LEGISLATIVE ACTION ITEM
SPONSOR: Grover C. Robinson, IV, Mayor
SUBJECT:
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AMENDED INTERLOCAL AGREEMENT BETWEEN THE ESCAMBIA COUNTY BOARD OF COUNTY COMMISSIONERS AND THE CITY OF PENSACOLA - ADDITIONAL FUNDING REQUIREMENTS FOR AEROSPACE MAINTENANCE, REPAIR AND OVERHAUL (MRO) CAMPUS EXPANSION AT PENSACOLA INTERNATIONAL AIRPORT
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RECOMMENDATION:
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That City Council approve the amended Interlocal Agreement between the Escambia County Board of County Commissioners and the City of Pensacola related to additional funding requirements for the aerospace maintenance, repair and overhaul (MRO) campus expansion at the Pensacola International Airport. Further that City Council approve additional Local Option Sales Tax IV funding of $5 million for the City’s share of the aerospace maintenance, repair and overhaul (MRO) campus expansion at the Pensacola International Airport. Finally, that City Council authorize the Mayor to take all actions necessary to execute an amended Interlocal Agreement.
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HEARING REQUIRED: No Hearing Required
SUMMARY:
On November 8, 2018 the City Council approved an Interlocal Agreement between the Escambia County Board of County Commissioners and the City of Pensacola related to the funding of the aerospace maintenance, repair and overhaul (MRO) campus expansion at the Pensacola International Airport. Included in that agreement was an understanding that both the City and the County would contribute $10 million each towards the project. As part of Escambia County’s $10 million contribution, the Board of County Commissioners voted on September 6, 2018 to forgive the $3.2 million loan to the City from the first phase of the MRO expansion (Hangar 1) which was budgeted to be repaid on or before December 31, 2019. Included in the original Interlocal Agreement the City shall contribute funding for the Expansion Project in the amount of $3.2 million on behalf of the County in lieu of repayment to the County under the March 6, 2014 Interlocal Agreement on or before December 31, 2019. This left a balance of $6.8 million due from Escambia County to fund the Expansion Project.
The estimated cost of the Aviation MRO Campus Expansion Project is $210,125,000. To date, funding in the amount of $165,250,000 has been identified for this project, leaving a deficit of $44,875,000. With both the City and the County providing an additional $5 million that shortfall would be reduced to $34,875,000. The City will request additional grant funding from the Florida Department of Transportation in the amount of $20 million and an additional $12.5 million from Triumph Gulf Coast. The City will be responsible for the remaining $2,375,000 as needed. However, the City will continue to pursue additional funding sources to offset the remaining amount needed.
$ 35,000,000 ST Engineering Aerospace
3,000,000 State Legislature
14,000,000 Governor’s Job Growth
25,000,000 FDOT Grant
10,000,000 City of Pensacola
10,000,000 Escambia County
12,250,000 Federal US Economic Development Administration
56,000,000 Triumph Gulf Coast
$165,250,000 Sub-Total
5,000,000 Anticipated City of Pensacola Additional Funding
5,000,000 Anticipated Escambia County Additional Funding
20,000,000 Anticipated FDOT Grant
12,500,000 Anticipated Triumph Gulf Coast
2,375,000 Anticipated Additional Funding (City Responsibility)
$210,125,000 Total
The additional funding from the City’s portion would come from the Local Option Sales Tax Series IV by reducing the following projects:
$ 1,000,000 800 Mhz Radio System
1,600,000 Energy Conservation & Efficiency
2,400,000 Capital Equipment
$ 5,000,000 Total
Funding for the 800 Mhz Radio system was originally for the City’s share of the upgrade to the 800 Mhz Public Safety Radio Communications system. However, based on recent conversations with the County, it would be more efficient as a long term maintenance agreement rather than one up-front payment. Therefore, LOST IV funding for that project is no longer needed and can be shifted to the Economic Development Initiatives category in LOST IV for the City’s share of Project Titan.
Currently there is a total of $3 million programmed for Energy Conservation & Efficiency Improvements over the period of ten years. The reduction of $1.6 million would result in a $100,000 reduction in Fiscal Year 2023 and no funding for Fiscal Year 2024 through Fiscal Year 2028. Within the Capital Equipment category, $800,000 has been programmed for Fiscal Year 2020 through Fiscal Year 2028. Beginning in Fiscal Year 2021 that amount will be reduced by $300,000 each year leaving $500,000 programmed in Fiscal Year 2021 through Fiscal Year 2028. As part of the budget process each year, Local Option Sales Tax revenues are reviewed. It is anticipated that revenue projections will increase at which time the funding for both of these categories will be reinstated.
The proposed amended Interlocal Agreement has been forwarded to the County and requested to be considered at the Board of County Commissioner’s Regular Meeting on Thursday, February 7, 2019. Additionally, the City will be presenting a request for additional funding from Triumph Gulf Coast at their special meeting on February 8, 2019.
PRIOR ACTION:
February 27, 2014 - City Council approved the Interlocal Agreement between Escambia County and the City of Pensacola for funding of economic development project - ST Aerospace of Mobile.
September 9, 2014 - City Council approved the Real Property Lease with VT Mobile Aerospace Engineering, Inc.
September 22, 2016 - City Council approved Amendment No. 1 to the Real Property Lease with VT Mobile Aerospace Engineering, Inc.
September 13, 2018 - City Council approved funding in the amount of $10 million from Local Option Sales Tax Series IV in the support of the aerospace maintenance and overhaul campus expansion.
November 8, 2018 - City Council approved an Interlocal Agreement between the Escambia County Board of County Commissioners related to the funding of the aerospace maintenance, repair and overhaul (MRO) campus expansion at the Pensacola International Airport along with funding from the City of Pensacola in the amount of $10 million.
January 17, 2019 - City Council adopted Resolution No. 2019-04 supporting Project Titan as a Qualified Target Industry (QTI) for the purpose of job creation, and promoting economic development.
FUNDING:
Budget: $ 35,000,000 ST Aerospace Engineering
3,000,000 State Legislature
14,000,000 Governor’s Job Growth
25,000,000 FDOT Grant
10,000,000 Escambia County
10,000,000 City Local Option Sales Tax Series IV
12,250,000 Federal - U.S. Economic Development Administration
56,000,000 Triumph Gulf Coast
5,000,000 Escambia County Anticipated Additional Funding
5,000,000 City Anticipated Additional Local Option Sales Tax Series IV
20,000,000 Anticipated FDOT Grant
12,500,000 Anticipated Triumph Gulf Coast
2,375,000 Anticipated Additional Funding (City Responsibility)
$ 210,125,000
Actual: $ 210,125,000 Estimated
FINANCIAL IMPACT:
Escambia County shall provide funding in the amount of $2 million on or before September 30, 2022, with the balance of $9.8 million being paid on or before September 30, 2023. The County’s total funding obligation will be contingent upon the City securing commitments sufficient to construct the Expansion Project.
The City of Pensacola shall provide funding in the amount of $6 million on or before September 30, 2019, $2 million to be provided on or before September 30, 2021 and $7 million to be provided on or before September 30, 2022.
For cash flow purposes, there will be a need for interim financing in the future for this project.
The additional $5 million from the City of Pensacola will be shifted from the 800 Mhz Radio System, Energy Conservation & Efficiency and Capital Equipment projects in the Local Option Sales Series IV. As revenue projections increase funding for both Energy Conservation & Efficiency and Capital Equipment projects will be reinstated.
CITY ATTORNEY REVIEW: Yes
1/31/2019
STAFF CONTACT:
Christopher L. Holley, City Administrator
Daniel E. Flynn, Airport Director
Richard Barker, Jr., Chief Financial Officer
ATTACHMENTS:
1) Project Titan Sources and Uses of Funds
2) Amended Interlocal Agreement between Escambia County and the City Related to Additional Funding Requirements of the Aerospace Maintenance, Repair and Overhaul (MRO) Campus Expansion At Pensacola International Airport.
PRESENTATION: Yes end