Airport Land Acquisition
Airport land acquisition FAQ
At the Dec. 19 City Council meeting, the Council voted (5-1) to authorize the City Manager to enter into an agreement with VTCR LP, Prairie Flight LP, and MADMT LP, collectively, for the purchase of approximately 190 acres of land located generally at the southeast side of McKinney National Airport. The land will be purchased with cash for $22.4 million.
Currently, the city owns 775 acres of land comprising the airport, and pursuant to the recommendations of an updated airport master plan, the city aims to add up to 500 acres in the coming years to protect the growth potential of the airport.
1. Why is the city purchasing this land?
According to the McKinney National Airport’s master plan, the long-term growth strategy for the airport is to acquire additional land surrounding the facility, allowing the airport to expand as aircraft operations increase and the need for expanded infrastructure and facilities grows.
While the city has long been looking for opportunities to purchase additional land, no opportunities were available that the city deemed to be consistent with future growth patterns. Recently, the land became available for a fair price and its proximity fit within the long-term strategy of the airport master plan.
2. What will this land be used for?
The airport master plan has identified this land on the eastern side of the airport for a future passenger service terminal and related infrastructure. While passenger service is not imminent at this time, the DFW Metroplex continues to experience explosive growth and will need a third commercial service airport in the future. McKinney National Airport is in a strategic position to provide that service when the demand and market are ready. In order to provide commercial airline service, the city must secure additional land around the airport.
3. How will the city pay for the land?
The purchase of the land will be made from available fund balance in various city funds, thereby avoiding the need for borrowing and incurring interest cost. At the Feb. 6 City Council meeting, Council approved an ordinance amending the annual budget and Capital Improvement Program to provide funding for the project from various excess fund balances in the city’s general fund as well as from a tax increment reinvestment zone fund.
4. Why were no public hearings held for the purchase of this land?
It is not typical for public hearings to be held for real estate purchases made with available funds.
5. How will the purchase affect the city’s bond ratings?
The land purchase should have no effect on the city’s bond ratings. The use of these funds would not reduce the city’s reserves below 25 percent, the required percentage of fund balance as outlined in city’s financial policy. After this purchase, the General Fund will remain above 33 percent, well above what the city’s ratings agencies deem adequate for maintaining investment grade credit worthiness.
6. A recent bond election voted against issuing debt for airport projects. How is this purchase different from what voters turned down?
In 2015, a proposition failed for the issuance of $50,000,000 general obligation bonds for unspecified improvements at the McKinney National Airport.
This purchase agreement differs from the proposed bond because (1) the city is not borrowing money, and (2) the use is very specific in the form of a strategic real estate purchase.
7. Will the city receive federal reimbursement for the purchase of this land?
Land reimbursement from the federal government through TxDOT is complicated. There are specific steps required to preserve the city’s ability to request reimbursement for part of the cost of land once it gets programmed for an airport use the federal government deems warranted. The city is not required to pursue reimbursement, nor may it wish to. However, the city has followed the requisite steps to preserve that option when and if the city wishes to pursue it. Of course, any reimbursement by the federal government is subject to availability of funds at that time and may be paid out over several years.
8. Why is this purchase a good thing for the city and the McKinney National Airport?
The airport is a lucrative asset that differentiates the City of McKinney from other cities in Collin County, setting McKinney apart as the only city with a public transportation facility – making our city an enticing location for economic development. In 2010, an economic study conducted by the University of North Texas found that McKinney National Airport generates more than $44 million annually in economic impact to McKinney. It benefits the community by the revenue it generates to help provide city services and education dollars. The single biggest beneficiary of the property tax valuation of the aircraft at McKinney National Airport is the McKinney Independent School District which receives over $1 million annually in ad valorem tax revenue, which funds the cost of education of more than 100 students a year. The McKinney National Airport benefits all citizens – even those who don’t fly.
By purchasing the land, the airport will be able to expand its physical footprint and expand operations as the city and the entire region continue to grow.
Read the additional FAQ on the McKinney National Airport.