Report to/Rapport
au:
Corporate Services
and Economic Development Committee/
Comité des
services organisationnels et du développement économique
and Council/ et au Conseil
18 June 2001/ le
18 juin 2001
Submitted
by/Soumis par: Ned Lathrop, General Manager/Directeur général
Development Services Department / Services d’aménagement
Contact/Personne-ressource: Robin Mackay, Manager, Business Initiatives/
Gestionnaire,
Initiatives d’affaires
Telephone
No.580-2424 Ext 22632, rob.mackay@city.ottawa.on.ca
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Ref N°:
ACS2001-DEV-BUS-0002 |
SUBJECT: CALL FOR EXPRESSION OF INTEREST – CARP
AIRPORT
OBJET: APPEL DE DÉCLARATIONS D’INTÉRÊT – AÉROPORT DE CARP
REPORT
RECOMMENDATIONS
That the Corporate
Services and Economic Development Committee recommend Council :
1.
direct staff to
prepare and issue an expression of interest document for the management,
development, and future ownership of the Carp Airport;
2.
direct staff to
evaluate the proposals received in response to the expression of interest call
and bring a recommendation back to the committee on the next steps.
RECOMMANDATIONS DU RAPPORT
Que le Comité des services organisationnels et du
développement économique recommande au Conseil de :
1. donner
instruction au personnel de préparer et de délivrer un cahier de déclarations
d’intérêt en vue de la gestion, de l’élaboration et de la prise en charge
future de l’aéroport de Carp ;
2. donner instruction au personnel d’évaluer les propositions reçues en réponse à l’appel de déclarations d’intérêt et de présenter une recommandation au Comité sur les étapes à venir.
BACKGROUND
This report discusses the history of the Regional Municipality of Ottawa-Carleton’s acquisition of the Carp Airport and the issues associated with operating and developing the airport lands. The report’s recommendation, if adopted, will be the first step in addressing these issues and responding to the needs of the current tenants at the airport and investors who are inquiring about opportunities at the airport.
1994 NATIONAL AIRPORTS POLICY
In response to the cost
saving measures introduced through the February 1994 Federal Budget, Transport
Canada published in that same year the “National Airports Policy”. Under this
policy, the Carp Airport and 30 other “Small Airports” used primarily for
recreational flying were to be declared surplus to the needs of Transport
Canada and transferred to local interests.
1994 OCEDCO BUSINESS PLAN
A business plan completed
on behalf of the Ottawa Economic Development Corporation (OCEDCO) in August
1994 and an associated report by the Carp Airport Task Force concluded that the
Carp Airport was generating a number of positive economic impacts (see
discussion section) on the regional economy. Both documents argued that the
Carp site could support a new industrial/commercial business park with an
airport. Proceeds from land rentals/sales at the airport were proposed to be
used to fund on-going airside operations. Specific business opportunities
identified included:
1. development of an industrial park;
2. expansion of existing commercial activities;
3. expansion of flight training activities; and,
4. development of aerospace field test facilities.
1996 CANADA-ONTARIO INFRASTRUCTURE PROGRAM
With the completion of these reports and the future role and development potential of the Carp Airport identified, Regional Council on March 14th 1997 formally acquired ownership of the Carp Airport for one dollar. The transfer was subject to a number of negotiated conditions with Transport Canada. One condition imposed by the Region required an estimated 2.1 million dollars be invested in upgrading the main runway and other components of the airport infrastructure. This work was carried out in 1996 under the Canada-Ontario Infrastructure Program with the Region paying one-third share of the total costs.
In March of 1997, Regional Council, in response to a staff report on the future operation and management of the Carp Airport, requested staff to undertake the following:
1. seek a contract with Ottawa MacDonald-Cartier International Airport Authority (OMCIAA) to operate the Carp Airport. The interim management of the Carp Airport was to continue to be provided under contract by the West Carleton Airport Authority (WCAA); and,
2. prepare a development strategy for the airport.
1998 GENERAL AVIATION STUDY
In response to Council’s
request, OMCIAA together with the City of Gatineau (representing the Gatineau
Airport) and regional staff maintained that an overall strategy for general
aviation in the greater Ottawa region was needed first. At the time, these
airports together with the Rockcliffe Airport were operating in isolation with
their own mandates which were not necessarily complimentary.
Later, Regional Council
supported this request and a general aviation study was commissioned and
completed in September 1998. The study recommended the following:
1. Closure of the north field at the Ottawa Airport which would shift most of its flight training and private flying activity to Carp. Corporate and industrial activity at Ottawa would continue to use the main runway and would be unaffected by the proposed closure.
2. The Ottawa Airport would manage both the Carp and Gatineau Airports. This would offer increased expertise in the case of Carp.
3. A detailed market assessment of Carp’s corporate and industrial potential opportunities was to be undertaken.
OMCIAA POSITION ON THE GENERAL AVIATION STUDY
By early 1999 the Board of
the Ottawa Airport decided that the north field would not be closed, rather it
would be upgraded to attract new business. This new activity, according to the
Board would offset current deficits and ensure that the capacity on the main
runways would be protected for commercial carrier activity.
On the matter of the OMCIAA managing the Carp and Gatineau Airports, the response was favourable on managing the Carp airport only. No interest however was expressed in the development of either the airside or non-airside lands.
1999 KMB AVIATION MARKET ASSESSMENT
In response to
Recommendation No. 3 above and the Ottawa Airport Board’s decision to keep the
north field open, regional staff retained KMB Aviation to undertake an
assessment of the market potential of Carp, specifically within the business
and high tech communities. The purpose was to review the market demand for new
development and determine whether the role for Carp envisioned previously
through the 1994 OCEDCO business plan and the Carp Airport Task Force was still
reasonable.
The report, completed in May 1999, concluded that the Carp Airport had
the following strengths:
· stable successful tenant base with companies such as First Air (formerly Bradley Air), Helicopter Transport Services Canada (Huisson Aviation), Westair, Kanata Flight Centre, etc.;
· 2.1 million dollars of new infrastructure; and,
· proximity to the high-tech sector in Kanata which could result in new business activity in the medium to long term.
Significant challenges for the expansion of the Carp Airport identified in the report included:
· Ottawa Airport becoming more competitive with improved services such as increased direct flights and U.S. pre-clearance;
· inadequate facilities at the Carp Airport;
· improved access from the employment nodes in the west end of the Region to the Ottawa Airport by way of the new Highway No. 416 and Hunt Club Road; and,
· a current lack of interest from the high-tech sector in using the Carp Airport. (A survey of 15 high tech companies in the west end of the Region who had extensive travel and shipping requirements was undertaken by the consultant as part of the study).
In summary, the consultant argued that the Carp Airport was of value to the community and general aviation traffic was expected to grow modestly in the foreseeable future. Current business activity at the airport remains strong with a solid prognosis for the future. The key recommendations of the report were as follows:
1. the development of a market strategy focused on growth of existing tenants;
2. updating the master plan previously completed for the airport in 1986 by Transport Canada. Delay all major development at the airport until this is completed;
3. increase the level of service at the airport only if demand exists; and,
4. make a decision as soon as possible on the future governance of the airport as this is negatively affecting the investment plans of the current tenants and the ability to attract new businesses.
RECENT INVESTMENT AND INQUIRIES AT THE CARP AIRPORT
The Carp Airport is an attractive location for recreational flying and the storage of private planes. Demand for new hanger space at the airport prompted the WCAA last year to prepare a business plan for a 20 plane hanger building. Regional Council supported the business plan and agreed to guarantee a bank loan for the building.
Investors responded
quickly and after carefully planning the location of the building so as to not
encumber the future development of the airport, the hanger was constructed and
is now fully occupied. Due to the majority of the units being sold outright to
investors (with an out clause granted to the Regional Government in the event
the airport lands are sold), only a small bank loan was required prior to the
construction of the building. The WCAA is of the opinion that demand now exists for a second hanger
building and has begun to advertise in the local airports.
Other recent investment
inquiries have included proponents who would like to construct new hangers for
airplane repair and a sign manufacturing company who would like to build a new
plant on the airport lands. Others have inquired about land for the
construction of housing on the non-airside lands for plane owners. This form of
development is commonly found in the United States where executive style homes
on country lots are located on airport lands with access to the runways.
A new company entitled “Celtic Jet Tech” is currently using the airport to shuttle traveling executives. Last year this company inquired about lengthening the main runway so as to allow the company’s larger jet to completely re-fuel before taking off. As the Carp Airport runway is only 4,000 feet in length, the plane cannot take off with a full load of fuel. If passengers are picked up at the Carp airport and are going over seas or on a long overland trip, a stop at the Ottawa Airport is necessary to top up the fuel tanks.
DISCUSSION
ECONOMIC ACTIVITY AT THE CARP AIRPORT
The Carp Airport is
contributing positively to the City of Ottawa’s economy. In addition to
supporting private aviation activity, the Carp Airport is unique among small
Canadian airports in that it is also home to about a half dozen businesses
employing directly about 210 people. Most of this employment is in the area of
maintenance and administrative activities.
The total direct economic impact of the airport in terms of payroll was estimated in 1994 at $6.5 million. In addition, it was also noted in 1994 that First Air, the largest business operating out of the airport, purchased about $50 million worth of goods annually from regional suppliers for shipment to northern communities (the shipments leave from the Ottawa Airport). In 1994 activities on the Carp Airport accounted for approximately 10% of the assessment base for the Township of West Carleton.
OPERATIONAL ACTIVITIES
The airport is currently
managed by the West Carleton Airport Authority on behalf of the City of
Ottawa. The authority has two full-time staff members who report to a 7 member
board. The City provides operating assistance to the airport in a variety of
ways, including provision of legal advise and maintenance services such as
light bulb replacement, re-doing pavement markings, runway sweeping, lighting
repair, grass cutting, snow clearing, pavement repair, etc. Over the last three
years these services in kind have amounted to approximately $50,000 to $75,000
per year.
In addition, the City provides subsidies of about $40,000 per year on an ad-hoc basis to cover operating deficits. These deficits were consistent with the forecasts included in the business plan prepared in 1994 and submitted to Regional Council.
Revenue generated at the
airport is derived mainly from building and land leases to tenants. Minor
revenue is earned from farmers who rent the non-airside lands and others who
use some of the existing building space for storage. Nav Canada owns and operates
various navigational equipment at the airport and pays the WCAA an annual
maintenance fee to remove snow from the access roads.
Leases for some of the
existing tenants at the Carp Airport will be expiring in the near future.
Tenants such as Huisson Aviation have identified improvements but are reluctant
to proceed with their full expansion plans unless they can secure long
term lease commitments from the City. (Any tenant improvement normally vests
with the landlord at the end of a lease).
ISSUES ASSOCIATED WITH OPERATING AND DEVELOPING THE CARP AIRPORT
Airport Size and Location
The airport consists of about 400 hectares of land and is bounded by lands that are one half of a concession lot south of March Road on the north side of the airport. Carp Road forms the eastern boundary and Diamondview Road next to Highway 417 forms the western boundary. To the south is rural vacant land owned by Karson Holdings Inc. (Attachment No.1).
Past studies have
estimated that up to 50% of the Carp Airport site is surplus to the needs of
the airport.
Regional Official Plan Designation
The airport is designated
“Carp Airport” in the official plan for the former Regional Municipality of
Ottawa-Carleton. The policies for this designation call for studies to evaluate:
1. how the airport can be used as a basis for increased economic activity; and,
2. prior to considering the extension of central services to the Carp Airport or the installation of communal services, a “servicing and development study” is to be undertaken. As well as evaluating how the airport can be serviced and developed, the study is to consider a number of official plan policies related to new growth.
Operational Requirements for the Carp Airport
The agreement with Transport Canada calls for the Region, now the City, to operate the Carp Airport as an airport for a minimum period of 10 years. Should the airport be closed prior to March 14th 2007, ownership will revert to Transport Canada. During the 10 year period, any proceeds from any sales of land must be used to finance the on-going operation and development of the airport.
It is common practice in the airport business to have twenty year leases with tenants to provide assurances that their investment in buildings and other facilities can be recovered. The Transport agreement effectively means that the City has provided a commitment to operate the airport only until March 14th 2007; hence it is unable to provide such long-term leases. While some current tenants have made investments in the expectation that the airport would remain in operation indefinitely, others are delaying expansion plans until this situation is clarified. In addition, this issue is negatively affecting the ability to market the airport to new tenants particularly those who may need to make sizable capital investments in order to operate.
Lack of a Current Master Plan
The last master plan for the airport was completed in 1977 and was updated in draft form in 1986. This master plan does not take into consideration the events that have transpired at the airport over the last 14 years such as the major infrastructure upgrades in 1996, the location of new buildings and additions nor the technological modifications that affect long term runway alignments and modern aircraft runway requirements.
As well there currently
does not exist a servicing plan, which would detail how water, wastewater,
storm water, and other services would be accommodated if there were additional
major land development at Carp. This plan is a fundamental requirement of any
business park development and is particularly important in rural areas such as
the Carp Airport, where there is a reliance on groundwater.
Existing Leases
The current leases with
tenants at the Carp Airport include a base rent plus a 75% share of total
eligible operating costs. This fee structure impedes moving forward towards
self-sufficiency as any additional rental revenue results in a reduction in the
share paid by each tenant, with only limited financial benefit to the airport.
In addition, some maintenance services are performed by tenant(s) in exchange
for a corresponding reduction in rent,
complicating somewhat the financial picture.
This cumbersome lease situation is a holdover from the procedures used by Transport Canada, and should be overhauled.
Capital Funding
The investment in upgrading the airport runway and ancillary systems in 1996 succeeded in stabilizing the operation of the airport and permitted the major tenants to remain in operation. However, there exists no capital funding plan which will ensure that further necessary airside improvements and the servicing required to support major development can be implemented. Capital improvements will be required in the future to attract new investors who will help offset the operating deficit.
The current
employment base at the Carp Airport is stable, and as long as the airport is
appropriately maintained, it is likely to expand as business in general expands
in the western part of the City. Past studies have suggested a modest demand
exists for the airport lands and recent inquiries confirm that new investors
are considering the Carp Airport as a location for new business investment.
The Carp Airport has some
value for the new City in terms of assessment, jobs and the service it provides
to the aviation community. The non-airside lands also have value which would be
realized through the completion of a master plan process and subsequent land
leases/sales. A land appraisal completed in January 1994 valued the total
crown-owned property under “highest and best use” at $980,000. Highest and best
use at the time was identified as “long term rural holding use”. The airport
precinct was valued at $1.00 for continued use as an airport.
Under the current agreement with Transport Canada, the City is required to operate the airport until March 14th 2007. After this date, the City can sell the airport and retain the proceeds. Prior to reaching this date, staff are of the opinion that various options can be explored with the private sector to address the operational and development issues that have been summarized above in this report.
To assess the full potential of the airport, the following planning steps should be completed:
Master Plan
Prepare a detailed master plan that would translate the prescribed role for the Carp Airport into specific physical requirements, so that lands for new or expanded runways and other airport facilities can be protected and the location of potential development lands can be defined.
Servicing Plan
Development of land at the
airport will require building and upgrading services such as roads, water,
wastewater and storm water facilities. This plan will determine how the airside
and non-airside lands will be serviced.
Investment Plan
The business plan prepared in 1994 recommended that the sale/lease of lands at the airport be the basis for funding the operation of the airport. The investment plan will dictate how this will be implemented.
Marketing Plan
The Carp Airport Market Assessment study completed in April 1999 for
the Regional Government recommended a market strategy and program be designed
and implemented for the Carp Airport that would initially focus on the growth
of existing tenants and exploitation of any existing business relationships.
The market strategy could also be expanded to target new investors for the land
uses proposed through the master plan exercise.
STAFF RECOMMENDATION
In view of the
interrelationship between developing the lands at the Carp Airport and managing
its on-going operation, staff recommend that a single party be responsible for
coordinating both of these functions. This party would undertake the planning
steps referenced above and be responsible for their execution.
As there maybe other strategies for managing and
developing the Carp Airport, staff are recommending that interest levels and
new ideas now be submitted through an Expression of Interest Process (EOI). By
completing this process first, new approaches can be evaluated before the City
decides on committing to a course of
action.
OBJECTIVES FOR THE CARP AIRPORT
To ensure that a number of important objectives are satisfied in managing and developing the airport, the EOI document will require that the chosen proponent:
1. commit to operating the airport at defined levels of service with appropriate maintenance standards;
2. commit to specific capital improvements over time which will benefit the majority of the tenants at the airport;
3. comply with the relevant City regulations and official plan policies;
4. support the City’s efforts to recover the capital and operating investment already made in the Carp Airport;
5. comply with the terms and conditions of the Transport Canada agreement with the City; and,
6. protect the existing jobs and tenancies at the airport over a reasonable period of time.
ENVIRONMENTAL IMPLICATIONS
The planning steps proposed in this report will require the proponent
to evaluate and address all environmental related issues associated with developing
the Carp Airport lands.
RURAL IMPLICATIONS
The report outlines the
City’s objectives that are to be satisfied through the expression of interest
process. A key objective that will have positive implications for the rural
community will be to ensure the new manager/developer/owner of the airport
protects and adds to the existing employment base at the airport. As well, this
proponent will need to work with the rural community in developing a suitable
master plan for the airport that supports the relevant official plan policies
and the objectives of the rural community.
CONSULTATION
Staff consulted with the
main airport tenant and the West Carleton Airport Authority in the preparation
of this report. Public consultation is anticipated once a proponent is chosen
and the above-mentioned planning steps are undertaken.
FINANCIAL IMPLICATIONS
It is anticipated that staff will report back to Council on the outcome of the EOI process and any financial implications that maybe necessary in an award.
ATTACHMENTS
Document 1 - Diagram of the Carp Airport lands and the
Boundary Roads
Document 2 -
Illustration of the Carp Airport in the context of the City of Ottawa
DISPOSITION
That staff be directed to prepare
and release an expression of interest call for the management, development and
future ownership of the Carp Airport. Authorization is also sought to evaluate
the proposals and make a recommendation to the committee on the next steps in
the process.
Diagram of the Carp Airport Lands and the Boundary Roads Document 1
Illustration of the Carp Airport in the context of the City of Ottawa Document 2
