| | | | | | | |  | STAFF REPORT
For Meeting of April 27, 2020
MAYOR AND MEMBERS OF THE CITY COUNCIL | Agenda Item # 11.G.
TITLE: Resolution No. 2149- CARES Funds |
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| | | | | | | | Subject
This resolution will authorize the City Manager to accept up to $70,000 of FAA grant money to support operations of the airport due to the COVID-19 pandemic.
Summary and Background
The $2.2T Coronavirus Aid, Relief, and Economic Security (CARES) Act, included $10B to the FAA for, “eligible U.S. airports to prevent, prepare for, and respond to coronavirus impacts, including support for continuing airport operations.”
Speed has obviously been the name of the game with all CARES Act funds, and in this instance, the $10B through FAA is simply being allocated based on formulas. There is an ‘application’ in name only. The Hermiston Airport will receive $69,000 as a result of the allocation formula, as was communicated to us by a press release from our Federal elected officials on April 14. Now is simply the paperwork housekeeping to apply for the funds. We will not get any more or any less.
The intent of the funds being awarded is to help airports weather the negative impacts of Coronavirus on the travel industry. Therefore, the guidance issued by FAA is that these funds are very flexible, as long as they are used to pay for airport operations.
Tie-In to Council Goals:
N/A
Fiscal Information
The Hermiston Airport operates as a department within the City’s General Fund.
Total budgeted revenue from Airport operations in FY ’19-’20 was projected to be $230,000; with $150,000 from fuel sales, and $80,000 from hangar/lease revenue.
Total budgeted expenses from Airport operations in FY ’19-’20 was projected to be $318,600.
The total General Fund Subsidy for the airport this FY therefore, was expected to be approximately $89,000.
Due to the nature of the users at the Hermiston airport, it is not expected that Coronavirus will have much, if any, impact on rental revenues, or fuel sale volume. Global oil markets have been in chaos, but we simply pass-through cost reductions to our retail fuel customers. Therefore, I don’t anticipate much negative impact on the net-position of the Airport’s demand on General Fund resources through June 30.
Once these $69,000 in FAA funds are received in to the General Fund, then Airport-related revenue for the year should climb close to $299,000.
I am recommending that we make no changes to expenses at the airport as a result of receiving these funds, and simply use them as intended, to cover airport operational expenses which were already budgeted. This will have the effect of reducing the General Fund cash subsidy required for Airport operations for this fiscal year from approximately $89,000 to approximately $20,000.
I hope that this step now will help “keep the powder dry” for a small amount of General Fund resources heading in to an almost certain recessionary revenue scenario.
Alternatives and Recommendation
Alternatives
1. Approve Resolution No. 2149
2. Reject Resolution No. 2149
Recommendation
Approve Resolution No. 2149
Requested Action/Motion
Motion to approve Resolution No. 2149
Submitted By: Mark Morgan |
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