January 17, 2008




The meeting was held in the Airport Commission Board Room, 8600 Garfield Road, Freeland, Michigan 48623.Chairman Kenneth Distler called the meeting to order at 1:02 p.m.Roll was called by Debbie Meisel.




Present†††††††††††††††††††††††††††††††† Staff††††††††††††††††††††††††††††††††††††††† Other††

Patrick H. Beson††††††††††††††††† Jeff Nagel†††††††††††††††††††††††††††††† John Palen, Midland Issues

George J. Biltz†††††††††††††††††††† A. T. Lippert†††††††††††††††††††††††††† Angela Osmond, TSA

Kenneth W. Distler††††††††††††† Ryan Riesinger††††††††††††††††††††††† Rich Bostwick, NWA†††††††††††††††††††††††††††

Darnell Earley††††††††††††††††††††† Debbie Meisel†††††††† ††††††††††††††† Cheryl Wade, Midland Daily News

Brian K. Elder††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Dolores Dandt, Citizen

Eugene F. Gwizdala†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

Jon Lynch†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

Hollis H. McKeag†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

Joyce J. Seals††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††




MINUTES:Mr. Gwizdala made a motion to approve the minutes of the Regular Commission Meeting held on December 20, 2007.Mr. Biltz seconded the motion.The motion was unanimously approved by the Board.


DECEMBER 2007 WARRANT AND CASH & INVESTMENT SUMMARY:Mr. Gwizdala made a motion to approve the Warrant Registers for the December Payroll Account Check Numbers 83541-83600; the December Operations and Maintenance Check Numbers 38083-38150; and the December Cash and Investment Summary.Ms. Seals seconded the motion and the Board unanimously approved it.




PERSONNEL COMMITTEE REPORT:Chairman Distler asked Mr. Earley, Chairman of the Personnel Committee, to report on the evaluation of the airport manager.Mr. Earley stated that the Personnel Committee met on January 9, 2008 to review the process and the composite scores from the evaluation.Mr. Earley stated that the evaluation instrument was a good tool as a starting place for the review process of Mr. Nagel and could be used to build off of.The other committee members felt that the process was much more structured and worked very well.Mr. Earley stated that Mr. Nagel had requested that the evaluation discussion take place in closed session.The recommendation of the board would be announced after returning from closed session.It was decided that the closed session would take place at the end of the meeting after other airport business had been completed.


Mr. Earley asked Mr. Nagel to report on the other items that were discussed at the Personnel Committee meeting.Mr. Nagel stated that at the December meeting he was requested to gather personnel information and report to the Personnel Committee.He proceeded to review several charts of detailed information.


Chart I:†††††††††††† Annual evaluation of total wages, overtime and holiday pay for all employee groups (Maintenance, ARFF and Admin).28 employees total.


Chart II:†††††††††† Annual evaluation of total benefits for all employee groups.


Chart III:††††††††† Annual evaluation of health insurance and retirement benefits broken down into the three employee groups.


Chart IV:††††††††† Annual evaluation of percentage of operating costs associated with personnel.


Mr. Nagel stated that Chart II includes retiree health care.That benefit, approved in 1984, is for management employees to receive fully covered health care upon retirement.The union employees receive $1,500 per year.In 2008 an actuarial is required to meet the GASB requirement.Funds have been set aside every year based on a formula that is calculated on current premiums, vesting, and age.Mr. Nagel and the Personnel Committee recommend effective 1/1/08, the fully funded health care for new hires in management be eliminated.The Personnel Committee members agreed that this recommendation be put on the February agenda for formal action.It has been a benefit for 25 years but it is time to put a cap to the benefit.Funding would continue for existing employees that are eligible for the benefit.†† Comments were made regarding differences in public sector and corporate.


Mr. Nagel reviewed Chart III.He explained that all retirement changes require a vote and resolution from the commission.Any retirement benefit increases for union and staff have been paid with lower wages or wage freezes.Mr. Nagel stated that he is in the middle of union negotiations and health care is a major issue at MBS and system wide at all municipalities.As negotiating continues, Mr. Nagel will keep the Personnel Committee aware of potential bargaining offers.The union is fairly receptive of the change needed in lowering health care costs and are working with Mr. Nagel to find the middle ground that will save MBS money but provide employees with a quality health insurance.

Mr. Nagel reviewed Chart IV.He explained that the operating costs did not include Capital Improvement Expense, Contingency Expense, and AIP Expense.Municipalities are a service group and as an airport MBS is similar in that labor is the primarily cost at 57-62%.Mr. Earley stated that City of Saginaw is close to 70%.


Mr. Nagel stated that he would be happy to update the board when the 2007 numbers are available. Mr. Biltz thanked Mr. Nagel for comprising the numbers.He also stated that with the stateís economic decline it is the boardís responsibility to control the airportís costs.Wages and benefits that were appropriate in the 80ís may not be now.He stated that the wages appear to be in control, however, the benefits are compounding at an average of 19% per year over the past three years.†† The health and retirement appear to be high cost issues.Mr. Biltz stated that to keep health care costs in check it is important to make employees responsible by cost sharing.The MERS benefit appears to be a concern even more than health care.


Mr. Nagel stated that MERS was discussed in the Personnel Committee meeting.Mr. Nagel has discussed with MERS various options however there is not an easy answer.Mr. Nagel stated that Mr. Lynch and Mr. Earley offered direction for alternatives through MERS and he will look into potential solutions.Mr. Nagel will report to the Personnel Committee the results of his findings.


Mr. Earley stated that many of these benefits were negotiated years ago but is noticeable now because of the high escalation factor.He commended Mr. Nagel for the information brought to the committee for analysis.Mr. Earley is confident that even though it is a large issue, Mr. Nagel is aware and is continuing to attempt to contain costs and define a fair strategy for the board to act on. Mr. Nagel stated that changing the retiree health care benefit that was started in 1984 may have been interpreted as a small step but it was not.Mr. Nagel stated that he was pleased with the discussions that took place with the Personnel Committee and happy with the response from the board and this topic will be brought up again.These are the types of issues that need to be addressed.††††††


ADMINISTRATIVE MATTERS:Mr. McKeag asked Mr. Nagel for a marketing update since MBS is in its eighth year of decline.Mr. Nagel stated that there are some ongoing marketing efforts.Proposals were sent out for a new marketing firm.Those have been reviewed and narrowed to two. A Marketing Committee meeting will be called to have the two firms give presentations.Mr. Nagel stated that he has not been advertising as aggressively as in the past until a new advertising company is chosen and the ads are reworked and there is a new message.Mr. Nagel stated that the budget was increased this year which included the marketing potential for a new carrier with the Small Community Air Service Grant.Mr. McKeag asked that he be included in the next Marketing Committee meeting.


Discussion took place regarding the bleed-off of passengers to Flint, discount carriers, and direct flights.Chairman Distler stated that in various ACI conferences there is a common denominator for airports that low cost carriers will come to such as location. Mr. Nagel stated that there are factors that are in our control and some that are not.Efforts have been made to get a third carrier but have not been successful. He does not debate that a low cost carrier would stimulate the market.Mr. McKeag stated that MBS needs to preserve service; that there are too many cancellations and United is losing dependability.Discussion needs to take place with the airlines and something dramatic needs to be done.


Ms. Seals stated that after reviewing the passenger counts at other Michigan airports, that there are four other airports in the same plight as MBS.Flintís numbers have gone up but they have tax subsidy to help support their airport.Ms. Seals has been flying out of MBS.She stated that the Northwest fares are now more in line especially after taking into account gas and drive time.She likes to support her local airport.She asked what other airports have said about their decreases.Mr. Nagel stated that there is a strong airport association in Michigan and he has worked previously in Traverse City and has good relationship with them.These airports have the same message that Mr. Nagel has given the board.Unfortunately, with the cost structure of carriers, trying to save billions of dollars, they have pared their capacity, number of seats in and out of markets, to the point of where the flights are flying as full as possible and the aircraft are getting a little smaller.Mr. Bostwick has done an excellent job getting MBS new aircraft.They are a 90 seat aircraft, comfortable with a first class cabin but they are smaller than a 125-150 seat DC9.MBS is down to one DC9 in the schedule.Traverse City had their DC9s removed from the schedule.Northwest is not the only airline doing this.In attempt to save money, airlines have lowered the domestic capacity seats available to such a degree that flights are going fuller than ever, there is less room for error, for a bump or cancelled flight.The numbers of seats offered are being reduced.Also, there is a higher number of reduced cost seats on a 150 seat aircraft that there is on a 90 seat aircraft.Mr. Nagel appreciated the comment about Northwestís fares being more competitive.He feels that Northwest has done a good job.


Mr. Earley stated that from a competitive point, MBS needs to look at the long term and find a way to compete with low cost carriers especially considering the new terminal.Marketing alone will not keep MBS on the same level as those who have the discount carriers.


Mr. Biltz stated that it would be extremely hard to get a low cost carrier. The low cost carriers base where they go on demographics and many other factors; MBS would not be on their high priority list.†† The Marketing Committee is looking at it as a supply and a demand problem.With United there is a creditability issue and with Northwest it is a supply issue and equipment.There is also a need for a third carrier for competition.There are many people who travel and a way needs to be found to touch these people.MBS needs to work with the three community chambers to stimulate people.The area is nearing a recession; how do the people grow out of that, how do you create new jobs, get more businesses, and get more people traveling?This would be a 3-5 year issue.So much is based on a healthy economy and what is MBSí role?Discussion took place regarding business versus leisure travel.Both are needed for MBS.


Mr. Gwizdala stated that a few years ago the board worked with the chambers to promote MBS and many businesses gave their support.Mr. Nagel also reminded the board that the three chambers, economic groups, and visitors and convention bureaus pledged $35,000 to MBS towards the Air Service Grant.They support MBS 100% and the relationship is strong.It comes down to seats to get the people in and out of MBS.


There being no further discussion, Chairman Distler asked if there was any other business before entertaining a motion to go into closed session.There being none, Mr. Gwizdala made a motion to go into closed session to discuss the airport managerís evaluation.Mr. Biltz seconded.Chairman Distler asked for a roll call vote.Ms. Meisel called roll; Patrick Beson, yes; George Biltz, yes; Kenneth Distler, yes; Darnell Earley, yes; Brian Elder, yes; Eugene Gwizdala, yes; Jon Lynch, yes; Hollis McKeag, yes; Joyce Seals, yes.Motion carried.The board took a short break and went into closed session.


Mr. McKeag departed in the middle of closed session.

AIRPORT MANAGERíS EVALUATION:Upon return from closed session, Mr. Earley made a motion stating that based on the review of the airport managerís job performance evaluation, the recommendation of the personnel committee is a 4% increase in salary effective February 1, 2007.In addition, the airport manager is directed to present a modified list of goals for 2008 at the February Commission meeting.Mr. Biltz seconded and the motion passed unanimously.


COMMISSIONER BESON RESIGNS:Mr. Beson announced that he is the new chairman of the Bay County Board and as such, he will need to allocate additional time to meet these demands.Therefore, effective immediately he is resigning from the MBS Airport Commission.Mr. Beson thanked and complimented the commission and wished everyone well.Chairman Distler acknowledged the service of Mr. Beson.


Next regular meeting is scheduled for February 21, 2008.


ADJOURNMENT:There being no further business, Mr. Gwizdala made a motion to adjourn.Mr. Beson seconded and the board unanimously passed the motion.The meeting adjourned at 2:41 p.m.




††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ††††††††††††††††††††††† ††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Eugene F. Gwizdala, Secretary