Qualicum Beach taxpayers can be excused if they feel confused with the actual cost to operate our airport after reviewing both the towns latest Financial Plan 2024 to 2028 comprising 146 pages and the latest 98 page 2023 QB Annual Report.
And if you think the most recent Airport Consultation Plan which cost the town $30,144 answers that question, you would be disappointed in that the consultant was not tasked with reviewing the viability of the airport. No financial review was undertaken.
Still wanting to know how our tax payer monies are spent, I was hoping the towns annual report would include at minimum a financial summary for the airport. Instead we receive only a consolidated financial statement prepared by the Towns external auditors. This financial report is so highly consolidated that tax payers cannot see how their tax dollars are actually spent.
Is it hard to get an accounting of the actual QB tax payer monies spent to support our airport?
In a simple one word answer, Yes.
On July10/24 in the Committee of the Whole meeting I made a presentation to council outlining just how difficult it is to get meaningful information from staff.
The information I was requesting from town staff was to enable an accurate determination and trends of both actual operating losses and capital expenditures at the airport which were not fully funded by grants. Being unable to obtain actual numbers from staff, I used the information publicly available to determine a conservative estimate of costs with each number referenced from a town published source document.
Using this hunt and peck method, I estimated that for the two years 2023 and 2024 we will have spent or are planning to spend over 1 million dollars at the airport which equates to almost $1400 per day. I noted that this did not appear to include related airport costs of oversight and project management work completed at city hall. It is also over and above the generous BC and Federal grant monies received by the town, which are also tax payer monies, albeit from a larger pool of taxpayers.
I also made it clear that council and the QB tax payers should not rely on my forensic accounting skills but rather suggested to council they should direct staff to produce a detailed report.
In my presentation to council I also suggested council direct airport staff do a review of the airport revenue lines to increase the user pay aspects of the airport. I provided several examples of additional fees being collected at other regional airports.
All we want are the facts... so why no motions and no action?
I have had conversations with several councilors since the committee of the whole meeting and conclude that they have been convinced that sufficient information has been released and that no further detail is required. This is illustrated when in the following council meeting, staff again used the same slides and numbers as in previous meetings with no effort to clarify costs included in "airside" and "terminal" expenses. In my opinion, neither councilors I spoke with are sufficiently comfortable with accounting processes to question and/or champion this request.
There are several other plausible reasons Council did not act as one would expect:
Staff cooperation will not happen easily as Council are often reminded how overworked they all are. To produce a report of actual costs (including any unallocated costs omitted in airside and terminal side expense lines) and thereby publicly acknowledging the true level of losses puts into question their general transparency with residents, and could be damaging to the towns image and public trust in both staff and Council.
Faced with documented ongoing significant losses at the airport Council would need to actually make a plan for what to do with the airport in the long run. The community is very divided over the merits of the airport and exploring options will take real leadership with strong negotiation skills and most likely a longer time horizon.
I have no explanation as to why no member of council made the less contentious motion to immediately review revenue lines at the airport. Surely we should be collecting what ever user fees we can to help offset the cost to QB taxpayers by minimizing the losses at the airport.
I intend to continue to pursue meaningful and accurate information from both staff and council with respect to the airport as it is important to me as a tax payer.
Marie Noel / August 20 /2024
We invite readers to send your comments /letters to QualicumBeachInsights@gmail.com
More Airport Financial Background
Speakers notes Committee of the Whole Meeting "COTW" July 10 2024 (edited for brevity.)
In late January 2024 COTW meeting addressing the airport consultant's report many residents were asking for more detailed information on airport financials. The town CAO offered that anyone wanting more information simply had to ask for it.
It took over 146 days with constant follow up to finally to get some answers to my questions.
The important questions not fully answered are;
Is it fair to assume that the town uses a cost center approach and that all work and expenses performed at the airport are reflected in the airside and terminal expense lines on page 106? Is this an inclusive reflection of town resources spent at the airport?
When cost overruns arise to airport improvement initiatives that are not fully covered by specific grants, where are they recorded and does the town do project based reporting?
I have learned over the years that the choices made when presenting financial information can paint very different pictures.
To someone without the financial expertise to do a deep dive into the numbers it appears that the airport has modest financial impact to the average QB tax payer. Reality may be quite different.
Planned tax payer subsidy For 2024 Taken from the 2024-2028 Financial Plan
$225,700. 2024 Projected operating loss ( page 106)
$168,700. 2024 Projected capital expense not covered by $1,237,300 grants (page131)
$ 394,400. Total projected monies to be spent at the airport from current taxes & reserves (which are previously paid QB tax payer money.)
The information I was requesting from town staff was to enable an accurate determination and trends of both actual operating losses and capital expenditures at the airport which were not fully funded by grants. I have attempted to review the information publicly available and have determined the following estimates.
For 2023.
* from 2023-2027 Financial plan
** from 2024-2028 Financial plan
*** town declaration of supplier payments >25K Operations Economics Inc
$187,042. 2023 projected y/e actual operating loss (page 106 **)
$280,000. 2023 capital ex. Portion not paid by grants. ($575k in total representing four projects) (page 105*)
$ Unknown. 2023 actual cost over run on above 4 projects
$ 20,000. 2023 airport structure review ( page81*)
$ 10,144. 2023 cost over run on structure review ***
$130,000. 2023 runway 29 survey and tree management (page81*)
$ Unknown 2023 cost overrun on survey and tree management
$627,042. Total QB tax payer funded from 2023 taxes & previous years taxes ( reserves)
For 2022.
*2022 Annual report (does not include detailed airport operating info)
2023-2027 Financial Plan consolidated
ACAP= Airport capital assistance program
$64,748 2022 projected year end operating loss ( page81**)
$??? Replacement of jet A fuel (received 159,000 from BC air access grant to partially cover project cost
$??? Airport lighting project budget started at $900k increased to $1114k at the end of budget negotiations. Narrative in the 2022 annual report page 36, indicates $1,400,000 ACAP grant fully funding airport lighting system. Same report (page 40) says lighting upgrades completed at a cost of $1,341,856 ACAP program covered 100% of infrastructure costs. End of year audited financial statements * show the town received $1,075,269.
Based on the info released, I am unable to reconcile a reasonably accurate assessment of total QB tax payer money spent at the airport for the 2022 year.
Using the same approach, of hunt and peck through council minutes and various financial reports, I conservatively estimate total taxpayer money spent in 2021 to be $365K (comprised of 65k operating loss and $300k for non grant funded airport sewer extension. ) The year 2020 was approximately $454k.
Going back to more recent numbers, my estimate for the most recent two years of 2023 and 2024 we spent or will be spending over a million dollars of QB tax payer money at the airport. That equates to almost $1,400 per day.
I will give you a minute to reflect upon that $1,400 per day number.
I also note that this does not appear to include costs of administrative and project management work completed at city hall on behalf of the airport and is also over and above the generous BC and Federal tax payer funded airport grants the Town has received.
Importantly, Council and other tax payers should not be relying on my forensic accounting skills. Rather, Council needs to request a detailed and accurate accounting of the money spent to support our airport over the past 5 years and provide a report to QB tax payers.
Such report should include all costs including overhead of management provided by Finance and others within city hall, all consultant report costs, insurance costs, all work conducted at the airport by both transportation and parks departments.
I would suggest this report also includes actual capital expenditures, and actualgrants received.
Alternatively, if Council is concerned with the amount of staff resources required to put this information together, Council could choose to engage an appropriate accounting consultant to do a full forensic audit to provide both Council and QB tax payers with creditable information.
Concurrently, Council should request management at the airport to review current pricing for all services to bring them in line with other airports in the province. For example
1)Tofino charges lease application fees and requires prospective tenants to bear the cost to have the their unit connected to water and sewer.
2)The Ministry of Forests BC Wild Fire pays landing fees ranging from $12 to $314 per landing to other airports . QB appears to be the only airport not charging them landing fees.( Refer to my handout).
3)Golden BC municipal airport charges landing fees to visiting pilots.
4)Campbell River’s commercial passenger fees include a passenger fee for both enplaned and deplaned passengers. They also apply an airport improvement fee and a regulatory recovery fee.
5)Trail airport has a set policy of marking up fuel by 20% to help offset airport costs.
I am not an expert in airport pricing but after doing a little internet research it appears to me that QB airport revenue lines could and should be improved. Airport management should provide Council with a report recommending new pricing and an adjusted revenue budget with line by line detail.
The Financial report and the airport management enhanced revenue report will give Council the ability to review and assess both monies in and monies out at the airport. Council will then be in a position to make an informed assessment as to the ongoing viability of the airport. Armed with the right information Council can then make the choice to re-approach the RDN to fund the airport on a regional basis, or seek other solutions to permanently resolve the ongoing funding requirements.
If after armed with full and complete information Council determines that the airport will likely always be a drain on our community resources, Council should begin to consider alternative long term strategic options.
I am not advocating to close and decommission the airport today.
There are a host of other options to explore such as;
-Negotiating with the RDN ,
-Negotiating with Transport Canada to run and take over the site. They currently own and operate 6 other airports including Port Hardy here on the island.
-If the airport has the commercial passenger and cargo scale necessary to be self sufficient, we could seek a private operator to own and run the airport as done in many regional airports including Nanaimo and Duncan
-the town could renegotiate the terms of the land grant. We need to consider all long term options for this 160 acre site. As an example, using a conservative formula of 4 homes per quarter acre, this site could provide 2560 new homes that people could actually afford while providing the town with a significant increase to the tax base. Alternatively the site could become a solar power facility to feed the grid and ensuring our town has access to affordable power. I am sure there are many other options to explore.
The residents of QB are deeply divided about the value of our airport.
Some are concerned about the financial impacts, others about the environmental harms from related pollution and noise issues that affect their day to day quality of life. Others feel the land could be better used to create much needed additional housing . But, our starting point needs to be accurate and full disclosure of the real costs of owning and operating our airport.
In closing, as David Eby refers to challenging situations, I see our airport as Qualicum’s own little “dumpster file”.
I urge Council to put a real focus on the airport and imagine this airport as either financially self sufficient or put to some other use that better aligns with the town’s long term strategic goals.
Thank you again for giving me this opportunity to speak.
Here are the original 10 questions we asked in an email to the town CFO
Here is some of the specific airport information I would like to review or clarify;
1. Page 106 of the 2024 2028 financial plan shows a projected operating loss of $187,042 to be funded by net property taxes. Does this include the portion of capital expense not covered by specific grants? On Page 131 airport capital budget 2024 shows an additional $1,406,000 on planned capital spending and only $1237,300 covered by grants. Does this mean that $168,700 is being taken from general tax payer funded reserves? Am I correct that the cost of the airport to the residents of qb for 2024 is planned to be the combination of $168,700 plus $187,042 for a total of $355,742.?
2. Is there any historical info in a similar format so that I can determine the QB tax payer cost over a longer period of time . If possible, rather than just looking at the planned future I would like to review actuals from 2019 to 2023 for a better understanding of trends.
3. When cost overruns arise to airport improvement initiatives that are not fully covered by specific grants where are they recorded? Does the town do project based reporting?
4. It is fair to assume the town uses a cost center approach and that all work and expenses performed at the airport by town employees/contractors is reflected in the airside and terminal expense lines of page 106? Is this an all inclusive reflection of Town resources spent at the airport?
5. I understand other airports (example Powell River)collect maintenance and management fees from lease holders, in a process similar to most commercial properties, office buildings and strata properties. Do the leases in QB have similar provisions ? If not, and if not do the leases come up regularly for renewal where these terms could be included?
6. Does the town have a formal program for reviewing lease rates, fuel markups and landing fees?
7. Other airports collect an airport improvement fee along with passenger fees to recover both operating losses and capital costs not fully funded by available grants. Has QB considered increasing passenger fees and also instituting an airport improvement fee to both reduce the impact of the airport to the QB tax payer?
8. How are utility costs at the airport recorded and collected?
9. What key performance metrics are used at the airport if any?
10. I understand that the airport land grant in favour of the town may have some limitations on the use of funds generated at the airport. Namely that the be used only for airport purposes. The QB land use plan report dated Dec 2018 implys that any revenues generated on the airport lands must be used to finance the airport for both operations and capital works. Is a copy of the land grant available?
I understand you and your staff are busy and hence I do not expect a quick turn around to this request. I would much rather have a detailed answer than a speedy reply.
Thank you for helping us to understand how tax payer monies are used to cover the costs at the airport.
This is the reply from the CFO to those questions:
Please find below this line a response with respect to the specific airport information as requested in your email from March 18, 2024:
The projected loss for 2023 of $187,042 is for operations only. It does not include capital expenditures. The loss is however offset by savings in transportations services. For example, in 2023, $48k of crack-seal patching was done at the airport. Expenses are reported in the Airport area, whereas the budget provision is in the transportation services area. Expenditures in the budget area in transportation services were curtailed to ensure offsetting savings in this area. In summary $48k of the projected loss of $187k is offset by savings of $48k in the transportation services area.
The 2024 Capital Budget for the Airport is $1,406k as reported on page 131 of the 2024 Financial Plan. $1,237k is contingent of grant funding and $168.7k is funded from Town Asset Reserves.
As reported in the financial table on page 106 of the Financial Plan, the 2024 operating budget for expenditures is $1,125k. $899k of the operating budget is funded through non-taxation revenues and $226k is funded through taxation revenue. And as mentioned in the paragraph above, the capital budget for 2024 is $1,406k, with $1,237k funded by grants and $168.7k funded from Town Asset Reserves.
The Town started reporting out in the budget book format in 2023. The 2023 financial plan includes historical information in this format that dates back to 2020, (page 81 of the 2023 Financial Plan). Historical information earlier than 2020 is not available in the same format.
All capital expenditures including the airport are tracked on a project basis. Council is made aware of any anticipated costs in excess of the approved budget throughout the year, as part of the tender award process and also through the mid-year and 3rd quarter financial reporting process. The next financial update to Council is scheduled for July 17.
There are lease agreements in place with tenants occupying hangers and for other spaces at the airport. The lease agreements and renewal terms are reviewed regularly. Fuel is acquired and sold at market rates. There is not much opportunity for fuel mark-up beyond the going market rate. Generally, there is a nominal mark-up on fuel.
The Town of Qualicum Beach passenger fee includes an Airport Improvement Fee. It is $11. An increase in the fee is not contemplated until a review and comparison with other airports is undertaken.
Utility costs are included in the Airside costs as reported in the Operating Schedule for Airport (p.106, 2024 Financial Plan).
Key performance metrics for the Airport are under development.
Per your request, “Land Grant for Airport may have some limitations on the use of funds generated at the airport. Namely that they be used for Airport Operations. Is a copy of the land grant available?” I will request a copy of land grant agreement for the airport from our Corporate Services area and forward it to you.