Draft EUG Master Plan Update, February 2010

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CHAPTER 5 FINANCIAL FEASIBILITY ANALYSIS The techniques utilized in this analysis are consistent with industry practices for similar studies which are used to evaluate the feasibility of large-scale airport capital improvement plans. While it is believed that the approach and assumptions are reasonable, it should be recognized that some assumptions regarding future trends and events might not materialize. Achievements of the proposed capital improvement plan as well as the operating results described herein are dependent upon the occurrences of future events and variations may be material. In the context of examining both the capital improvement plan and operating revenues/expenditures, this financial feasibility analysis is based upon the following: The Airport’s existing financial structure, airline agreements, and agreements with other major tenants. The historical financial performance of the Airport including its existing debt obligations. A schedule for the implementation of proposed capital projects for the entire 20-year planning period. Projections of enplaned passengers as presented in Chapter Two to derive Federal Aviation Administration (FAA) Airport Improvement Program (AIP) entitlements and Passenger Facility Charge (PFC) revenues. A funding plan for the capital improvement plan utilizing AIP entitlement and discretionary funds, PFC revenues, the Airport’s Operating and Capital Reserve, Customer Facility Charge revenues and other funding. Historic revenues, expenses, and debt service for the Airport for the period FY 2003 through FY 2007. Budgeted revenues, expenses, and debt service for the Airport for fiscal years 2008 and 2009. Projections of revenues, expenses, and net cash flows from the operation of the Airport over the planning period of FY 2010 through FY 2016 based on historical actual (FY 2003–2007) and budgeted (FY 2008-2009) financial activity at the Airport. A detailed cash flow analysis for the planning period FY 2010 through FY 2016 identifying the 2 sources and uses of funds applied to the CIP. Detailed financial projections of revenues and expenses included in this analysis focus on the more immediate years of the plan rather than the entire 20-year planning period; however, a detailed analysis of the availability of AIP and PFC funds to finance this period of the program are presented in order to provide the reader with an understanding of the feasibility of all elements of the plan. 1. Airport Financial Structure The Airport is operated as the Airport Division of the Department of Public Works of the City of Eugene and its financial results are reported within the composite financial statements of the City. The City maintains discrete accounting records to account for the itemized revenues, expenses, and segregated funds of the Airport. The City of Eugene, and therefore the Airport, operates on a modified accrual basis for financial reporting based on a July 1 to June 30 fiscal year (FY). Accordingly, all information 2 This represents the maximum time period considered reasonable. 5-2 Eugene Airport Master Plan Update (February 2010)