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HomeMy WebLinkAboutMinutes Airport Board - 05/09/2007 GULAR MEETING.MINUTES CORPUS t.ARISTI INTERNATIONAL AERPOki BO 1000 INTERNATIONAL DRIVE FRE IVELs,AVIATION ADMINISTRATIVE CONFERENCE ROOM CORPUS CHRISTI,TEXAS Y 0 20io _ INTERNATIONAL NAL MAY 9M 2007 3:30 P.M. It-iTERNATIOhAL AIRPORT BOARD MEMBERS Jerry Kane, Chairman Don Feferman,Member Frank"Rocco"Montesano,Vice-Chair William Dodge,Member J.C.Ayala,Member Jesse Olivares,Member Glenn E. Lyons,Member Jay Wise,Member Sylvia Whitmore,Member Sam Susser,Member Ed Hicks,Sr.,Advisory Member AIRPORT STAFF Ron Massey, Interim Director of Aviation Debra Keller, Asst.Director of Aviation Adelle Ives,Management Assistant I. Call to Order The meeting was called to order by Chair Kane at 3:31 p.m. A quorum was present. II. Approval of the minutes for the April 11"'regular meeting of the Airport Board. Chair Kane called for approval of the minutes for the regular meeting of the Airport Board held on April I Vh. Board member Susser moved to approve the minutes as read. Vice-chair Montesano seconded and the motion carried. (Chair Kane introduced Ron Massey, Assistant City Manager, who is acting as the Interim Director of Aviation. Mr. Massey gave a brief report of his experience of 8 years with the City and his prior military experience.) III. Presentation on Proposed FY 2007-2008 Airport Budget. Asst. Director Keller began the presentation for the proposed Fiscal Year 2007-2008 Airport Budget. The report included last year's actuals, this year's current budget as well as the year-end estimates and the proposed budget for next fiscal year. She reported the unreserved beginning fund balance is at $2.837 million and the operating revenues are projected at $8,046,692,which is slightly less than last year's figure. She continued by commenting that transfers from the Airport Capital Reserve Fund are $110,000 less this year from last. This fund, which is about $60,000, consists of monies collected from the airlines and used to purchase operating capital such as vehicles, equipment, etc. Mrs. Keller went on to explain the changes to the Operating Expenditures by Division, Operating Transfers to the Capital Reserve and the Operating Reserve Fund. She reported that the Debt Service has stayed the same from year to year. She added that every year, the Airport debt, from the sale of an old series of bonds, is being paid down and the funds are being transferred to the 2000 A &B series bonds as payment from the operating fund and the Passenger Facility Fund. This fund has been utilized in order to avoid raising the rates and charges to the airlines. She felt that within the next three years, the$400,000 debt would be completely paid off. Mrs. Keller continued by reporting on expenses by division. She commented that Building Maintenance is the largest portion of the budget at 24%followed Public Safety. This report gives a cost breakdown for each division along with the allocations. Corpus G,...)ti International Airport Board Agenda May 9,2007 Page 1 of 7 Mrs. Keller continued with her presentation and the Revenue Detail report. She expressed her concern on the decrease in revenue and the need to keep the airline's rates and charges from increasing. She reported that oil and gas production has decreased and would be looking to eliminate the Airport's dependency on this revenue. Board member Feferman questioned if there were any other proposed leases. Mrs. Keller stated there is another well to be developed on Airport property, but work on this well has not begun. Work was to begin in February. Board member Susser questioned whether the Airport charged extra for the drill site. Mrs. Keller responded that the Airport has a ground lease that includes a bonus for the drill sight. Board member Susser informed Mrs. Keller that a fanner adjacent to the Airport is having a well drilled on his property, but the drilling is going directly under Airport property. He questioned who should collect revenue on the gas produced from that well. Mrs. Keller stated she would research this issue and report back to the Board. Mrs. Keller continued her presentation by reporting on the increase in revenue at the Parking Lot. She suggested that the Covered Parking Lot be expanded into the Short-Term Parking Lot to increase revenue within the next two years. She reported that the budget proposes Parking Lot revenue to increase by 12%. Board member Susser questioned how much revenue the Parking Lot has generated to date. Mrs. Keller responded that as of April, 30th, the Long-Term Parking has generated $978,940 and the Covered Parking is $455,392. Mrs. Keller stated that the proposed 12%increase in the budget for the Parking Lot could be increased,but she felt that being conservative in the budget estimates would be advantageous for the Airport should revenues drop. She felt being conservative would prevent having a net income at the end of the year and, thereby, refunding money back to the airlines at a 60140 split. Her preference is to utilize these surplus funds for unexpected projects that arise throughout the year. She added that interest income, fund balance and investment rates have increased from last year's budget. Mrs. Keller reported that Concessions and Airline revenues are at 32%, the two largest revenues, with the Parking Lot revenue and Ground Lease revenue closely following. She noted that Oil and Gas revenues are at the bottom of the revenue chart. Mrs. Keller continued her presentation by reviewing the Airline Revenue Analysis. This report reflects the revenue from the airlines for the last six years. She explained that airlines are constantly focusing on the cost per enplaned passenger, and based on this report, the cost per passenger has decreased from $5.99 to $5.55 as a result of having more enplaned passengers. Rates have not been increased since 2002. Board member Feferman questioned whether a current survey complicd by A.AAE was available on rates and charges from other airports. Mrs. Keller stated the current survey is two years old and expected a new survey from AAAE last October,but the date of completion for this report has been moved to May. In the expense detail, which was broken down into different categories, Mrs. Keller stated the categories were changing from last year's budget. NUS' allocation was increased to $31,000 this year due to the WiFi not being charged to the Airport last year. It was decreased last year approximately$20,000. Board member Ayala questioned when the Airport would begin charging a fee for WiFi use. Mrs. Keller responded that initially during negotiations with the service Corpus G.,tsti Intematronal Airport Board Agenda May 9,2007 Page 3 of 7 provider, the Airport had requested to be excluded thereby continuing to offer internet use free of charge. Unfortunately, passengers will be charged a minimal fee for internet use at the Airport. Board member Lyons requested more information on where the free hot spots in the City are located. Interim Director Massey felt that MIS could give the Board a presentation on this issue. Board member Feferman felt that having free WiFi at the Airport was an added benefit of flying from Corpus Christi. The Board agreed and voiced their opposition of charging for internet use. Mrs. Keller continued her presentation on expenses. Board member Susser questioned some of the line items of the Expense Report. He questioned lower allocation expenses for Administration, Maintenance, Business Development, Travel/Training and MIS. Mrs. Keller explained that under Business Development, ExpressJet's contract included$75,000 which will be spent this year. She also reported that Travel/Training expenses are in place for the new Director. Board member Susser felt that if revenue allocations are being estimated conservatively, expenses should be as well. Mrs. Keller reported the Airport's budget is zero-based and the proposed expenses are specific and managers have to justify proposed expenses. She added that the 27% decrease in Maintenance and Facilities is due to the fact that a considerable amount of environmental studies were conducted this year for Air Log, Semtech and the Industrial Business Centre site which will not occur again next year. Interim Director Massey added that due to the requirement to deliver a balanced budget, adjustments are needed on expenses such as the MIS. allocations. Board member Susser questioned whether all City departments also have an 18% increase in their MIS allocations for next year's budget. Mrs. Keller added that a large portion of the MIS allocation, $15,000, was due to charges for WiFi for the Airport offices, which is based on the number of FTE's. Board member Susser was concerned on getting revenue that is generated from passenger WiFi use. Interim Director Massey explained that franchise payments for the City are factored into this allocation. Mr. Massey felt that more information.regarding WiFi could be brought back to the Board after staff's meeting with WiFi staff. He continued by stating that he works with other Enterprise Departments and they also pay the same allocations. Board member Susser requested that the Airport's MIS allocations not be more than other Enterprise Departments. Mr. Massey stated he would have more information after meeting with WiFi staff, He added that some of the changes in expenses are based on expenses that would not be continued. He also wanted the Board to know that the expense decreases would not affect the quality of service delivered; but, would increase with the use of a good work-management system. Mrs. Keller added that the new chillers could have savings of$52,000 due to having the system being under warranty and,therefore, omitting expenses for supplies and maintenance agreements. Mrs. Keller continued her budget presentation with a graph on personnel costs, allocations on utilities and maintenance and supplies. Board member Lyons reiterated his concern over the charge for use of WiFi at the Airport. He asked whether staff expected feedback from passengers. Mrs. Keller responded she anticipated negative feedback from passengers. She also added that in her initial contact with MIS and EarthLink, who is the internet service provider for the City, she had informed them of her expectations of negative feedback on this issue. She added EarthLink proposed that if citizens are EarthLink users at home or work, they would automatically have internet service access at the Airport at no cost. Board member Feferman asked what EarthLink would be charging for internet use at the Airport. He also questioned whether the cost of internet service for Airport passengers could be added as an expense to the budget. Chair Kane commented that as an Advisory Board there is some latitude in the discussion of issues such as this, in order to obtain the best possible alternative for the Airport. Corpus Gfw i�n International Airport Board Agenda May 9,2007 Page 4 of 7 Discussion continued on this issue and the Board's role in decisions pertaining to budget. Chair Kane discussed other alternatives to provide free internet service at the Airport. Mr. Massey added that he questioned the terms of the contract and a perception of competition with EarthLink. To conclude her presentation,Mrs. Keller continued with information on matching funds for FAA grants. She asked the Board to note that the$600,100 in the Airport Capital Reserve fund is the Airport's match at 5% this year and possibly at 10% next year for grant funds. Funds obtained from the airlines go into the Capital Reserve Fund. Her concern is that at the end of the next fiscal year, the projected ending balance will be $13,000 along with the $250,000 balance which is required to be in the fund by the Series 2000 Bond Covenants. Since rates and charges for the airlines can not raised and monies are not available to be put into this fund, another non-airline source of funding needs to be found. For this next fiscal year, matching funds required by FAA are available in this account; but, in order to balance the budget, monies for three FTE positions were cut. She added the AAAE rates and charges survey will indicate the number of employees that are required for an airport the size of CC1A. She asked the Board to note that the number of FTE's has decreased from 91.75 FTEs last year to 89 FTEs. Typical small-hub airports have 81. She added that the eliminated positions used for this purpose were selected as those that would least impact customer service. Interim Director Massey stated that staff will make it a high priority to search for additional sources of revenue for next year. Chair Kane requested that this budget be approved with the addendum of finding additional sources of revenue. - Vice-chair Montesano questioned whether the FAA would be increasing the amount of matching funds for grants. Mrs. Keller stated in the Reauthorization Bill, they are looking to increase to a 10% match. For the last three years,the percentage rate has been at 5%. The FAA is also looking to changing to pre-2000 entitlement funding of$1.7 million per year. At present, CCTA receives $2.7 to $3 million per year. The Reauthorization Bill may cut funding of entitlements entirely for large hub airports. interim Director Massey added that these actions were subject to legislation. IV. Action Items a. Motion recommending approval of the Corpus Christi International Airport Proposed FY 2007-2008 Budget. After discussion of the budget presentation, Chair Kane called the question. Board member Susser moved to approve the recommended budget with the condition that funds be used from the funding going to the City to balance the budget. Board member Feferman, seconded and the passed unanimously. b. Motion recommending action on proposal from Mercury Air Center,Inc. Chair Kane stated that since Mercury is looking to invest heavily in their property and to evaluate this matter thoroughly, he asked that a sub-committee be formed to make a recommendation on Mercury's proposal. Board members Lyons, Feferman, Susser, Dodge and Vice-chair Montesano volunteered to sit on this sub-committee. This group of Board members would report back to the Board their evaluations of the proposal and make recommendations for a new lease with Mercury. Discussion was heard from the Board on the terms of the current lease and considerations to be made for the new lease. Interim Director Massey asked the Board to develop the framework for the new lease and provide a response to Corpus Uristi International Airport Board Agenda May 9, 2007 Page 5 of 7 Mercury's proposal. It was agreed that the sub-committee meet next Wednesday at 9 a.m. in the Airport Board Room. Discussion and questions continued among the Board and Mercury representatives regarding the impending sale of Mercury. c. Motion recommending an Airport representative to attend the Convention Visitors Bureau Board meetings. Chair Kane informed the Board that this position could be filled with a staff member and recommended Mr. Massey represent the Airport Board at the CVB Board meetings. Interim Director Massey stated that usually the City Manager appoints a non-voting member to attend these meetings and this appointment would be to fill in the former Director's place at the CVB meetings. Board member Susser moved to recommend having Interim Director Massey appointed as the Airport's representative to the CVB Board of Director's meetings. Vice.chair Montesano seconded and the motion carried. d. Motion recommending three candidates to City Council for appointment to the Airport Board. Chair Kane stated the consensus of the Board would be to advise City Council of the desire of those Board members who have agreed to re-appointment. Mrs. Keller also added the Advisory Board position could also be filled. Interim Director Massey expected this issue to be addressed at the City Council meeting on May 29P. V. Director's Report a. Construction update Facilities Manager,Roy Rodriguez,reported to the Board that the contractor has scheduled the completion of construction of Runway 17135 as mid-June depending on weather. Board member Susser questioned whether there were any performance criteria the contractor needed to meet. Mr. Rodriguez stated that their contract stated the deadline for completion of this project as the first of August. Interim Director Massey interjected that there are liquidated damages written within the contract, but that most City contracts have performance stipulations which are relatively minor amounts of damages. b. ExpressJet update Asst. Director Keller reported that ExpressJet is doing better than initially anticipated by ExpressJet personnel with approximately 10 passengers per flight. She added they are hopeful that the numbers will increase and that May is a slow month for airline travel. Board member Susser questioned how many of their passengers have destinations past Austin. Mrs. Keller stated that ExpressJet does not have the capability to report this type of information as yet. This capability will be forthcoming as it is necessary for reports that are due to the Department of Transportation and the Airport. Discussion continued on the low cost of flights and the length of the flight. Vice-chair Montesano wanted to compliment the staff for their work on the inaugural flight. Chair Kane questioned when the new walk through would be conducted. Mrs. Keller stated that it would be on May 13`h. ! Corpus Caristi International Airport Board Agenda May 9, 2007 Page 6 of 7 1w Board Business Vice chair Montesano wanted more information on the FAA funding reported at the last meeting. Mrs. Keller stated that the $2.8 million in funding went to City Council yesterday and was approved. The $$3.8 million of discretionary funding is still expected to be received. Interim Director Massey reported this funding is for the work on the apron and that the bid opening for this project was held today. He added that the low bidder was at$7.4 million. He continued that funding would now be sought with the bid price now established. Vice-chair Montesano questioned the status of the fuel flowage fee survey. Mrs. Keller stated that the information regarding fuel flowage was included in the FBO Survey distributed to the Board. a. Board absences Chair Kane called for a motion to excuse Board member Whitmore. Board member Feferman moved to excuse Board member Whitmore for this meeting. Board member Lyons seconded the motion and it passed. Chair Kane reported that Chautauqua Airlines, working for Continental Airlines, is going to build wide walkways so that passengers are not exposed to the elements until they board the aircraft. He questioned whether passengers would be covered on the stairs as well. He is awaiting a response regarding this inquiry. He added he is working on assistance in getting Chautauqua's aircraft out of Terminal "D" in Houston. Chair Kane felt that the real problem is in Houston and he asked that the Board to stand up for the City regarding this issue. Mrs. Keller, in her discussion with Continental Vice President of Operations, Kenneth Gregg, advised him that Continental may lose their market share if they continue unloading planes onto the apron. Mrs. Keller informed the Board that Chautauqua uses the same aircraft that ExpressJet uses, but ExpmssJct has patented the door without the stairway and Chautauqua would need to purchase door equipment from ExpressJet for approximately$120,000 each. It seems Chautauqua would be unwilling to do that at this time. In Ms. Keller's conversation with Jimmy Conner, ExpressJet's Station Manager at CCIA, she was informed that CCIA is receiving three to four flights per week with this type of aircraft. She was told by Kenneth Greg with Continental Airlines that the five aircraft in question should be taken out of service soon. By August, Chautauqua will be snaking a full transition flying 100% of the Continental Express flights. She was informed that there is an adapter for this aircraft but it is expensive; and, Continental does not want to spend the money to acquire them due to trying to remove them from their fleet soon. The cost for the adapter is about $2,500. Chair Kane felt the use of these aircraft was not in the best interest of Continental holding a competitive advantage. Board member Feferman questioned whether there was any negative feedback with this move. Board member Susser requested information regarding the number of passengers flying out of Corpus Christi going to the following destinations from last year to date. The listing consisted of El Paso, Phoenix, Las Vegas, San Diego,Los Angeles-Metro, LAX, SNA, LBG, ONT, San Francisco-Metro, SFO, OAK and SJC- Board member Lyons wanted to thank the CCIA staff on the great job they did on the ExpressJet inaugural event, and recognize Mrs. Keller for the great job she is doing in the absence of a Director. P Corpus Garish International Airport Board Agenda May 9, 2007 Page 7 of 7 Vice chair Montesano requested an update on the China marble for the Airport entrmce. Mr. Rodriguez responded it would be 10 %z weeks before it is delivered from Italy. Adjournment As there was no further business, Chair Kane adjourned the meeting at 5:14 p.m.