HomeMy WebLinkAbout04-25-2002 Airport Commission Meeting MinutesMINUTES
IOWA CITY AIRPORT COMMISSION
THURSDAY APRIL 25, 2002 — 5:45 P.M.
IOWA CITY AIRPORT TERMINAL
MEMBERS PRESENT: Rick Mascan, Michelle Robnett, Mark Anderson, Alan Ellis
STAFF PRESENT: Sue Dulek, Steve Atkins, Ron O'Neil
CALL TO ORDER:
Chairperson Anderson called the meeting to order at 5:50 p.m.
PUBLIC DISCUSSION — ITEMS NOT ON AGENDA:
No items were discussed.
ITEMS FOR DISCUSSION/ACTION:
a. Aviation Commerce Park - marketing options- ONeil stated that the Tracy Overton,
from Iowa Realty, and the Commission subcommittee had discussed the reluctance of
potential tenants to lease space in the ACP. Overton said that most of the interest has
been from potential tenants that want to buy property. ONeil said he contacted the
Federal Aviation Administration and was told that in some situations, the FAA will allow
the local owner of an airport to sell some of the property. Grant assurances prohibit the
sale without FAA approval. ONeil said that only the Council could sell the property.
The Commission would need to decide if they wanted to send a recommendation to the
Council to sell some or all of the property in the ACP.
O'Neil said he had invited Steve Atkins to answer questions about how this would impact
the Airport's budget. ONeil said he discussed selling the property with Atkins and Kevin
O'Malley. Both suggested it was something that should be explored in more detail.
Overton explained some of his marketing analysis with the Commission. He said the
current pricing structure was not acceptable to most potential tenants. They said that it
would be a better investment to purchase property than to lease it long term for the prices
the Commission was asking for the lots. Overton said he tried to equate a land lease with
the long-term lease. He based his analysis on property worth $ 4.50 per square foot.
Based on this, the property would have to be leased at $ .15 per square foot. Overton said
the problem with this pricing is that it would take 15 to 20 years for the Commission to
pay for the infrastructure.
O'Neil said that the original idea that came out of the subcommittee was to sell the
property, pay off the outstanding debt at the Airport, and then invest the remaining funds.
The annual operating budget would be supplemented with the interest income. ONeil
said the FAA has indicated that if the Airport has funds available for capital
improvements, whatever was available would be deducted from any grant amount the
Airport was eligible for. ONeil said he did not know if that applied to IDOT grants.
O'Neil told the Commission that although selling some or all of the property would pay
current debt, it would not provide for a perpetual fund for the Airport. Mascari said that
if the property were sold, additional revenue would be generated for the City s general
fund. He said the Airport property would help to build the tax base.
Mascari suggested selling enough property to pay off the capital debt and lease the rest of
the property. O'Neil said the immediate problem was that there was not a very good
response to the long-term leasing proposal. He said potential tenants are saying that it is
difficult to get financing to build structures on leased property. Overton said leasing is
not uncommon. It is just the fact that the leasing option is not competitive with the land
that is for sale in Johnson County.
Mascari asked Atkins if the property could have a TIF designation. Atkins said it could
and that was an additional marketing tool. He said the immediate question now was one
of policy, and that involves sale versus leasing. He said it seems like selling the property
is the best option.
Anderson said he has discussed the idea of selling the property with the Mayor. He said
the Mayor was supportive ofthe idea. Anderson said it would be positive for the Airport
and for the City in general.
Atkins said it was his understanding that the FAA was against selling Airport property.
O'Neil said that is still the case, but there are mechanisms for making it happen. He said
that not only the FAA, but Airport Commissions in the past have been reluctant to
consider selling any property because the Airport is already very constrained. One reason
the FAA may be reconsidering their view is that on the 2002 Airport Layout Plan update,
the property in question is no longer being considered for any future aviation use.
Runway 18/36 is designated to be closed after the improvements are made to Runway
07/25.
Mascari said he was under the impression that any money generated on the Airport,
including the sale of property, would need to be reinvested in the Airport. O'Neil said
that is part of the FAA grant assurances. Atkins said that is something that can be
accounted for.
Atkins said that the Airport would need to include covenants in the land sales to protect
the aviation rights. Dulek said City and Airport Zoning Codes would also protect the
aviation rights.
O'Neil said the covenants, codes and restrictions have been developed and were to be
included in the leases. Ellis said these would have to be included in contract sale. Ellis
said that when the Commission started the development, they knew it would be a five to
ten year process. He questioned whether the Commission is giving the leasing strategy a
long enough trial period. He said there seems to be more positive than negative points
for selling the property.
Robnett asked if Overton was looking at selling the whole parcel or individual lots?
Overton said his strategy was to sell individual lots. If someone was willing to purchase
the whole site, he said that would work also.
Mascari asked if the Commission could charge a percentage of gross from a business that
locates on the property. Overton said that may be done on a lease, but was not an
industry standard if you sold the property. Mascari said maybe the Commission should
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sell enough ofthe property to payoff the Airport's debt and then lease the rest. Atkins
said he thought that if the Commission was going to put some of the property on the
market, all of it should be for sale. This would be better than selecting some lots to lease
and some to sell. Ellis said the Commission should offer all the lots for sale or lease.
ONeil said that selling the property could improve the City's financial situation in the
near future, but that the Airport may still need support from the general fund in the long
term.
Robnett asked if there was still any interest in moving the Airport to a new site? ONeil
said the Airport Master Plan is a long-term plan for this site. Ellis said that as
improvements are made to the Airport, it might become so busy that it will need to be
relocated.
Mascari made a motion to send a recommendation to the City Council to sell the property
in the Aviation Commerce Park. Ellis seconded the motion. Ellis said the FAA would
still have to review the decision. Atkins suggested that if this is the policy
recommendation, the Commission should send a detailed letter to the Council outlining
what would be involved with switching from a lease to a sale strategy. There are
numerous questions that need to be answered before the Commission can move forward.
Mascari said he wanted to change his motion to say the Commission is changing the
focus from leasing to selling the property and send that idea to the Council. Robnett
seconded the motion. Dulek said there would be some costs and fees involved in
changing strategies, including updating the appraisal and renegotiating Overtons's
agreement.
Mascari withdrew his motion and Ellis withdrew his second. Robnett made a motion to
investigate selling the Aviation Commerce Park land. Mascari seconded the motion.
Atkins said by the nature of the motion, the Commission will need to renegotiate with
Overton. Atkins also suggested that a letter be sent from Anderson to Lehman outlining
the Commission's new strategy. The motion passed 4 - 0, with Ruyle being absent.
b. Fuel site - final approval - Dick Blum, from H.R. Green, updated the Commission on
the project. He said that last week, Double Check sent a representative to the Airport to
trouble -shoot the problems the Airport had reported concerning the fuel system. He said
one of the main problems discovered was that the phone line had been reprogrammed and
the modem was not calling out to the credit card companies to approve the card. Blum
said he thinks it was done when Jet Air was changing the price in the pump.
Robnett said that anytime software is reprogrammed, there is the potential to change
some of the defaults in the rest of the program. Blum said Jet Air has been told the next
time they want to change the price, they should contact Double Check or Applied
Technology and they will walk them through the reprogramming. Blum said when the
final software is installed, this should eliminate the problem
Blum said there was an incident of a pilot that couldn't get fuel in the middle of the night.
A check of the system showed that the pilot was using an unauthorized card. The FBO
and their fuel vendor determine the types of cards used in the system. Blum said the FBO
needs to post a notice on which cards they accept.
Mascari said he used the pump and was limited on how much fuel he could get. Blum
said that is also a credit card decision. The vendor or the credit card company limits how
much can be spent on each purchase.
Anderson asked Blum if he thought the system is working? Blum said that in the week
since Double Check made changes, there have been no known equipment malfunctions.
Mascari said he would like to wait until the next Commission meeting to accept the
system. Blum said he would recommend accepting the system as it exists. He said the
Commission still has the two-year performance bond if any problems develop. Blum said
the Commission has a reasonably good relationship with Double Check at this time. He
said the Commission would depend on Double Check for the next two years for warranty
work.
Mascari said Double Check has not been good about returning calls and following up on
complaints. Blum said the H.R. Green is over budget an what their scope of services
called for on this project. The contract called for 20 days in construction management.
He said Green probably has 90 days invested in the project. Robnett asked Blum if
Green billed Double Check for meetings that they didn'tshow up for. Blum said they
don't have any leverage to bill Double Check. Blum said he discussed this with the
subcommittee, to charge Double Check for the additional time Green had invested
troubleshooting for Double Check.
Blum said the two year warranty starts on the day the Commission accepts the project.
There is also a provision in the contract that addresses liquidated damages. Ellis said he
thought the project should be accepted and the retainage paid. He suggested Dulek send
a letter, reminding them of the warranty obligations. Ellis said Jet Air should be trained
on the system so they do not create any problems and a letter of understanding that if they
cause any problems with the system, they will be responsible for paying to have things
corrected.
O'Neil asked Blum who would be responsible for training Jet Air on the additional
software? Blum said training was not included in the original bid, but he would get a
quote from Applied Technology for training. Mascari said he thought the Commission
should wait until the next meeting before accepting the fuel system. ONeil said that if
the check request went in tomorrow, the check would net be issues until May 15. He said
the next Commission meeting is May 9.
Ellis made a motion for a resolution to accept the new fuel system. Mascari seconded the
motion. Dulek and O'Neil will draft a letter of understanding between the Commission
and Jet Air, explaining the responsibilities for the remote fueling system. At roll call
vote, the motion passed 4 - 0, with Ruyle being absent.
ADJOURNMENT:
A/=
M rson, Chairperson