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H3. Res. 5949 - Airport Users Assoc. Grant ApplicationKALISPELL City of Kalispell Post Office Box 1997 - Kalispell, Montana. 59903 Telephone: (406) 758-7701 Fax: (406) 758-7758 MEMORANDUM To: Mayor Johnson and City Council From: Doug Russell, City Manager Re: Grant Application request- Kalispell City Airport Runway Lighting Meeting Date: November 18, 2019 BACKGROUND: In December of 2017, Council adopted Resolution 5848, adopting the form of lease with a User's Association for the management of the Kalispell Airport. As part of that agreement, a Master Plan for Capital Improvements was included, identifying projects that would be cooperatively completed. In October of 2018, the User's Association requested and received an amendment to the agreement to account for more clearly defined components of the project, including stormwater and engineering. The Users Association also requested funding from the Council for lighting and fencing improvements. Council did not agree to that request but encouraged the association to look for additional sources of funds. As such, the User's Association has been looking at a program form the State Department of Transportation for grant funding, which they desire to apply for in respect to the runway lighting at the airport. As the property is owned by the City of Kalispell, the City would have to be the applicant (similar to our previous grant applications for the golf course and Kidsports). This grant application is for $200,000 with the user's association committing their funds for engineering. This would be a pass- through grant with no fiscal obligation on behalf of the City. The User's association will be present at the meeting to answer questions that Council may have. RECOMMENDATION: It is recommended that Council adopt Resolution 5949, a resolution authorizing submittal of a grant application for runway lighting to the State Department of Transportation. Attachments: Resolution 5949 Airport User's Association Grant Application RESOLUTION NO.5949 A RESOLUTION TO APPROVE AN APPLICATION BY THE CITY OF KALISPELL TO THE MONTANA DEPARTMENT OF TRANSPORTATION FOR A GRANT IN THE AMOUNT OF $200,000 TO FUND LIGHTING IMPROVEMENTS ON THE KALISPELL CITY AIRPORT. WHEREAS, In December of 2017, the Kalispell City Council adopted Resolution No. 5848, adopting the form of lease with a User's Association for the management of the Kalispell City Airport; and WHEREAS, a Master Plan for Capital Improvements was included in the lease that identified projects that would be cooperatively completed; and WHEREAS, the User's Association requested capital improvement funding from the City for upgrades to lighting and fencing at the facility which the Council did not approve but rather encouraged the Association to look to other sources for those funds; and WHEREAS, the User's Association has now identified a program from the Montana Department of Transportation for grant funding in respect to the runway lighting at the airport for which the City of Kalispell, as owner, is eligible; and WHEREAS, the User's Association proposes committing its funds to all out of pocket costs of the lighting project, such as engineering, with the City's agreement to be the applicant for the grant that would operate as a pass -through grant with no fiscal obligation on behalf of the City; and WHEREAS, the City Council finds that the arrangement proposed by the User's Association for funding the airport lighting improvements is in the best interests of the City and its citizens. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION 1. The City Manager is directed, on behalf of the City of Kalispell and in cooperation with the User's Association, upon the terms as set forth above and more specifically described in Exhibit "A" attached hereto, to make application to the Montana Department of Transportation for a grant in the sum of $200,000 for the purposes of funding lighting improvements for the Kalispell City Airport. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 18TH DAY OF NOVEMBER, 2019. ATTEST: Aimee Brunckhorst, CMC City Clerk Mark Johnson Mayor Kalispell City Airport — 2019-2020 Airport Improvements Loan and Grant Narrative Common Name: KALISPELL(2) Access Code: A1WAV0 Applicant Information Airport Name (Formal) Kalispell City Airport Airport Name (Common) Kalispell Airport Website* Airport Owner: Owner Name City of Kalispell Address (Line 1) 201 15T Ave East Address (Line 2) City Kalispell State MT Zip 59901 Country USA Phone Number #1 406-883-7211 Phone Number #2 Email Address citymanager@kalispell.com Airport Contact: First Name Zack Last Name Anderson Address (Line 1) PO Box 67 Address (Line 2) City Kalispell MT Zip 59903 Country USA Phone Number #1 406-837-7730 Phone Number #2 Email Address Zack@andersonmasonryinc.com Airport Engineer: Firm: Jackola Engineering and Architecture Project Information: Have you previously requested funding for any portion of this project? If your request for the grant and/or loan amount on the previous page was rejected, would the airport still have the financial means to complete the project? Please identify the range of loan value you are willing to accept: Not less than Not more than When is the project scheduled to commence? Brief Description - Insert A Yes No $0 $0 04/01/2020 The Kalispell City Airport has a long and controversial history. This public airport has been a major hub of general aviation activity in Kalispell since its initial construction in 1966 as a fully improved airport. Over the past 50 years, the airport has grown into one of Montana's larger general aviation airports. The airport currently reports 56 based aircraft and 28,000 operations per year. Although a NPIAS airport, the FAA has not been able to fund development at the airport because the existing infrastructure does not meet minimum FAA design standards. Past efforts have been undertaken to conduct the master planning and environmental work which were needed to begin a redevelopment project which would upgrade the airport to ARC B-II standards. Kalispell City council voted to approve the upgrade in 2012. However, Council's decision 1 was overturned through a general election ballot initiative shortly thereafter. Since that time, the airport has been limping along with aging pavements and limited facilities with its future in -flux. In 2017, the Kalispell Airport Association successfully negotiated a 30-year term lease of the airport from the City of Kalispell. Key conditions of the lease include the following: 1. The airport must continue operating under its previous operating guidelines; 2. Existing hangar leases with the City were canceled and new leases with the Association were established; 3. Assets within the Airport Enterprise fund were turned over to the Association; 4. The Association could make pre -approved improvements to the airport using a combination of Association funding (Airport Enterprise Fund) and Tax Increment Financing (TIF). Improvements approved by the Council are included on the attached Master Plan (Exhibit 1). The terms of the TIF limit restrict funding to new construction only and do not allow for the funding of rehabilitation or repair work. In addition, the terms of the lease agreement limit the use of TIF funding to the amounts approved by the Kalispell City Council as depicted on the Master Plan. The first phase of improvements at the airport were designed and bid in the spring of 2018. Improvements included the following projects and are depicted on the attached Exhibit 2: • Runway 13 Extension (60' x 450') — Includes new lighting and requires a displaced threshold • Taxiway Reconstruction and Widening — Includes partial depth reconstruction and widening of both parallel taxiways and connector taxiways to 25' • Hilton Ramp — A new east -side, public -use parking ramp with 8 aircraft tiedowns • Street Access Taxiway — New west side taxiway to allow for new hangar development and includes a public use ramp with 2 aircraft tiedowns • Runway Turnarounds — Provides for run-up areas at hold lines on each runway end • Runway Lighting — Replaces an unreliable low intensity lighting system with a new medium intensity lighting system • Perimeter Fencing - Completes the perimeter chain link fence around the airport As the property owner, the City of Kalispell has been clear that they do not want to take on loans; however would be supportive of obtaining grant funds to help with the improvements being undertaken by the Airport Association. The "2019 Project Cost" below is a summary of the projects undertaken by the Airport Association during the 2019 construction season. These projects were funded through Airport Association money and TIF dollars available through the City. The 2019 projects show a commitment among the Airport Association to maintain and improve upon the airport facilities and improve safety of the operations. The "2020 Project Cost" are additional projects to be completed by the Airport Association and were possible to fund during the past year. As a significant amount of resources were expended this past year, grant money to help fund these projects are critical to their completion. 2019 Project Cost Information: Type of Work East-West Taxiway Repair FAA Funded? No Administration $0 Engineering $13,682 Construction $251,302 Project Cost Information: Type of Work Hilton Parking Ramp FAA Funded? No Administration $0 Engineering $16,087 Construction $295,462 Project Cost Information: Type of Work Street Access Taxilane FAA Funded? No Administration $0 Engineering $9,196 Construction $168,889 Desired Grant $10,000 Desired Loan $10,000 Project Cost Information: Type of Work Runway Extension FAA Funded? No Administration $0 Engineering $8,175 Construction $150,152 Project Cost Information: Type of Work Runway Turnarounds FAA Funded? No Administration $0 Engineering $6,476 Construction $118,946 Project Cost Information: Type of Work Runway Lighting FAA Funded? No Administration $0 Engineering $15,462 Construction $ 200,000 Desired Grant $200,000 Desired Loan $0 Project Cost Information: Type of Work Perimeter Fencing & Hilton Gate FAA Funded? No Administration $0 Engineering $0 Construction $42,500 Desired Grant $0 Desired Loan $ Supplemental Information: Annual Airport Income $72,000 Annual Airport Expenses $58,000 Is there a tax levy in place specifically for airport funding No Appx how much does it generate annually $0 Number of Mill Levies 0 3 Describe what the airport serves and any special roles or functions it may also provide - Insert B Kalispell City Airport (S27) is a general aviation airport one mile south of downtown Kalispell in Flathead County, Montana. The airport is north of Flathead Lake in the northwest region of the state serving a city of 21,000 people. The region is known for its outdoor recreational opportunities offered by Flathead Lake and the Rocky Mountains. Kalispell City Airport is an active airport with approximately 28,000 operations per year. The summer and fall months are particularly busy, with airplanes coming and going at all hours of the day. Activities include recreational flying, agricultural spraying, corporate and business aviation, search and rescue, and public charters. Because of the airport's proximity to US Highway 93, spectators often watch aircraft take -offs and landings. The airport also provides a staging area for community events, including an annual Community Day that draws nearly 5,000 people. Several organizations host fly -in events, including the Experimental Aircraft Association (EAA) Young Eagles, Antique Pilots Association, Cessna Pilots Association, and Piper Pilots Association. Kalispell City Airport is an economic engine for the surrounding region. From providing daily general support of local industries to annual events drawing large crowds, the airport positively impacts the local economy and serves an important asset to community life. Direct On -Airport Monetary Impacts: $2,392,000 Visitor Spending: $1,711,000 Total Economic Impact: $6,709,000 *From 2016 Economic Impact Study of Montana Airports Describe the need, urgency and support for this project - Insert C The need, urgency and support for all of these projects is strong. As discussed earlier, the history of this airport has been controversial and its future has been in -flux. Because of the efforts of the Kalispell Airport Association, a future exists for this airport. With the new lease in place, the airport now has a legal arrangement to continue its operations for at least 20 years (there is an option in the lease for a 10 year extension to 30 years). However, there has not been a development project at the airport since 2004 when the west side ramp and taxilanes were constructed. The Airport has been faithfully performing crack sealing over the years and has managed to extend the life of the pavements. But the taxiways are well beyond band aid repairs and the runway will soon follow. Improvements outlined in the exhibits demonstrates work that has been committed to the City of Kalispell. Numerous improvements from the plan were constructed during 2019; however, fencing and lighting upgrades remain in addition to milling and overlaying the runway. Below is a summary of the projects included in the funding application. As mentioned above, the City of Kalispell has indicated that they do not want to take on additional loans as the Association is responsible for the maintenance and operation of the Airport. This provides a greater dependence on private dollars; however, the City indicated they would be supportive of applying for grant dollars to help offset the financial burden taken on by the Association. Runway Lighting: The existing runway lighting system is a low intensity, direct bury system that is frequently failing and in need or repair. A new, more reliable system is needed to continue night operations at this airport over the next 20 to 30 years. The Association intends to install a used PAPI under this project which will require that new electrical conduit and cable be included in the project out to the PAPI location on Runway 30. In an effort to be as efficient as possible with the limited funds available, the remaining electrical for a future lighting system replacement was bid with this project. The bid work included the installation of the conduit, light cans, and cable around the entire runway. The City of Kalispell considers the cost of replacement of the lighting system as a repair item so no TIF funding is available for this work; all costs must be entirely paid for by the Airport Association. It is estimated that an additional $75,000 would be required to fully construct an operational lighting system with a new regulator, controls and MIRL fixtures with transformers. This is a significant cost item for the Association which cannot be completed without funding assistance. 4 Perimeter Fencing: The majority of the airport is fenced with 7-foot tall chain link fencing; the exception is the south and southwest end. This is problematic and causes both wildlife and unauthorized entry safety issues at the airport. The remaining fencing is needed to mitigate these safety issues. This work was not initially presented to the City Council on the master plan which was approved as part of the lease agreement and is therefore not an item that can be funded with TIF money. The total cost of these fencing improvements must be paid for by the Association. Additional Comments - Insert D The work completed this summer was the first phase of a three-phase project for the Kalispell City Airport. The second phase includes the installation of fencing and gates as indicated above. The third and final phase is a mill and overlay of Runway 13/30 will be at least 3 to 4 years away. The pavement on the runway is in better condition than the taxiways and does not need to be rehabilitated at this time. This will be another significant investment for the Airport Association which will not be eligible for TIF funding since it is considered to be repair work. The Airport Association has limited funds and a limited revenue base to accomplish all of the necessary work at this airport to keep it functional and save over the next 20 to 30 years. The airport income primarily consists of Hangar Leases. Some additional revenue comes in from Fuel sales. The income is approximately $72,000. Expenses include electric, airport management, snow removal, general maintenance, insurance, and miscellaneous administrative costs and supplies. Expenses were approximately $58,000. There are currently four vacant hangar pads available for development. The proposed improvements will allow for the construction of eight T-hangars and one additional hangar pad. Attach document(s) to upload Exhibit 1— Master Plan (CIP) Exhibit 2 — Project Plan Exhibit 3 — Project Cost Breakdown MD7* Loan and Grant Application Review Applicant Information Airport Name (Formal) Kalispell City Airport Name (Common) KALISPELL Airport Website https://www.kalispell.com/202/Airport Airport Owner: Owner Name* City Of Kalispell Address (Line 1)* Po Box 1997 Address (Line 2)* City* Kalispell State* MT Zip* 59903 Country* USA Phone Number #1* Home 406 758 7703 Phone Number #2 Email Address* citymanager@kalispell.com Airport Contact: First Name* Zack Last Name* Anderson Address (Line 1)* 7395 Mt Hwy 35 Address (Line 2)* City* Bigfork State* MT Zip* 59911 Country* USA Phone Number #1* Work 406 837 7730 Phone Number #2 Email Address* zack@andersonmasonryinc.com Airport Engineer: Firm Jackola Engineering & Architecture, Pc First Name* Toby Last Name* McIntosh Address (Line 1)* 2250 Highway 93 South Address (Line 2)* City* Kalispell State* MT Zip* 59901 Country* USA Phone Number #1* Work 406 755 3208 Phone Number #2 Email Address* tmcintosh@jackola.com Project Information Have you previously requested funding for any portion of this project? QQ Yes O No Please identify the range of loan value you are willing to accept: Not less than* $0.00 Not more than* $0.00 When is the project scheduled to commence? 04/01/2020 Please provide a very brief description/overview of the project: Over $1 million dollars in ramp and taxiway work was completed summer/early fall of 2019 using Airport Association and City of Kalispell TIF dollars; however lighting upgrades to the airport were deferred based on overall project costs. The work included under this grant application is related to upgrading runway lighting to improve overall safety. Project Cost Information Type of Work* Acquire Security Equipment/Install Perimeter Fencing {E.g., Access Control} FAA Funded?* No Administration* $0.00 Engineering* $0.00 Construction* $42,500.00 Desired Grant* $0.00 Desired Loan* $0.00 If your request for the grant and/or loan amount is rejected, would the airport still have the financial means to complete the project?* Yes Type of Work* Install Runway Lighting (HIRL, MIRL) [Statutory Emphasis Program] FAA Funded?* No Administration* $0.00 Engineering* $15,462.00 Construction* $200,000.00 Desired Grant* $ 200,000.00 Desired Loan* $0.00 If your request for the grant and/or loan amount is rejected, would the airport still have the financial means to complete the project?* No Supplemental Information Annual Airport Income* $ 72, 000.00 Annual Airport Expenses* $ 58,000.00 Is there a tax levy in place specifically for airport funding? O Yes * No Approximately how much does it generate annually? Number of Mill Levies Please try to limit your response to the space provided, however, if additional information has to be presented, please feel free to attach documents as necessary. Please describe what area the airports serves and any special roles or functions it may also provide: See supplemental information. Please describe the need, urgency and support for this project: See supplemental information Additional comments for airport finances. (optional) See supplemental information Attach document(s) to upload Please print a copy for your records. You will NOT be able to access or print this application after November 15. Pri nt Kalispell City Airport MDT Aeronautics 2020 Loan and Grant Application Supplemental Information Airport History and Protect Description: The Kalispell City Airport has a long and controversial history. This public airport has been a major hub of general aviation activity in Kalispell since its initial construction in 1966 as a fully improved airport. Over the past 50 years, the airport has grown into one of Montana's larger general aviation airports. The airport currently reports 56 based aircraft and 28,000 operations per year. Although a NPIAS airport, the FAA has not been able to fund development at the airport because the existing infrastructure does not meet minimum FAA design standards. Past efforts have been undertaken to conduct the master planning and environmental work which were needed to begin a redevelopment project which would upgrade the airport to ARC B-II standards. Kalispell City council voted to approve the upgrade in 2012. However, Council's decision was overturned through a general election ballot initiative shortly thereafter. Since that time, the airport has been limping along with aging pavements and limited facilities with its future in -flux. In 2017, the Kalispell Airport Association successfully negotiated a 30-year term lease of the airport from the City of Kalispell. Key conditions of the lease include the following: 1. The airport must continue operating under its previous operating guidelines; 2. Existing hangar leases with the City were canceled and new leases with the Association were established; 3. Assets within the Airport Enterprise fund were turned over to the Association; 4. The Association could make pre -approved improvements to the airport using a combination of Association funding (Airport Enterprise Fund) and Tax Increment Financing (TIF). Improvements approved by the Council are included on the attached Master Plan (Exhibit 1). The terms of the TIF limit restrict funding to new construction only and do not allow for the funding of rehabilitation or repair work. In addition, the terms of the lease agreement limit the use of TIF funding to the amounts approved by the Kalispell City Council as depicted on the Master Plan. The first phase of improvements at the airport were designed and bid in the spring of 2018. Construction began during the summer of 2019 with progress wrapping up this fall. Improvements included the following projects and are depicted on the attached Exhibit 2: • Runway 13 Extension (60' x 450') — Includes new lighting and requires a displaced threshold • Taxiway Reconstruction and Widening — Includes partial depth reconstruction and widening of both parallel taxiways and connector taxiways to 25' • Hilton Ramp — A new east -side, public -use parking ramp with 8 aircraft tiedowns • Street Access Taxiway— New west side taxiway to allow for new hangar development and includes a public use ramp with 2 aircraft tiedowns • Runway Turnarounds — Provides for run-up areas at hold lines on each runway end • Installation of a used PAPI on Runway 13-30 • New Sanitary Sewer and Storm Drain Piping Summary of the 2019 Improvements: With the formation of the Kalispell Airport Association, a future exists for this airport. With the new lease in place, the airport now has a legal arrangement to continue its operations for at least 20 years (there is an option in the lease for a 10 year extension to 30 years). However, there has not been a development project at the airport since 2004 when the west side ramp and taxilanes were constructed. The Airport has been faithfully performing crack sealing over the years and has managed to extend the life of the pavements. But the taxiways are well beyond band aid repairs and the runway will soon follow. The following work has been completed with use of Kalispell Association and Kalispell Tax Increment Finance (TIF) dollars as part of the 2019 improvements. • East-West Taxiway Repair: There are 20-foot wide parallel taxiways on both sides of the runway. These taxiways do not meet minimum width standards for ARC B-I aircraft and there are significant drainage issues in the runway -taxiway infield areas. Besides crack sealing, there has not been any rehabilitation work on the taxiways since they were originally constructed in the early 80's. Significant cracking has developed on the taxiway surface that can no longer be sealed with conventional crack sealing materials. The taxiways are failing and need to be fully reconstructed and widened to allow for the safe movement of aircraft around the airport. The City of Kalispell has authorized the use of TIF funding for the 5-foot widening, but the airport must pay for the cost of the rehabilitation portion of the existing 20-foot wide section. • Hilton Parking Ramp: There is a large ramp located on the west side of the airport which is used mostly for parking of based aircraft. There is a small ramp with a few in -pavement tie -downs and several grass tie -downs located on the east side of the airport which is leased by the airports FBO. The west side of the airport functions primarily for based aircraft and is not very functional for itinerant aircraft operations and visitors. A public -use aircraft parking ramp on the east side of the airport is solely needed. This ramp will provide visitors a place to park their aircraft which is close to US Highway 93 and to a host of businesses located along this corridor. The City of Kalispell has authorized the use of TIF funding for this ramp which will cover the majority of the cost. However, the contractor's bid price exceeded the amount authorized by the City of Kalispell which will need to be covered by the Airport Association. • Street Access Taxilane: There has been interest by a private freight company to build a small processing facility/hangar at the Airport. This type of facility would require both access to the airports taxiways and runway as well as provide access for public vehicular traffic and parking. This taxiway is being constructed to allow for business/hangar development along airport road and provide for additional areas for private hangar development. Growing revenue potential on the airport will be key to this airports ability to maintain a viable airport over the next 20 to 30 years. Without any tax revenue to help fund improvements, the Airport Association will need to establish a sufficient revenue base for all future repair and rehabilitation work. The City of Kalispell has authorized the use of TIF funding for this taxilane which will cover the majority of the cost. However, the contractor's bid price exceeded the amount authorized by the City of Kalispell which will need to be covered by the Airport Association. • Runway Extension: The previous master plan completed for the airport in 2012 recommended a runway length of 4,200 feet which would accommodate 95% of the small aircraft fleet. The existing runway at Kalispell City Airport is 60' x 3,600' which is 600 feet shorter than the recommended length. A runway extension will increase the safety margin for all aircraft operating at the airport. Although a 600-foot extension cannot effectively be constructed within current airport property, a 450' runway extension is feasible on the north end provided a displaced threshold is implemented to maintain the current threshold on Runway 13. The extension will increase the runway length to 4,050 which will be a significant safety improvement for departures and Runway 30 landings. The City of Kalispell has authorized the use of TIF funding for this runway extension which includes edge and threshold lighting which will cover the majority of the cost. However, the contractor's bid price exceeded the amount authorized by the City of Kalispell which will need to be covered by the Airport Association. Runway Turnarounds/Run-up Areas: One of the services of the FBO operating on the airport is a Part 61 flight school. With limited areas at the airport suitable for performing run -ups and checklists on the east side, these operations are typically conducted at the taxiway hold lines at each runway end. The typical 25-foot wide connector taxiway would create a bottleneck at the runway end connectors when these operations are occurring which are typically longer in duration for flight instruction. The wider hammerhead turnarounds/run-up areas will provide a taxiway around aircraft performing these operations. The City of Kalispell has authorized the use of TIF funding for the turnaround areas on both runway ends which will cover the majority of the cost. However, the contractor's bid price exceeded the amount authorized by the City of Kalispell which will need to be covered by the Airport Association. Need, Urgency, and Support for the 2020 Project: Runway Lighting: The existing runway lighting system is a low intensity, direct bury system that is frequently failing and in need of repair. A new, more reliable system is needed to continue night operations at this airport over the next 20 to 30 years. The Association intends to install a used PAPI under this project which will require that new electrical conduit and cable be included in the project out to the PAPI location on Runway 30. In an effort to be as efficient as possible with the limited funds available, the remaining electrical for a future lighting system replacement was bid with this project. The bid work included the installation of the conduit, light cans, and cable around the entire runway. The City of Kalispell considers the cost of replacement of the lighting system as a repair item so no TIF funding is available for this work; all costs must be entirely paid for by the Airport Association. It is estimated that an additional $75,000 would be required to fully construct an operational lighting system with a new regulator, controls and MIRL fixtures with transformers. This is a significant cost item for the Association which cannot be completed without funding assistance. • Perimeter Fencing: The majority of the aiport is fenced with 7-foot tall chain link fencing. The exception is the south and southwest end. This is problematic and causes both wildlife and unauthorized entry safety issues at the airport. The remaining fencing is needed to mitigate these safety issues. In addition to this fencing, a gate is being provided at the Hilton parking/Ramp entrance. Both items were not initially presented to the City Council on the master plan, which was approved as part of the lease agreement between the City and Airport Association and is therefore not an item that can be funded with TIF money. The total cost of the fencing improvements must be paid by the Association. Additional Comments for Airport Finances: Airport Finances: The work completed this summer was the first phase of a three phase project for the Kalispell City Airport. The second phase includes the installation of fencing and gates as indicated above. The third and final phase is a mill and overlay of Runway 13/30 will be at least 3 to 4 years away. The pavement on the runway is in better condition than the taxiways and does not need to be rehabilitated at this time. This will be another significant investment for the Airport Association which will not be eligible for TIF funding since it is considered to be repair work. The Airport Association has limited funds and a limited revenue base to accomplish all of the necessary work at this airport to keep it functional and save over the next 20 to 30 years. The airport has only one source of revenue which is lease revenue for commercial and private ground leases. Ground leases will generate $76,069 in 2019. There is an annual 3% payment escalation clause in all ground leases. Expenses include electric, airport management, snow removal, and insurance. Expenses amounted to $48,923 in 2018. There is growth potential at the airport and as this growth occurs, airport revenue will grow also. There are currently four vacant hangar pads available for development. The proposed improvements will allow for the construction of eight T-hangars and one additional hangar pad. There is an immediate demand for T-hangar spaces and this once developed, an estimated $3,000 of additional revenue. Project Funding: In 2017, the Kalispell Airport Association successfully negotiated a 30-year term lease of the airport from the City of Kalispell. One of the terms of the lease was that the Association could make pre -approved improvements as depicted in the airport master plan (Exhibit 1) which was made a part of the lease. The City was able to allow the use of the Southside TIF to fund all or part of the new improvements constructed on the airport. However, none of the rehabilitation or repair work would be eligible for TIF funding and therefore would need to be funded fully by the Association either through the remaining funds in the Airport Enterprise Fund or through loans. In addition, the terms of the lease agreement limit the use of TIF funding to the amounts approved by the Kalispell City Council as depicted on the Master Plan. Bids were opened for this project in June, 2018 but construction was postponed until 2019. Bid prices were marginally higher than original master plan costs approved by City Council so the amount of TIF funding approved falls short of the total cost to construct the new improvements. To complete all of the work approved for Phase 1 required additional contributions from the Airport Association as well as limiting some project scope. 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