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Home My WebLink About _ 9.1(b)--Authorize Mayor to Sign Letter to Shasta County Board of Supervisors � � �' � � � � � � ' � �' � � ' � ` CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: March 4,2025 FROM: Barry Tippin, City Manager ITEIVI NO. 9.1(b) ***APPROVED BY*** btippin@cityofredding.org t�� , s�. ° . �s ?I'�i,f"�C�'?5 btippin@cityofredding.org SUBJECT: 9.1(b)--Consider authorizing Mayor to sign a letter to the Shasta County Board of Supervisors requesting reconsideration of terms attached to the additional $100,000 minimum revenue arantee for the United Airlines Denver/Redding flight. Recommendation Authorize the Mayor ta sign a letter requesting the Shasta County Board of Supervisors to reconsider their terms attached to the additional $100,000 offered for the Minimum Revenue Guarantee for the new United Airlines Flight between Denver and Redding. Fiscal Impact Should the Shasta County Board of Supervisors (BOS) decline to change their terms, the City of Redding (City) will need to provide an additional $100,000 to the Minimum Revenue Guarantee (MRG). Alternative Action The City Council (Council) could choose to not send the letter, modify the letter, accept the terms proposed by the BOS or provide other direction to staff. Background/Analysis The City has successfully negotiated with United Airlines (United) for new air service between Redding and Denver beginning in May 2025. This agreement requires the City to provide a $2 million MRG to United to ensure the flight is profitable in its first year of service. As of December 2024, City staff and the Shasta Economic Development Corporation had obtained contributions from several businesses and organizations totaling $560,000. This, combined with a grant from the Federal Aviation Administration and funds from City sources provided $1,610,000 toward the MRG. This total included a $100,000 contribution from the County of Shasta. The remaining $390,000 would need to be funded by the City or obtained through other donations. Report to Redding City Council February 27,2025 Re: 9.1(b)--Authorize Mayor to Sign Letter to Shasta County Board of Supervisors Page 2 At its January 7, 2025, meeting, the BOS approved an additional $100,000 toward the MRG with the following stipulations: • The additional $100,000 commitment for the Denver flight is subject to a Memorandum of Understanding(MOU)being negotiated between the City and Shasta County; • The 1VIOU would require that the City agree to discussions in 2025 regarding the possible creation of an airport authority with Shasta County having a seat at the table in operation of the airport; and • Shasta County requires that the additional $100,000 will be used as the last funds to facilitate the revenue guarantee. While the offer of funding is much appreciated, staff does not feel the terms are in the best interest of the City nor the Airport. I�n particular, the requirement for the funding to be "last in". This wi11 set a perception that the entire $2 million will not be used and an expectation that for future MRG needs, any and a11 donors can negotiate the "last in" preference. Staff has informed all of those who provided donations to consider it a grant and not to expect a return of funds. This is predicated on our past experience along with the experience derived from other airports. Generally, on the very rare occasion MRG funds remain, they are used to advertise the airport and the various flights available. With regard to the request to discuss a Joint Powers Agency to run the Airport, that discussion can occur at any time the Council feels it is appropriate and no MOU is necessary. Environmental Review This item is not a project as de�ned under the California Environmental Quality Act, and no further action is required. Council Prio�ity/City Manager Goals • This is a routine operational item. Attachments ^Letter to BOS - Reconsideration of Terms - Shasta County MRG Funds I T Y F --' CITY Q�� E D1 ta c-! 777 Cypr�ss �venue, R�dclir�g, C� 96t�01 .. , �. PC� BC�X �J6C�71, F��dcEii7g, CA 9��}��-6071 C � 1 ��F E �� c�tyc�fr�dclirtg.or�g _� � Jack Munns,Mayor Jmu nn s@cityofredding.org 530.225.4447 March XX, 2025 Kevin Crye, Chairman Shasta County Board of Supervisors 1450 Court Street, Suite 308B Redding, CA 96001 Subject: Reconsideration of Terms for Additional Minimum Revenue Guarantee Funding Dear Mr. Chairman, On behalf of the City of Redding, I would like to express our sincere appreciation for the Shasta County Board of Supervisors' commitment to regional air service and the Board's approval of an additional$100,000 toward the Minimum Revenue Guarantee (MRG) for the new United Airlines flight between Redding and Denver. Expanding our air seroice is critical to fostering econoinic growth, business opportunities, and improved connectivity for our residents. While we greatly value the County's financial support, we respectfully request that the Board reconsider the terms attached to the additional funding. Specifically, the requirement that the County's contribution be the "last in" funding as this presents challenges in maintaining consistent donor expectations and may inadvertently impact future fundraising efforts. Historically, all MRG contributors have provided their funds essentially as grants without an expectation of reimbursement, and this approach has proven successful in � � �� securing new airline services. The proposed"last in" condition sets a precedent that could complicate future�� efforts to attraet airline partners. Additionally, while the City is open to discussions regarding the fonnation of an airport authority, we believe these conversations should occur independently of the MRG funding process. The City of Redding is open to engaging in a construetive dialogue regarding airport governance at the appropriate time,without requiring an 1VIOU as a precondition for the County's financial participation. � � �� We appreciate your consideration of this request and look forward to continuing our strong�partnershrp in � advancing regional air serviee. Please do not hesitate to reach out sbould you wish to discuss this matter further. Sincerely, Jack Munns Mayor City of Redding � � � � �