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Title:
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Police Air Fleet Replacement
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Title
Police Air Fleet Replacement
Description
This report provides the Public Safety and Justice Subcommittee with the findings from a recent review and assessment of the Police Department’s aircraft fleet performed by an aviation industry expert. This report further requests the Subcommittee recommend City Council approval to adopt the air fleet replacement strategy and financing option recommended by City staff.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
Over the past two years, the Police Department has provided information to the City Council on Police aircraft long-term needs. At the May 13, 2020 Public Safety and Justice Subcommittee meeting, the Subcommittee recommended approval for the Police Department to have an aviation industry expert assess the department’s air fleet and develop an aircraft fleet replacement plan. City Council approval was received at the June 3, 2020, Formal City Council meeting to fund the assessment.
Van Winkle Aviation, LLC was hired by the City of Phoenix to conduct the air fleet assessment. An onsite review was conducted in June, and a report outlining fleet replacement recommendations, as well as funding and purchasing options was submitted in a report to the City in August.
Background - Current Police Air Fleet
The Police Department has a total aircraft fleet of 10 units, which consists of:
Five patrol helicopters, purchased between 2004 - 2010.
One twin-engine (rescue) helicopter, purchased in 2005.
One fixed-wing Pilatus PC-12, purchased in 2008.
One fixed-wing 1981 Cessna 172.
One fixed-wing 1972 Cessna 182.
One fixed-wing 1986 Cessna P210.
The industry standard for helicopters is seven years. Maintenance on the aircraft fleet is part of the daily operations. Scheduled maintenance is based on flight hours where specific components are inspected, repaired and/or replaced. The age of the current fleet results in unscheduled maintenance, which is costly and difficult to budget. It also results in more frequent scheduled maintenance that increases costs. The frequency of unscheduled and scheduled maintenance also results in less time the aircraft is operational. Additionally, because of the age of the aircraft, the current fleet is utilizing old technology, which is less efficient, and in some situations can pose officer safety issues.
The Department’s Air Support Unit (ASU) flew approximately 5,000 hours and responded to more than 10,000 calls for service last year. However, the ASU was unable to respond to over 4,000 requested calls for service due to reduced flight hours.
Assessment Recommendations - Van Winkle Aviation, LLC
The following fleet replacement recommendations highlighted below were identified in the assessment conducted by Van Winkle Aviation, LLC.
The piston airplane fleet (Cessna 172P/182Q/P210R) should be sold immediately since these aircraft are no longer needed for training or surveillance operations.
The Pilatus PC-12 and rescue helicopter are serviceable and have relatively low flight times, so they should be kept in-service.
The current patrol helicopter fleet is in need of replacement since maintenance costs are continuing to increase as a result of unscheduled maintenance due to aircraft age and high aircraft flight times.
The following aircraft purchases should be made, in this order or priority:
In order to decrease occurrences where the ASU is unable to assist and increase patrol aircraft availability, Phoenix PD should replace the current patrol helicopter fleet with seven to eight Airbus H125 patrol helicopters. These should be purchased over a several year period at a rate of two or three aircraft per year. The current patrol helicopter fleet should be traded-in on the new H125s.
In order to keep up with the requests for high-altitude surveillance and investigative travel, Phoenix PD should purchase a second Pilatus.
In order to increase mission range for the search and rescue (SAR) mission and to increase capabilities for critical missions, the Phoenix PD should purchase a medium twin-engine SAR/Critical Missions helicopter to meet the increased mission requirements.
ASU staff should conduct flight demonstrations and an internal review to determine the best law enforcement mission suite to be installed on all ASU aircraft (existing fleet and new aircraft purchases).
A mission equipment replacement plan should be developed for the aircraft to be kept in the ASU fleet (Pilatus and rescue helicopter) since all of the installed equipment is over 10 years old and is much less capable than current technology.
Phoenix PD ASU staff need to work with agency Information Technologies staff and command staff to develop a data management plan for the recording and distribution of live aircraft video and data.
The new patrol helicopters and new Pilatus (PC-12NGX) basic aircraft should be purchased from the original equipment manufacturer by sole source purchase; aircraft completion should be purchased from a third-party vendor with on-going support provided for all aircraft mission equipment and ground infrastructure; this method will reduce initial and on-going costs to the City of Phoenix.
An RFP should be developed for the purchase of a new medium twin-engine SAR/Critical Missions helicopter, which includes flight demonstrations of the desired missions.
The City of Phoenix Finance staff should select the finance method that will minimize the costs to the agency while facilitating the aircraft upgrade/replacement plan.
Since receiving the aircraft fleet recommendations from Van Winkle Aviation, LLC, staff has worked closely with the Budget and Research and Finance Departments to develop an air fleet replacement strategy and funding options that conform with the budget.
Air Fleet Replacement Strategy
In the absence of a recurring bond program, the air fleet must be maintained and replaced at regularly scheduled intervals or be grounded, which would cause significant operational issues for the department. Given the age and increased maintenance costs associated with the core fleet (five patrol helicopters, one rescue helicopter, and one Pilatus), staff recommends adopting a standard 10-year replacement plan to ensure operational continuity and to eliminate the risk and liability associated with the aging fleet.
Another benefit of adopting a 10-year replacement plan is that we will be maximizing trade-in value and reducing ongoing operations and maintenance costs associated with an older fleet. The recommended replacement strategy would be considered an ongoing budgetary expense and would not be dependent on a new bond program. To accomplish this goal staff recommends that each of the five aircraft identified above be replaced as soon as possible preferably within the next five years. The estimated cost associated with replacing these units is between $48-$50 million.
Staff has identified two ways to finance the recommended replacement plan:
Option 1 - Plan to replace one unit per year for the next five years using General Fund (GF) Pay-As-You-Go. To accomplish this goal staff recommends creating an “Air Fleet Sinking/Replacement Fund.” This fund would be funded with a GF transfer of approximately $7 million per year between this fiscal year and FY 2025 - 26 and approximately $8.5 million in FY 2026 - 27. After that, the transfer amount would decrease to approximately $4.5 to $5 million per year. From this point forward the replacement fund would have the resources required to ensure that each aircraft could be replaced every 10 years as suggested by the independent consultant. Under this option, the first five years would require significant budgetary resources before flattening out to a lower level because of the upfront replacement costs.
Option 2 - Plan to replace the units discussed above using excise tax debt or another revolving debt instrument. Based on discussions with the Finance Department, the $48-$50 million required to replace the five patrol helicopters, rescue helicopter and Pilatus would require annual debt service payments of between $5.2 million and $6.5 million per year depending on market conditions and whether or not the debt were tax-exempt or taxable. While this approach would keep the budgetary costs slightly lower over the first five years of the plan it does reduce debt capacity for other needs in the future including but not limited to Pension Obligation Bonds.
Based on the current state of the fleet and the relatively minor short-term savings associated with financing the fleet using debt, the Budget and Research and Finance Departments recommend Option 1. Staff further recommends using any available fund balance or savings accrued this year to accelerate the initial replacement. This would help reduce short-term budget pressure and eliminate operational liabilities. Any efforts to expand the fleet beyond the five core units identified above would require a supplemental request or expansion through a future General Obligation Bond Program.
Department
Responsible Department
This item is submitted by Assistant City Manager Milton Dohoney, Jr. and the Police Department.