TO: Mayor and Members of City Council
THRU: Kelly Olivera, Assistant City Manager
Jeffrey Yates, Assistant City Manager
FROM: Kimberly Leonard, CLGFO, CLGBO, CPA, MPA, Budget and Evaluation Director
Deontae K. Watson, MBA, A.A.E., Deputy Airport Director
DATE: December 9, 2024
RE:
Title
Adoption of Budget Ordinance Amendment and Special Revenue Ordinance to Appropriate Funds for an Air Service Development Incentive Program
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal IV: Desirable Place to Live, Work and Recreate
Objective 4.1: To maintain public transportation investments with high-quality transit and airport services
Executive Summary:
In the December 4th Council work session, the Council directed staff to prepare an appropriation ordinance for $400,000 for an Air Service Development Incentive Program. The funding source for this appropriation is a transfer of accumulated interest income from the American Rescue Plan Act (ARPA) funding in the Federal and State Assistance Fund. Accordingly, Council is asked to adopt Special Revenue Ordinance (SRO) 2025-14 to transfer $400,000 of ARPA interest funds to the general fund and Budget Ordinance Amendment (BOA) 2025-10 allowing the general fund to receive and appropriate the $400,000 for an air service development incentive program at the Fayetteville Regional Airport (FAY).
Background:
Council received a presentation from Airport leadership at the December 4, 2024, work session about a new air service development incentive program that is a minimum revenue guarantee for any new air service to and from FAY. As discussed in the presentation, the Federal Aviation Administration (FAA) has an oversight of all incentives offered to airlines and specifically prohibits the use of Airport revenues for minimum revenue guarantees. Contrastingly, the FAA does permit local municipalities to use non-federal revenues to provide minimum revenue guarantees for new air service. The Council directed staff to prepare an appropriation ordinance for consideration at its next regular meeting.
The airport currently has an incentive program for incoming air service providers totaling $149,133 in in-kind contributions. In addition to this program, the NDCOT Division of Aviation has allocated $24,000 in a local commitment. The Fayetteville Regional Airport is requesting the City Council to appropriate $400,000 in local funds supporting the need for increased travel options to and from FAY. The new Air Service Development Program at FAY will total $573,133 over a 12-month period.
Issues/Analysis:
Once the documents outlining the details of the incentive program have been created, they will be provided to Council for approval.
Budget Impact:
There is no impact on the General Fund fund balance, as the funding source is interest income earned from ARPA funds which is transferred from the Federal and State Assistance Fund.
Options:
1. Adopt SRO 2025-15 and BOA 2025-10 to appropriate funds for an air service development incentive program.
2. Do not adopt SRO 2025-15 and BOA 2025-10 and provide further direction to staff.
Recommended Action:
Staff recommend that the Council move to adopt SRO 2025-15 and BOA 2025-10 to appropriate funds for a minimum revenue guarantee air service development incentive program.
Attachments:
BOA 2025-10
SRO 2025-14