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HomeMy WebLinkAboutMinutes Airport Board - 08/13/2008 • - REGULAR MEETING MINUTES CORPUS _ARISTI INTERNATIONAL AIRPO&%f BOARZer7 d jo 1000 INTERNATIONAL DRIVE D 4� AVIATION BOARD ROOM rNTER ATI NAL CORPUS CHRISTI,TEXAS S [NT6RNATIONAL CORPUS L�11�itJ iL'1�1�1J FEB AIRPORT AUGUST 13,2008,3:30 P.M. BOARD MEMBERS CE J.C.Ayala,Member Don Feferman,Me William Dodge,Member Jesse Olivares,Member Jay Wise,Member Sam Susser,Member Ed Hicks, Sr.,Member George Richard,Member George Fisher,Member AIRPORT STAFF Fred Segundo,Director of Aviation Enrique Castillo,Asst.Director of Aviation Adelle Ives,Management Assistant Roy Rodriguez,Facilities Manager Mario Tapia,Finance&Admin Manager Carl Gross, Operations Manager John Hyland, Chief ofPublic Safety Gary Williams,Aviation Maint.Manager Amy Gazin,PR&Mkt. Coordinator (Board member Hicks reported to the Board that Chairman Jerry Kane was not present at this meeting as he has resigned his seat on the Board. Board member Hicks suggested to the membership that he would be acting-chair with their approval. The membership unanimously approved Board member Hicks acting as Chair for this meeting. L Call to Order Acting-chairman Hicks called the meeting to order at 3:30 p.m. A quorum was present. (Acting-chair Hicks paused to welcome the new members to the Board, Board members Richard and Fisher.) II. Approval of the minutes for the June llt�,2008,Regular Meeting of the Airport Board Acting-chair Hicks called for the minutes for the June 11`x, Regular Meeting. Board member Dodge moved to approve the minutes as written. Board member Feferman seconded and the motion carried III. Approval of Board member absences for the June 11te,2008 Board meeting Acting-chair Hicks called for approval of the absences of the Jane I V Board meeting. Board members absent for the June meeting were Board members Ayala,Hicks &Fisher. Board member Susser moved to approve the member's absences. Board member Wise seconded and the motion carried. (Acting-chair Hicks requested to move Item YI to this portion of the meeting.) VI. Discussion and Possible Action on the Selection of Airport Board Officers for 2008-2009 Acting-chair Hicks opened the floor for nominations for Chairman of the Board 2008 through 2010. Board member Susser nominated Board member Hicks for his years of proven experience on this Board. Acting-chair Hicks called for any further nominations. There were none. Since there were no other nominations,Board member Susser moved that Board member Hicks be elected to Airport Board Chairman by acclamation. Board member Feferman seconded and the membership unanimously approved. The motion carried. Newly elected Chairman Hicks called for nominations for Vice-chairman for the Airport Board. Board member Wise nominated Board member Feferman because of his experience and passion for Corpus Christi International Airport Board Agenda August 13,2008 Page 2 of 7 this Board. Board member Dodge seconded the nomination. Chair Hicks called for any further nominations. There were none. As there were no further nominations, Board member Susser moved to appoint Board member Feferman as the Airport Board Vice-chair for 2008 through 2010. Board member Fisher seconded and the motion was unanimously approved. The motion carried. (The meeting continued with the agenda as written) 1V. Public Comment Assistant Director Enrique Castillo introduced Mr. Mark Williams with HNTB. He also commented that the Director and Assistant Director have work with this company on various projects. Mr. Williams commented that during his visit with CCIA staff earlier in the day, he felt that his company could possibly work with the Airport on some of the upcoming projects. He added that his firm is a full-service company and looks forward to working with CCIA. Board member Susser commented on Delta's reduction of flights of SkyWest and how that could equate to flights from CCIA to the west coast. He asked that staff contact Delta's corporate office to see if this would be possible. Director Segundo stated that CCIA could accommodate these flights should Delta decide to fly from Corpus Christi. Chair Hicks wanted to commend Board member Susser for flying in from San Diego, California, for this meeting. He also highly encouraged all members to make it a point to attend all meetings. V. Discussion and Possible Action to Recommend to City Council an Airport Board Member appointment Chair Dicks called for recommendations from the floor for appointment to this vacancy on the Board. Board member Ayala recommended the Board review Mrs. Rita Padron's bio. Mrs. Padron is currently an Airport Ambassador. Board member Wise questioned what Mrs. Padron's position entailed. Director Segundo reported that Airport Ambassadors are volunteers who work the information area of the Airport,assisting passengers with any needs that may arise. Board member Wise suggested the Board review Mr.Bill Strom's bio. In his review,he mentioned that Mr. Strom currently works for the Texas Department of Transportation and is also a pilot for the Coast Guard auxiliary. In reviewing Mr. Strom's bio, Vice-chair Feferman also found that he has both a Bachelor and Masters Degree. Discussion was heard regarding the process of choosing someone for a vacancy on a Board or Commission. CCIA's legal counsel gave a brief report on the process. Director Segundo gave the Board the option not to recommend anyone and allow City Council to make the appointment. He did express his view on the composition of the Board and how the recommendation to City Council will reflect the Board's vision. In light of this discussion, Vice-chair Feferman brought to the Board's attention the bio for Mr. Richard Drilling who is the General Manager of KIII-Channel 3 TV. He felt that someone with extensive marketing background would be very beneficial to the Airport Board. Vice-chair Feferman moved to recommend to Council the appointment of Mr. Richard Drilling to the vacancy on the Airport Board. Board member Ayala seconded and the motion carried. Corpus Christi In ational Airport Board Agenda August 13,2008 Page 3 of 7 VIT. Discussion and Possible Action on the Airport By-laws Chair Hicks called for discussion on the draft Airport Board By-laws. Vice-chair Feferman asked that the By-laws reflect that Airport Board is no longer"advisory" and the tern should be stricken from the draft. Vice-chair Fcferman also recommended that because of information in Article VI, compensation of free parking for Board members could be in question. Director Segundo responded to his concerns by stating that the policy of extending free parking to the Board is also extended to Council members and other City employees who are at CCIA on Airport business. Legal Counscl, Ms. Hundley explained the policy on this issue. Vice-chair Feferman questioned Article XII wording of the composition of a committee and the selection of the committee chair. Chair Hicks thanked Vice-chair Feferman for his input and asked that staff forward a draft that includes these edits to Vice-chair Feferman in order that he review them for submittal to the Board at the next meeting. Director Segundo added that this is just a draft from which the Board could formulate a set of By-laws. Vice-chair Feferman stated that under the Texas Corporate Law, Boards can meet via telephone and questioned whether this Board would be able to conduct telephonic meetings. Ms. Hundley, CCIA Legal Counsel, responded that this Board is mandated by City Council to comply with Texas Open Meetings Act. She added that if an open meeting can be conducted via the telephonic method it would be for CCIA staff to request from the City Manager. It is permitted under the Texas Open Meetings Act for statutory mandate boards as long as there is a way for the public to comment and for the public to be made aware of the information that is to be up for discussion. This would need to be authorized by the City Manager. Board member Olivares questioned the wording having to do with the amendment of the By-laws by less than a quorum. Ms. Hundley explained that a quorum was necessary for the meeting but amendments to the By-laws could be passed with as little as three members voting to amend the By-laws. Chair Hicks stated that no action would be taken on the Airport Board By-laws until the final draft is presented to the Board at the next meeting. VIII. Presentation and Discussion of Financial Report FY '08-'09 Airport Budget Chair Hicks called for a brief report on the Airport's financial status. Director Segundo turned the presentation on this subject over to Mr. Mario Tapia, Finance/Admin. Manager. He began his report by stating that the fiscal year ended on July 31st and that the figures reported would be preliminary and would indicate that essentially, the Airport ended the year approximately 5700,000 in the black. The report he handed out to the Board highlighted key amounts such as the 103% increase in budgeted revenues which was achieved with the pay-off of the Semtech lease in the amount of$8.4 million in revenue. He also pointed that expenditures were at 95% in the amount$7.7 million. The difference was 5737,185. The.Airport's financial status is good for this year but next year may be a challenge with the exit of Delta Airlines. Corpus Christi International Airport Board Agenda August 13, 200& Page 4 of 7 Mr. Tapia began reporting on the 08-09 fiscal year's budget which showed $7.7 million in revenues compared from last year of$8.1 million that was budgeted in the 07-08 fiscal year due to the loss of landing fees and space rental. This impact is due to Delta's exit from CCI.A. Mr. Tapia continued by indicating the largest revenue sources for the Airport. He reported that 21% is Other Revenue which includes FBO's leases and non-commercial rental. Due to the drop in revenue, adjustments to expenditures have been made which include increase in the rates for the airlines of 1.5%. This topic would be addressed by Mr. Castillo in his discussion of the Airline Lease and Use Agreement negotiations later in the meeting. Mr. Tapia reviewed the expenditures that are budgeted for 08-09 fiscal year. He informed the Board that the Airport biggest expenditure is in Personnel. He went on to explain that this year positions that had been frozen in previous years were unfrozen. Director Segundo decided that to improve in customer service and cut overtime costs, one Airport Dispatcher position, one Parking Lot Assistant position along with the addition of a new inventory control position would be added. He added that the reduction in the Operating Budget was due to the conversion from a gas-absorption unit to a more efficient electrical unit with a cost savings of over $200,000. He continued by adding that the debt-service increased slightly due current bonds. He also reported that allocations to the General Fund dropped slightly. In the capital fund, there is $67,000 for this year to repair the terminal roof which currently leaks. With an increase in expenditures, it was attempted to balance with revenues. A deficit of$244,000 was budgeted for the year. He added this was due to airline rate charges were not being factored in along with the expectation of additional revenue with the new rental car agreements. Director Segundo added that there is a reserve fund of$3.8 million but with the cost-savings, next year the reserve will in $4.1. He also stated that a plan was presented to the City Manager on generating revenue to offset the deficit. He is confident that the budget will be balanced but there is a plan for a worse-case scenario. Vice-chair Feferman questioned whether the total amount of money shown is transferred to the City. Mr.Tapia responded affirmatively with an exception in Personnel costs which include the health insurance and self-insurance costs. Director Segundo stated that staff is looking very closely at allocations to determine what the Airport is being charged in order to find cost- savings. He felt that this was important should the Airport be audited by the FAA. Board member Fisher questioned the item listing revenue received for security services. Mr. Tapia explained that a portion of the Public Safety Officers staff is charged to the airlines for post-checkpoint security as stated in the airline use agreement. Board member Susser questioned the S25 million increase in personnel costs. He asked what was actually budgeted for personnel in FY 07-08 compared to the budgeted amount for FY 08- 09. Director Segundo responded that complete information on personnel would not be available until next month. Mr. Tapia stated that he would get that information to Mr. Susser when the actuals report becomes available. Chair Hicks asked for a status update on oil & gas revenues. Mr. Tapia responded that in the past,there was approximately$1.2 million in revenues from oil and gas. At this point, revenue has dropped to $162,000 and had been expected to drop to$100,000, but with the rising cost of Corpus Christi International Airport Board Agenda August 13, 2008 Page S of 7 fuel, it has kept steady. He added that there is some interest in the development of work-over rigs along with interest in drilling on Airport property and EOG still has an option on the Sand with one year left on the option. Lastly, Mr. Tapia explained the report in the members' notebooks regarding Federal Grant funding. He explained that the FAA funds approximately 95% of the cost of any of the Airport's improvement projects. Thus far, this year, the Airport has received $7.5 million in grants with the Airport matching $500,000. He stated that some of the projects include the rehabilitation of taxiways,modifications to the ARFF station to accommodate larger emergency response vehicles, as well as, building a maintenance facility to house equipment, such as tractors and vehicles. To recap, Mr. Tapia stated that the Airport has received$7.5 million and additional$750,004. L ,. Presentation and Discussion of Director's Report a. Use&Lease Agreement Briefing by Asst.Director Castillo Director Segundo stated that Asst. Director Castillo would be contacting John DeCoster with Trillion Aviation, the consultant working the Airport's airline lease and use agreements,to join in the meeting via telephone. Director Segundo informed the Board that based on the GAR, enplanements were down as July's numbers were low. He added that American had 12 flights cancelled in July, Continental had one cancellation and Southwest had six cancellations. In terms of available seats, he added that this equates to about 1,200 seats in just July with a 79% load factor,which is approximately 1,000 customers that we did not have the capacity to put on planes. The numbers were not favorable as we were down 4.5% for the month from the same month last year. It showed only a 1.5% decrease over the same month last year. Asst. Director Castillo had Mr. DeCoster on the telephone for his presentation on the Airline Use and Lease Agreement. He began a slide presentation regarding the work on restructuring the current agreements. He reported to the Board that the Airport is in receipt of Southwest's executed one-year extension. He added that Continental and American Eagle are still working to send the Airport an executed agreement. He continued that this morning, an email was sent to American Eagle and Continental Airlines to advise them that Southwest has submitted an executed extension and if they do not submit their executed lease extension within a specific timeframe, non-signatory rates, which are a 25% mark-up, would be assigned. Continental responded immediately that they would have their executed extension submitted no later than the end of the week. Staff and Trillion Aviation will begin restructuring the current Use and Lease Agreement and propose a timeline for this to be achieved. He went on to explain the timeline for the five-year capital plan including sources and use of funds. The first phase would be between the months of August and September. The analytical studies to generate non-airline revenue should be completed by the end of September. He continued that for the months of October to December, the proposed timelines will include a draft of a new use agreement and determining rate-making methodology that will be used to develop a baseline model for the agreement. He added that the airlines Corpus Christi Internatlonal Airport Board Agenda August 13,2008 Page 6 of 7 will be solicited for any potential space adjustments. After addressing space requirements for the airlines, preliminary exhibits will be prepared for distribution and discussion. A draft will be available by late December along with a plan for non- aeronautical revenue. Relative cost centers and administrative allocations should be determined by the end of that month for each of the airline representatives. For the months of January through March, staff will be meeting with the airlines to document and negotiate changes. From April through May, negotiations should be finalized and in July all documents should be received by the airlines for submittal to City Council. Asst. Director Castillo questioned Chair Hicks regarding the proposed briefing schedules and the frequency which the Board would like to be briefed. Discussion was heard on this topic. The consensus of the Board agreed to be briefed as progress was made on this topic either at the monthly meetings or via email. Board member Susser questioned why non-aeronautical revenue was not considered sooner. Asst. Director Castillo responded that at this time. there are several non- aeronautical business initiatives currently in the works. He stated that the QTA facility, the International Business Centre' interest by the US Border Patrol and US Customs Border Protection, T-hangar development with three letters of intent by separate individuals, Charter services and flight training school as some of the initiatives. Director Segundo added that TSA is interested in the retail space that is available near the Security Check-point area for their use. He is hopeful that the increase in non- aeronautical revenue will prevent any further increases to the airlines. Vice-Chair Feferman questioned how the Master Plan tied into the development that is needed by the Airport at this time. Director Segundo explained that the Master Plan only gives a baseline for expansion when the Airport reaches certain milestones with respect to enplanements. Chair Hicks questioned the financial impact the new Civil Air Patrol had on the Airport. Asst. Director Castillo stated that there was no financial impact to the Airport. This project was a combined effort with Airport tenants, especially Signature Flight Service. Director Segundo stated that this growth,with minimal cost, is a plus in that it gets more people on property therefore generating revenue for tenants and bring more service oriented business on property. Mr. DeCoster added that seeking non-aeronautical revenue will continue in the aviation industry from now on. Asst. Director Castillo turned the floor over to the membership for questions. As there were no questions, Mr. DeCoster concluded his participation in the meeting's discussion. Asst. Director Castillo began his briefing with a report on the Consolidated Rental Car Quick Turnaround Area(QTA). He continued by stating that PGAL was hired to assist with the development of a `white paper" for this QTA. Surveys were conducted with rental car agencies on and off property and a conceptual design was developed and submitted to star about two weeks ago with several modifications. This is being presented for the Board's review and comments which are to be submitted to either the Director or Asst. Director. An RFP has been drafted and sent to the City's Purchasing Department. He estimated that the final RFP would be ready within the next 30 to 45 days. Corpus Christi International Airport Board Agenda August 13, 2008 Page 7 of 7 Asst. Director Castillo continued his briefing by reporting that the RAC concession agreement is in draft format and being currently reviewed by the Legal Department. He stated that he anticipates sending out both the QTA and RAC agreements at the same time in order to have all questions by the rental car agencies answered. He continued by stating that PGAL has submitted the draft "white paper" for review. The members received a copy of the document in their binders. He added that a proposed briefing is to be scheduled. Asst. Director Castillo concluded his presentation and asked the members for questions. Board member Dodge questioned the timeline for this facility's construction. Asst. Director Castillo replied that build-out would be within 18 to 24 months. With an RFP, it would be between 60-75 days for new companies to be on property. Board member Dodge commented that Enterprise is very interested on getting on property and asked that staff follow-up on their request. Director Segundo replied that staff is working to expedite the RFP as soon as possible. Chair Hicks agreed. Board member Susser asked that solar energy be used in this new facility. Director Segundo responded that solar panels are going to be designed in the construction of the new QTA facility. X Adjournment Board member Dodge moved for adjournment and Vice-chair Feferman seconded and the motion carried. The meeting was adjourned at 4:47 p.m.