MBS INTERNATIONAL AIRPORT COMMISSION

 

March 20, 2008

 

MINUTES

                                                                           

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 1:00 p.m.  Roll was called by Debbie Meisel.

 

COMMISSIONERS

 

Present                           Absent & Excused      Staff                      Other     

Kenneth W. Distler        George J. Biltz            Jeff Nagel             Rich Bostwick, NWA

Brian K. Elder                Darnell Earley             A. T. Lippert         Cheryl Wade, Midland Daily News

Eugene F. Gwizdala        Jon Lynch                  Ryan Riesinger      Wilma Kasten, Citizen

Ernie Krygier                                                     Debbie Meisel       John Palen, Midland Issues

Hollis H. McKeag                                                                            Paul Wyche, Saginaw News

Joyce J. Seals                                                     Guests

                                                                           Randy Morse, Andrews Hooper & Pavlik                           Lori Wagner, Andrews Hooper & Pavlik                                               

                                                                                                        

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Gwizdala made a motion to approve the minutes of the Regular Commission Meeting held on February 21, 2008.  Mr. Elder seconded the motion.  The motion was unanimously approved by the Board.

 

FEBRUARY 2008 WARRANT AND CASH & INVESTMENT SUMMARY:  Mr. Gwizdala made a motion to approve the Warrant Registers for the February Payroll Account Check Numbers 83689-83746; the February Operations and Maintenance Check Numbers 38248-38308; and the February Cash and Investment Summary.  Mr. Krygier seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None.

 

2007 FINANCIAL AUDIT:  Andrews Hooper & Pavlik were in attendance to present the 2007 Financial Audit.  Mr. Nagel thanked Ms. Meisel for her work preparing for the audit.  He stated that the Finance Committee met on March 13, 2008 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 the job was well done.  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 by December 31, 2009 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 management did a good job analyzing the expenses especially in energy costs which are not in anyone’s control.  With various increases in rents and keeping costs in check, it resulted in an increase in net assets and a decrease in loss from operations for the year.

 

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.

 

Mr. Elder stated that the Finance Committee reviewed the Financial Audit in detail and it is consistent with prior years and what has been done in the past.  Mr. Gwizdala made a motion to receive the 2007 MBS Financial Audit.  Ms. Seals seconded and the motion unanimously carried.

 

SURPLUS EQUIPMENT:  Mr. Nagel stated that a new 20-foot high-speed runway broom was delivered last week.  This piece of equipment allows MBS to dispose of one of the older brooms, a 1983 Mack truck with a 14-foot broom.  The truck is in good condition and the broom is in fair to poor condition.  The estimated value of the unit is less than $5,000.  Mr. Nagel stated that the value of the truck may actually be higher.  He preferred to keep the truck and the broom together as a unit and contact the three local general aviation airports to see if there was interest in submitting bids.  If there was no interest he would expand his search to include G.A. airports statewide.  This practice has been used in the past.  Mr. Gwizdala made a motion to declare the 1983 Mack truck with 14-foot broom as surplus equipment and authorize the Airport Manager to sell the unit by receiving bids.  Ms. Seals seconded and the motion passed unanimously. 

 

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. 

 

Last year’s service included 80 total calls to the airport of which 58 were critical or emergency and 22 were preventative maintenance.  Of the “critical” and “emergency” calls, Honeywell met the contract requirements for response time and completion time on all calls.

 

The most significant repair which took place last year was the replacement of a complete chiller unit at a cost of $32,000.  This entire cost was covered under the agreement.  In addition, while the chiller was out and parts were on order, Honeywell representatives made every effort to insure that events held in the Skyroom were as comfortable as possible.  This was not an easy task and they are to be commended for the effort.

 

Last year the contract was extended for one year with no cost increase.  Honeywell is not able to extend another year without a cost adjustment.  A two-year extension with an increase of 2 ½% per year has been negotiated.  The contract cost would be $50,493.00 for 2008-09 and $51,755.00 for 2009-2010.

           

Mr. Nagel stated as the new terminal moves further along, Honeywell is flexible and MBS may be able to scale the scope of service down.  However, at the current time it is best to leave the entire scope in place.  Mr. Nagel informed the Board that this was discussed with the Finance Committee and they agreed with the recommendation.  Mr. Elder made a motion to approve a two-year extension of the Honeywell agreement for the above-stated contract rates and authorization for the Airport Manager to sign the agreement. Mr. Gwizdala seconded and the Board passed the motion unanimously.

 

TITTABAWASSEE TOWNHIP WATER TANK PROJECT:  Mr. Nagel stated that MBS currently buys domestic water from Tittabawassee Township.  Last year MBS was informed that the current supply serving the airport does not have adequate capacity nor pressure to meet current and future development plans.

 

The township has proposed constructing an at-grade water storage facility which would solve capacity and pressure issues within the township, including those at MBS.  The best location for this facility is at the intersection of Freeland and Garfield Roads.  This site is directly above the required piping and valves needed and is also one of the most-elevated sites in the township.  MBS owns the land and has discussed various mechanisms which would allow the township to utilize this site.  Based on conversations with the township and the FAA, the best way to allow the township to use the property is for the commission to request a property release from the FAA.  The commission would then sell the property outright to the township.  By FAA grant assurance, the airport is required to charge fair market value for the land.  As part of the financing of the project, the airport would like to commit the proceeds from the sale of the property back to the township.  This arrangement is subject to FAA approval.

 

This project greatly enhances the future development of MBS.  Dow Corning is also making a substantial contribution toward the project as well.  After brief discussion, Mr. Krygier made a motion to declare the property as surplus and request that FAA grant a release.  In addition, the commission agrees to charge the township fair market value.  Proceeds from the sale shall be remitted to the township to assist with the airport share of the proposed water storage facility.  The motion shall be subject to FAA approval.  Ms. Seals seconded and the motion passed unanimously. 

 

OLD BUSINESS: 

 

FAA Reauthorization:  Mr. Nagel updated the Board on the FAA reauthorization.  A temporary measure has been passed and signed giving limited AIP funding in 2008.  Currently design work is being done at RS&H for site work for the utilities as outlined in the five year capital program that the commission has already approved.  The State still has not passed the Capital Outlay Bill which is the transferring mechanism to allow the federal dollars to transfer from Washington D.C. to the State and then to the airport.  The Michigan Airport Association is lobbying hard to get the aeronautics portion of the bill passed but that has not been successful yet.  However it does look like there will be limited work for the terminal building that will be done yet this year.

 

Airline Merger:  Mr. Nagel stated that there is no news on the potential Delta/Northwest merger.  The media reports are saying that there is not an agreement with the pilot’s union that could or could not possibly block the deal.  With the high cost of fuel, Delta is looking at reducing capacity domestically by an additional five percent; they reduced by five percent earlier.  Staff has not heard from Northwest Airlines in regards to capacity cuts system wide.  Mr. Nagel stated that he continues to request an increase in capacity.

 

Mr. Nagel stated that he was informed by Rich Bostwick that beginning in June two CRJs that seat 76 will be replaced with Airbus A319s that seat 124.  One flight will be midday back and forth to Detroit.  The other will be a night flight coming in from Detroit overnighting at MBS and going out to Minneapolis the next morning.  Mr. Nagel thanked Mr. Bostwick for all that he does for MBS.  Mr. Nagel stated that in speaking with other airport managers, they are not getting some of the new aircraft such as the CRJ900 and the ERJ175 that MBS has had the opportunity to get.  Mr. Bostwick keeps MBS in the forefront with the new aircraft and now the two A319s. 

 

Marketing Committee:  Mr. Nagel asked Dr. Distler to report on the Marketing Committee.  He stated that the committee met last week and had a very productive meeting.  Mr. Biltz is the chairman of the committee.  The Marketing committee was formed a year ago with three objectives. Those objectives were to work with Northwest to get fare parity with Flint, to re-think the local marketing campaign to get people to fly MBS, and to get an air service grant for MBS from the FAA. 

 

The committee did convince NWA to bring MBS into line with fares out of Flint.  The process was open and cooperative with NWA and had support from the consultant.  MBS also did get the air service grant.  The Marketing Committee has set three goals.  The first is a campaign called FLY MBS in an effort to convince customers that MBS is a reliable, convenient and economical place to fly from.  Dr. Distler stated that FLY MBS is critical to the next step, BUILD MBS which is the effort to design and build a new terminal.  The third part is to put the air service grant to best use.

 

Mr. Elder, as a member of the Marketing Committee, explained how the committee achieved the fare parity with Flint Bishop.  He also explained the air service grant is to attract another air carrier and let them test the market.  Mr. Nagel stated that Marketing Committee was needed and it should continue its efforts.

 

NEW BUSINESS:  Mr. Nagel stated that Standard Parking has managed the parking lot for a long time.  In the past there has been trouble with credit card processing.  Mr. Nagel was notified last week that Standard Parking is planning to spend approximately $80,000 to upgrade the credit card system which will allow for faster credit card processing.  This will in turn improve the credit card lane.  Mr. Nagel appreciates their efforts in resolving the problem.

 

ADMINISTRATIVE MATTERS:  Chairman Distler again asked if there was any public comment.  There was none.  Next regular meeting is scheduled for April 17, 2008. 

 

ADJOURNMENT:  There being no further business, Mr. Gwizdala made a motion to adjourn.  Mr. Krygier seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:42 p.m.

 

 

                                                                                                                                                            Eugene F. Gwizdala, Secretary