Practices in Preserving and Developing Public-Use Seaplane Bases (2015)

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19 CHAPTER THREE ECONOMIC BENEFIT AND FUNDING The reasons for developing an SPB vary across the country and reflect the socioeconomic and transportation needs of the local community. One of the main transportation benefits of an SPB is having access to the NAS, especially in Alaska and the San Juan area of Washington State. Seaplane operation at several of these communities is the primary means of access by the communities to other cities for travel and cargo shipment. Economic benefits exist whether the SPB is used for commercial, recreational, research, training, or other purposes. SPB operators provide jobs, they purchase supplies and services from the local community, and they attract commercial and recre- ational activity to the area. People who use the SPB spend money on other transportation modes and at businesses in the com- munity. The SPB operators themselves are investing in and contributing to the community through employment, expenditures on goods and services, and rent and taxes. These are all components of a measurable economic impact. Nonfinancial benefits of an SPB vary by community and location, especially for Alaskan communities. Eighty-two percent of Alaskan communities do not have access to roads—accessibility is possible only by air and water transportation (Statewide Aviation, n.d.). For some communities, indirect employment and expansion of the tax base provide an incentive to operate an SPB facility. Such is the case for Tavares, Florida (see chapter seven). ECONOMIC IMPACT An economic impact study is a method and means to document and describe the financial and other benefits an organization or activity contributes to the community. Economic outputs are generally considered to be employment payroll and the purchase of goods and services by the SPB and its users. The market data captured by a study can then be conveyed to the community to illustrate the SPB’s value and importance, and to show the possible consequences and impacts should SPB activity be restricted or hindered in the future. Three airports responded that an economic impact study associated with their SPBs has been performed {Q9}. One was specific to the SPB, while the other two were part of larger regional metropolitan studies. The literature search discovered additional economic impact studies involving SPBs, though all were part of a larger airport, metropolitan, or state study, mak- ing it difficult to discern the exact impact of a single SPB. Examples of economic and transportation benefits to a region are illustrated by the following examples: • In the San Juan Island area of Washington State, travel to the remote islands can be an all-day affair on the ferry system. Commercial seaplane operators provide access in less than an hour. • Several states—Maine and Alaska in particular—have robust sporting camp industries located in remote water areas of the state. Seaplanes become the avenue for transporting customers to those camps. • National and state forest services, fisheries and wildlife services, and natural resources departments use seaplanes in their operations. • Oil companies in the Gulf of Mexico region operate or use SPBs regularly to service their networks. • Seaplanes can provide emergency response and relief when it may be difficult for other transport modes to do so. Conducting an economic impact study for an SPB has its challenging aspects, depending on the size and type of operations conducted and its location. Difficulties arise primarily from lack of recorded usage data. Standard economic impact models may require adjustment, according to researchers (Gartner et al. 2005). The State of Minnesota commissioned an economic impact of its airports that included 16 public and private SPBs. The study used methodology established in the development of an airport economic impact calculator by Gartner et al. (2005). In the study, the authors identified the following nine airport- based activities that create economic activity:

20 1. Public airport operations and capital investments 2. Fixed base operators (FBOs) 3. Commercial scheduled air service 4. Retail businesses 5. General aviation 6. Freight operators 7. Private corporations with flight departments 8. Nonprofit and government entities 9. Other activities. The authors of the Minnesota DOT economic study conclude that the model used does not detail all the benefits an airport can provide, as a number of nonquantifiable impacts are significant. Foremost among them would be medical/life support airlift, disaster relief, and aerial firefighting. While not quantifiable as an economic impact, there is no doubt as to the essential service that medevac capability provides, especially in Alaska or remote areas where road accessibility is nonexistent or difficult. The value of an SPB can be immea- surable in those circumstances. The same is true for other types of services, such as aerial firefighting and natural resource conservation. Those activities are not intended to generate measurable economic activity but do provide the intangible value of protecting property and natural resources. On the commercial side, several other airports and state systems have conducted economic impact studies that include SPBs. In addition to Minnesota, the states of Florida, Idaho, and Alaska have evaluated the economic impact of their airport systems to include SPBs. The state of Florida completed a study in 2014 that documented the economic impact of 120 airports in the state (Florida Statewide Aviation Economic Impact Study Update 2014). This was accomplished as part of the overall Florida Aviation Sys- tem Plan (FASP). The SPB at Tavares, Florida, was included in the study (see Appendix E). The State of Idaho Division of Aeronautics, as part of its SASP, conducted an economic impact study of its airports in 2009. For each of its general aviation and commercial service airports, it published a brochure summarizing the economic impact, facilities and services, and recommended development costs of individual airports. Facility improvements are listed with expected funding sources (Idaho Airport System Plan—Brooks Seaplane Base 2009). Appendix F displays the economic impact sheet for the Brooks Seaplane Base. Another example is Lake Hood SPB in Anchorage, Alaska. Deemed to be the largest active SPB in the world, the people of Anchorage, and the world for that matter, now know that Lake Hood was the SPB of choice for the majority of the 23,200 nonresident visitors to Alaska who purchased a flightseeing tour during their visit to Anchorage in the May 2011 through April 2012 period (Economic Benefits of Lake Hood Seaplane Base 2013). They also now know that Lake Hood accounts for approximately 230 jobs, $14.0 million in payroll, and $42 million in annual economic output. While Lake Hood is the excep- tion among SPBs, the state DOT&PF works to ensure its value is conveyed to others as a means for continued viability of commercial, governmental, business, and personal use activity. The state of Alaska pursued a study to evaluate the economic feasibility of a new floatplane facility located in Anchor- age area (Economic Feasibility Study of a New Floatplane Facility Located in Anchorage, Alaska 2008). The existing facilities at Lake Hood were at capacity with over 700 seaplanes and a long waiting list for future access (Figure 6). While the report concluded the financial cost of a new facility would most likely not make the proposed facility self-sustaining, it was noted in the report that only two of the public airports operated by DOT&PF operate profitably.

21 FIGURE 6 Aerial view showing congestion at Lake Hood Seaplane Base, Anchorage, Alaska. [Source: Alaska DOT&PF (Siting Analysis, Sitka Seaplane Base–Sitka, Alaska 2012)] CAPITAL AND OPERATIONAL FUNDING Across the United States, airports, including floatplane facilities, rely on a variety of funding sources to finance capital devel- opment, operations, and maintenance expenses. Major funding sources include federal and state grants, airport and special facility bonds, airport-generated income, and local governmental budget allocations (Economic Feasibility Study of a New Floatplane Facility Located in Anchorage, Alaska 2008). The investment in future transportation development at the state level is often reflected in state transportation improvement plans or airport capital improvement plans. Also, because of the size and scope of harbor activity, a harbor master plan can be funded through sources from which the SPB can benefit. To be eligible for federal funding, an SPB must be a public-use airport, be listed in the NPIAS, and have a current sea- plane base layout plan (SBLP), per grant requirements under FAA’s Airport Improvement Program (AIP) (Advisory Circu-

22 lar 150/5395-1A 2013). SPB maintenance or repair is not an eligible item for funding under AIP. As part of the application process, an AIP project requires justification to the FAA or must undergo a cost-benefit analysis to qualify. Two respondents identified this as a problem for them. When asked about receiving external financial support for capital projects in the form of federal, state, or economic development aid, 11 SPB operators answered yes and 30 answered no {Q10}. Of the 11 that did receive assistance, seven were tied to an existing NPIAS airport that qualified for federal or state assistance. The remaining four received assistance from their respective state avia- tion agencies, one of which received outside community economic development grant aid and another of which received Federal Emergency Management Administration assistance as a result of a natural catastrophe. When asked about funding sources for the improvements needed at their SPB, most operators cited internal funding sources or state aviation grant assistance (Figure 7) {Q11}. Federal AIP assistance was identified by those SPBs affiliated with a land airport that is in the NPIAS. The funds are contingent on any project at the SPB being qualified under the state or federal funding guidelines. FIGURE 7 Funding sources for future SPB improvements. (Source: SMQ Airport Services {Q11}) FAA and State Grant Funding Many NPIAS airports seek funding assistance through the congressionally authorized Airport & Airway Trust Fund. The trust fund receives its money in part through commercial airline ticket taxes and other similar commercial use fees. Noncom- mercial general aviation operators contribute to the fund through taxes on aviation fuel. Trust fund grants, appropriated by Congress and administered by the FAA, use the AIP as the mechanism for assisting airports. In addition to funding capital improvement projects at airports, the AIP provides grants to public agencies, and in some cases to private owners and entities, for the planning and development of public-use airports. Comprehensive information on AIP can found on the FAA website (http://www.faa.gov/airports/aip/). Information provided in the following paragraphs summarizes some of the applicable provisions and requirements. AIP funding allocations are driven by a number of factors, including passenger enplanements, volume of cargo transported, the number and type of aircraft operations, and the priority of the capital funding or planning request. SPBs do not typically generate the level of landing, takeoff, and approach activity needed to qualify for major AIP funding. They may qualify for a funding category known as nonprimary entitlement funds that are specifically designed for GA airports. Otherwise, SPBs must compete for discretionary funds under AIP. The largest allocations of AIP funds go to commercial service airports. Commercial service airports provide scheduled passenger service and enplane more than 2,500 passengers annually. Some SPBs may qualify as a commercial service airport, but they generally do so because they are located with a land airport that generates most of the traffic. From the survey, 12 of the SPBs are associated with or located adjacent to an existing airport and serve a public transportation need in conjunction with that airport {Q12}. Other SPBs receive allocations of federal money through their state block grant program. Scheduled air carrier operators are required to report enplanement data to the U.S. Department of Transportation (14 CFR 241.19). Unscheduled air taxi and charter operators do not have the same requirement, but often do report the data for business purposes. Of importance for SPBs is to have all commercial operators report their operations and enplanement data to the FAA and

23 the U.S.DOT. The data are used to determine eligibility for federal financial assistance if other criteria are met. Just as important, this information helps illustrate to the general public the importance and use of the SPB. AIP funds are to be used for public purposes and facilities. Under AIP, the FAA definition of an eligible airport includes any appurtenant area used or intended for airport buildings and facilities, including any necessary rights of way [49 U.S.C. § 47102 (3)] The majority of SPB landside facilities are operated by private entities, such as marinas or private individuals, thereby making them ineligible for funding assistance (see Table 1). AIP funds for airport development are contingent on a project being shown on an approved SBLP. A layout plan, usually a prod- uct of the master planning process, demonstrates that the SPB meets certain design parameters and requirements for safe operations. AIP grants can be used only for eligible projects identified in congressional legislation. The current emphasis is on enhancing capacity, safety, or environmental concerns, such as runway construction and rehabilitation, airfield lighting, and airplane noise mitigation. The number and cost of eligible airport projects submitted to the FAA by airports far exceeds the available grant fund- ing authorized by Congress. To assist in determining which projects merit funding, the FAA uses a priority point system to rank the eligible projects. Based on the type of airport and project, the FAA then allocates the available funds in a normal budget cycle. Local Funding An economic advantage to communities of an SPB over a land-based airport is that the SPB does not require the acquisition of land area and the cost of construction and maintenance for runways and taxiways. The primary SPB investment cost for a community occurs in the transition area from water to land. Finding money to support or improve SPB infrastructure can be difficult, though, as many of the landside facilities are held by private entities, making them unavailable for public assistance. As with other business entities, SPBs are subject to the demands and consequences of a changing economy. Those SPBs oper- ated by a public entity suffer the same pressures during times of budget deliberations for cost-benefit comparisons as do other public services operations. In an open-ended question asking what facility improvements were needed at their SPB {Q13}, respondents provided a multitude of replies that reflect their individual situations. Dock repair was the most frequently identified improvement, fol- lowed by ramp replacement or repair and additional slips or pullouts. Two individuals cited obstruction removal and another two cited fuel facility repair or installation. Table 5 lists the improvements mentioned in the survey. Ten of the respondents indicated no improvements were needed. TABLE 5 LIST OF FACILITY IMPROVEMENT NEEDS AT 31 SURVEYED SEAPLANE BASES 1 Floating dock repair/replacement (6) 2 Ramp repair/replacement (4) 3 More slips/pullouts (3) 4 Obstruction/vegetation removal (2) 5 Hangars (2) 6 Fuel system repair/maintenance (1) 7 More beach area/erosion control (1) 8 Dredging/deeper water access (1) 9 Removal of disability barriers (1) 10 Waterway edge lighting replacement (1) 11 Paved SPB taxiway to airport taxiway (1) 12 Signage for boaters and seaplanes (1) 13 Telephone service (1) 14 Additional counter space (1) 15 New roof (1) 16 More public parking (1) 17 Paved access road (1) Source: SMQ Airport Services {Q13}. Note: Totals exceed 31 as respondents provided multiple need responses.

24 Operating Budget Preserving SPBs means maintaining the docks, beaches, slipways, and pullouts. Survey responses varied widely concern- ing the most expensive operating aspects of an SPB {Q14}. As one respondent noted, expenses tend to be minimal. Another concurred, especially when compared with the operating costs of the aircraft that use the facility. Tax and insurance costs are cited by several operators as their biggest expenses. Another two respondents stated that maintaining the access road to their SPB was the costliest aspect. Utility costs are further cited as the highest-cost items by other SPB operators. In a unique situation, one operator maintains a manmade waterway and must pay to have water pumped from nearby agriculture culverts to keep the SPB’s water at acceptable levels. A number of factors affect SPBs’ operating budgets. Higher maintenance costs appear to be associated with saltwater SPBs than with freshwater SPBs. Wave, tidal action, and corrosion all take their toll on the docks and shore. But it is the SPB’s level of GA activity that has the greatest financial impact on an SPB’s preservation and sustainability. According to the survey, low utilization rates at a number of SPB facilities, especially those used in the northern tier of the United States, made it hard to justify expenditures for improvements. On the revenue side, 15 of the survey operators indicated that a seaplane-based business currently operates at their facil- ity, while 16 indicated that none do {Q15}. Fifteen of the 31 SPBs also do not have fuel available, a main sources of revenue income. SPBs tied to marinas may benefit financially from that relationship. However, one operator questioned his continued support of the seaplane dock because it had very limited use by seaplanes. The operator thought there exists potential for additional revenue to be produced by boat usage of the dock. The short summer operating season is a factor for reducing revenue potential. A total of 18 SPBs are open year-round (11 in the lower United States and seven in Alaska) and 13 are open during the period early spring to fall (eight in the lower United States and five in Alaska) {Q16}. For those having partial availability, they range in operation from 6 to 8 months in the con- tiguous states and 4 to 6 months in Alaska. An equal number of SPBs, five each in the contiguous states and in Alaska, make their bases available for ski plane operation during the winter, provided ice depths are thick enough to safely support the aircraft {Q17}. Five SPBs operators, all located in Maine, support winter operations at their SPB. SUMMARY To help promote SPB preservation, an economic impact study is a useful tool for demonstrating its importance and value. A number of states have conducted such studies for airports and SPBs within their state or within a particular region. An economic advantage to communities having an SPB is that it does not require the land area and related construction cost for runways and taxiways that a land airport requires. The body of water already exists for such a purpose. Various sources have been used to fund SPB development. Internal funds are the main source, followed by state, federal, then economic development grants. To be eligible for federal funding, an SPB must be a public-use airport, be listed in the NPIAS, and have a current SBLP. State requirements may exist for the same or similar criteria. Operating costs vary among SPBs, with dock repair or replacement needing the most attention. To offset costs, half of the SPBs are supported with an active seaplane business that generates revenue. The short summer operating season reduces rev- enue potential, and some SPBs counter this limitation by making the base available for ski plane operation during the winter.