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HomeMy WebLinkAbout2003-02-10 TranscriptionFebruary 10, 2003 Council Work Session Page I February 10, 2003 Council Work Session 6:30 PM JOINT MEETING - IOWA CITY CITY COUNCIL & AIRPORT COMMISSION EMMA J. FIARVAT HALL FEBRUARY 10, 2003, 6:30 PM COUNCIL MEMBERS PRESENT: CHAMPION, KANNER, LEHMAN, O'DONNELL, PFAB,VANDERHOEF, WILBURN AIRPORT COMMISSION MEMBERS PRESENT: ANDERSON, ELLIS, ROBNETT, MASCARI, THROWER STAFF: ATKINS, HELLING, DILKES, DULEK, O'NEIL, O'MALLEY, KARR TAPES: 03-15, Side 2; 03-17, Side 1 Lehman: Okay folks. We'll get started. I am not wearing my coat because I think we're going to be out of here really, really early and didn't have time to take it off it's because it's cold in here. Let me read this before we start. For good cause tonight's meeting was moved from the Airport to Harvart Hall on less than 24 hours notice due to equipment difficulties which would have prevented the taping of the meeting if held at the Airport. And Marian was down today and for reasons I don't understand the equipment at the Airport would interfere with the equipment here and I think most of it is disappointed that we have to meet here. So in any event. The first thing I'd like to do is have everyone introduce themselves. This will primarily for the person who transcribes the tape. Starting with you, Connie. Champion: Cormie Champion, City Council. O'Donnell: Mike O'DonneI1, Council. Pfab: Irvin Pfab, Council. Mascari: Rick Mascari, Airport Commission. Ellis: Alan Ellis, Airport Commission. Thrower: Baron Thrower, Airport Commission. Anderson: Mark Anderson, Airport Commission. Kanner: Steven Kanner, Council. Vanderhoef: Dee Vanderhoef, Council. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 2 Robnett: Michelle Robnett, Airport Commission. Lehman: Ernie Lehman, Council. First thing we have on the agenda is the strategic plan that the airport has talked to us about and I'd like some I'd like someone to walk us through that - what it is you like to do and what you hope to have found... Anderson: I suggest Michelle. Robnett: Okay. Anderson: Just a kind of a lead in for Michelle. Robnett: No, that would be fine. Anderson: I think it was at our last joint session one of the goals that we had was to put together a strategic business plan for the Airport and so as result we pretty much put together a subcommittee which is what we do for a lot of our projects and things. And Alan and Michelle were the ones that volunteered to work on that group. And came up with some recommendations and I think I'll let Michelle go from there on. Robnett: Actually Baron and I... Anderson: Or was it Baron...did I get the wrong group? Robnett: We have this unpaid consultant now. Anderson: Okay, I'm sorry. Robnett: Just to give the credit where's it due. Alan had talked to the group prior to my joining the Airport Commission about doing strategic business planning and it became real clear within the first three or four months of my being part of the Commission that that was needed. There was no one source document that I could go to to find financial projections, marketing, business strategy and growth. There is no one document. The master plan that the airport had a consultant do many years ago talks about how to take care of the airport facilities, the runways, the lighting, those kinds of things. And it talks in detail about what the elevation of the runway is at one end versus the other end, what the prevailing winds were what percent of the time and what they recommended as far as capital improvements to maintain or to improve or keep what we already had for really hardcore facilities. I never saw any budgets or anything like that and didn't even receive financial reports on a monthly basis. And having been a corporate officer I was so used to it I felt naked. And I read six months of past minutes - which I feel sorry for you because I know this is only one commission - and it was hard to tease out what I was able to tease out, This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 3 what I thought were ali the projects the airport was working on. But that still didn't tell me what other things they might want to work on and how we'd get there and how we're going to finance those changes or growth. And so following Alan's suggestion we did move forward with looking at strategic planning (can't hear) Alan's significant amount of research. We've looked at companies - Alan did primary research on this - that provide strategic planning for airports and came up with a list of good names and companies; researched them all and then we requested RFP for...to be submitted to the Council for funding. And I thought it was a very reasonably priced RFP from a very experienced airport consulting firm. That's about the basis of it. We know we want to grow. We want to market ourselves. We want to grow. But there are things we don't know as aviations people or even volunteers with no aviation experience like Baron that Ron may not even know. And that we can have the benefit of for a few short dollars and I don't think that's...I don't think that's very expensive having done a lot of work with strategic planning and pricing consultant services before. I was told we would never find one for less than $25,000 for the College of Nursing. And I did my research and homework and did find one. So it is one of the next steps we need because some of the questions I have is, "Is it feasible to grow?" "Is it feasible to have no tax support for operations?" "How many airports in Iowa make money?" "Why do they make money?" "Why are we making money, you know, as more than a break even kind of analysis?" And so we after looking after the different kinds of consulting companies Alan did get a very well-prepared group to submit the RFP and I was very impressed. Champion: Michelle, just in my...what was the amount of money attached to that? Robnett: $10,000 plus expenses and the gentleman was willing to do the work with the least amount of expenses as possible because he knew we were actually (can't hear). And we were going to actually find a local facilitator. I asked Jude West this past summer if he would be willing to do that because I knew he did the Fire Department's. And I used students and faculty at the College of Business quite a bit. But he was booked at that time and unfortunately I didn't even get a student team to work on it which we were planning to this past fall because the negative press and the fear to put students on a project with the negative press. Because they have teams that will do business planning, marketing, web site design and programming. They have all kinds of student teams that are "free." Ellis: Let me correct that number - it's $15,000. They wanted $5,000 up front and then they'd bill us by the month. So their estimate was $15,000 plus the expenses. And we did keep the expenses down. The This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 4 vice president of the company his office is in Denver and it's a straight flight Denver to Cedar Rapids. So his expectation was to come here only once. And that was part of a very tailored proposal. That was why we cut out all of the extra that we thought. We went straight for the things that we thought were very necessary besides the strategic plan which is the vision we get the action plan which is business plan - the implementation of the key initiatives. We also get a lot of value added product and that's the regional analysis of the airport, how it fits in, what are the products that we can reliably expect to go into so that we don't sit and spin and wheels during vision planning and get all wrapped around the axle about things that we could never do. They were going to be...keep us very tailored. They were going to give us the milestones or a roadmap as such so we could stay on a track that's more keeping with who we are and what kind of an airport we have. And that was how we kept him down on the expenses was just that one visit. That one visit would be a week, but it still be...he'd be collecting, gathering information, doing interviews and then the value added comes out as we get an airport operations manual that reviews our minimum standards. They'll help us write airport roles and regulations. They'll go over our leasing policies. They'll do regional analysis of our rents, our rent structures, our pricing and what are the things that we can do both aeronautical and non-aeronautical. That's value added. And that's because they looked at all those things as well as our management practices. They looked at all those things as part of the things they needed to know to help us develop a strategic visions and an action plant o follow that. Anderson: And the only concern I've had with the whole thing is, you know, doing a lot of consulting and master planning myself I find it hard...you know I'd like to see him here more than one trip if he could. I think, you know, the trip should be...we'd get a much better product out of it. But... Champion: Mark would the second trip come like a year later or immediately afterwards? Anderson: What I would see happening is he would come here, do the research, gather up the data, develop the report, and then come back and make a formal presentation to both us and you as to what the strategic plan is and be available to answer those kinds of questions that might come up during a presentation that maybe only he could answer. Ellis: And he certainly offered that, but he was trying to keep it like I was trying to keep it as inexpensive as we could do this. And given that in our view we're on a time schedule. We don't have the amount of time to sit there and do this long-term analysis over a four or five year period. We needed to do this relatively quickly. This was a 90-day This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 5 deal that he believed that we could gather all this information up and produce this vision with our assistance in a 90-day period once we started. Lehman: Does this also include a marketing plan? Ellis: Yes. Robnett: Extensively marketing plan - and unfortunately as I mentioned I did all my prep for tonight and then I promptly left all those notes at home - but the best part of that plan was the feasibility analysis they were going to do of the airport and potential growth projects that we might be able to take onand the marketing possibly. And he included a large chunk that was free marketing and I have worked in that area (can't hear) many of you business people as well. There is a substantial amount of free marketing that can be done. It's just how do we do it. And that's not my expertise. I have always turned to somebody else for the market research. Or not the research, but how to do the marketing to the right groups, and to focus and targeted and keep our expenses down. (Can't hear). But it was definitely an implementation plan, not some pie-in-sky...just we think this would be wonderful if this happened. It's very realistic. Wilburn: I'm sorry if you answered this before I came in, but did you see an example of the plan? I'm thinking particularly of the action plan. Robnett: No, I have not. Ellis: I talked to the Aircraft Owner and Pilots Associations, Airport Support Network and they reference the web side for a copy of an airport business plan that they think is the best and it comes from the American Airport Executives web site which is the other trade agency that is actually an accreditation agency for airport management. And the example that is used for the industry is the one developed by the same company that we're trying to hire. It's very extensive and it's way more extensive than anything we try to develop on our own. And that's the advantage of brining in the third party industry expert. Wilbum: I guess...might if I (can't hear) you know when we had talked about this before and you had mentioned the strategic plan and business plan and action plan I guess I was thinking more of that action planning piece the here's how we are going to come up with the funds. So I'm glad that it incorporates that. Maybe... Robnett: I think that's more of what it is (can't hear) RFP. Wilburn: Uh-huh. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 6 Robnett: It's very to-do focus, not ethereal. Wilburn: Yeah. Okay. You mentioned, you know, a specific timetable and it's good that you're focusing on that. I'm glad that you're focusing on that. Maybe you can compare for me and for us because I think our focus is really on that action planning piece and you know whatever else you walk away with that's fine. But I mean another example for me is the Senior Center Commission. They realized that they were going to have a deficit and without going through this process and coming up with this kind of strategic and massive planning, but they focused really on an action plan for themselves. Can you tell me or can you speculate how we would benefit more or what is it preventing us with the Airport Commission getting right at that here's what we need to come up with. I mean it may be a step type thing that this would be the first step. The next time maybe something more broad can come to mind. I'm thinking another example with the Parks and Recreation Commission I mean they've been talking about a Parks and Rec master plan for several years, but in the mean time they've reevaluated their fee structure and kept true with a policy that, you know, fees have to cover so much. Can you talk to me through...? Anderson: I think to answer your question... Pfab: Can I... Wilbum: I'm sorry. Could you....I really want to...? Anderson: I think to answer your question I think we are doing some of those short term things such as the north commercial area which is one of those things that we, you know, if through sales or leases we can bring that cash...increase that cash flow to reduce our indebtedness. But I think and we have just within this last year increased annual rents and those kinds of things to bring some of that quick capital in. But the key really comes down to the process. I know in our business when every year when we go to do the business plan for that year we always look to a session that we did four years ago where we set down as a corporation and all of our six offices and directors said okay well who do we want to be? Where do we want to go? What do we want to do? And we spent quite a long time trying to develop the vision for our company as far as what we wanted to be. So then on a year by year basis when we develop our business plans for that year we al~vays go back to and look at what was the vision that we had for where we wanted to be and how are we tracking that year to year progress at getting towards that vision. And so I kind of see the airport really in the same position as that unless we really know where we're going, how do we know what business plan we need to develop? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 7 Robnett: How to get there. Anderson: Or how to get there? It's like when I'm planning a hospital. You know they say I need all these different things and you can say well, but how do you know you're going to build them in the right spot if you don't' know what the vision is for whole facility. So it's kind of like jumping in, you know, kind of the cart before the horse. If you don't know where you're going how do you know what to do to get there. Pfab: It's too bad you weren't able to get to the meeting today at the Senior Center. Unfortunately that thing isn't working too good. That's got a lot of problems. That is what I wanted to question you on. The Senior Center program they put it up and it's... Lehman: That's another issue. Pfab: That's why I think it may be in the fact that we thought that was solved and it isn't solved. Maybe that might be a reason we should take a harder look at this. O'Dormell: Nobody thought that it was solved. Wilburn: Solved, yeah. Lehman: Well are there questions from the Council for the Airport Commission as relative to the strategic plan and what we vision or what they vision for this? And Steve if you have comments I would invite you to participate in this as well. Steven? Kanner: Well I guess I have some problems in that I think if you're going to do a strategic plan ! would like to see more of an overall point of view. The main purpose is to see how we're going to be independent of City funds within x number of years - 3 years, 5 years. You mentioned north commercial. We still don't have an idea how that's going to affect the bottom line. We don't know how it's going to affect the budgets in the future. We don't have a plan. Now if you tell me you want to do a strategic plan that's going to look at getting you independent in five years. I would be more likely say okay. Let's go for it. It might be a good investment. But I don't hear that as the overriding, overarching goal of the plan. And that's my concern - one of my major concerns with the plan. And I think Steve touched on that in his memo to a certain extent. I don't know if he puts it in the same way I do, but it seems our main concern right now is the budget for this year, next year and next few years down the road. We see our subsidies going up to the airport from the general fund. We see we're continuing to pay debt obligations and again that comes from property This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 8 tax. So it's a different levy. So that's a concern for me and I need to see that more directly addressed in a strategic plan than I think that you're putting out there. Anderson: As we mentioned on numerous occasions the sale of the land in the north commercial area will take care of the immediate debt burden hat the Commission or that the airport has to the City. And in actuality we'll put some money in the bank that we can draw on for some use. But as I've stated before that anytime a project comes along like the extension ora runway or some other capital improvement project that money has to be used for that money until that's gone and then the Federal government will pitch in again. So at some point in time we'll be right back to where we are. You know if we can get enough businesses on .... Lehman: Well that...we're going to take that under the next item of the agenda. But I understand what you're saying. But I would assume from my perspective a strategic plan looks at the long term value of the airport and where you'd like to be 5 and 10 and 15 and 20 years from now. Anderson: Hopefully. Lehman: I mean I think a goal. Anderson: Yeah and hopefully ways to entice more businesses. Lehman: Right. And then I think you start filling in the blanks as to how you get the what the goal is. Anderson: Right. Lehman: Okay. Steve? Atkins: Ernie the memorandum that I directed to you was I think as Steven pointed out our thinking is somewhat similar that it seemed to me that until their financial house is in order there's very little predicting and projecting you can do. We had an economic analysis done in 1994 of the airport. We've, you know, had that information available to us. I guess it'd be...no I guess, I know I would be concerned using the phrases the "long-term value." We have to be prepared that the assessment may be that it isn't the value that we thought with respect to the economic indicators for the airport. I felt that you as a matter of policy the City Council have said that the airport will be a functioning part of the package of municipal services. And therefore we need to run that airport as efficiently and as effectively as we can. And to me it's a financial issue - that the subsidies are growing far greater than any of our other operations and until we get that thing in line we can This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 9 wish for all sorts of things, but a strategic plan that doesn't have the financial backing of the City Council and/or its own home-grown revenues it's not going to do a whole lot of good for us. Lehman: Yes? Robnett: We as Commissioners are all volunteers and we realize that you'd love to have us be able to develop a strategic plan and give you something more focused. We can't. We have full time jobs. Part of what this plan will do is talk and evaluate about potential feasible practices that we can implement to grow this place. None of the Council members are taking on the analysis for how and whether to bring utilities to city- owned utility. It's the same question. Can we invest in some planning and some money to actually get up and get going? Part of it is the reason we can't say that it wouldn't become completely independent is how feasible is it and how many places in the United States are actually totally independent. Ron, how many airports in the State are even making more than breaking even? O'Neil: Well I don't know the exact number, but as an example there was an article in the paper today Waterloo commercial service airport they are trying to do some different things so that they don't have to pay out of their general fund. Waterloo, you know, there's a commercial service airport and they certainly have mom avenues to raise revenue than a general aviation airport does. Robnett: At one point...just going to finish...Ron did tell me three airports in the State were making more than breaking even. Atkins: And Ernie and Michelle that's fine. I understand that. Then the Council needs to say that we expect to subsidize. If you expect to subsidize the extent to which you're going to subsidize is something that you all will have to decide, but you can't make that decision until you have some sense of what the financial resources are that the airport can generate. It seems to me silly to make a long-term strategy when we don't have the money in the bank to ultimately finance it. Thrower: If I think the strategic planning proposal that we put forward may be in some sense a misnomer in a sense that I hear a great deal of focus being applied to the long-range elements of it. What we're also saying that go hand in hand with those long-range elements are literally the tactical implementation which is literally you know to the City Manager's point the short term need and need assessment, targeted actions that need to occur for us to move this activity forward. Clearly if we don't have our short-term house in order we won't ever reach the long-term objective. So any strategic plan that missed the tactical implementation would be wanting quite clearly. Another point that This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 10 hadn't been touched on as of this moment is the notion an objective third party. Clearly the current Airport Commission has the ability to apply certain skills and techniques and the amount of available time that we have to all of us to attempt to put something together. It may be called into question in regards to its overall objectivity. We really wanted to have some third eyes, if you will, come to the table and look at this thing compared to national and regional standards and apply those national and regional standards objectively to our current infrastructure and make some hard recommendations, if you will, back to us and us through you back to the City Council. And so I think having both the long-term, the short-term as well as the objectivity of this consultant to come on board and assist us in this process really creates a more...what I would describe as a more digestible response to what the City has been asking us. Lehman: Alright. Let's put the strategic plan...let's just kind of set that off to the side and let's go to number three which is Airport Financial Self- Sufficiency. Now I know there have been...I've been on the Council for nine years as regarded by a lot of people as too long, but we have always...I think we have always had some subsidy from the City to the airport. My understanding is that that's true of most airports all over the place. There has always been an interest on the part of the City as I am sure there has also been on the part of the airport to generate as much of the funds necessary to operate the airport as possible. I have a real personal problem with the City having an ultimate goal of total...no, I don't know quite how to say this. I don't know that the airport can be totally self-sufficient. It may very well be able to. It may very well not be able to. But I don't believe that a policy that says the airport will absolutely be self-sufficient is a good policy and i don't think that that's one that's in the best interest of the airport. The goal of...the first item under this one is establish a goal. Obviously for me a goal would be to generate as much as those funds you possibly can within the framework of what you have. Beyond that and as long as the airport is well run, well managed, great operation down there it may very well over the years from time to time have to have subsidies of varying amounts from the City. Champion: But we subsidize a lot of transportation. There's isn't any question about it. I don't really think the airport can be totally self-sufficient, but I think this Council's goal is to make it as self-sufficient as possible. And I don't know what happened. I mean to me the amount of money that we're subsidizing now is a lot of money out of our general fund. And we can all blame 9/11, we can blame the economy, we can blame a lot of things. But I think the quick escalation really kinds of frightens us because we just don't have the money. It's going to have to come from some other service. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February i 0, 2003 Council Work Session Page 11 Wilbum: Well I think certainly though it is reasonable to have an expectation like with Parks and Rec and that's a self-imposed goal that fees will cover a certain, you know, percent. Mascari: Well as some might say keep in mind that the reasons why we move forward in trying to sell the property in our north area was to eliminate the debt that the airport incurred in putting in the infrastructure in the first place. The last estimate that we got from our realtor the one that you all met the other day - was that it was...the property was worth something like 40 cents per acre I think it was which adds up to be a little over 5 million dollars. Champion: 40 cents an acre... Lehman: 40 cents an acre is... Mascari: Square foot, excuse me. Champion: I'm going to buy that land right now. Lehman: I'll give you 50 cents. Mascari: My mistake. So 40 cents per square foot which adds up to be a little over 5 million dollars. Now the amount that the City loaned the Airport Commission to put the infrastructure in was right around 1.6 million dollars. Now the biggest obstacle, the biggest thing that caused the jump in the subsidy was the fact that we had that main, that big hangar built here a couple years ago and then lost our tenant. Now with the sale of this property we can see we can pay offthe debt of the infrastructure, pay off the debt on the big, large hangar building, and then also pay off the remaining debt of the t-hangars that have all been built in the last few years. Which then will allow us to take the rent that we're receiving right now for all those t-hangars and such and apply it toward our operating budget. Now one thing that we have to keep in mind and this is very important is that we are mandated by the FAA that any funds generated by the airport has to remain with the airport. So what that means is that any excess funds that we might get out of the north commercial area sale would have to be used for airport development. The problem with that is is that the FAA typically gives 90% loans on any projects. Now if they see a balance in the checking account then that 90% is going to go away. See until that's gone and at which time they'll kick back in with the 90%. So that's why we say that this is going to be short-term because once those funds are gone we're back in the same ballpark. Champion: Just back up a bit. What do you mean it'll be short-term? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 12 Mascari: Once the funds are gone the amount that we receive from... Anderson: The sale of the property. Mascari: ...the sale of the property by doing airport improvements then the FAA will then start with their 90% again. But as long as they see a balance in our checkbook then the 90% goes away. Vanderhoefi Tell me, can the sale of the land does that have to go into capital project or (can't hear)? Mascari: I can't answer that. O'Neil: It can go to either one. Lehman: As long as it's airport related I believe. Vanderhoef: So when you're talking about money in the checkbook if it is obligated for airport maintenance, if it's obligated for Ron's salary - all those kinds of obligation then does that still.., if it's obligated then will the FAA still kick in with the 90%? Mascari: No. Anderson: Until it's gone. Mascari: Until it's gone. When it's gone no. Vanderhoefi Okay so obligation is not a criteria that they take into effect. Lehman: Well I would think to a... Anderson: Yeah I know what you're saying. Vanderhoefi You're saying when the checkbook is empty and I'm saying here is your budget it says this much is going out each month of this money for operations. Anderson: We would have to ask them that question I guess. Mascari: But keep in mind too though that the revenues that ~ve're getting right now for rents and all the t-hangars and such will all be free and clear money ~vhich we can apply toward the operation of the airport. So we do have even without a strategic plan we do have some goal in mind. Pfab: I want to clear up something. You said that any funds from the sale of property has to go to the airport. Does that mean you can't pay offthe City debt? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 13 Lehman: That is airport. Anderson: That is airport. Pfab: Okay. Lehman: But I think let's make that very clear right now. We all...and I hear what you said Rick and I think there's an airport policy thing that Steve has here and essentially it says that... Atkins: Oh, the thing I wrote for you guys. Lehman: Essentially it says that the proceeds from all sales will go directly to debt. So that we get ail of the debt retired for the airport. And I think this is just the business. Anderson: This made sense. Mascari: That's exactly what we're saying yes. Lehman: Right and...but all we are in agreement on that? Champion: I'm not in full agreement on it. Lehman: Tell me what you don't agree about. Champion: What I don't think they should sell all the land. I don't object...well you can explain to me. Anderson: And that idea was tossed around too. The idea was...the idea that was tossed around was to sell enough of the property to retire ali the debt. If we're talking a little over 5 million dollars quick math tells us that we probably owe the City right around 2...almost...less than 3 let's say...less than 3. So we should have a balance in the checking account. If we don't sell all the property and then lease the balance of the property we could use those lease payments as operating too. Champion: I think that's a valid thing if it's possible. Lehman: If you could lease it. Mascari: If you could lease it, but that might be... Champion: But you don't know yet. Ellis: We only gave the whole leasing operation one year... Champion: Right. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 14 Lehman: Right. Ellis: ...before we were sort of compelled to do something more (can't hear). Champion: I don't object to you selling part of the land. I think it's a great...it's like, you know, eating chocolate when you want something sweet. It takes care of it. But sometimes you have to diet after that. And I'd like to see...I mean I hate to see us sell all that land. If you end up having to eventually I could live with that. But I don't think the leasing thing is really...I mean those roads aren't all in over there, the land is (can't hear). Lehman: This could be part of the plan that you put together. Mascari: Exactly. Atkins: Let me do some simple arithmetic for you and maybe I can help you focus the discussion. Since the particular points a, b and c under 3. The value of the Aviation Commerce Park when sold is about 5.5 million dollars sell it all. That's the income. The outstanding Aviation Commerce Park debt is 1.7. Now we have other outstanding obligations from the airport that we are financing. In total the Aviation Commerce Park plus hangars, master plans, other expenses of capital total 5.4 million. Lehman: These are capital. Atkins: This is capital. If you were to sell - and I was trying to accomplish by this policy that you would focus all of the proceeds toward the airport. If you sell it all at 5.5 and you can pay off the outstanding debt of 5.4 I'm kind of right back to where I was trying to point out to you to begin with we need money to operate the airport. We can sell the Aviation Commerce Park and get out of debt - all the debt if you choose to do so. Or you can focus the payments. Mascari: Excuse me Steve, but what do you mean by the master plan debt? Atkins: Oh, when we borrow...when we match for... Mascari: We can't pay that back. I didn't think that that was required by us by the City Council. Atkins: That's my point. That's where I'm going with this Rick... Mascari: I thought we discussed this last year Steve. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 15 Atkins: There are Council Members that are interested in seeing all of the debt repaid. Mascari: I think we need to discuss that with (can't hear) first. Atkins: And I agree with you. I'm not arguing with you. I'm pointing it out the Council needs to focus its debate and limit or take it all away with respect to the outstanding debt at the airport. If the sale of Aviation Commerce Park... Mascari: If I might just interject I think this really needs to be discussed with the FAA. I don't think that we're allowed to do that. The 90%...or the 10% match that we have to put in with the FAA under grant money is not something that they're expecting to be put back using this airport property. Lehman: Well that's something we could work out. Mascari: Right. Lehman: Very honestly whether or not... Atkins: And if that's the case we can split out the master plan expense and cover hangars, terminal improvements, fuel tanks and things such as that. But the important thing I still get myself back to the point is that they need money to operate the rrm the day to day. And I happened to agree with, you know, Rick's point. I'm trying to show you the simple arithmetic of the value of the asset that you're about to sell off Aviation Commerce Park the outstanding debt - and it is truly coincidental - that they're very close with respect to the City's obligations at the airport. The policy position that I wrote and showed you Emie and apparently have distributed to the rest of the folks was intended to focus all of the money toward.., excuse me... toward payment of airport obligations. If you choose to continue to finance through the debt service levy master plan for example, you can certainly choose to do that. Lehman: Well if that north airport property were all sold and all the debt was paid off - I don't know and this is something that you would have to compute but if all of the revenue from the airport was unencumbered I don't know how far you'll come from covering your costs right now. I mean I think you'd come very, very close. Champion: But is it a smart idea to sell all that land? Lehman: Well that's something the... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 16 Ellis: The next time we needed a T hangar built - hangar 10 more we would have to borrow the money and we'd be right back where we are now. Lehman: Right. Atkins: And that's where you have to decide as a Council and obviously in collaboration with the Commission if you look at the policy position I made the assumption your priority for repayment was Aviation Commerce Park, but there is other outstanding debt. And you've raised that question with me in the past and I felt obligated to show that in the policy. These are in order of priority. And then the final is that if you paid everything off whenever it was left we would go into an improvement reserve depreciation account because right now if you're going to run an enterprise fund for the airport you should have a depreciation account in order to replace some of the capital assets that are out there. So they don't have to... Kanner: (Can't hear) you're referring? Atkins: This is a policy that I...in fact I just wrote it yesterday or Friday. O'Neil: Is that this one, Steve? Atkins: Yeah that's it. Ron gave it to the Commission. Apparently he didn't give it to the rest of you. Or I didn't give it to the rest of you. Kanner: Could we take a look at that? Atkins: Sure. It's real straight forward. Robnett: Can I make one other point? The conclusion that Steven just came to is the same conclusion we've come to. After we do...and we don't plan on selling all the airport land if it's feasible not to...regardless we're going to come to a point where we have to be self-sufficient and that takes time to develop those means. It doesn't happen overnight. What I do for the College of Nursing is start new businesses and it's very rare that a new business even breaks even within the first three years. We have to start now so that after we've paid all this money off that we have revenue streams coming in to the airport. We can't wait. If we wait we're going to be back in the same hole again that we exist in now in debt beyond our eyeballs. And that's part of...a huge chunk of what this plan proposes - what's feasible, what can we do and how can we market the airport, how can we proceed to get those new revenue generating services working for the airport. Lehman: Alright, but I think that the one key thing and I think this is key because I...when we did the north airport commercial and we were This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 17 thinking of leasing the property we set it up on a 20 year payment period and the airport was going to pay so much a year and it was to be extended over 20 years just as the hangar rents were going to be pay offthe notes on a hangar. But what I am hearing here, and I think this is correct, the revenue from the sale of the north airport commercial will be applied to whatever outstanding debt we have at this point on hangars and the infrastructure on the north airport commercial so that that the airport will be free and clear of the capital debts. Now I think the issue of the master plan as I remember I don't recall that that was an issue that the airport was...but I do think there's another issue here that I think we really have got to get clear. I think there...I'm sure there are FAA regulations relative to the sale of airport property, how you use proceeds from sales, how you use proceeds of leases and all that sort of thing. And I think that the City needs to have copies of those regulations. And they're simple and so we don't have the question is this okay or is that okay. The regulations should be in written form. We should be able to have those for both of our benefits so there are no questions about that. But I hear us saying we will refuse the revenue to retire the debt. My suspicion is as that north airport sells it's going to be an awful lot easier to lease property if you've got a half a dozen buildings going up there than it is when it's nothing but vacant property. And you may very well decide at some point that leasing is much better than selling because then you'll have a revenue stream which along with the rents from the hangars would certainly go a long ways to make the airport self-sufficient. Now the other issue we touched on this and I don't know that I've heard any definitive answer is the Council of an opinion that the airport must be self sufficient. Champion: I think it's very possible. Lehman: No, okay I understand that. Champion: The goal. The goal should be to be self-sufficient. Lehman: Alright and I would agree with that. Pardon? O'Donnell: (Can't hear). Champion: The goal. O'Donnell: You should always have a goal. Lehman: The goal would be self-sufficiency, but we would recognize that from time to time the airport may need to have a subsidy from the City. Is that a fair statement? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 18 Atkins: Could I make a suggestion on that? Lehman: Yes. Atkins: Why not make the goal self-sufficiency, back into the number, then you can assess the consequences? Lehman: That's fine, but I... Atkins: I just think we will be self sufficient. Now in doing so airport hangar rent has to go from $10 to $20. That's unacceptable in this market, then you make an adjustment. Lehman: Right. Atkins: But I think it's sort of like you aim at nothing, you hit it every time. We need to have a goal and then you can back off from that goal and the Commission can report back to you we have to take these sorts of financial steps in order to bring our airport subsidy to hopefully you could design a policy 10% of operating or some number like we do in our own reserve position where you have a five-year policy, floating average policy. Robnett: We used that same principal and that's why I felt so naked without (can't hear) because I've always been responsible for the financial aspects of departments in hospitals that I've been in. That's exactly what we've done. We've determined... Atkins: You have to be hard on yourselfi Robnett: Yeah you do and that's part of once we established those dollar figures where we need help is how to we get to some of those different dollar figures. But I totally agree with you. That was perfect. To me that makes total sense. I've always functioned that way. I don't know ho~v to function other ways - this shot gun shoot and hope we make some money. Mascari: Ernie if I just want to remind the Council that the airport is not a service that we provide. This is in fact a facility, not unlike other facilities within the City. Now fortunately for us our facility has the ability to generate some income and we apply that income towards the operations of that facility. But it is in fact a facility. It's not something that we do for other people as a service. I mean it's not something we could charge more money for because we're providing a service... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 19 Lehman: I think we understand that, but it very definitely is a service. If it weren't for the service aspect it wouldn't be an airport. There'd be no reason to have an airport. Mascari: It's...well... Lehman: It is. It serves the community of Iowa City. Mascari: A facility that serves the (can't hear). Ellis: But I think it's also important to know that if you want to reduce costs at the airport one we talked about cost reductions at our last joint Council Commission meetings and we told you we had and we still have cut them down just about as low as they can go. We haven't added anything. It hasn't changed. The top three things that we pay for are debt re-servicing, employee costs, and the next thing is electricity. And below that there really are miniscule amounts of money. And we did some things like reduce janitorial services. But really those are inconsequential amounts of money that can be reduced from the operating budget. Lehman: No, and I think you're exactly fight. Vanderhoefi Reduction is not the problem. It is the income. Ellis: That's right, but income has to stay with what the market will allow US. Lehman: Absolutely. Ellis: And that is...and that is in the grand assurances that the FAA sends us that the ideal of self-sustaining on an airport is just that - an ideal that is almost an unattainable one because of market conditions. It's important to know that over 13,000 airports in the United States. 5,000 of them...over 5,000 of them are public owned, public use airports. 360 of them are operated with airlines. Of those 300 probably 80% of those are self-sustaining. None of the others. I've called and checked with a number of places on self-sustaining airports and we have found two airports that do not have commemiaI service that are totally self-sustaining. One is in Nebraska. They discovered oil on the property. Two is DuPage. Champion: Okay, but we're not arguing that. Ellis: Well the issue is the self-sustainment issue really needs to kind of go to rest. Lehman: Well, no, no. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 20 Champion: We're making it a goal. Ellis: It is exactly that a goal. Lehman: Thank you. Champion: It's a goal that's all we've said. Lehman: Steven? Kanner: Well actually the airport industry is one of the most heavily subsidized with public dollar industries... Mascari: That's a fact. Karmer: At the expense I think of other, more widely used ones, more beneficial. But Emie getting back to the point you made before I think the Airport Commission does a fine job of what they're doing. The question is up the Council of what we want to do. We are the ones I think that have to set the goal from our perspective. And I would say self-sufficiency is possible. I think we set a goal and we can do it at a gradual level. And we say similar to the Parks and Rec we start out at maybe 50% of your total operation and debt payment is subsidized by the City and eventually working it down to zero over a certain amount of years. I think it's within our realm to say that. Now of course as you say at other times we could...future Councils could change that and circumstances... (End of Tape 03-15, Beginning of Tape 03-17) Karmer: It could be done, but I think it's up to us as a Council to set the goal. We set the goal and then we say to our Commission make it work just like we set the broad p61icy in other areas and we say to the Staff and the City Manager make it work. But it's up to us to do that. Anderson: I've got a question I mean it's not a question so much as just a very difficult issue...not an issue even...I don't even know what this is. Pfab: It's rhetorical. Lehman: Why don't we evaluate it for you after you say it? Anderson: It's nothing but hot water I just know it. The airport is used by a lot of other people besides Iowa City. If you knew how many businesses came in here that were going out to Coral Ridge Mall. We're providing services for more than just Iowa City. We're providing for Coralville, North Liberty, Johnson County. Is there any way of getting some (can't hear) revenue from the different...? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 21 Mascari: Not going to happen. Lehman: Probably not. Mascari: That's what Waterloo did right there. Vanderhoef: I said in the paper in today that Ron was alluding to it. Lehman: Cedar Falls/Waterloo. Vanderhoef: Cedar Falls was looking at this. And Waterloo and is looking at what they call a regional and they were looking at it in a county wide situation and is there any way to put an airport tax or some such thing that covers a lot more people so that one City doesn't have to carry the burden for the region. Anderson: And the University. They're a very large business. Kanner: And that's just what I suggested in my memo and I think again it's up to you folks. We set a goal and you folks go out there and it could be that you're going to have charge people not of the City a higher price. You're going to have to start doing landing fees. And I think that's something... Ellis: We addressed landing fees at our last joint Council meeting. We're not allowed to charge landing fees. That's a State requirement. Champion: It's not legal. Atkins: Yeah. Kanner: You're not allowed. Then it might be other areas. So it won't be...but it's up to you to figure out how to get that and how to get it from other communities. It could be increased fuel fees. It could be the hangar fees like we're talking about. There are a number of different...it could be fundraising. Champion: But you can't price yourself out of the market (can't hear). Lehman: Market will dictate. But I do think that... Karmer: Who's the market for Connie? I mean 600 people a week... Ellis: And again this is one of those things that the third party business consultant... Kanner: Connie, 600 people a week approximately use the airport which is miniscule compared to our other transportation system that we put This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 22 money into roads. There's thousands...tens of thousands that use it every week. Public transportation - tens of thousands. The question is Connie how much do we want to give for 600 people a week approximately using the airport. And these are figures I got from Ron and I could go through the math with you where I got the 600. That's how many people use it. It's not used by a great amount of people. Ellis: 68% of the traffic in and out of Iowa City Airport is non-local. That is they are not people who live here. They're people that are flying in here to either conduct business, be tourists, buy and sell things. Lehman: Alright. Let's...we've got one thing decided about what we're going to do when we sell the property. Is it fair for us to say that the goal of the Council is to ask the airport to be as nearly self sufficient as they can possibly be. I mean I don't think that's different than your goal is right now. Anderson: That's right. Vanderhoef: But you need to say self sufficient or not self sufficient. Atkins: Not self sufficient yeah. Vanderhoef: Don't as nearly as possible. Atkins: Ernie I mean this respectfully that's half pregnant. I mean you're either... Lehman: I knew there was something wrong with it. Atkins: Eruie you create... Pfab: I have a question to ask. Okay I picked up something on what Rick said and I don't know ifI understood it correctly. He's telling me that as long as there's money in the checkbook the Federal government will not go back to a 90/10 help facilities. So is it to the advantage to be totally self-sufficient. I don't know that answer, but I wanted to go into one other thing ifI can just a second. Okay I'd like to ask about that study that you had. Who were the people that you had looked at? Were those the people who drew up the master plan for that industry...that industry group? Ellis: The master plan? Pfab: Yes. Anderson: Oh, the (can't hear). This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 23 Pfab: Were those people were they people that drew up master plans for more than one airport - big airports? Ellis: Yeah those are the same folks that gave us the proposal for our strategic vision plan. Pfab: What was the things that they drew up plans for? What's their credentials? Ellis: They're a nationally accredited airport planning firm and they don't do businesses for FPOs they work almost exclusively for airports. Pfab: Okay so they have a track record? You were able to...? Ellis: Oh yes. And again they are some of the writers of the documents used by the accrediting agency. Pfab: Okay well that was...so they were the people that put this together? So obviously their experience is a lot more broad. Ellis: They're very, very qualified. Pfab: And broad. Robnett: They have three offices. Pfab: Okay. So but I'm beginning to wonder here if maybe if we can tap into that without too much money now this may not be the time, but it might also be the time to take and spend that money and do it. O'Donnell: That's what we're talking about $15,000 plus expenses. Pfab: No, no, no. That's...okay...I hear you. Okay, but I'm aware of other cities that and other operations that had miserable histories and they finally made up their mind that they were tired of being that way so they went out and hired somebody that knew what the hell they were doing and some of our write-ups - and they're not too far from here - are doing a heck of a job. I can name you a couple, but I won't at this point. Lehman: I think that's what they're telling us. O'Dormell: A long time ago. Mascari: Ron, can I just ask real quick? I know there's something in the grant assurances that the FAA puts out that addresses self-sufficiency. What does that say? This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 24 Ellis: Right there. Mascari: What does it say? Ellis: It says...specifically it says that we are...an airport is supposed to be financially self-sufficient given and it's standing as possible in the circumstances that exist at that airport - given the circumstances. Mascari: So what we're trying to say is that we're already mandated by the FAA to do just what you're telling us to do. Ellis: And then it goes on and on to discuss the market conditions and other things that would prevent it from coming. Lehman: So then what we're going to be telling you is that we don't want you to be half pregnant that we'd like you to be self-sufficient. Is that what I'm hearing? Karmer: Well I think we have to set the goal. Champion: That's the goal. Kanner: No, I mean definite yearly goal. O'Donnell: Well they can have bake sales out there Steven, but I don't think that's realistic. I have a question on sale... Kanner: (Can't hear) think of an animal shelter that has fundraising and we have a number of Commissions...we have a Parks and Rec and I think we could ask more I think from the airport. O'Dormell: Maybe you could get with them and discuss these sales Steven the rummage sales, but I've got a question on leasing versus selling. Does the FAA mandate how you can lease a property number of years? Lehman: Yes. Ellis: Well they...their original issue with the leasing was they don't want you to lease it for so long that it becomes a sale. But the reality of the industry, at least by what we can research, is that a 99 year lease is possible. And that's about as close to a sale as you can get. O'Donnell: You can do a 99 year lease? Ellis: Other airports do it. We haven't specifically addressed that. But obviously they have allowed us to go forward with sale. I don't think especially given the way the airport is set up that we sliced off that land that once that land got sliced off and developed it really wasn't This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 25 going to be returnable to airport use. So I don't think they would and we would certainly encourage and we talked about this at one of our meetings with the broker is if we can go and offer a 99 year lease will that give us some help in attracting businesses. And this is again one of those things that we're hoping to find an emerging trend or some practical concepts from the business consultants. They know what's out there and what's working and what doesn't. Anderson: Yeah we've had many discussions and I think Connie we're on the page as you are. We would rather be leasing if we could. I think it's a much better deal than selling. And so our goal... Champion: And I don't object like I said to selling the property to give you a kind of(can't hear), but I hate to have you sale all of it. I think selling part of it is probably a really good idea. Anderson: Yeah. Champion: And it might...it might inspire people then to lease when you get some buildings out there and it's not just this little isolated area. But I think, you know, I think you all do as good as a job as you can and there's been a lot of circumstances. And the economy has not been the best to help finance and help anything. But as...frankly as elected officials we also get pressure from other people who don't like the airport. Not everybody likes it. And...and I really want to see you maintain your autonomy - is that a word? Lehman: I think it is. It's a good word. Anderson: Yeah that's a word. Champion: And I don't want to be forced to have the City take over the airport and that's why I really want this meeting to have some productive (can't hear) and we can get there. Lehman: It seems to me that a number of the things that we've been discussing tonight I don't know that any of us really know the answers for. But I think that if nothing else we're making a really, really good case for some sort of a strategic plan. Now as far as the time to become self- sufficient. I don't know that we know enough to be able to tell you in 2007 you will be self-sufficient. I mean on what basis would we have for that? Or on the other hand what basis would you have for telling us that you could be self-sufficient in 2011. If you told me that I'd ask you why you couldn't be in 2009. I mean I think we have an...there's more that we don't know then we do know. I mean do we...does other people... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 26 Pfab: I think we're saying is we don't know what we don't know. Champion: Exactly. Lehman: We know that we don't know. Champion: Well I know that Steve doesn't have this in the budget, but what do we have left in our Council budget? O'Donnell: We're cutting that remember? Champion: We're cutting it. I mean if we can finance a water study maybe we could finance the... Lehman: The utility study. Champion: Maybe we should be financing it. Lehman: Well I do think that if we go forward with the strategic plan one of the goals of the strategic plan has got to be self-sufficiency which I'm sure it would be. I mean I hear that. Ellis: It's been our goal for a long time. Lehman: Well I don't think that...I think that's right. I mean I think that's the way we all are... Vanderhoef: Connie if you're talking about the $50,000 that was placed in the Council budget it appears from the memo (can't hear). Wilbum: There will be some left over. Yeah. Lehman: That's for electric. Vanderhoefi ...is for $35,000. There might be... Champion: $15,000. Vanderhoef: ...$10,000 to $15,000 there. One other point that I want to just make people aware of. It isn't going to make any difference in what we do here. But the sale of the land then puts it into private property which then becomes taxable and assists our general fund from this direction. Ellis: That's correct. Vanderhoef: So having the balance between leased and purchased is sort of a win- win for both of us. Lehman: Well and then... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 27 Champion: Leased land will pay taxes. Lehman: ...even the leased property has to pay taxes. Vanderhoef: Well they'll pay on the building, not on the property. Mascari: That's correct. Kanner: Well and they also...but they're asking for TIFs which would be I assume on the building part which would negate any taxes for a number of years. Anderson: If you approved it. Vanderhoef: If we approve it. Kanner: Right. That's what they're asking for and... Vanderhoefi Individual. One by one we'll look at each project. Kanner: ...so that part of the park. So just keep in mind though there might not be any. The Council tends to approve TIFs. Champion: We do like them. Vanderhoef: And TIF is there for an economic development tool that builds our tax base that will continue to produce taxes over a very long period of time. So when we look at 3 to 5 years on a TIF or a declining abatement of taxes that is still a good investment in my mind. Lehman: Alright. Pfab: I have one question. There's no fence lines or road signs that you could hook on some other TIF? Never mind. Lehman: We could connect it by air. Alright. The next item on the agenda is... Atkins: Emie, can I ask what you decided? Lehman: Pardon? Atkins: What did you decide? Lehman: I think that we have agreed that the goal of the airport is self- sufficiency. I also think it is not my...I'm just speaking for myself. I don't think we can sit here and put a date on self-sufficiency. I think there has to be something come back here in the way of a plan that says we believe we can do it by...and we may decide the year time is This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 28 too long and negotiate something, but unless you got numbers and stuff to work with. I mean there's so many variables. What happens if the economy goes sour and you don't sell a piece off the airport commercial for three years or if you sell it all in one year. I mean there are so many variables. Mascari: We are very fortunate that we have that land to sell. Lots of airports don't have that. Lehman: And I think it's really...I think it's really choice stuff. Mascari: Oh, it is. Champion: Are we all agreeing to the strategic plan? O'Donnell: Yeah. Mascari: Right I think that's the real question is... Ellis: That's what Connie I thought I heard, but... Champion: Yeah that's I'm asking. Atkins: That's where I'm going. I'm asking did you confirm the strategic plan? Lehman: Do we agree that the strategic plan is a necessary part of what we're asking the Airport Commission to do? Champion: I think it is yes. Pfab: Is this the plan that they've presented to us? Champion: No. Lehman: No. they don't have a plan that's one of the reasons that we're sitting here batting things back and forth because they don't have a plan to work with, we don't have a...it's very difficult to talk back and forth if you don't have something on the table. Pfab: Are we going for an objective summary that's not involved to help draw up the plan? Vanderhoef: Yes. Lehman: They already somebody to do it. Pfab: Okay. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 29 Lehman: That was presented to us... Vanderhoef: They've chosen someone if we choose to finance it. Pfab: Okay. Lehman: Is there... Vanderhoef: And we're choosing to finance. O'Donnell: I'd like Ernie can't hear) Commissioners asking for help... Pfab: I move that.. O'Donnell: ...and I'm really in favor of it. Atkins: You can't vote. Lehman: Alright. Pfab: I move that we... Lehman: We can't...we're not going to have motions here, but are we in...do we concur? Kanner: I would go along with Steve's memo. I think we have to get other things in order before we approve this strategic plan. Lehman: I would... Karmer: I think it's addressing the issue that he brought up that I have concerns about so I'm not in favor at this time of doing it. Lehman: Okay. Pfab: I'm in favor of it. Vanderhoef: (Can't hear) the plan that they have here. It's real difficult to reach the spot where Steve's memo was talking about on the marketing and the value of the assets to create money and I think it's a total package. I'm willing to go that far to say that to get where we need to go I think we need the whole package, not just the start of the money side of work back to us. Champion: The one thing we talked about the last time since we're approving more money for the airport here is we talked about somehow the Airport Manager reporting to Atkins on the everyday business or This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 30 weekly business or monthly business. Ernie you brought that up last time? Lehman: Well I don't know that I did, but I do think that's coming up under item number 7 so that will come up. Ross? Wilburn: The only piece I was going to add is I mean I'm okay with you going forward with the strategic plan, but you have to have that piece to answer the question. Okay. Lehman: But I don't think we can get the pieces without the... Wilbum: I understand that, but if they walk away from the strategic planning process without that piece then it failed. Robnett: And we won't pay them. Because that's project we're asking for. Wilburn: If that's part of the product then, you know, yeah. Lehman: Then we have 6 to 1 in favor of moving forward with the... Atkins: Ernie. Lehman: Yes. Atkins: It would be my intent since I assume have taken this as far as they have that I'd authorize a transfer to the contingency which means they can virtually begin as soon as possible. Lehman: Tomorrow morning. Right. Atkins: Is that what you want? Lehman: I think that's what we want. Atkins: Okay. Kanner: And just to partially answer Connie's question Ron meets with Steve and the other staff weekly. They have a staff meeting. I assume they... Lehman: Right. Champion: Do we agree that these funds can come out of Council money? Lehman: They're coming out of contingency. Atkins: Contingency account. That's why we have an emergency account. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 31 Lehman: That's because it's coming out of this fiscal year and we're talking next fiscal year. Champion: Oh, okay. Atkins: And then and ifI could answer Dee's question then the likelihood is that in the upcoming budget we are over budgeted for the public power study. Champion: Oh. Atkins: Remember you (can't hea0 so we would be over budgeted on that assuming it comes in at the... Vanderhoef: 34 something. Lehman: Right. Atkins: Whatever the number was. Yeah. We're in the fiscal '03 and they want to start this thing. I want to be able to authorize release of the money so they can go get their contracts put together. That's what I heard you tell me. Okay. Lehman: Item 5 is marketing airport services. My personal feeling is that's part of your strategic plan. I have a question that I think perhaps relates to a public relations and marketing and etc. and this is just an observation I cannot for the life of me understand why you don't have your Airport Manager's office in the terminal building. I mean we don't put the City Manager's office in public works or at the sewer plant or at the water plant. Atkins: Thank you. Lehman: I mean...that could change, that could change. But I can't understand for the life of me when someone goes into the airport, someone flies in here and lands or someone from the public goes out there the Airport Manager is not accessible. Ellis: Absolutely agree. But right now we're on a lease that gives all that property to the business that's there. It would be tough to go back and renegotiate a room? Lehman: All of it? Ellis: The terminal other than the public spaces those offices all belong to the business. Lehman: When you go in all the offices on the... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 32 Ellis: They use them all. Lehman: I mean they're all leased when you go in that terminal building all the ones on the... Mascari: The public space right there by the windows the main floor that belongs to the City. Lehman: No right I understand that, but all of the rest of the office space is leased? Mascari: It's leased to generate revenue. Ellis: Yeah. Lehman: Could I suggest that you talk to the people down there and see if you could work something out? Because I think that's to their advantage as much as it is the rest of the community that our manager be visible. Pfab: Could that be part of your strategic plan there? Ellis: We're actually working, negotiating with them on some issues so (can't hear). Bring the Airport Manager. Lehman: I think that it's so important and frankly I don't think we've had the negative comments about the airport nearly as much in the two, three or four years that we had previously. I mean I think that the airport enjoys a fairly... Ellis: Well you put a beautiful facility out there you (can't hear). Lehman: Absolutely, absolutely. But I just think that it's for your sake as well as the public's sake and the people who fly in and out that it would really be nice if you could walk in and see "manager" over the door and you got somebody there. Alright. But marketing is going to be something that you're going to address in your... Ellis: Definitely it's one of the value added products that come out of this business strategic planning. Lehman: Alright. I'm sorry. Champion: I have a really stupid question. Tell me what your revenues are - the hangar rentals... Mascari: Let's let Ron answer that. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 33 Ellis: We could...do you want specifics or do you want generally what an airport gets. Airports get money... Champion: I'm not sure I really understand. Ellis: Airports get money from renting land and space. They either rent the concessions, they rent the farms, the rent the businesses. That's where an airport gets its money. If it has commemial or scheduled air traffic, commercial traffic can be charged a landing fee. If you have a passenger terminal you could charge passenger service fee and that's where commercial airports make their profit. But what we get is we get to rent the land, build buildings and rent hangar space in those buildings or rent land to farms so that they can... Anderson: Or businesses. Ellis: ...and businesses. That's where the monies come from on a capital like that. And the average industry average - for an airport is $ I 0 of invested revenue get $1 return. Anderson: Ron, what is our income on a monthly regularly basis from all those things? Do you know? O'Neil: About $155,000 to 160,000 1 think it what we... Ellis: $160,000 was the projected for next year. O'Neil: I think what we budgeted in '04. Ellis: Income. Champion: But that's... Vanderhoef: And how much is that encumbered in paying back of the hangars? Anderson: All of it. Lehman: That's just total income. Ellis: Dee I didn't hear you what...? Anderson: Oh no we got salaries and that kind of stuff out of it. Kanner: Well $85,000... Vanderhoef: How much of it is encumbered with the payback on the... Lehman: 100% subsidized of $185,000 This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 34 Vanderhoef: ...on the leases though? I mean people are looking at total expenses and there's a couple or three very fixed things there that have to come out of the top of that $160,000. Kanner: I think it's $85,000 for the hangar loan Dee. Thrower: It's the difference between the debt services and our operating expenses is the question. Lehman: It takes $340,000 a year to operate the airport. Atkins: Well, remember... Lehman: Between the income you take in... Atkins: No, no, no it does not because master plan and some of those expenses are being financed by our debt service but separate levies. Lehman: But it takes $340,000 to make the debts on the loan and... Atkins: Not all the loans. You have loans that are being financed through the debt service funds. That's right. That's why I was brining up this in aggregate. Okay are you with me? Lehman: Yeah. Anderson: I don't think we can answer that question tonight. Lehman: No, no I don't think so, but those are the kinds of things that we really need to be able to answer. And that's the sort of thing that you should get from a plan. Ellis: I think all we'll ever...when you talk about airport self-sufficiency kind of revisit that what we're only probably ever going to be able to do is come up with operating budget - the money it costs for us to turn on the lights and run an airport. And when you go beyond that into the debt services and capital improvements I doubt that the airport will ever become self-sufficient regarding that side. Lehman: Well that's...we'll get that from your study. Ellis: But the operating study is what we would...what the goal for self- sufficiency would be that we'd be able to turn on the lights, pay the employees and run the airport with monies generated from within the confines of the airport. Lehman: Okay. Project updates. Improving internal controls. I'm not sure I know exactly what that... This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 35 Atkins: Internal controls were the result of the report we did and the things were doing very well. Lehman: Okay. Runway extension. What's the timeframe. Do we know that? Atkins: Some of these things were put on, Ernie, just to allow you to ask questions about those. Lehman: Right. But the runway...? Anderson: Do you want an update...do you want an update on the runway? Lehman: Well I mean is there...? Anderson: We're proceeding with the process of getting the environmental impact statements done and the construction stuff done and... Lehman: '04? Anderson: Yeah whatever that...I don't know the exact dates, but we went through that schedule and we're on track so far. Lehman: Okay. And then the north/south runway will close only after the extension is completed on 25. Is that fight? Anderson: Right. Vanderhoefi And that's projected when? Lehman: '04?05 probably. Anderson: What was that date, Ron? Fiscal year? O'Neil: If we continue to get the federal funding fall of '05 would be the soonest. Champion: I would suggest you not sell...only sell enough land to pay oft'the immediate debt. Anderson: Well that will be something we need to coordinate with you because of the agreement - the way it's written puts that sale on your shoulders. You're the deciders on those. Lehman: Well...no there's a much larger issue than that too because if we have all that property listed with a real estate, commercial real estate agent, and he feels it's all for sale and suddenly he gets a buyer and we say no. I mean I think this all hinges on your strategic plan. It comes This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 36 back, there may be a recommendation that you sell 40%, you sell 60%, you sell it all. I mean I don't know. Anderson: Right. Lehman: So that's why you need those things. Robnett: We did talk about this issue with a realtor saying that we may well not want to do an all or none kind of deal because there are some people that are approaching us that potentially would do leases versus some for instance Civil Air Patrol might be much mom interested in a lease than they would be in buying something because as a governmental agency they much to prefer not to own assets. Vanderhoef: If we were looking at the long term and you're talking about '05 runway paving and we know that we have 10% of that to come as a capital project I would like to know kind of dollars we're looking at for that. Ellis: It was in our capital improvement budget. Vanderhoefi I haven't seen it. Atkins: Sorry. ! don't have that with me. Vanderhoef: Okay. Champion: I had to keep (can't hear) but I'd like to get an answer because your strategic plan may take awhile and you're already... Robnett: 90 days. Champion: You have a realtor in charge of selling this land. What if he sells the whole package before you're done? Robnett: In 90 days? Ellis: It doesn't happen. Pfab: Probably have a street dance. Champion: But no I don't want you to do that. Ellis: I don't think anything will happen that fast. And actually in some ways that area being fenced off already it's less a part of the future plan of the airport than what we own right now. Because there will be other developmental opportunities perhaps on the western side once Mormon Trek is in and that kind of stuff. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 37 Mascari: Yeah but Connie is saying... Ellis: But we're looking for from them especially on the airport side is where are the aeronautical opportunities out there. Can we bring in businesses to the airport that will help pay the airport's way - bring in business aircraft to pay the way to allow the businesses there to hire more mechanics. We'll pump more fuel. We'll use more of the runway. That's where we hope to bring self-sufficiency to the airport, not selling off bits of land or doing other things non-aeronautical. That's the emerging concepts we hope to bring forward. Robnett: My best guess on the probability of that happening is - 0.1%. Ellis: Well certainly when that consultant gets there if he says don't sell that land well we'll listen. Champion: Yeah why invest if we want to buy it all. Robnett: Well we can tell you what our experience has been over the past 6 months. Lehman: Of course you haven't been able to sell it. Robnett: But we've had inquiries. We've paid attention to what inquiries they have. Ellis: You also did put some restrictions on that at least when we were doing the leasing as far as people buying or leasing the land they had a certain amount of time and they had to actually start building. Vanderhoef: Right. Ellis: That's sort of covered already that they couldn't just do speculative purchase. Lehman: Yeah. Anderson: Right. Lehman: Okay. We are out to bid on Mormon Trek extended which will be...pardon? Anderson: I don't know. Lehman: Oh, no we are. Vanderhoef: We are. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February i 0, 2003 Council Work Session Page 38 Lehman: We are. And that is I believe a two year project is it not? Atkins: Yes. Two construction season project. Lehman: The completion of Mormon Trek is going to pretty much coincide with the completion of that runway extension which also then should pretty much coincide with the closing of that north/south runway which my...I don't have a map, but my guess is there's going to be another significant portion of property that's going to available for development - perhaps airport property as well as other property on that road. Anderson: It's no where near as large... Mascari: I think this is a good time to bring up...I'm sorry Mark. Anderson: It's no where near as large as the north section amount was. Lehman: I don't know how much is there. Atkins: It's about 17... Mascari: Is this a good time to bring up Ron did you get a chance to check with the FAA regarding that? As you can tell I'm scared of the FAA. Lehman: Regarding what? Mascari: Well it appears to us that the road is going to actually penetrate a portion of airport property and we need to make sure that the FAA will allow that to become non-aviation use. We've got to make sure that that's okay before we go ahead and move forward. O'Neil: Where you put a road as long as it meets the safety standards they're going to tell you that's a local decision. Mascari: Okay as long as we get that in writing. I think it's important. O'Neil: There's something I wanted to clear up because I saw some very puzzled looks on mainly the Commission's face when Steve was putting numbers out here about the 5.3 that were due. He is including in that everything that has been...everything that the City has used bond money for. Now that includes the fuel system. That includes the renovation of thc terminal building. That includes some 10% matches. Some of which you've...the Council had looked at as a capital project and agreed to pay for. But that's the number, the 5.3, is what is out there that they used bonds to pay for. Is that correct. Atkins: Yep. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 39 O'Neil: So that...and that's why that number seemed really high...a lot higher than we anticipated. At the Commission level we were certainly talking about the infrastructure for the Aviation Commerce Park and the hangars. And that's why there's a big difference in the two numbers. Lehman: Right. O'Neil: Okay. I just wanted you... Mascari: But you will check on that...with that issue with the FAA for me. O'Neil: Yeah I already have. Mascari: You have? O'Neil: Yeah. Mascari: And everything is okay? Lehman: At some point we need to sit down and get the list of items that are considered that we agree on that are capital. Like for example the terminal building no question in my mind that that was to be remodeled as a municipal facility and there was never any intention from the Council's perspective, I don't believe, that that was to be paid by airport monies. But I think we need that laundry list so we don't...you know we need to have... Anderson: We do too. Lehman: No, no I agree. Champion: Our philosophy was that was for the public... Vanderhoef: Ernie I think you can speak for yourself on that. Lehman: Well and i just did. Kanner: Well and I don't know if we clarified...we were talking earlier about the sale of the property and the lease payments covering all capital debts except possibly the master plan which we think might be exempt - we're not sure. Are we still going with that? Is that...was that your understanding Steve? Atkins: My understanding was that Aviation Commerce Park for sure. Lehman: Right. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 40 Atkins: And I asked that a report be prepared showing me all of the other outstanding debt - that which is being financed by our debt service fund and/or internal loans knowing that the Master Plan piece of that list of projects may be encumbered in some fashion by the FAA. You have not decided on how to split that out. Kanner: Okay. Did you make up that list? Atkins: I didn't make it up. No. Kanner: Did you have that list tonight? Atkins: Yes I just got it. We just finished it this afternoon so we'd have some numbers. I'm going to take this back. I need to prepare it in fashion that's easier for the arithmetic and send it out to you. Kanner: So we have to as a Council again decide with our position and then work with the Commission on whether we want to include all of that. We have to make a policy statement. We might not do that tonight, but I think we have to do that in the near future. Atkins: These debts are already incurred. Bills are already being paid. It became a matter of how did you want to use the Aviation Commerce Park resources. That was your policy decision as a Council you have to make. You have not made that yet. Anderson: Going down through that list in looking at it. I mean you know decision to go ahead with things were made on discussions with Council for the terminal...like the terminal building for example it was pretty clear to us as a Commission that we did not need to pay that back. So... Champion: I think it was a very conscious Council decision because the building - which is an outstanding building - was being allowed to deteriorate and we felt it was a public... Lehman: City asset. Champion: ...municipal building and we keep all of our buildings very well maintained and we were letting this one totally fall apart. The other thing was that we figured it is an entrance to the City. And we try to protect those and keep them in good shape. So I agree with Emie that there was no obligation on the airport's part. That was a Council decision to redo that building, no an Airport Commission. Anderson: And that's what we understood too. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 41 Lehman: In fact I think we were the ones that wanted it. Well not that you didn't agree with...that building needed redoing. Anderson: It was a much bigger issue than just that. Champion: It was. It was a much bigger issue. And it's (can't hear). Vanderhoef: Steve, when you get the list made would you copy the (can't hear). Atkins: Sure. Yep. Lehman: Okay. Annexation/development issues around the airport. Steve? Atkins: Just to let you know that we're actively involved with putting together an annexation plan for all of those properties that are in and around the airport, particularly as a consequence of Mormon Trak extended. We also have a sewer project that also is listed in your capital improvement budget. The clear intent is that the airport is not going anywhere. It is where it's going to be. The traffic system around it is being designed in a fashion to accommodate their interest as well as general economic development policy interest. Lehman: And at some point during this process in that Mormon Trek I think we'll get some idea of how much airport commercial property is available and how much that road makes...adds to the inventory of property that the airport will be able to sell. And at some point as much as I love the airport and I think the Council feels it's an important airport, but the...I believe that if that road goes adjacent to the airport part of that cost to that road may be assessed to parcels that it serves which I can't imagine it would amount. Anyway... Vanderhoef: Keep you ears open for any fill to put in down there in the south end. I heard a number of years ago when we were talking about public works down in there (can't hear). Anything we can get is (can't hear). Lehman: The next item is the role of the Commission and its relationship to the Council and City Manager. From my perspective I believe that I as a Council person and my suspicion is the same is true of Steve someone needs to speak for the Airport Commission. I mean it's going to be either your Airport Manager or the Chairman of the Commission or someone you designate, but somebody needs to be in charge. The buck has to stop someplace. Now who is that person? I mean that's fine... Ellis: In total it's the Chair of the Commission, but we use the Airport Manager as our conduit for information. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 42 Lehman: Then who should the Council talk to...who should the City Manager talk to? Ellis: I would say the Airport Manager. Lehman: Okay, but I mean I think for example when we say we want copies of the FAA regulations relative to the revenues from leasing and sale of airport property then we could expect that to come from Ron. Mascari: Absolutely. Anderson: With regards to policy that would come from us. With regards to management and day-to-day that would come from Ron. Lehman: I think most of the information that Council and Steve probably needs generally are not policy issues. They're just everyday operational sort of issues. Anderson: Everyday...right. Yeah Ron would be the...he knows that stuffbetter than we. Lehman: So then if Steve needs something from the airport he should be able to call Ron and that's... Anderson: Oh, absolutely and I think... Lehman: ...and the Council. Anderson: ...that's happened. Karmer: Yeah Emie I don't understand where that's coming from. They do get that information... Lehman: No, no because over the years there have been lots of spokespeople for the airport and they've all been really good people, but there needs to be one person who is the final authority. I mean obviously he gets that authority from you. And that is the person who I would assume would be and probably should be. But I think that's something that needs to be clear. Ellis: It's clear. It's Ron. Anderson: It's Ron. Lehman: Any other business for us tonight? Let me just recap a couple things. We have agreed the sale of the commercial property the proceeds will go to retire debt. Oh and I just want to...a lot of this is precipitated by what probably would be characterized by the public as a bit of a This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 43 surprise. You know the deficit in the budget popped up because of a lease that grew...I mean the conditions were such that we signed a lease that was significantly lower than...and I would ask that even though the Airport Commission has the authority to sign leases that if there are going to be negative surprises for the Council and for the general fund that those sort of things be communicated at least to the City Manager before they happen. Nothing may change except there just won't be any surprises. Anderson: We hope not. Lehman: But anyway we've done that. We are going to do the Master Plan. We do have an agreement that self-sufficiency is a goal for the airport that that is what we want to do. The marketing obviously something we're going to expect from the Master Plan. This is kind of an aside, but really hope that Ron's office gets into the terminal building. I mean do you think that's a little thing? I don't think that's a little thing at all. I think that's a big thing. And Ron is going to be the person who is the spokesperson for the airport when it comes to the City Council and the City Manager. And we're going to get copies of the FAA regulations relative to the sale and/or lease of property so we can have them on file and we're not going to have this coming up ali the time. Any other issues? Champion: If the school bond passes we can move a temporary over there. Mascari: I just want to... Anderson: I'm not sure the spokesman... Mascari: I just want to ask one quick question. Lehman: Yes. Mascari: How are we going to determine about the payback regarding the numbers that Steve had versus the numbers that we have on the payback? Lehman: Let's get the numbers first and then go over them. My suspicion is there probably will not be...there probably will be very little disagreement as to which ones are...but that's...we don't even have the item so I mean you look at them, we'll look at them. I think those that we do not agree with are the ones we'll sit down and talk about. But my guess is the lion share of them will probably be non-issue. Mascari: Okay. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003 February 10, 2003 Council Work Session Page 44 Anderson: Hey thanks for getting this together so quick. I think it's a good meeting. Lehman: Well I apologize for not having addressed this earlier than we did. But I believe in that airport. I think it's a real asset to this comxnunity. And I think it can be better. And I really think that your...the idea that you need a roadmap to know where you're going. So we won't be flying by the seat of our pants. Anderson: We're going to be on an instrument plan instead of a (can't hear). Lehman: Yeah we want to be on...okay. Vanderhoef: You have to put wings on it. Lehman: Any other issues? Thank you very much. Robnett: Thank you very much. This represents only a reasonably accurate transcription of the joint Iowa City City Council and Airport Commission meeting on February 10, 2003