MBS INTERNATIONAL AIRPORT COMMISSION

 

April 19, 2007

 

MINUTES

                                                                           

The meeting was held in the Airport Commission Board Room, 8600 Garfield Road, Freeland, Michigan 48623.  Chairman Eugene Gwizdala called the meeting to order at 1:00 p.m.  Roll was called by Debbie Meisel.

 

COMMISSIONERS

 

Present                                  Staff                                        Guests  

Patrick H. Beson                   Jeff Nagel                               Randy Morse, Andrews Hooper & Pavlik

George J. Biltz                       A. T. Lippert                           Lori Wagner, Andrews Hooper & Pavlik

Kenneth W. Distler                Ryan Riesinger                       

Darnell Earley                        Debbie Meisel                         Other

Brian K. Elder                                                                      Rich Bostwick, NWA

Wilmer Jones-Ham                                                              Angela Osmond, TSA

Eugene F. Gwizdala                                                             Ryan Stanton, Bay City Times      

Jon Lynch                                                                            Cheryl Wade, Midland Daily News

Hollis H. McKeag                                                                Wilma Kasten, Citizen

                                                                                            André Borrello, City of Saginaw Attorney

                                                                                           

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Biltz made a motion to approve the minutes of the Regular Commission Meeting held on March 15, 2007.  Mr. Elder seconded the motion.  The motion was unanimously approved by the Board.

 

MARCH 2007 WARRANT AND CASH & INVESTMENT SUMMARY:  Mr. Earley made a motion to approve the Warrant Registers for the March Payroll Account Check Numbers 82974-83055; the March Operations and Maintenance Check Numbers 37394-37477; and the March Cash and Investment Summary.  Mr. Beson seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None

 

2006 FINANCIAL AUDIT:  Mr. Nagel stated that Andrews Hooper & Pavlik were in attendance to present the 2006 Financial Audit.  Mr. Nagel also stated that the Finance Committee met on March 20, 2007 to review the audit and asked Mr. McKeag as chairman of the committee whether he had any comments.  Mr. McKeag stated that they found everything to be satisfactory and that they were happy with the audit.  Mr. Nagel turned the discussion over to Randy Morse, Partner, and Lori Wagner, Manager.

 

Mr. Morse thanked staff for their cooperation with the audit.  He stated there were no surprises in the audit; that the audit basically followed the objectives of the scope letter.  Mr. Morse stated that time is spent looking at the projects, PFC revenues and areas that they feel would be where a material mistake could take place or there could be risks.  He was pleased to inform the Board that there were no issues related to those. 

 

Mr. Morse stated that in a couple of years GASB 45 will be required pertaining to post retirement and how it is to be recorded.  Several years ago, the airport made an asserted effort to make a rough estimate of the liability and updates it on an annual basis.  GASB 45 will require an actuarial valuation to be done closer to the effective date of December 31, 2009.  Mr. Morse stated that the airport may want to have the actuarial done around December 31, 2008.  GASB 45 will affect many governmental entities that have not been currently accruing.

 

Mr. Morse stated that they review internal controls.  Although the accounting department is small and there are areas where there is not proper separation of duties, proper compensating controls are in place.  There were no significant deficiencies or material weaknesses.  Mr. Morse also stated that there was good communication, no issues, no adjustments or unrecorded items, and no disagreements with management.  Andrews Hooper and Pavlik gave an unqualified opinion which is the best opinion given.  The audit went very well and they had great cooperation with management.

 

After brief discussion, Mr. Earley made a motion to receive the 2006 MBS Financial Audit.  Mr. Elder seconded and the motion unanimously carried.

 

HONEYWELL AGREEMENT:  Mr. Nagel stated that Honeywell has been providing service to MBS since 1985.  Their service includes a computerized automated energy management system for the Passenger Terminal and Administration Building.  They also provide preventative maintenance, limited component replacement and 24-hour, seven days per week emergency response service.  Honeywell has also assisted us by providing additional services over the years at no charge.  The service contract benefits MBS by saving energy, reducing equipment downtime, extending equipment life and helping control the budget.  Honeywell employees are trained in our security requirements and have security badges which allow access anytime they need it.

 

A summary of the last year of service includes 56 total calls to the airport, 11 were “critical” or “emergency”, 27 “other” reports, and 18 preventative maintenance.  Of the “critical” and “emergency” calls, Honeywell met the contract requirements for response time and completion time on all but one, due to the need to order a part.

 

In the past, the contract has been for five-year increments.  The past two years the commission approved a one-year extension with no price increase.  Mr. Nagel has discussed the contract with Honeywell and agreed to another one-year extension at the cost of $49,261.00.  With the ongoing terminal project, it is Mr. Nagel’s belief that this is the best way to proceed.  Ms. Jones-Ham made a motion to approve the one-year extension to the Honeywell contract for the same rate as 2006-2007, and authorization for the Chairman to sign the agreement.  Mr. Biltz seconded and the motion passed unanimously.

 

REPORT ON TITTABAWASSEE WATER CONTRACT:  Mr. Lippert reviewed the ongoing water negotiations between the City of Saginaw and Tittabawassee Township.  The City of Saginaw has determined that it is necessary and essential to extensively renovate and improve its water treatment plan and the treated water distribution system.  The Saginaw water system has served the townships and villages in Saginaw County with high quality water since the mid 1940s under long term contracts assuring delivery of treated water.  Many of the contracts have expired and others, including the Tittabawassee contract are being renegotiated to provide continuing service for the next 30 years. 

 

The cost of improvements to the Saginaw water system will be paid from a bond issue that is secured by the city’s water contract with its user customers.  A permit from the DEQ will be required for the installation of a water main to the new terminal.  This will trigger the revenue-sharing section of the agreement, which will directly impact all persons, without exclusion, working in the new passenger terminal, and the employees of MBS who work in the terminal on a full-time or part-time basis.  The tax rate at this time for non-resident employees is .5%.

 

The Commission’s counsel, A.T. Lippert, Jr., represents Tittabawassee Township in its negotiations with the City of Saginaw.  He has requested, with the consent of the Tittabawassee Township Manager, that the City of Saginaw, as a one-third owner of the airport, consider exempting persons working in the new MBS terminal from the tax obligation imposed by Section 8.1.4.  Also the new terminal is replacing the current terminal; it is not a new development to the area.  The requested change to the proposed agreement has not been forthcoming.

 

This report is intended to inform the commission members of the status of the proposed water contract and its impact when concluded upon some airport employees.  It is reasonable to foresee strong objections to the imposition of a city tax upon non-resident employees, and those who will work in the new terminal may conclude that is the obligation of the commission to express its approval or disapproval of the agreement as it is now written.  The consensus opinion of the commission can be communicated by the chairman to the Saginaw City Council if an exemption is considered appropriate.

 

Mr. Earley stated that the arrangement with Tittabawassee Township and other wholesale customers on the water system is to improve and maintain the quality of the water system and apply consistently the policy and the design of the act.  Mr. Earley stated views differ in the fact that the terminal is just replacing the existing building.  The whole idea of the new terminal building is to increase and enhance the economic development climate in the region.  All negotiations of contracts begin with if there is economic benefit and it is within the context of what the act allows, the City has taken the position that it does apply. 

 

Discussion took place as to whether the airport could pay a fee rather than having the employees pay a tax.  Mr. Lippert stated that the act allows only for a tax.  After discussion, Chairman Gwizdala asked that the commissioners be allowed to think on this topic before making a decision.  Possibly a committee could be set up to discuss it further.

 

OLD BUSINESS:  Mr. Nagel stated that the City of Saginaw passed the Resolution of Necessity regarding the purchase of the property.  All three municipalities have now passed it.  There is no further news at this time regarding the property.

 

Mr. Nagel updated the board on the projects.  It appears that MBS will be getting three grants this year; terminal design & wetland mitigation, pavement projects & snow broom, and the property purchase.  Mr. Nagel stated that he hopes to have the project resolutions to the board in May or June.  Staff is anxious to get the grants so MBS can be reimbursed for the money spent from local funds on specs for the snow broom and pavement.

 

Mr. Biltz stated that the capital outlay bill was approved by House and Senate.  Did the governor sign it?  Mr. Nagel stated yes.

 

Mr. Biltz asked about Mr. Nagel’s meeting with the editorial board from Midland Daily News.  Mr. Nagel stated that he did meet with them for over an hour but had not seen an editorial in the paper.  Mr. Nagel referred to Cheryl Wade of the Midland Daily News.  Ms. Wade stated that the purpose of the meeting was that all the editors would know what the issues are so that when stories arose they would be informed.  She also stated that she thought it was a really good discussion, however no editorial has printed. 

 

Mr. McKeag asked about the rate study.  Mr. Nagel stated that it was presented and that there were three recommendations by the Marketing Committee.  Mr. Nagel stated that the Small Community Air Service Grant Application is due the end of this month.  The 20 key fare market study that Mike Boyd is doing will be done the end of April or the beginning of May.  Mr. Nagel stated that he is working on developing a request for qualifications/proposals for a marketing firm.       

 

NEW BUSINESS:  Mr. Nagel stated that Rich Bostwick informed him that NWA has decided to hire assistant managers of airport operations at 33 stations.  It is a new position for NWA and it definitely shows NWA’s commitment to customer service.  MBS is one of the first stations to get the position which is being filled by Karen Ehrlin.  She has 28 years of experience with NWA.  Mr. Nagel stated that he welcomes her.

 

Mr. Nagel stated that the travel agent meeting was yesterday.  Mr. Gwizdala, Mr. Elder, and Mr. Lippert were in attendance.  The fare study was discussed and an update was given of the terminal project.  It was a small group of about a dozen agents.  They were very interested in the airport development.  Comments were good.  The next meeting will be in late summer or early fall. 

 

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for May 17, 2007.

 

ADJOURNMENT:  There being no further business, Mr. Elder made a motion to adjourn.  Ms. Jones-Ham seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:50 p.m.

 

 

 

                                                                                                                                                            Hollis H. McKeag, Secretary