MBS INTERNATIONAL AIRPORT COMMISSION

 

November 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 1:04 p.m.  Roll was called by Debbie Meisel.

 

COMMISSIONERS

 

Present                                             Staff                                        Other     

George J. Biltz                                 Jeff Nagel                               Angela Osmond, TSA

Kenneth W. Distler                          A. T. Lippert                           Rich Bostwick, NWA

Darnell Earley                                   Ryan Riesinger                        Bill Hewitt, WSGW

Brian K. Elder                                   Debbie Meisel                         Cheryl Wade, Midland Daily News

Eugene F. Gwizdala                                                                                Wilma Kasten, Citizen

Ernie Krygier                                                                                   Paul Wyche, Saginaw News

Jon Lynch                                       

Hollis H. McKeag                           

Joyce J. Seals                                  

 

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Gwizdala made a motion to approve the minutes of the Regular Commission Meeting held on September 18, 2008.  Mr. Krygier seconded the motion.  The motion was unanimously approved by the Board.

 

SEPTEMBER & OCTOBER 2008 WARRANTS AND CASH & INVESTMENT SUMMARIES:  Mr. Gwizdala made a motion to approve the Warrant Registers for the September Payroll Account Check Numbers 84150-84207 and October Payroll Account Check Numbers 84208-84264; the September Operations and Maintenance Check Numbers 38754-38835, void checks #38759 & #38785 and October Operations and Maintenance Check Numbers 38836-38929, void check #38800; and the September and October Cash and Investment Summaries.  Mr. Biltz seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None.

 

Mr. Nagel addressed the Commission regarding the ongoing FAA reauthorization program.  Congress has passed a short-term extension for AIP projects but the timeline is very short to apply for grants and the amount of entitlement money is greatly reduced.  Bids will need to be submitted in February which is several months earlier than normal.  RS&H has been very busy working on a project to fit the amount of entitlement dollars which are available for MBS.  The project will include property demolition, temporary fence, temporary access road, and pavement and tree removal.  The estimated cost of this project is approximately $475,000.  Plans need to be submitted to the State in early December with the hope of a FAA grant in February.

 

In addition to the RS&H project the following two items will also be included in the 2009 grant.

 

PAINT MARKING CONTRACT:  Mr. Nagel stated that the AIP process has been utilized in the past for painting the airfield and is planned again for 2009.  Congress has authorized a short-term extension for the AIP program and bids must be received in February.  To complete the plans and specifications to bid the painting, a contract is needed with Peckham Engineering.  Bob Peckham’s price to complete this work is $7,413.00.  Mr. Gwizdala made a motion to approve the contract with Peckham Engineering to develop the plans and specifications for painting the airfield, subject to State approval of the contract, and authorize the Chairman to sign the related documents.  Ms. Seals seconded and the motion passed unanimously.

 

UPDATE PROPERTY MAP:  Mr. Nagel stated that the FAA has requested that the MBS property map be updated.  To accomplish this task, a contract is needed with Peckham Engineering.  Mr. Peckham has provided a price of $5,029.00 to complete the work.  This project would also be part of the 2009 AIP projects.  Mr. Gwizdala made a motion to approve a contract with Peckham Engineering to update the Exhibit A property map, subject to State approval of the contract, and authorize the Chairman to sign all related documents.  Mr. Krygier seconded and the Board passed the motion unanimously.

 

SEWER LIFT STATION:  Mr. Nagel stated that MBS Airport and Tittabawassee Township have had an excellent historical relationship working together to bring utility improvements out to the airport.  This relationship started with the original water line which was constructed in an airport/township partnership back in 1983.  Since the airport receives federal grants, MBS must be very careful to only participate in the portion of a project which benefits airport development and not strictly township development.  This is the same process that is being used in the ongoing water tank construction project.

 

The sewer lift station which serves the airport was constructed in 1985.  The lift station needs to be rebuilt to accommodate the new terminal development.  Since there are limited users on this sewer line, the percentage of cost is 70% airport and 30% township.  The total cost of the project is estimated to be $350,000.  The township has agreed to charge the airport on the quarterly water and sewer bill over the course of seven years.

 

Mr. Gwizdala made a motion to approve the Agreement For Payment of Construction Costs for Pump Station #8 Replacement Project and authorize the Chairman to sign.  Ms. Seals seconded the motion.

 

Mr. Biltz had a question in regards to the estimated water usage stated in the contract.  Mr. Nagel explained that the additional estimated gallons are lower than the current amount because the new terminal will be more efficient.  The Township did not eliminate the current usage because it is unknown at this time what will be done with the present terminal.  The estimate usage is only being used for construction costs.  The water and sewer bill will be billed on actual use; the percentage will have nothing to do with the monthly billing.

 

Mr. Lynch confirmed that this is for the construction of a lift station which is a fixed asset compared to the usage of water and sewer.  Mr. Lippert approved the contract based on the discussions that have taken place.  It was his opinion that the airport does not own it therefore it should not be treated as a capital expenditure.  He also stated that this arrangement meets FAA requirements.  The township agreed to set payments on a time basis.  Mr. Lippert added that the lift station serves the whole airport not just the two terminals.  There being no further discussion, the motion passed unanimously.

 

AIRLINE LEASE RENEWAL:  Mr. Nagel stated that the current airline leases expired in September.  Since that time, the leases have operated on a month-to-month basis.

 

It has always been the intent to balance revenue generation with competitive rates and charges.  Based on the economic difficult times in the airline business, it is recommended that the current agreements be extended until September, 2009 at the current rates and charges.  Mr. Nagel stated that this was discussed with the Marketing Committee.  Mr. Gwizdala made a motion to extend the airline leases until September, 2009 at the current rates and charges and authorize the Chairman to sign the amendment.  Mr. Elder seconded the motion. 

 

Discussion took place regarding rates at other airports.  Mr. Nagel stated that our landing fees are a few cents higher than Traverse City but much lower than Lansing.  He also stated that several airports are either holding rates or reducing rates for the airlines.  Mr. Nagel stated that he feels that MBS is competitive with surrounding airports.  Rates are normally increased by 2-3 percent.  There being no further discussion, the motional passed unanimously.

 

AIR SERVICE INCENTIVES:  Mr. Nagel stated that in March, 2004 the Airport Commission approved a recommendation to support any new air service route with marketing dollars.

 

In an effort to improve the air service incentive program, the Marketing Committee has met and discussed this issue.  A draft of the Air Service Incentive Program was included in the packets which was reviewed and approved by the Marketing Committee.  This program will provide additional incentive for existing carriers to establish a new route from MBS and hopefully serve to entice a new entrant carrier.  The program is also designed to comply with FAA grant assurances.  Mr. Lippert has been involved in this process from the beginning.  Mr. Gwizdala made a motion to approve the MBS International Airport Air Service Incentive Program.  Ms. Seals seconded and the motion passed unanimously.

 

OLD BUSINESS:  

 

Replacement of the Airport Attorney:  Mr. Nagel stated that there is an ongoing process to replace the airport attorney.  Mr. Nagel is working through the Personnel Committee.  The position was advertised and 15 Letters of Interest and Statements of Qualifications were received that were shared with the Committee.  Five firms will be interviewed.  Mr. Nagel stated that anyone on the Board who would like to be involved in the interview process should contact him.  The recommendation should be at the December meeting.  Mr. Earley added because of Mr. Lippert’s long tenure as the airport’s attorney, the Committee felt they should look to see what was in the marketplace and services that would be able to step up and continue the job that Mr. Lippert has done.  The five firms will be interviewed the first week in December.  Chairman Distler asked whether the recommendation would be coming from the Airport Manager or the Personnel Committee.  Mr. Earley stated that the Personnel Committee would be making the recommendation based on interviews and consultations.

 

Property Update:  Mr. Nagel stated that he wanted to update the Board on the property purchase through the AIP program.  The property has been purchased to the north and airport has taken possession.  The airport has been reimbursed for the money spent to date.  Through the condemnation process there is an ongoing settlement in terms of final compensation for the land owner.  Mr. Lippert stated that it is eligible to go into closed session if the Commission would like a brief update.

 

Mr. Elder made a motion to go into closed session.  Mr. Krygier seconded.  Chairman Distler asked for a roll call vote.  Ms. Meisel took roll call as follows:  Mr. Biltz, yes; Dr. Distler, yes; Mr. Earley, yes; Mr. Elder, yes; Mr. Gwizdala, yes; Mr. Krygier, yes; Mr. Lynch, yes; Mr. McKeag, yes; Ms. Seals, yes.  The motion carried.

 

Chairman Distler welcomed the public back to the meeting.

 

NEW BUSINESS: 

 

New Route:  Mr. Nagel announced that effective February 11, 2009, Northwest Airlines will be implementing non-stop service from MBS Airport to LaGuardia Airport in New York City.  It will fly six days a week; leave MBS at 6 a.m. arriving at LaGuardia at 8 a.m. and arriving back at MBS about 10 p.m.  Rich Bostwick has worked on this diligently.  It is the first new city and route in a long time.  Approximately five years ago service to Cleveland started again but this is the first new city out of MBS in a long time.  It will be operated with a 50 seat regional jet. 

 

Although Mr. Nagel was informed of this early in the week, prior to the Board passing the Air Service Incentives, it would be his recommendation since he and the committee have been working on the incentives for some time, that the Board approve offering these incentives to NWA for this particular route.  This was discussed with the Marketing Committee.  Mr. Gwizdala made a motion to offer the incentive to NWA for the new LaGuardia route.  Ms. Seals seconded the motion.

 

Mr. Lynch asked why the airport should offer an incentive for a route that is already established.  Mr. Nagel stated that the marketing dollars as an incentive were agreed to in 2004.  Today the incentive was formalized and a starting point of $25,000 matching marketing funds was established.  Northwest was aware that the airport was working on an incentive plan, although not formalized until today, and had asked whether MBS was offering any incentives.  The timing was incidental that it had worked out this way.  Mr. Nagel feels that it would be appropriate, based on the ongoing discussions with NWA and the timing, that the incentive be approved for the new route.  Since NWA was aware that the incentives were being brought to the Board today, they requested that they qualify.

 

Mr. Biltz asked whether NWA analyzes the profitability based on the airport or by each flight.  Will the reduction of landing fees affect only that flight or all flight’s profitability at the airport?  Mr. Bostwick stated that the question should be addressed by corporate. Chairman Distler stated and Mr. Nagel agreed that NWA should show that the LaGuardia flight has an incentive.  Mr. Elder agreed that the incentives have been talked about and that it is purely coincidental that the incentives were passed today.  Mr. Biltz added that before the discussions were in generalities but the boundary lines have now been set.  Mr. McKeag stated that it is now our responsibility to market the flight.  Mr. Nagel stated the incentive program will do that but will require matching funds to work with the carriers.  Matching funds show support for the carrier to get the route established and also MBS can work with them to see how to best spend the money.  Mr. Earley was concerned with sustainability of the flight.  Mr. Biltz stated that he is sure that every flight, every month, that comes into MBS is analyzed by the carriers.  There is no such thing as a long term contract for a flight.  The message needs to get out to the public that this is something new.  Mr. Bostwick stated that the flight is already in the computers and being offered.

 

Passenger Statistics:  Mr. Lynch stated that every month the Board sees a comparison of passenger traffic based on the MDOT statistics.  The current data is a percentage of change compared to the same month of the previous year.  Nationwide there is a reduction of capacity which results in fewer opportunities to travel.  There has been discussion regarding less seats being available.  How many of the seats that originate here on a monthly basis are filled or not filled and how that changes over time would be very valuable.  Mr. Biltz stated that would be what the airlines consider the load factor per flight.  Mr. Nagel stated that he can get total seats for the month and total passengers for the month but he would check to see if it possible to get it by flight.  Mr. Nagel also stated that the airlines look at the yield of a flight.  Flights can be 98% full every flight but if money is not made the flight will be pulled.  Mr. Nagel stated that Mr. Lynch had a good point and will provide those numbers.

 

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for December 18, 2008. 

 

ADJOURNMENT:  There being no further business, Ms. Seals made a motion to adjourn.  Mr. Krygier seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:55 p.m.

 

 

                                                                                                                                                            Eugene F. Gwizdala, Secretary