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HomeMy WebLinkAboutMinutes Airport Board - 06/14/2006 3 oMinutes CaR d STI Airport Board Meeting INTERNATIONAL June 14,2006 AIRPORT Board Members City/Airport Staff ®Jerry Kane,Chairman ®Dave Hamrick, Director ®Frank"Rocco"Montesano, Vice-chair ®Debra Keller,Assistant Director ® Glenn E. Lyons,Member ®Adelle Ives,Management Assistant ® J.C. Ayala,Member ®Don Feferman,Member ® Sylvia Whitmore,Member ā¯‘William Dodge, III,Member ® Jesse Olivares,Member ® Sam J. Susser,Member ® Jay wise,Member ® Ed Hicks, Sr.,Advisory I. Call to Order The meeting was called to order at 3:30 p.m.by Chair Kane. A quorum was present. IY. Approval of Minutes for the Airport Board meeting held May 10,2006. Chair Kane call for a motion to approve the May l 0`h meeting minutes. Board member Lyons moved to approve the minutes and Board member Wise seconded. The motion passed. III. Presentation by Peter Bryant,President of the Texas International Boat Show, on the 2007 event to be held in Corpus Christi. Mr. Bryant introduced himself and gave the Board an overview of the Texas International Boat Show which will be held in Corpus Christi on April 26'h through the 29h,2007. Mr.Brant explained the event would be held in the new Marina. He further added that there would be four different categories: the boat show,to be held at the Marina; the jet aircraft exhibit, to be held at Mercury Air, the car show; and the luxury RV and Coach exhibits which will be held at the Marina. He added that with seven months to go, the majority of the different event exhibit space has been sold. He further explained that Corpus Christi's location would fill a need for those shopping for these items. He distributed an event brochure to the members and added the opportunity for event sponsorship was available. He feels P Airport Board Minutes June 14,2006 Page 2 of 11 that this event could make Corpus Christi the recreadonat/vacation capital of Texas and Mexico. He felt the show would showcase Corpus Christi's Marina facilities. He also felt that since there are no longer boat shows held in Mexico, Corpus Christi could fill this void especially since most individuals interested in these types of purchases are willing to travel outside of Mexico to shop for these types of items. (Sylvia Whitmore arrived at 3:40 p.m) In seeking sponsorship for this event,Mr.Bryant reported that he has met with Southwest Airlines who has expressed interest in becoming the official airline of the event. He continued by reporting the activities to be held at the show that would appeal to all members of the family from children's exhibits to a fashion show. Discussion and questions from the Board were heard on this topic. Chair Kane thanked Mr. Bryant for making this presentation to the Board. IV. Old Business a. Motion recommending names for the street located in the New International Business Centre. Chair Kane referred to the email sent from staff to Board members calling for recommendations on names for the street located in the new International Business Centre. General discussion was heard on this item. Chair Kane recommended that staff make another request from Board members for recommendations for one additional week to submit their recommendations. Once the Board has submitted their recommendations,a decision would be made on the top three recommendations. Vice Chair Montesano expressed his concern that the street not be named after an individual or commercial business. Board member Susser recommended the name"C.C. International Blvd." Discussion was held regarding confusion between the recommendation of C.C. International Blvd.and International Drive which is already located on Airport property. Board member Susser moved to recommend"C.C.International Boulevard"as the new street name. The motion was seconded and failed. Vice Chair Montesano moved to have one more week for members to submit their recommendations for the street name,limiting the recommendations to the aviation industry excluding individuals and commercial names, and then a decision would be made based on the list of submitted recommendations. The motion was seconded by Board member Lyons and passed. Airport Board Minutes " June 14,2006 Page 3 of 12 Staff will be contacting the Board for another round of submittals from where the top three recommendations will be selected for approval. b. Motion recommending the City Council authorize the City Manager,or his designee,to execute an agreement with the Corpus Christi Regional Economic Development Corporation (CCREDC)in the amount of$50,000 for Airport Business Development Services. Chair Kane called for Mr.Roland Mower, CEO for the Corpus Christi Regional Economic Development Corporation, CCREDC,to give a brief overview to the Board regarding this motion. Mr.Mower began by thanking the Board for the opportunity to speak before the Board. He gave a brief history to the Board regarding the original contract with the Airport,which came about before his term with CCREDC. He went on to explain that at the time the original contract was drawn up, the Airport did not have a full-time marketing person. The functions of the marketing position at the Airport were transferred over to CCREDC through this contract. CCREDC was to assist the Airport in developing new air service through their marketing services. The original contract expired in December, 2005. The scope of the original contract was accomplished with the development of an airport video and the marketing of airport properties. He added since the City contract expires in July and the Airport contract expires in December, the six-month extension of the Airport contract was to have both contracts run in sync to expire at the end of the City's fiscal year. Chair Kane questioned what services would be provided in the six-month contract extension. Mr.Mower stated that in working with staff this contract would be an on-going relationship. He reported that CCREDC has continued to provide marketing services and would continue marketing the Airport regardless of the contract approval. Vice Chair Montesano requested on behalf of the new Board members that Mr. Mower give more information on what had been provided in the original contract. He asked that Mr. Mower inform the Board on what was expected from CCREDC on the original contract and what would be expected from the extension of the contract. He questioned if the funding of this contract would be related to specific airport activity or the funding was to further economic development. Chair Kane asked Mr. Mower to explain what he felt were the terms of the contract. Mr. Mower explained that the contract was to provide a marketing promotional aspect as it relates to a video and the marketing properties on-site. Chair Kane added he had spoken with the City Manager who strongly recommended the approval of this contract extension. Vice Chair Montesano moved to approve the six-month, $50,000 extension of the CCREDC's contract with the Airport. Board member Wise seconded and discussion followed. Airport fivardMnutes June 14,2006 Page 4 of 12 Chair Kane asked that discussion be held regarding the new contract. Board member Susser asked that an explanation be made on what is to be provided in this extension. Director Hamrick reported that what the CCREDC has provided in the past has been the Scannell property, a potential$375,000/year development which would be replacing$I,275/year farm lease. He continued by adding that the contract calls for a video production,which needs to be changed; and, calls for concerted CCREDC efforts to promote commercial development at the Airport. He added that the CCREDC would still provide this service regardless of the approval of the contract. Director Hamrick felt that the contract insured the CCREDC's focus on Airport development. Board member Lyons questioned if this extension was to for the time period of December to July. Staff responded affirmatively. He also questioned Director Hamrick as to his position on this issue. Director Hamrick responded that he would approve this motion. Discussion continued. Board member Whitmore questioned as to whether at the next meeting, the Airport would be requested to fund another contract for the next fiscal year. Asst. Director Debra Keller stated that funding was not available in next year's budget for another contract. Board member Ayala questioned what the status of the video/commercial was and if it served its function. Director Hamrick responded that he has personally heard several comments regarding the video and does not have a documented ROI. He felt that it may have had an incremental impact on travel,but had no tangible documcntation to substantiate this. W.Mower did not have any background on the initial video and the impact of the video on air travel. Board member Ayala requested that in the next video specific destinations be mentioned. Director Hannick stated that this request was possible. Vice Chair Montesano felt that video was not the best avenue to take in promoting air service. Discussion followed on this topic. Board member Susser questioned whether the Airport is subsidizing the CCREDC for the sake of funding or is a specific benefit for the Airport to be obtained. Chair Kane reiterated what Director Hamrick stated regarding the original contract and the current$50,000 extension. He felt that the Airport has had significant developments occur. Board member Susser interjected his opinion that the CCREDC was definitely worth the money. Board member Wise questioned Chair Kane opinion on whether this money was well spent. Chair Kane responded affirmatively. Director Hamrick stated that he works with Mr. Mower on an almost weekly basis. Mr.Mower interjected that there is a constant line of communication between Mr.Hamrick and himself,not only on a project-by-project basis, but secondly on global issues,specifically international air service. He added that he X Airport Board Minutes June 1 4,1006 Page S of 12 has spent a great deal of time in the last few months in developing relationships not only with the Airport but with other community businesses to assist in securing international air service to Mexico. Chair Kane called the question and the motion passed. V. New Business a. Motion authorizing the City Manager to execute a real estate option agreement with Scannell Development Company in consideration of$1.00 Option Fee for the first option period of nine(9)months, $20,000 for next successive twelve(12) months and$20,000 for next successive twelve (12) month period,to lease all or part of approximately 56 acres of land in Phase I of the Corpus Christi International Airport International Business Centre (State Hwy 44)West of International Drive north of Glasson and east of Pinson Road)for a term of forty years with successive five-year options to renew; and-providing for publication. Director Hamrick deferred to Assistant Director Debra Keller on this item. Mrs. Keller began by referring to the recommendations given to the Board in their packets. She added that she had spoken with Steve Kozarits, Vice President of Scannell Development Co., who has agreed with the following recommendations: Item Number 1,he agreed to this once staff specifies the tenants they are currently in negotiations with. Item Number 2, calling for architectural approval. Mrs. Keller added that based upon Mr.Kozarits suggestion,staff will be working on architectural standards to be put in place. Item Number 3 regarding the minimum square footage taken per each parcel,he did not want to be limited in a specific amount and asked that the Board consider giving him more freedom with this aspect. Item Number 4 regarding B4 zoning,Mr.Kozarits felt that storage is a component of an industrial park and felt this should be left in the lease. Item Number 5,he felt the project could be started within nine months rather than three months. She added that staff could work with him on the timelines. Item Number d,Mrs.Keller explained Mr. Kozarits'reasoning for rate increases every ten years is due to the manner he structures his leases with his sub-tenants. He requested the lease state the increase would be every 10 years at 15%. She ALport Board Minutes June 14,2006 Page 6 of 12 added the Airport usually increases rates in three year increments at 3% and felt this is more substantial than what has been done in the past. Item Number 7,Mr.Kozarits commented on the$35 rate and added he would consider a figure between$15 and$35. Mrs. Keller stated she had reviewed other leases,such as Semtech,which are now past the developmental stage. She reported that in the past, companies came on-board paying a lesser rate than today's rate. At present, these leases are going at market value. She added that he is willing to look at a higher rate than the$.15 although this rate is higher than other current leases. She mentioned that current leases, such as DHL's, are now paying a split for an improved and unimproved land. The Scannell lease would be paying 5.15 for both improved and unimproved land. She reported that this rate is the highest requested at the airport for new development. There is room for negotiation on this item. Mrs.Keller closed by stating that these were very good recommendations and worth the time and effort. Chair Kane questioned Director Hamrick's statement regarding the potential $365,000 per annum in revenue for the Airport. Director Hamrick stated this revenue would be achieved upon completion of all the build-out.. Chair Kane also questioned when this would be achieved. Director Hamrick stated this was entirely dependent on Mr.Kozarits and added he was aware that he was very anxious to get started. He added that Mr. Kozarits has put in a great deal of time and money in getting potential tenants. Director Hamrick expressed his appreciation to Mr.Joe Adame for his valuable input. He also wanted to express to the Board that this property had been previously leased at$1,275 per year.In anticipation of the development and with the start of construction, the lease was not renewed which diminished airport revenue. He cautioned the Board that unless the Airport proceeds with this lease and work through the list of recommendations,this opportunity could be lost. Chair Kane questioned whether this was the best opportunity for the Airport. Director Hamrick responded that the property in question has been vacant for many years and this is the first viable interest expressed in this property. Board member Lyons felt that the B4 zoning could be an issue due to the high- rise signs that are permissible under that type of zoning. Mrs.Keller stated that this has been taken under consideration in that all signage has to be approved by staff. Board member Lyons also questioned whether a progressive rate increase could be considered in order for the Airport to benefit should the value of the surrounding properties increase in value. Mrs. Keller responded this is a 40-year lease with a 15%increase every 10 years. At this point, it would be up for renewal and would then go to a market rate based on an appraised value rate of Airport Board Minutes June 14,2006 Page 7 of 12 return of 8%,depending on the risk of the client. She wished to point out that she had researched Scannell Development and advised the Board of the many properties they have developed with many national companies, such as DHL,Fed Ex and several other firms totaling over 5250 million in commercial real estate development projects. She felt comfortable in dealing with this company who has expressed their eagerness in working with the Airport in this development project, Board member Fefennan commented on the Option of$40,000 and the possibility that the developer could hold on to this land for 33 months and do nothing. Mrs. Keller explained that staff looked at what the Airport was getting per year on this property,which was$1,275 per year. She felt that since no one else expressed an interest and Scannell was willing to put a proposal on the table,the potential income to be brought in by the development of the property outweighed the loss of$1,275 per year. Mrs. Keller went on to add that with no other interested parties seeking to develop this property and the need to develop other avenues of revenue,this option was the best. Board member Feferman voiced his concern in the length of time limit given to the developer in which to develop the property. He felt it would be better to charge the developer$1 for 18 months. Chair Kane voiced his reservation that there would not be another interested party should this lease not be approved and agreed with staff in that if this lease was not approved, there may not be another opportunity of this sort. Vice Chair Montesano questioned if this developer is ready to go within 9 months,why did he require an additional 12 months at$20,000. His concern was in tying-up the property for that period of time. Mars. Keller explained that if the developer has not taken the full 56 acres by the second year; or, if he has taken a portion of the property within the first year and he would like to continue to hold the rest of the acreage, he would owe the airport$20,000 the second year. Board member Lyons felt that since developers cannot accomplish much within the first nine months,they would require an incentive in order to develop the property. His opinion was that by the end of the first 12 months,he should have the project going. Director Hamrick stated that the Board has brought up excellent comments, but was concerned that if this was not acted upon by the Board,the opportunity might be lost. Chair Kane called for a motion.Board.member Lyons moved to approve the motion regarding the Scannell Properties lease to include the amendments made by staff with suggestions by Mr. Adame. Vice Chair Montesano seconded and discussion followed. Chair Kane gave the floor to Mr.Joe Adame to address his suggestions. Mr. Adame began by referring to his correspondence to staff regarding his suggestions for the Iease. He continued by referring to item Number 3 and how he felt that the lease should stipulate a control of the size of the sites. He also added that the developer should have to take down a substantial minimum amount in order to Airport Board Minutes June 14,2006 Page 8 of 12 protect the Airport's interest in prime frontage sites,which could be under the developer's control for an indefinite length of time. He felt that this was a point that needed to be negotiated rather vigorously. He continued by adding that the rate should be increased based on the Consumer Price Index. He also suggested that if this project did not come about, staff should determine property's worth and calculate how many dollars were spent and the expected rate of return. Mr.Adame also added that another advantage in making the developer take a minimum of smaller parcels of property is that if he doesn't follow through, any value added will increase the value of remaining property. He also added that if this project failed, a stipulation should be made that requires all information regarding this property,such as soil testing, studies,architectural information, etc.,be given to the Airport. Board member Whitmore questioned Mr. Adame on his suggestion on Item Number 3 regarding the 7 acre minimum. Mr.Adame responded that he based that amount on how the property has been divided indicating that the smallest parcels are 7 acres and 19.1 acres are the larger parcels. He felt it would be to the Airport's advantage to have the developer begin on the smaller parcels and then move him onto the larger,more attractive pieces of property based on his performance on the smaller parcels. Board member Feferman wanted to thank Mr. Adame and felt that his comments were very beneficial. He also commented on past history of development in Corpus Christi and his opinion that the Airport should not concede in development for the sake of developing but rather for the development of quality establishments. Mrs. Keller interjected that the negotiations on this lease have not been to the advantage of the developer, and added that staff has not relinquished their vision of development that is up to par with the quality of the newly constructed terminal's standards. She appreciated Board member Feferman's comments but wants the Board to know that staff has worked diligently on this and that a great deal of pride is taken in the negotiations of this lease to adhere to the high standards of the Airport. She also added that she is willing to take back to the developer any suggestions that the Board recommends. Vice Chair Montesano commented that he would like more negotiation done on the size of the parcels in order to protect the property. Board member Feferman did not feel the developer's leases made sense being written as 10-year fixed rent. He asked for Mr.Adame's opinion on this issue. Mr. Adame concurred with Board member Feferman. Mrs. Keller interjected that the developer informed her that his leases are written in this manner when it is a " Alrpart Board Minutes June 14,2006 Page 9 of 11 build-to-suit project in order for the tenant to know what the rent will be for the first 1 O years. She added she could ask for verification by requesting copies of such leases. Board member Feferman requested that she ask for copies of leases such as what the developer is planning to do at the Airport. The question was called. Chair Kane responded the motion was to approve the lease incorporating the amendments based on Mr. Adame's suggestions. He added that these recommendations still required negotiation with the developer. Mrs.Keller stated that Mr.Kozarits is willing to meet with the Board if needed and she is willing to take the Board's recommendations to Mr. Kozarits for re- negotiation to include some of the Board's concerns. Mrs.Keller called for direction from the Board on what points needed re- negotiation. Chair Kane stated that the Board is requesting staff to negotiate points of concern brought up at this meeting. Director Hamrick asked for the Board's "deal breakers". Board member Feferman felt that Mr.Adamc's suggestions should be included into the lease. Board member Lyons felt that the Board was mistaken in trying to negotiate the lease. He felt that the Board should take Mr. Adame's recommendations along with staff's input to incorporate into a final draft to be presented to the Board for approval. Chair Kane called for any further suggestions from the Board. Board member Wise asked Mr. Adame if he felt that Item Numbers 3 and 5 were primary"deal breakers". Mr.Adame responded that all the suggestions were reasonable requests from the landlord's standpoint especially taking into consideration how long he will be controlling the land for a minimal amount of money. Mrs.Keller reiterated the"deal breakers"to be: The return of all information on the project to the Airport at the end of the Option Period should he decide not to take it. The developer will take down a specific amount of acreage and/or a sight plan outlining on the development of the property. Mr. Adame suggested a survey be used to verify the calculations of square footage and use it as an exhibit and specify the number of acres within tracts to be used to keep the more viable parcels in tact. Mrs.Keller felt that the developer would be willing to negotiate this item. On Item Number b regarding the 10-year rate versus tying it to the Consumer Price Index every three years,Mrs.Keller was not sure this would be an item that could be negotiated. She felt that his policy is to go with a 10-year rate. Airport Board Minuses June 14,2006 Page 10 of 12 Discussion was heard on the use of CPI. Board member Wise requested that if the developer is not willing to use CPI,could Mrs.Keller ask for an instance where he has used this in the past and the success of the property with this specific rate. Mrs.Keller responded affirmatively. Vice Chair Montesano questioned who would be responsible for maintenance of the development, Director Hamrick responded that the developer was responsible for this service. Mr.Adame commented on the one disclaimer included in his suggestions,which was that he does not provide legal advice. He questioned whether the City's Legal Department reviewed the lease. Director Hamrick responded that both Risk Management and the City Attorney's office have both reviewed the lease. Mr. Adame added that there is Ianguage in the lease regarding environmental issues and felt this should be addressed. Mrs. Keller responded that monitoring wells are already in place. Chair Kane asked Mrs. Keller to review the recommendations for re-negotiation. Mrs.Keller reported on the take down of the parcels or having to do a minimum take down and/or a sight plan on how the development is to occur. This would also include approval of how the sights are to be taken down. She would also recommend that instead of a 10-year increase go with a 3 year increase based on CPI or have increases more often than 10 years. If he has a problem with the rate of increase,she would ask him to show the Board leases where the I0-year increment of increase has been successful. Board member Fefenman questioned what items the developer agreed on. Mrs. Keller responded that he agreed on Item Numbers 1 and 2. Board member Feferman questioned the developer's concern of the B4 zoning. Mrs.Keller stated that Item Number 3 would have to be negotiated and that the developer's concern on Item Number 4 regarding B4 zoning was due to the possible need for outside storage. Mrs.Keller addressed the Board's concerns by stating staff approves the manner in which items will be stored outside, as is done at present. She added that specific standards would be put into place for this purpose. She would also be requesting that all information regarding this project would be returned to the Airport at the end of the option period. Director Hamrick questioned whether this item needed to come back to the Board. Chair Kane felt that if the majority of the recommendations were agreed upon by the developer, a special meeting was not needed. He added that if staff required assistance from the Board to finalize the lease, a spocial meeting could be called. Director Hamrick recommended advising both the Chair and Vice Chair on the status of the lease and have them determine whether a special meeting needed to be called. Adrpart Board Minwes .Tune 14,2006 Page 11 of 1z Board member Lyons amended his motion to include the recommendations discussed. Vice Chair Montesano seconded and the motion passed. VI. Reports (Director Hamrick broke with the order of the agenda to introduce the Airport's new Asst. City Attorney, Wendy Ogden) (Director Hamrick also introduced Juan Cardenas with US Customs. Director Hamrick asked that since the information in the Reports Section was presented to the Board members in their packets, he requested that the meeting adjourn so that Mr. Cardenas could give the Board members a tour of the Airport's Customs facilities. Chair Kane requested that this tour be given at the next meeting in the essence of time) a. Parking Revenue Report No discussion was heard on this item. b. General Activity Report(GAR) No discussion was heard on this item. c. CCIA Financial Report Mrs.Keller reported that the Financial Report reflected a request by Board member Susser to add the last year's comparable figures. She stated that next month's report would be corrected to reflect the previous year's figures. An adjusted current report would be emailed to the Board. Also,Mrs.Keller presented the Board with a revised Parking Lot Revenue Report showing May's figures. Mrs.Keller stated that the proposed 06-07 Airport Budget had been given to the Board in their packets and would be reviewed by her at the next meeting. She asked that the Board review for discussion at July's meeting. d. Director's Report No discussion was heard on this item. Airport Board Minutes June 14,2006 Page 12 of 12 VII. Board Business and Reports a. Board Member Absences Vice Chair Montesano moved to excuse Board member Dodge. Board member Feferman seconded and the motion carried. b General Comments No discussion was heard on this item. VIII. Adjournment As there was no further business,the meeting was adjourned at 5:15 p.m.