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.
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Council and Airport Commission meeting on February 10, 2003
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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,
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Council and Airport Commission meeting on February 10, 2003
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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
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Council and Airport Commission meeting on February 10, 2003
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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
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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.
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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?
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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
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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
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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
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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.
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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?
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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?
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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.
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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.
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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...
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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
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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?
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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...
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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.
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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...?
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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
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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).
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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?
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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
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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...
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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...
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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
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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.
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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
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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.
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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...
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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.
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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
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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...
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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