Saturday , 26 May 2018

City Council Approves $25 Million Purchase of Airport Assets

The City of McKinney is officially getting into the airport business. At Tuesday evening’s city council meeting, the council members officially approved a $25 million purchase of assets at Collin County Regional Airport.

Those assets include hangars, buildings and lease agreements with the airport’s current tenants. The city is set to purchase the assets from McKinney Airport Properties Inc., McKinney Aviation I Ltd., Tres Airport Partners, LP, and Collin County Regional Investments, LP. Schuler Development controls all four of those entities.

In recent weeks, the council had granted City Manager Jason Gray the authority to negotiate for the purchase of the Schuler-controlled assets in an effort to control all of the operations at CCRA. The council granted Gray the authority to make an offer on the airport assets at the August 21 council meeting.

The city is currently the landowner at CCRA but did not control the buildings on the property. Once this purchase is finalized, the city will own the land and all of the buildings on the airport grounds.

Gray told the council “the value of the airport goes beyond those direct costs,” in reference to the purchase price of $25 million. Gray, Mayor Brian Loughmiller, Councilman Don Day, Councilman Ray Ricchi and Councilman Roger Harris all spoke to the benefits of the city controlling the entire airport operations.

Gray and Loughmiller spoke about “the streamlined operations and ability to negotiate” with potential airport users in the future.

Gray told the council that the “timing was favorable” for this purchase as a combination of factors fell into place. Those factors are a willing seller (Schuler Development) and the expiration of the contract of Cutter Aviation, currently serving as the fixed base operator (FBO) at CCRA.

Cutter’s contract expires on October 31 and it appears that the city is prepared to take over FBO operations at the airport. Negotiations between Cutter and the city soured after the city indicated its intention to control the fueling operations at CCRA. Cutter claimed it needed to continue the fuel service, which served as a profit generator that helped drive their continuing FBO operations.

With Cutter’s contract set to expire soon, Gray told the council that the first order of business is to identify people to manage the operations at the airport and hire a staff similar to what Cutter had at CCRA. The approved purchase agreement calls for the city to take over FBO operations and assume control of the airport’s buildings on Nov. 1. Gray said that CCRA Executive Director Ken Wiegand will oversee the FBO operations going forward.

Gray also stated that McKinney will not be engaging in aircraft sales or maintenance.

To fund the $25 million purchase, the council approved the issuance of debt in the amount of $18 million. The debt issuance resolution states that the city will use the debt for the purpose of “acquiring, constructing, improving, extending, and equipping municipal airport facilities and professional services.”

The resolution also states that the repayment of the debt will be made from ad valorem taxes and a limited pledge of the net revenues from the city’s airport operation.

The resolution states that $17.5 million of the requested debt will be used “directly for the acquisition of the facility.” The remaining $8 million will come from TXDOT and FAA reimbursements.

Not all of the council members voted in support for the airport deal. Mayor Pro Tem Travis Ussery was the lone dissenting vote among the council members. Ussery also expressed his reluctance to approve the airport purchase when the money could be better used in other places. “There’s no doubt that an airport offers economic benefit to the city, but there are areas of the city that have sub-standard services,” he told the council. “We ask these people to wait while we go and spend money on this.”

Ussery mentioned areas within his district, District 3, which have sub-standard sewer and water lines and suggested the airport money should be directed there instead.

Ussery also questioned the ability of a government entity to take over private business operations. “We say that we can do it better than the private sector, but where is the proof of that?,” Ussery said. “I can’t reach peace in my conscience that this is the best thing for the City of McKinney.”

Ricchi voted to approve the purchase but stated his desire that the city eventually sell the assets and utilize that money to help the citizens of McKinney. “We don’t need to be a gas station,” Ricchi said. “We don’t need to be in the airport business, but we need to be able to control the city’s interest in the airport. We need to reduce our debt and work to sell these assets to help our city.”

Several citizens also spoke out against the airport purchase, including former City Council member Gilda Garza and two-time city council candidate Jeremiah Hammer. Garza complemented Ussery for his stance and echoed his statements that there are other areas of the city that would be better served with the money the city is about to spend on the airport.

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