MBS INTERNATIONAL AIRPORT COMMISSION

 

August 19, 2010

 

MINUTES

                                                                           

The meeting was held in the Airport Commission Board Room, 8600 Garfield Road, Freeland, Michigan 48623.  Chairman George Biltz called the meeting to order at 1:01 p.m.  Roll was called by Debbie Meisel.

 

COMMISSIONERS

 

Present                           Absent & Excused         Staff                             Other

Tom Adams                   Darnell Earley                Jeff Nagel                     Herb Spence, Spence Brothers

George J. Biltz               Brian K. Elder                Andre R. Borrello         Angela Osmond, TSA

Bregitte Braddock                                                 Ryan Riesinger              Marty Wazbinski, City of Midland

Greg Branch                                                          Debbie Meisel               Ron Sujkowski, Citizen

Eugene F. Gwizdala                                                                               

Ernie Krygier                                                        Guests

Paula Whittington                                                 Mark Wilcer, RS&H

                                                                              Steve Westerbeke, RS&H 

                                                                              Pat Frame, RS&H

                                                                                                               

PLEDGE OF ALLEGIANCE 

 

WELCOME:  Chairman Biltz welcomed Paula Whittington, from the City of Midland, to the Airport Commission Board.  She is replacing Jon Lynch.  She is also appointed to the Personnel Committee.

 

MINUTES:  Mr. Gwizdala made a motion to approve the minutes of the Regular Commission Meeting held on July 15, 2010.  Mr. Krygier seconded the motion.  The motion was unanimously approved by the Board.

 

JULY 2010 WARRANTS AND CASH & INVESTMENT SUMMARIES:  Mr. Gwizdala made a motion to approve the Warrant Registers for the July Payroll Account Check Numbers 85552-85609; the July Operations and Maintenance Check Numbers 40513-40572; and the July Cash and Investment Summaries.  Mr. Branch seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  Mr. Herb Spence, of Spence Brothers Construction, thanked the Board for considering Spence Brothers for the next phase of the construction project.  He is involved in the Great Lakes Bay Regional Alliance and realizes how important this project is to the entire region and is very excited to be involved.    

 

Mr. Ron Sujkowski, of 3184 Yorkshire Drive, Bay City asked if there was on-demand shuttle service for handicap and senior citizens to and from the parking lot.  Mr. Nagel stated that the airport does not have that service but it has been looked at and it is cost prohibitive but it can be revisited.  Mr. Sujkowski also stated that he has seen that MBS is sponsoring different events and recommended that the airport have annual air shows.  Mr. Nagel stated that he made a presentation to the Commission several years ago to have the Blue Angels come.  The airport applied but was unsuccessful.  Mr. Sujkowski feels that if the airport would continue to apply it would have a better chance.   

 

EXHIBIT SUMMARY:  Mr. Nagel stated that he had included a summary of the following five exhibits related to the next phase of terminal construction.  Technically this covers Phase V, which is being funded through the FAA AIP discretionary grant and Phase VI which is being funded through a variety of funding sources.

 

Congress has passed another short-term extension of the FAA funding bill.  This is the 15th such extension since the program expired three years ago.  As I have stated in the past, the timing of this is not ideal for our project; however, by working closely with the FAA we have developed a finance plan to allow us to continue the work.  While our discussions with the FAA were positive, it did require us to take a sequential approach to funding this phase of work.  This approach provides the best opportunity to take advantage of FAA funding as those dollars become available.

 

In summary, these are the exhibits in the order they appear in the packet:

 

-        Exhibit #1:  RS&H recommendation to approve the base bid of Spence Brothers

 

-        Exhibit #2:  Recommendation of a Plan of Finance for this phase

 

-        Exhibit #3:  Recommendation to authorize a Notice of Award to Spence Brothers

 

-        Exhibit #4:  Recommendation to approve the Construction Administration contract for RS&H

 

-        Exhibit #5:  Standard FAA AIP Resolution.

 

The process to get to this point has been complicated and I have been meeting with the Operations Committee throughout.  The Committee agrees with the recommendations as stated in each exhibit.

 

PHASE V & VI BIDS (PROJECT #4209 & #4310):  Mr. Nagel stated that bids for Phase V & VI of the terminal project were opened on May 11, 2010.  Four bids were received and RS&H has provided a letter of recommendation.

 

This is a major phase of construction and it includes, in general, the roof, side walls, partitions, electrical, HVAC and plumbing.  Below is a summary of the bids received.

 

            Engineers Estimate                                                    $20,213,000

 

                  Base Bids:

                  Spence Brothers                                                  $20,390,000

                  LA Construction                                                 $21,049,000

                  Sorenson Gross Corp.                                          $22,847,000

                 

            (The fourth bidder, CCC, withdrew their bid on June 9, 2010.)

                 

In addition to the base bids listed above, several alternates were also bid including millwork, signage, security system, interior finishes, flagpoles, alternate roofing system and chain link fence.  Each of these items has a separate bid amount and the contractor must hold these prices for four months.  The details of the various bids for these items are attached to the RS&H letter of recommendation included in the packet.  The intent is to award the base bid work at this time and award any or all alternates if MBS receives FAA discretionary money yet this year.  If not, the work in the alternate bids will be re-bid at a later date.  This was discussed with the Operations Committee.

 

It is the recommendation of RS&H to award the contract to Spence Brothers in the amount of their base bid of $20,390,000.  Mr. Krygier made a motion to approve the Base Bid of Spence Brothers in the amount of $20,390,000 and authorize the Chairman, or in his absence the Vice-Chairman, to sign all related documents.  Mr. Adams seconded the motion.  Ms. Braddock asked what is included in the base bid.  Mr. Nagel stated that basically it is everything inside the terminal except the interior finishes, the tiles, carpet, millwork, and counters.  Those are considered the alternates.  Spence is required to hold their bid for the alternates for a certain amount of time.  If MBS does not get the discretionary money, the alternates can be re-bid at another date.  Chairman Biltz added that this is strictly internal terminal work; it does not include any tarmac, parking or external work.  There being no further discussion, the motion passed unanimously. 

 

PHASE V & VI FINANCE PLAN (PROJECT #4209 & #4310):  Mr. Nagel stated that the Finance Plan was reviewed by the FAA, RS&H, and the Operations Committee. 

 

 

costs

 

Spence Brothers Base Bid

$20,390,000

RS&H Base Contract

$1,373,000

Total

$21,763,000

 

Phase V & VI will carry through portions of two FAA fiscal years.  Unfortunately, since Congress has not passed a multi-year FAA funding bill, the finance plan for these phases of work is slightly more complicated.  The intended sources of funding for these phases include the following:

 

 

sources of funding

 

FAA Entitlement1

$4.9 Million

FAA Discretionary2

$7.9 Million

State3

$.3 Million

PFC4

$3.7 Million

Local5

$5.0 Million

TOTAL

$21.8 Million

 

1 – faa entitlement to include the following:

     

      $1.7 Million in 2010 for Grant #4310

      $1.6 Million local funds reimbursed to MBS in 2011 with AIP grant

      $1.6 Million local funds reimbursed to MBS in 2012 with AIP grant

      (2011 and 2012 are based on Congress Continuing AIP Program Funding)

 

2 – FAA Discretionary to include the following:

 

      $2.85 Million in 2009 for Grant #4209 (Phase V)

      $5.05 Million anticipated in 2011 grant

      (2011 and 2012 are based on Congress Continuing AIP Program Funding)

 

3 – State currently provides 2.5% matching funds on AIP Entitlement and Discretionary Grants

 

4 – PFC to include the following:

 

      $2.8 Million currently held in restricted MBS bank account

      $.9 Million will be local funds reimbursed on a pay-as-we-go through PFC Application #7

 

5 – Local funds will be capital expense funds currently in unrestricted MBS bank accounts

 

Although the financing for this phase is complicated, there are two important points to keep in mind:

 

  1. MBS has the funds available to award these contracts.
  2. So far, the amount of funding from each source is very close to the original estimates.

 

The terminal construction will be a fourteen month process.  Since a good deal of local funds will be utilized, it is important to authorize the Airport Manager to make the required payments.  Mr. Gwizdala made a motion to authorize the Airport Manager to make payments for Project #4209 and Project #4310 in accordance to the contracts and the plan of finance as outlined above.  Mr. Krygier seconded the motion.

 

Chairman Biltz stated that the Operations Committee has been working very closely with Mr. Nagel on various funding alternatives and feels that this is a reasonable plan.  It is not risk free.  Certain expectations from the FAA, as 2011 budgeting and planning approaches, will not be confirmed until the airport is into this project.  As commitments are made on the project, the airport is expecting certain funding sources.  If they change or are delayed, the Commission will have to address them and work through the process.  It is felt that this is a fairly reasonable risk based plan to move forward with but it is difficult when the project is a multi-year project and the funding entity only gives 30 day funding agreements.  Although the airport is thankful for the dollars, it does put the airport in a risk position because of the way the government does their budgeting and spending.

 

Ms. Braddock wanted to verify that the airport does have a commitment to get the money.  Mr. Nagel stated that the plan of finance was discussed in detail with the FAA Office in Detroit.  They are committed.  For the last three years, the FAA funding for this program has been dependent on Congress passing legislation in Washington, D.C. to continue the funding.  Mr. Nagel explained that there are two sides to the funding; one it collects the taxes and fees from the aviation system and two it spends it on capital improvement projects such as MBS.  That funding program has not expired over the last three years but it has been short term extended 15 times.  If Congress did not pass future legislation, not only would MBS have to go to an alternative plan, but every airport in the nation that had an ongoing project would also.  The collection of taxes and fees for the aviation system would also expire.  Mr. Nagel has heard that after October 1 there may be a six month extension.  He stressed that it is dependent on Congress not just the FAA.  Mr. Nagel stated that as far as he knows, the AIP funding has never expired.  Chairman Biltz added that MBS has a commitment from the FAA but the FAA does not have a commitment from Congress yet.  He stated that as an airport commission and an airport manager, there really is nothing else that can be done differently at this point.  Ms. Braddock stated that the commissioners should call their congressmen. Chairman Biltz stated that MBS is the only airport in the nation that has ever presented a letter to the FAA signed by both Republicans and Democrats, all congressional, all House and Senate people from the area on one letter and all agreeing.  Within the bounds of what would normally happen, Chairman Biltz feels the airport is covered but there is risk and as a Commission everyone should be aware.  Mr. Nagel assured the Board that the contract will be covered, the funds are available.  There is a contingency plan.  There being no further discussion, the motion passed unanimously.

 

NOTICE OF AWARD (PROJECT #4310):    Mr. Nagel stated that the next step in the process is to authorize the Airport Manager to issue a formal Notice of Intent to award the contract.  At this time, only the work in the base bid will be awarded and that work may be split with separate Notice-To-Proceeds.  This again is being coordinated with the FAA for funding purposes.  Mr. Krygier made a motion to authorize the Airport Manager to issue a Notice of Award to Spence Brothers in the amount of the base bid $20,390,000.  Ms. Braddock seconded and the motion passed unanimously.

 

PHASE V AND VI CONSTRUCTION ADMINISTRATION AGREEMENT (PROJECT #4209 & #4310):  Mr. Nagel stated that the proposed contract for RS&H to provide Construction Administration and Resident Project Engineer Services for Phase V & VI of the terminal project was included in the packet.  This is another large phase of work and will continue with the terminal building construction process.  In summary, this contract covers the following:

 

-        Construction Administration Services

-        Full-Time On-Site Resident Project Engineer

-        Pay Application Review

-        Submittal, Contractor Inquiry and Request for Information Review

-        Periodic Site Visits by Project Manager and Members of Appropriate Staff

-        Closeout and As-Built Review

-        Utility Coordination

-        Township Code Review

 

The RS&H proposal has three different aspects.  The first to consider is the work associated with the Construction Administration Services related only to the Spence Brothers base bid.  The cost for RS&H to perform these tasks is $1,373,000 as depicted on page two of the cost spreadsheet attached to the contract document.

 

There are also two listed alternates for the RS&H Agreement.  The first is associated with the seven bid alternates in the Spence Brothers bid.  If FAA discretionary money becomes available and the alternates are approved, the cost for the RS&H services is $104,000 as depicted on page three of the cost spreadsheet attached to the contract.

 

In addition, if there is a delay in FAA funding next year and the Spence contract is extended for four months, the extra RS&H cost is $221,000 as depicted on page four of the spreadsheet.

 

RS&H plans to continue to use Steve Westerbeke as their on-site representative.  Steve has been on-site throughout Phase III and is very familiar with this project.

 

Mr. Gwizdala made a motion to approve the RS&H Construction Administration Agreement for Phase V and VI, authorize a Notice to Proceed for the base amount only ($1,373,000) and authorize the Chairman, or in his absence the Vice-Chairman, to sign all related documents.  Mr. Krygier seconded and the motion passed unanimously.

 

AIP GRANT RESOLUTION:  Mr. Nagel stated that the FAA and the State require an official Resolution passed for each AIP grant the airport receives.  Mr. Gwizdala made a motion to approve the Resolution for Grant #4310 with Mr. Branch seconding. 

 

RESOLUTION

(AIP Grant #4310)

 

RESOLUTION ADOPTING AND APPROVING THE EXECUTION OF THE GRANT APPLICATION, GRANT AND ALL RELATED DOCUMENTS BY THE MBS AIRPORT COMMISSION, A SPECIAL STATUTORY BODY, ACTING AS SPONSOR FOR THE CITY OF MIDLAND, CITY OF SAGINAW, AND COUNTY OF BAY, MICHIGAN, AND THE UNITED STATES OF AMERICA, FEDERAL AVIATION ADMINISTRATION, FOR THE PURPOSE OF OBTAINING FEDERAL AID FOR THE DEVELOPMENT OF THE MBS INTERNATIONAL AIRPORT, UNDER PROJECT NO. 3-26-0083-4310.

 

BE IT RESOLVED by the members of the MBS International Airport Commission,

Freeland, Michigan:

 

Section I.  That MBS International Airport Commission, on behalf of the City of Midland, the City of Saginaw and the County of Bay, Michigan, shall submit a Grant Application and enter into a Grant Agreement for the development of the MBS International Airport, and that such Grant Documents shall be set forth hereinbelow:

 

Section II.  That the Chairman or Vice-Chairman of the MBS International Airport Commission, is hereby authorized and directed to execute said Grant Application, Grant Agreement, and all other related documents in (4) copies on behalf of the City of Midland, City of Saginaw, and County of Bay, Michigan, and the Airport Manager is hereby authorized and directed to impress the official seal and to attest said execution:

 

Section III.  That the Grant Application/Agreement referred to as Project 3-26-0083-4310.

 

The motion passed unanimously.

 

OLD BUSINESS: 

 

Dow/Avflight Lease:  Mr. Nagel stated that on April 15, 2010, the Commission approved a motion to authorize the Airport Manager and Attorney to develop the final lease language consistent with the Dow/Avflight lease exchange, which will result in hangars 5 and 6 being under a new lease between Dow and MBS; and hangars 3 and 4 being under a new lease between Avflight, as sublease of CRS Realty Saginaw, and MBS. 

 

Mr. Nagel stated that the transaction is nearing conclusion and wanted to provide the Commission an update that they believe the necessary documents will be executed by the end of the month.

 

The rates and lease terms will be as approved by the Commission.  The format and structure of the agreements are consistent with those of other recent hangar leases, although several changes were proposed and agreed to by the parties regarding operational issues and other matters not related to the rent or term of the lease.

 

One notable term that is proposed to change is that dealing with capital improvements made by the FBO lessee.  In the current lease, the Commission is required to pay the lessee the cost of capital improvements at then-market value.  Through negotiation, it has been agreed that the Commission will not pay such costs; however, the new FBO lease is proposed to have any successor FBO pay the difference between the fair market value of the premises prior to the improvements and at the time of termination.   

 

The lease will be for twenty years with multiple five year options.

 

Chairman Biltz asked if the current FBO left and there was a time period where there wasn’t a replacement, would the airport have any obligation.  Mr. Borrello stated that the final language has not been finalized but the most recent discussions were “until you find a successor”.  Discussion took place regarding how the capital improvement value would be calculated. 

 

Meeting Schedule:  Mr. Nagel reminded the Commission that last May when the meeting schedule was approved, a September meeting was not scheduled.  Mr. Nagel has a commitment with MAAE and may be voted in as president of that association on the normal scheduled day for the Commission Meeting.  Mr. Nagel stated that if the FAA had discretionary money before the end of the fiscal year, it would take Commission action for the grant and for approval of the work.  The meeting could be the same day as the normal meeting would have been or it could be another date depending on the timing.  A notice will be sent out with a packet for a meeting or as a reminder that the meeting is canceled.  

 

NEW BUSINESS:  Mr. Nagel updated the Commission regarding Phase IV taxiway construction and the removal of Taxiway Gulf and Bravo.  The FAA requested that when a major project was done on the airfield that the two taxiways be removed because they meet at the intersection.  RS&H researched the “as-built” plans and their design plans were based on that review.  Unfortunately, concrete was discovered under the asphalt and there will be an additional cost to the project.  The three options that were looked at were leave it in and put dirt over it; partial removal for any future electrical work; or remove it all.  It was operationally and financially best to take the second option since the runway and airport closes from midnight to 5:00 a.m. because it is at the intersection of both runways and the safety area.  No action is required at this time but there will be a Change Order at a later date.  This was discussed with the FAA and the costs are eligible.   Estimated cost is $50,000 for time and materials.            

 

 

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for October 21, 2010.

 

ADJOURNMENT:  There being no further business, Mr. Krygier made a motion to adjourn.  Mr. Gwizdala seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:31 p.m.

 

 

                                                                                                                                                            Darnell Earley, Secretary