McKinney Bond Committee proposes $200 million bond election item for airport development

McKinney Courier-Gazette
By Audrey Henvey | Star Local Media
January 18, 2023

A potential $200 million bond item regarding the McKinney National Airport could be coming to voters in May.

In September, McKinney City Council members appointed a roughly 40-person committee to look at future capital projects that could be presented as part of a bond election in May 2023. At the time, the city of McKinney said the focus of the program was expected to be on the McKinney National Airport. The committee included regional and local representatives.

On Tuesday, the committee, represented by committee member Brian Loughmiller, presented a recommendation for a $200 million bond item to go to voters for the May 6 election. The recommended amount is for “for future development at the McKinney National Airport and capital projects outlined in its master plan,” according to the city.

According to Loughmiller’s presentation, the amount would cover roughly 67% of capital projects funding that would be needed for initial commercial service to come to the airport.

The idea of bringing commercial service to McKinney’s airport has been part of the airport master plan since 2012, according to multiple city presentations. “Due diligence” on such a project began in 2019 “as a result of unsolicited interest from airlines and developers,” according to a presentation from Airport Director Ken Carley. The city and airport have commissioned a series of studies to validate the market and demand for service, as well as to understand costs, economic impact and environmental impact.

The bond committee met three times, starting on Oct. 10 and concluding on Nov. 9.

“The purpose of the meeting was to do an evaluation and make a recommendation and not necessarily just come in and say, ‘Yeah this is great, this is what you want to do, go do it.’” Loughmiller said in a presentation to the council. “So it was really a lot of, I think, critical thought put into the issues that were presented to us, everything from the standpoint of the dollars involved, the timing of it, trying to meet the goals of the council in this project, but also taking into consideration the concerns that typically we see with bond elections as relates to debt services, as relates to impact on tax rates and things of that nature. So there were a lot of discussions about that that were, in my view, very objective.”

A preliminary site plan presented Tuesday indicated that development would include a 140,000-square-foot terminal with four gates and 2,000 parking spaces.

“It will have the ability to expand beyond the four gates, but that is the initial plan for development,” Loughmiller said.

Financial estimates presented Tuesday indicated that capital projects necessary for initial commercial service at the airport would total roughly $300.7 million. Estimates indicate $173.5 million of that would be for the four-gate terminal building. Other listed projects included infrastructure development, a terminal entrance and loop roadway, surface lots and more. 

“As you can see, it’s a significant project. It’s a significant ticket item,” Loughmiller said. “(...) But also, I think keep in mind that there are other sources of funds available for airport development, including reimbursement from the FAA (Federal Aviation Administration) on supported projects.”

The committee is recommending a $200 million general obligation bond item to pay for a portion of that cost.

“Based on what information we received from the finance department, we felt comfortable that that number is a number that is sustainable from the standpoint of debt service capacity, the potential for future bond elections that may be necessary for additional growth in other areas of the city, the ability to retire debt going forward (...), and also from the standpoint of available sources of other funding, whether it be from FAA reimbursement or other things that could help with either the retirement of debt service or to help with the project,” Loughmiller told the council.

Proposed sources of funding for the remaining $100.7 million of the expected cost included grants (from the federal, state and local level), potential funding from the McKinney Economic Development Corporation or Community Development Corporation, low interest Federal Transportation Loans or fund balances, according to Loughmiller’s presentation.

According to the Tuesday presentation, potential annual economic impact could equate to roughly 3,000 new regional jobs in the first year of operation.

A presented timeline indicates that the terminal could be open by 2026, with construction starting in 2024.

McKinney Mayor Pro Tem Rainey Rogers asked if there had been a study to determine when the project could sustain itself.

“Our consultant team that’s been working with us since 2019, they’ve developed a model that tells us that given the anticipated operations and the anticipated operating expenses as well as the debt service that is carried by the airport, that it will probably be somewhere out in the seven to 12-year time frame before it is fully funding itself,” Assistant City Manager Shelton said in response, adding that the figure is dependent on a number of assumptions. “If we land a good collection of airlines, it could be as positive as cost neutral in year one, two or three. If we struggle to land airlines or flights and we don’t have the number of passengers, then it could take longer.”

Shelton added that the process for moving towards the proposal included a sense of “off ramps,” and if information changed (such as economic factors or the industry), the city can decide not to move forward.