UPDATE: Read the latest on the city’s airport takeover by clicking here. The City of McKinney is negotiating for complete operational control of Collin County Regional Airport.
As it stands, the city owns all the land at the airport but does not own the majority of the buildings on the airport grounds. George Schuler of Schuler Development currently owns many of the airport buildings.
According to sources close to the situation, City Manager Jason Gray is negotiating with Schuler to purchase the buildings. This potentially multi-million dollar transaction would see the city purchasing Schuler’s assets and taking over the lease agreements with the airport’s current tenants.
The takeover would be a two-part process. In addition to purchasing the airport’s buildings, the city is also pushing to take over the fueling operations at the airport, according to Will Cutter, President and CEO of Cutter Aviation. Cutter Aviation currently manages fuel operations at the airport and serves as the FBO (Fixed Base Operator) at CCRA.
As FBO, Cutter Aviation provides fueling services, aircraft maintenance and storage, aircraft sales and charter services. Cutter said that he feels that Cutter Aviation has been “shoved into a corner” in the negotiations with Gray because the city is currently unwilling to budge on its plans to control the fueling at the airport.
Part of the reason for the city’s unwillingness to negotiate could be because Cutter Aviation’s contract expires on Oct. 31. Cutter said that the city is planning to exercise a “proprietary exclusive” for the fueling services. By invoking this right, the city would take over fuel sales and service from Cutter Aviation.
“We want to stay. We’re willing to invest in the city and the people. And this is not in the best interest of the citizens of McKinney.” – Cutter Aviation President and CEO Will Cutter
But Cutter told TownSquareBuzz.com that having the fueling services as a portion of his business is critical to their business operations at CCRA. “They (the City of McKinney) don’t see that the fueling side affects everything,” Cutter said.
Cutter said that the fueling operations allow them to maintain their other services at the airport, which are not as profitable as the fueling services are. He said that several of the services operate at a loss, but that the services are necessary to ensure a quality operation at CCRA.
Cutter said that he is concerned about government getting involved in an industry without the requisite knowledge and experience that Cutter (or any other FBO) can provide. “They can make the whole airport look bad,” Cutter said. “They aren’t going to do good job.”
Cutter said that his company currently purchases over 15 million gallons of fuel a year for their multiple FBO locations. He said that 800,000 gallons are currently being purchased for CCRA. Cutter said that he can negotiate lower rates with the fuel providers because of the size of their business.
“This is true government,” Cutter said. “Buy something and think we can charge less. I’ve got really good relationships with the fuel companies. I can get better insurance rates and better truck rates than the city can.”
According to Cutter, if the City of McKinney does take over fueling services, the city would also be required to provide aircraft repairs and service and two of the following services: flight instruction/aircraft rental, aircraft sales, charter operations, instrument, avionic, and propeller repair, aircraft storage and other aircraft support activities.
Aircraft storage would almost certainly be one of the two services provided by the city, because under the proposed agreement with Schuler, the city would own multiple hangars at the airport.
The issue then becomes how the city will provide the other services. Cutter said that he worries about the city’s ability to provide those other services and compete with the other airports in the area. “They’ll have to pay more for fuel, more for employees, more for marketing and more for operations,” Cutter said.
Cutter told TSB that the city is offering Cutter Aviation the opportunity to continue its services as FBO with the city operating the fueling services. Cutter has balked at this proposal, telling Gray that the fueling services are essential to Cutter’s continued operation at CCRA.
Without the fueling services, Cutter said that they may “reluctantly” vacate their CCRA operations entirely, potentially as soon as Oct. 31, when the contract expires. If they do leave CCRA, Cutter said they will be taking 34 jobs and hundreds of thousands of dollars in payments to the city in the forms of rent, taxes and fees with them.
Cutter said that they would also be forced to discontinue their jet sales operations at CCRA, which bring large amounts sales taxes to the city. “We’re No. 1 or No. 2 in Piper Aircraft sales in the entire world,” Cutter said. “And those sales are all done at CCRA.”
Cutter said that they have planned to establish a sales center for the new HondaJet at CCRA. “It would serve from Texas all the way to California,” he said.
“We want to stay,” Cutter said. “We want to make CCRA one of the best airports in the entire country. We’re willing to invest in the city and the people. And this is not in the best interest of the citizens of McKinney.”
Cutter said that they engaged with many of the aviation groups they are involved in and those groups may become involved in the negotiations. “We’ve also engaged an attorney to help us with this,” he said.
City Councilman Ray Ricchi told TSB he could not comment on the specifics of the negotiations, but said that the City Council is currently looking into possible business models to determine the rate of return on any investment of public money into the airport.
Ricchi said that the citizens of McKinney would also have an opportunity to be present for discussions about the airport purchase once a proposed agreement is made public. “Any decision that is made on the airport will be made in a public council meeting where the public will have the opportunity to be present and hear our discussion,” he said.
City Councilman Don Day told TSB via e-mail, “Should the city own all the assets, the city is in a much better position to compete with these other airports because the city is not looking solely at rental rates and fuel sales for income because the city also has tax revenues. Should the city own all the assets, it can consider lower hangar rental rates and lower fuel cost to make our airport more competitive and therefore more attractive to large planes that will boost tax revenues.
“By striking a balance between hangar rental rates, fuel cost and increased tax revenues generated by additional planes as well as additional hangars for new corporate citizens, the city can maximize the combination of all revenue streams from the airport. This balanced approach to managing the airport will create more revenues to the city and MISD and will create more jobs for our citizens. With the recent completion of the new control tower, the new runway and the desire of the private developer to pursue other interest, we have a rare and unique opportunity to grow our airport to benefit all our citizens.
“As a member of Council, I have reviewed all the numbers from the price of purchasing the airport to income potential to expenses and as a business man with almost 50 years experience, I strongly support the purchase of the McKinney Airport by the City of McKinney. If McKinney does not purchase the Airport, McKinney will have missed a rare opportunity.”
TownSquareBuzz.com has left messages for City Manager Jason Gray, Mayor Brian Loughmiller, George Schuler, and members of the McKinney City Council and will update this story when we receive any further information.
Check back with TSB for further updates as this story develops.