for

Chico Municipal Airport



Catchment Areas of Northern California

AvPORTS 2015 Zip Code Database (based on May 2015 zip code data provided by Datasheer, LLC)

Source: U.S. DOT O&D Passenger Survey & Adjusted ARC Passenger Booking Data (CY 2014)

CIC


Equidistant Catchment Areas

Each catchment area represents the

geographic region where that airport is

the shortest drive away from each zip

code contained within.

This catchment area calculation

methodology prevents airports from

having overlapping catchment areas,

allowing each airport to claim its own

uncontested region.

Defining catchment areas in this way

allows for more accurate comparisons

of airport air service markets while also

quantifying the maximum potential for

small and medium sized airports.

RDD

CIC

SMF

RDD


SMF


STS


ACV


RNO


STS

RNO

ACV



Chico (CIC) Catchment Area

Chico Catchment Area:

Total Population

296,090

Average Household Income

$43,483

Total Passengers

623,388

Total Passengers (PDEW*)

854



RDD

CIC

SMF

STS

RNO

ACV

*Passengers Daily Each WayITEM 4.2. ATTACHMENT 1


Chico (CIC) Vs. Redding (RDD)

Population & Point of Sale Passengers

Chico Catchment:

Total Population

296,090 Average Household Income

$43,483


854



Redding Catchment:

Total Population


$43,245


725

RDD

CIC

SMF

STS

RNO

ACV

Chico: 25% More People &18% More Passengers than Redding



Chico (CIC) Vs. Arcata/Eureka (ACV)


Chico Catchment:

Total Population

296,090


$43,483


854



Arcata/Eureka Catchment:

Total Population

140,139


$41,612


441

RDD

CIC

SMF

STS

RNO

ACV

Chico: 111% More People &94% More Passengers than Arcata/Eureka

*Passengers Daily Each Way ITEM 4.2. ATTACHMENT 1


Chico (CIC) Vs. Santa Rosa (STS)


Chico Catchment:

Total Population


$43,483


854



Santa Rosa Catchment:

Total Population


$62,095


5,033

RDD

CIC

SMF

STS

RNO

ACV

Santa Rosa: 174% More People &489% More Passengers than Chico




Catchment Area

Passenger Overview




Passengers by Type

Domestic 550,626

88%

International 72,762 12%


Chico Catchment Area

Air Passenger Market

(623,388 Passengers)

(854 PDEW*)

International

Are passengers traveling

to/from non US destinations

that require a passport for

travel.

Domestic


to/from cities with the United

States or its protected

territories.

CIC

*Passengers Daily Each Way




Passengers by Type

Business 468,191

75%

Leisure 155,197

25%


Business


to/from non-leisure

destinations such as Dallas/Ft.

Worth or Los Angeles.

Leisure


to/from leisure destinations

such as Las Vegas or

Orlando.




(854 PDEW*)

CIC





Passengers by Airport of Use

SMF 76%

SFO 9%

CIC 5%

OAK 4%

RNO 4%

SJC 2%


Domestic Air Passenger Market


(754 PDEW*)


International Air Passenger Market

(72,762 Passengers)

(100 PDEW*)


SFO 50%

SMF 39%

CIC 8%

SJC 1%

RNO 1%

Others 1%





Point of Sale Passengers by Direction of Travel

Inbound Diversion 271,374

44%

Outbound Diversion 352,014

56%

Source: U.S. DOT O&D Passenger Survey & Adjusted ARC Passenger Booking Data (YE 1Q 2014)

Outbound Diversion

Are passengers who live

within the Chico Catchment

Area and drive to other

airports when flying.

Inbound Diversion

Are passengers who live in

other parts of the

country/world who must use

other airport in order to visit

or conduct business within

the Chico Catchment Area.




(854 PDEW*)

CIC




International Air Passenger Market

(72,762 Passengers)

(100 PDEW*)


Passengers by Airline

WN/FL 50%

UA 16%

AA/US 10%

DL 9%

AS 8%

B6 3%

HA 2%

VX 1%

Others 1%

UA 30%

AM 15%

AA 15%

DL 9%

AS 5%

AC 3%

BA 2%

LH 2%

AF 2%

AV 1%

VS 1% Others

15%



Domestic Air Passenger Market


(754 PDEW*)




CIC Can Serve

Chico & Redding Travelers



SMF 71%

SFO 14%

CIC 5%

OAK 4%

RNO 4%

SJC 2%

SMF 63%

SFO 16%

RDD 7%

OAK 7%

RNO 4%

SJC 3%

Others 0%

Chico (CIC) & Redding (RDD)

Passengers by Airport of Use


Total Air Passenger Market


(854 PDEW*)

Redding Catchment Area



(725 PDEW*)





Chico (CIC) & Redding (RDD)

Serving Both Via CIC

89% of Redding Passengers drive past Chico en-route to SMF, SFO, OAK & SJC

Chico passengers would choose SMF over RDD since the drive time is virtually the same and SMF has far superior flight schedules.

Redding passengers traveling to SMF, SFO, OAK & SJC could be intercepted by CIC since CIC is much closer than these other airports

Service to CIC gets you the Chico & Redding markets.

Service to RDD only gets you the Redding market.

RDD

CIC

SMF

SFO

OAK

1:10 Drive

1:30 Drive



Chico (CIC) &. Redding (RDD)

Combined Population & Point of Sale Passengers



RDD

CIC

SMF

STS

RNO

ACV

Chico/Redding Catchment:

Total Combined Population

532,142


$43,377

Combined Total Passengers

1,152,910

Combined Total Passengers (PDEW*)

1,579

*Passengers Daily Each Way ITEM 4.2. ATTACHMENT 1



Catchment Area

Air Service Opportunities




Top 25 Domestic Combined Markets





Top 25 Domestic Airports





Top 5 Air Service Opportunities

Los Angeles (LAX)

(BUR)

San Diego

Las Vegas

Seattle

Phoenix (PHX)

(AZA)




Chico Municipal Airport – 2025 VISION

300,473 O&D Passengers*

Ten times previous CIC O&D traffic levels

Airport could capture 50% of leakage

CIC

LAX

SMF

71%

SFO

14%

CIC

5%

OAK

4% RNO

4%

SJC

2%



623,388 O&D Passengers

Complete Year 2014

PDX

SAN

SEA

PHX

DEN

LAS

???

*Estimated Schedules & Load Factors

-DEN: CRJ-200 12/wk. @ 85%/LF

-LAS: MD-80 3/wk. @ 92%/LF

-LAX: CRJ-200 20/wk. @ 85%/LF

-PDX: Saab-340 7/wk. @ 75%/LF

-PHX: CRJ-200 7/wk. @ 85%/LF

-SAN: CRJ-200 7/wk. @ 85%/LF

-SEA: CRJ-200 7/wk. @ 85%/LF


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCIn5wqb97sYCFcaSDQodEeQFzA&url=http://main.acsevents.org/site/TR/RelayForLife/RFLCY15GW?pg%3Dentry%26fr_id%3D66096&ei=sayvVcncA8alNpHIl-AM&psig=AFQjCNEER8LoeR8Ys5K5Q6eWY7ssBafQ5Q&ust=1437662757573119


THANK YOU


Appendix B


Chico Municipal Airport Marketing Action Plan



Chico Municipal Airport Marketing Action Plan A Roadmap for Effectively Marketing Chico Air Service

July 28, 2015 ITEM 4.2. ATTACHMENT 1

Chico Municipal Airport Marketing Action Plan - Slide 1

Purpose of a Marketing Action Plan:

Promote the use of commercial airline service at CIC

Communicate schedules, destinations, fares and other tangible service points to

the region for any new entrant airline to CIC

Communicate the airport’s level of reliability

Comparisons to SMF, RDD & SFO

Ensure the public knows that CIC’s new air service is far more reliable than what

the airport had in the past

Educate the public about the importance of “Flying Chico First”

Improved air service = economic growth, more jobs, increased outside

investment, and new sources of tax revenue

Driving to SMF or SFO is bad for the environment, expensive, time consuming,

and after a long flight, very unsafe

“Fly Chico First” for the same reasons we “Buy Chico First” it keeps local money in

the community

Introduction



Marketing Action Plan Messaging

The Five (5) Messages CIC will Communicate to the Public:

(#1) Chico Municipal Airport Exists

Many local travelers new to the region are not even aware the airport exists

Educating the public about new air service at CIC will generate new business

(#2) Affordability

Fares from CIC should be similar in price to other nearby airports

Flying from CIC saves you money in gas, parking and possible hotel costs

incurred when flying from SMF or SFO

(#3) Convenience

CIC’s size makes the travel experience very quick and easy

Fly when you want to fly without the drive

(#5) Reliability

New CIC air service will be just as reliable as at other airports

Frequent delays and cancellations are a thing of the past

(#5) Local Pride

If you “Buy Chico First” then you should also “Fly Chico First”



Aspects of the Marketing Action Plan

The Five (5) Pronged Approach to Market CIC:

Advertising Campaign

Limited use of Radio, Print & Billboards

Sponsorship of local events

Use of Mascot(s)

Social Media

Heavy use of Facebook, Twitter & Pinterest

These resources have little cost and make users fans with entertaining content

Partnerships

Work with entities like the Chico Chamber of Commerce or the Downtown Chico

Business Association to share resources

Airport Website

Redesign website & separate it from the City of Chico’s website

Link to all social media sites and populate with similar content

Media Attention

Write regular editorials to educate the public about all things related to CIC

“Destination of the Week” column in the Enterprise Record



Four (4) of the Five (5) Prongs have VIRTUALLY NO COST:

Advertising Campaign

Social Media

Partnerships

Airport Website

Media Attention

A Cost Effective Approach


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCNKwg8Sg78YCFQTVgAodkFcJpA&url=http://www.csuchico.edu/chicoexperience/partners.shtml&ei=otGvVdLXCoSqgwSQr6WgCg&bvm=bv.98197061,d.eXY&psig=AFQjCNHlHp4ZG0Q-vS_w5rp5WhbMOxk_WQ&ust=1437672203682921

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCJeBruGg78YCFQaqgAodoycH8w&url=http://www.downtownchico.com/dcba&ei=39GvVdeVKobUggSjz5yYDw&bvm=bv.98197061,d.eXY&psig=AFQjCNFlc0IPIlknGr8kYX-s9ib3wNoFvQ&ust=1437672276658427


Staff Resources

"One person with passion is better than forty people

merely interested.“ – E.M. Forster

A Dedicated & Focused Marketing Team IS REQUIRED:

Dedicated Staff

Multiple marketing initiatives must be managed simultaneously

Ad buys

Sponsorship responsibilities

Setting up for events & scheduling mascot appearances

Social Media Updates

Forging and maintaining of partnerships

Website updates

Fielding frequent media inquiries

Focused & Passionate

Chico air service sustainability will be determined by community use. The

stronger our message is and the more passionate those who communicate

it are, the more likely users of the flights are to become champions for

Chico air service.



Meet the Chico Airport Mascots

Effective

Everyone wants to take their picture with these mascots

Very high sharing volume via social media

Airport branding in every picture

Affordable

Interns, family members, city staff, and/or volunteers can be used as the ‘talent’

Instant Brand Recognition

Everyone knows pilots and flight attendants are associated with airports

No need to educate the public,



THANK YOU


long term strategic plan for cic - … term strategic plan for cic: ... prospects for chico...

Documents