MBS INTERNATIONAL AIRPORT COMMISSION

 

August 18, 2011

 

MINUTES

                                                                           

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

 

COMMISSIONERS

 

Present                                       Staff                                                  Other                        

Tom Adams                               Jeff Nagel                                          Angela Osmond, TSA

George J. Biltz                           Andre R. Borrello                              Rich Carpenter, Standard Parking

Bregitte Braddock                      Ryan Riesinger                                  Kristin Statler, Standard Parking

Greg Branch                               Debbie Meisel                                    Bob Reiser, Standard Parking

Kim Coonan                                                                                          Pat Wurtzel, Bierlein

Darnell Earley                            Guests                                               

Ernie Krygier                             Mark Wilcer, RS&H                           

Tom Ryder                                 Pat Frame, RS&H                              

Paula Whittington                      Steve Westerbeke, RS&H                  

                                                                                                                                                 

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Krygier made a motion to approve the minutes of the Regular Commission Meeting held on July 21, 2011.  Mr. Biltz seconded the motion.  The motion was unanimously approved by the Board.

 

JULY 2011 WARRANTS AND CASH & INVESTMENT SUMMARIES:  Mr. Coonan made a motion to approve the Warrant Registers for the July Payroll Account Check Numbers 86339-86394; the July Operations and Maintenance Check Numbers 41440-41522; and the July Cash and Investment Summaries.  Mr. Krygier seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None

 

HANGAR #1 CONSTRUCTION:  Mr. Nagel stated that at the June 16, 2011 meeting the Airport Commission approved a new ground lease with Bierlein for the Hangar #1 location.  Bierlein has completed the design for a new hangar at this location and has received bids on the project.  They are now requesting Airport Commission approval of the project.

 

The proposed hangar is 100’ x 100’ with a small office attached to the side.  This will be an excellent addition to the general aviation flight line at MBS.

 

Final approval of the construction is subject to the FAA airspace determination, (approval has now been received), airport staff approval of the plans as well as obtaining the appropriate building permits.  Bierlein and staff are currently reviewing the drawings.  Bierlein has also been working with local Township officials on the necessary permits.  Once these steps are completed, Bierlein will begin by removing the existing hangar at this location.

 

Mr. Krygier made a motion to approve the construction of Hangar #1 by Bierlein pending final FAA airspace determination, final staff review and approval of local building authorities.  Mr. Biltz seconded and the motion passed unanimously. Mr. Wurtzel informed the board that demolition will take place within 30 days and the project should be completed within 120 days. 

 

AUDIT SERVICES PROPOSAL:  Mr. Nagel stated that Andrews Hooper and Pavlik (AHP) have completed the MBS audit services for the past several years.  They have done a good job of preparing the annual audit, the PFC audit and recently, the single audit required for the ARRA grants.  In order to get a fresh look at the MBS operations, AHP has designated a new project manager for the MBS audit approximately every three years.

 

The MBS Finance Committee had asked staff to obtain a proposal for audit services from AHP for the next five years.  This request was due to the fact that MBS currently has nine open FAA grants with two of those being “stimulus” grants.  AHP has submitted a proposal and the Finance Committee met on July 22, 2011 to review the proposal.  The committee felt that due to the complexities of the terminal project, the number of outstanding AIP grants and the two stimulus grants, it would be best to stay with AHP.  The committee also felt the proposal provided by AHP was very reasonable.

 

The AHP proposal was included in the packet and in summary, the cost of the annual audit service increases less than 2% per year.  The cost for the PFC also has a slight increase, which totals $500 over the five year service period.

 

Based on the costs provided by AHP, and the ongoing terminal project, the committee recommends approval of the AHP proposal.  Mr. Coonan made motion to approve the proposal of Andrew’s Hooper and Pavlik to provide audit services for MBS for the next five years.  Mr. Adams seconded and the motion passed unanimously.

 

STANDARD PARKING AMENDMENT:  Mr. Nagel stated that Standard Parking has been managing the parking lot at MBS for the past 40 years.  The current agreement expires on December 31, 2011.  Mr. Nagel introduced Bob Reiser, Senior Vice President from Cleveland, Kristin Statler, Regional Manager, and Rich Carpenter, Local Manager.  Staff approached Standard to gauge their interest in signing an extension.  Standard was interested in an extension and has proposed a five-year deal which would see the airport through the transition into the new terminal parking lot.  After much discussion, Standard provided a proposal which was included in the packet.

 

In summary, Standard has offered the following:

 

-        $250,000 investment in the new equipment for the new parking lots

-        Support, engineering and testing of the equipment, in coordination with RS&H

-        Development of a transition plan from the existing lot to the new lot including providing temporary shuttle bus service at their cost

-        Elimination of a $.25 per day “capital expense” provision which will result in additional airport revenue of approximately $40,000 annually.

 

In exchange for this Standard requests a five-year extension of the existing agreement.

 

Standard Parking currently manages the airport parking facilities at several Michigan airports including Traverse City, Lansing, Flint, Grand Rapids and Kalamazoo.  Ms. Statler, Regional Manager is based in Kalamazoo and maintains excellent contact about once a quarter with MBS.  Rich Carpenter has been the local manager for the MBS operation for the past 11 years.  He is very familiar with the operation and does a good job to solve any issues that develop with this agreement.

 

This proposal was presented at the Finance Committee meeting on July 22, 2011 and the committee agreed to present this to the full commission for approval.  Mr. Branch made a motion to approve a five-year extension to the Standard Parking agreement according to the proposal dated June 23, 2011 and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Ryder seconded the motion. 

 

Discussion took place regarding the rates.  Mr. Nagel stated that any change in rates would come to the commission for approval.  Normally rates are reviewed approximately every two to three years to keep pace with other airports but not outpace those airports.

 

Mr. Biltz questioned if moving to a new terminal is the right time to be looking at other alternatives or options versus signing a five year contract.  Mr. Nagel stated that there are several ways to contract out the parking.  The current Standard Parking encompasses staffing the lot, providing liability insurance, maintenance, etc.  Mr. Nagel talked to others in the industry and was told to get through the transition and go out to bid after the transition. 

 

Mr. Biltz asked what percentage of the costs for the parking lot is the $250,000 capital investment.  Mr. Reiser stated that the amount is entirely towards new revenue control equipment, which includes ticket spitters, computers, credit card access, and electronic license plate monitoring but does not include parking booths.  As part of the proposal, Standard Parking will supervise the process and will provide RS&H with drawings that include the conduit and layouts for the entrance and exit lanes. At the end of the contract the equipment passes to the airport.  Mr. Biltz also asked if there are any limitations under the contract for other things that the airport may want to do with the parking lot such as installing solar collection.  Mr. Nagel stated that this had been discussed in preliminary discussions and Standard Parking is very willing to work with the airport with incentives that are brought to them.  Nothing would bar the airport from using the space.  Mr. Reiser stated that the parking lot is the airport’s facility and it is in charge of the parking rates.  Standard Parking provides a service to collect and protect the airport’s revenue and provide customer service.

 

Ms. Whittington asked for an explanation of the minimum guarantee.  Mr. Nagel explained that the minimum guarantee is an amount that is paid up front each month with the revenue over that amount being paid the following month.  Increasing the minimum does not increase the amount of revenue the airport will receive however it will change the revenue flow.  It also locks the amount that Standard Parking is guaranteed to pay.

 

There being no further discussion, the motion passed unanimously.

 

SAGINAW COUNTY SHERIFF CONTRACT:  Mr. Nagel stated that MBS has had a contract with Saginaw County Sheriff Department to provide law enforcement support to the airport as required by the TSA.  The partnership has worked well throughout the years and the Department has worked with MBS on numerous special events including training exercises, VIP visits and sheriff administration attendance at various security-related meetings.  A deputy is on duty 16 hours per day seven days per week and they are responsible for responding to all checkpoint alarms, patrolling the curb, random security checks on the ramp, responding to all terminal security-system alarms as well as a variety of other functions.  The contract is a “pass-through” contract where MBS pays actual costs associated with the Deputies stationed here and the County adds a 5% administration fee.  In December, 2010, the Airport Commission approved a nine-month extension of the existing agreement at the current rate of $28,600 per month.  The extension expires at the end of September, 2011.

 

Discussions have taken place between the County and MBS on a new three-year agreement.  The County has their new costs for the upcoming fiscal year.  Based on these numbers, the first year cost to MBS will be $26,416 per month which represents a 7.6% decrease in the current contract cost.  The cost for the final two years of the contract will be discussed prior to each year.  Once the county realizes their expenses related to the contract, it will be brought to the commission for approval.  MBS does have some protection built into the contract by virtue of a 90-day out clause.

 

This contract was discussed at the MBS Finance Committee meeting on July 22, 2011 and the committee agreed with staff recommendation of a three-year agreement with SCSD with the first year being $26,416 per month.  Mr. Nagel stated that it was recommended that an outside attorney review the contract since Mr. Borrello works for the county and MBS.  Mr. Nagel had Gary Campbell who has a history of working with MBS in the past review the contract.  Mr. Campbell stated that he had no issues with the contract.  Mr. Krygier made a motion to approve a new three-year agreement with the Saginaw County Sheriff Department with the first year cost to be $26,416 per month and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Biltz seconded the motion.  Chairman Earley asked what the reporting procedure is between SCSD and the airport.  Mr. Nagel explained the procedures and stated that the airport has a written handbook for the deputies.  There being no further discussion, Chairman Earley called for a vote.  The vote was 8 yeas, 0 nays, and 1 abstention.  Ms. Braddock abstained. The motion passed.    

2011 AIP GRANTS:  Mr. Nagel stated that the intention for this grant was to address strictly entitlements for about $1.6 million.  This money was to be used for reimbursement for a portion of the Spence contract and for reimbursement for a portion of the water main loop.  These costs were part of the finance plan the commission previously approved for this phase of work.

 

The commission has also approved the bids for both Phase X (ramp and perimeter road) and Phase XI (building finishes) along with associated construction administration costs.  All of these approvals were subject to receiving FAA funding.

 

Mr. Nagel continues to work with the FAA on various funding scenarios for both entitlements and discretionary dollars for the project.  Because of the recent FAA shut-down and the fast-approaching end of the government fiscal year, he has been asked by the FAA to submit a hybrid grant application including both entitlement dollars and discretionary dollars.  In addition to this grant application, MBS may actually receive more than one grant in the next five weeks.

 

Therefore, Mr. Nagel asked the commission for flexibility to submit any requested FAA grant application necessary to receive either 2011 AIP entitlement funding or 2011 AIP discretionary funding.

 

Ms. Braddock made a motion to authorize the Airport Manager to submit FAA grant applications as requested by the FAA for 2011 entitlements and 2011 discretionary money related to the terminal project and authorize the Chairman, or in his absence the Vice Chairman, to sign the related grant documents.  Mr. Krygier seconded.  Mr. Biltz stated that there is not a September meeting.  There will be many budgeting issues in the next four to five weeks.  The purpose of this motion is to give Mr. Nagel as much flexibility as possible to react to however the budgeting process happens.  Mr. Nagel stated that this is very unusual since he normally comes to the commission with very specific grants.  He is working with RS&H and staff in addition to the items that have been approved by the commission pending funding, they are moving forward to bid the security system for the building and the relocation and installation of the passenger loading bridges.  Those are the last two pieces of the project that would require federal funding.  They are hoping for last minute available money.  The numbers from the bids would be used for grant application with formal approval later from the commission.  The airport is trying to get as much funding as possible into this year. 

 

Mr. Coonan asked what the status of the FAA in Washington was.  Mr. Nagel stated that the FAA was shut down for about ten days.  The Senate and the House passed and the President signed another short-term extension to the AIP funding program that goes until September 16.  That’s why the projects are being bid so the numbers are ready on September 16.  Chairman Earley stated that flexibility is very important at this time.  Mr. Nagel stated that he reiterated the plan with the manager at the FAA district office in Detroit and he is in favor of any flexibility that can be obtained.  Chairman Earley stated that he appreciates that Mr. Nagel is staying on top of this.  There being no further discussion, the motion passed unanimously. 

 

PHASE V SPENCE BROTHERS CONTRACT CHANGE ORDER #7 AND #8:  Mr. Nagel stated that the Spence Brothers contract for the current phase of the terminal project is divided into three sections.  Each portion of work was given its own Notice-To-Proceed (NTP).  This was done because of the complexities involved in the financing of this work and to coordinate with certain FAA grants.  As done in the past, each change order is directly related to an individual Notice-To-Proceed.  This has worked well to keep the financing clear with the State and with the FAA.

 

In order to keep an accurate record of change order approvals, it is best to discuss each proposed change order individually.

 

Change Order #07 for NTP #1:  Mr. Nagel stated that this change order has three items as outlined in the letter from Mark Wilcer including kitchen area modifications, electric signage infrastructure and additional power receptacles.  In summary, these three changes would increase the amount of NTP #1 by $20,238.25.  It should be noted that previous changes to this NTP had reduced the amount by over $1.5 million.  Therefore, even with this change, this NTP will still be well under the original amount.   Mr. Nagel stated that the Operations Committee met to discuss this change order. Mr. Biltz made a motion to approve Spence Brothers Change Order #07 for NTP #1 and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Krygier seconded the motion.  Chairman Earley stated that the flexibility to meet to discuss the change and modifications keeps the project moving.  Mr. Nagel does an excellent job of keeping the Operations Committee informed so there are no surprises. There being no further discussion, the motion passed unanimously.

 

Change Order #08 for NTP #2:  Mr. Nagel stated the Notice-To-Proceed #2 was divided out to equal the exact amount of the second ARRA (stimulus) grant which MBS received.  This work covers a very specific portion of work for this phase of the project.  The two items included in this change order are a modification to the passenger screening wall which will provide additional flexibility for the future and modification to the steel bracing at the ticket counter to coordinate between previous phases of the project and this phase.  These two adjustments will increase the amount of NTP #2 by $40,278.58.  It must be noted that the FAA has been reluctant to increase the amount of ARRA grants in the past and these costs will most-likely be MBS responsibility.  That being said, because the overall contract cost has been decreased through previous changes the local dollars committed to this phase are still within the commission-approved finance plan.  Mr. Nagel stated that the Operations Committee also reviewed this change order.  Mr. Krygier made a motion to approve Spence Brothers Change Order #08 for NTP #2 and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Ryder seconded and the motion passed unanimously.

 

PERSONNEL COMMITTEE UPDATE:  Mr. Nagel stated that negotiations between MBS and the local Teamsters union have been ongoing since last fall.  Shortly after negotiations began, Mr. Nagel was informed that the Teamsters local had changed from 486 to 214.  This change caused a delay in the negotiations and caused the process to revert backwards to some degree.  Since that time, negotiations have continued with Local 214.

 

Airport staff along with the airport attorney met with the Personnel Committee on August 8, 2011 to discuss a contract proposal.  The discussion of collective bargaining strategy is eligible for closed session and the union has made a request for the commission to have these conversations held in closed session.  Mr. Borrello stated that under the provisions of the Open Meetings Act the collective bargaining process, the public body is allowed to have a strategy session in closed session if the body so chooses.  It does require a roll call vote.  Mr. Biltz made a motion to go into closed session.  Mr. Krygier seconded.  Chairman Earley asked for a roll call vote.  Ms. Meisel took roll call as follows:  Mr. Adams, yes; Mr. Biltz, yes; Ms. Braddock, yes; Mr. Branch, yes; Mr. Coonan, yes; Mr. Earley, yes; Mr. Krygier, yes; Mr. Ryder, yes; Ms. Whittington, yes.  The motion carried.

 

Mr. Branch left the meeting after closed session.  Upon return from closed session Mr. Coonan moved to accept the recommendation from the airport manager to approve and ratify the collective bargaining agreement (CBA), as proposed to the commission by the airport attorney and manager and as summarized below.  The commission ratifies this CBA with the understanding that the Teamsters Local 214 bargaining team has tentatively agreed to these terms and contingent on ratification by the Teamsters bargaining unit.  Approval includes authorization for the appropriate parties to execute the CBA on behalf of the MBS International Airport Commission when ratified.   

Summary of the terms of the new CBA:

 

     1.  Wages

               a.  2010-11:  Wages Frozen

               b.  2011-12:  $0.35/hour Wage Increase; $500 lump sum

               c.  2012-13:  $0.30/hour Wage Increase; $300 lump sum

               d. 2013-14:  Wages frozen; $1,000 lump sum

               e.  2014-15:  Wages Frozen; $1,000 lump sum

               f.  Eliminate highest rate shift premium for non-24 hour employees

     2.  Health Care

               a.  Change from PPO2 to Michigan Conference of Teamsters Welfare Fund

               b.  Rates as provided in MCTWF Schedule, but summarized as follows:

               c.  Significant savings in annual premium

                           i.   1st year:  12.5% decrease from current rates

                          ii.   2nd year:  7.9% decrease from current rates

                         iii.   3rd year:  0.7% decrease from current rates

                         iv.   4th year:  2.9% increase from current rates; employer and employees to split cost of increase

               d. Eliminate Employer hearing and vision contributions

               e.  Eliminate Employer offer of monthly stipend for retirement health care

     3.  Miscellaneous

               a.  Nearly 5-year term:  Expiring March 28, 2015

               b.  Language clarifications throughout

               c.  Streamlined and clarified grievance procedure

               d. Add different uniform options as proposed by Union

               e.  Other minor operational issues

 

Ms. Braddock seconded the motion. Mr. Biltz asked when ratification could be expected.  Mr. Nagel stated that the union would be voting, Tuesday, August 23.  The end of the payroll is the 24th and the payroll changes would take effect on the 25th, the first day of the pay period.  There being no further discussion, the motion passed unanimously. 

 

Non-Union Personnel:  Mr. Nagel reviewed a memo that he had issued the Personnel Committee.  At the MBS Personnel Committee meeting held on August 8, 2011 he briefly discussed possible wage adjustments for the six administration employees who are not part of the bargaining unit.  The airport manager is not included since he has a separate review process.  The committee had asked for additional information. 

 

In summary, the administration employees have not had a wage adjustment since September, 2008.  Historically, the administration employees receive wage adjustments similar to what is called for in the collective bargaining agreement for the union employees.  It should be noted that wages and benefits are not always exactly the same for both employee groups, but they are usually close. 

 

In September, 2009 the union employees received a 3% pay increase as called for in the approved collective bargaining agreement.  The administration staff did not receive an increase at that time.  Mr. Nagel requested an adjustment in administration employee wages if the airport commission approved the proposed union contract at today’s meeting. 

 

His proposal for the administration employees is as follows:  3% pay increase effective immediately and $500 lump sum payment for each employee.  The 3% wage adjustment is commensurate with the 2009 increase provided to union employees and the $500 lump sum payment coincides with the lump sum payment for union employees.   

 

Mr. Nagel stated that another factor to consider is the ever-changing health care coverage.  As mentioned in the committee meeting, staff is closely tracking the State legislative proposal to cap the amount a public employer can pay towards a monthly health care premium and/or require employee health care contributions.  Mr. Nagel has asked the airport’s insurance agent to research policies that can cover our administration employees along with the retirees and stay below the proposed caps.  Once this proposal becomes law, that could have a financial impact on the non-union employees as well, and he may have to go back to the Personnel Committee for further action.

 

Mr. Nagel also recommended that the administration wages be evaluated annually and that process will involve the airport manager and the Personnel Committee.  Mr. Krygier made a motion to give the administration employees a 3% pay increase effective immediately and a $500 lump sum payment for each employee.  Ms. Whittington seconded.  Mr. Biltz asked the Personnel Committee’s opinion.  Chairman Earley stated that they had talked about the proposal during the Personnel Committee meeting.  He and Ms. Whittington were in attendance.  He stated that this is the standard way of how to handle non-union employees when bargaining with the union employees.  It’s well in the scope of the airport’s ability to pay.  The last thing you want to do is have your non-union employees feel that they don’t have the same kind of acknowledgement as a union employee.  Ms. Whittington added that the administration employees have been under a wage freeze since September of 2008.  She stated that in the local area they are starting to see businesses coming out of wage freezes and getting 2-3% increases and she feels it is appropriate.  There being no further discussion, the motion passed unanimously. 

 

Mr. Coonan asked whether the five-year contract with the union protects them if the state mandates employees to pay 20% towards their health insurance.  Mr. Nagel stated that it is not law yet but based on the proposal he believed it would protect them.  Mr. Borrello added that the contract would need to be ratified prior to the law passing.  He also stated that the proposal states that it won’t take effect until January 2012.  

 

OLD BUSINESS:  Mr. Nagel thanked Mr. Riesinger for handling the press inquiries regarding the FAA shutdown while Mr. Nagel was on vacation and not within cell phone coverage.  It did not affect the phase of work with Spence Brothers.  FAA is back working since the extension is good through September 16th.

 

NEW BUSINESS:  Mr. Nagel stated that Allegiant Air announced that they will begin less than daily non-stop air service between MBS and Orlando Sanford Airport in Florida beginning November 3rd.  Mr. Nagel has been working with Allegiant for about four years.  They have been to MBS twice to visit; he has visited them several times at their headquarters and provided them with various proposals.  He was in the process of working with another carrier for Orlando service but it had not been finalized.  Allegiant sent Mr. Nagel an email last night.  Tickets are now on sale and MBS is on the Allegiant website.  The service is less than daily which is very common for airports MBS’ size.  Mr. Nagel stated that Allegiant currently does not have an operating agreement or an air service agreement to be able to take advantage of the airport’s Air Service Grant.  Most likely a special meeting will be needed sometime in September to get agreements approved.  Mr. Biltz stated that the board could give power to a committee to approve a contract.  Mr. Nagel stated that typically a committee recommends and the board approves and five members would be needed.  Mr. Nagel stated that the Air Service Grant is $600,000 which is $500,000 Federal money and $100,000 of local money.  Of the local money $30,000 is from various chambers and economic development groups and $70,000 of MBS money.  Plus Allegiant will be looking for additional marketing monies.  Mr. Nagel stated that he would feel more comfortable having the board approve the contracts.

 

Chairman Earley stated the following:

 

“This is wonderful news not only for the MBS Airport but for the region as well.  Allegiant’s announcement as a new discount carrier service provider will put MBS on a more competitive footing with similar size airports in the region.  This good news along with our $48 million new terminal currently under construction will enhance our status as the most desirable transportation hub for north, central and mid-Michigan air travelers.  I think those of us that have been around here for at least six years know that has always been a goal and a point of contention.  Thanks to Jeff and to the staff and everyone who have brought us to this point, I think that it opens up the door for other discussions with regards to the carrier’s capacity and what they are willing to do to help as we move forward to become more competitive.  So this is very good news for the region and for the airport.  Thank you.”           

 

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for October 20, 2011 and possibly a special meeting in September.

 

ADJOURNMENT:  There being no further business, Mr. Krygier made a motion to adjourn.  Mr. Coonan seconded and the Board unanimously passed the motion.  The meeting adjourned at 2:05 p.m.

 

 

                                                                                                                                                            Ernie Krygier, Secretary