MBS INTERNATIONAL AIRPORT COMMISSION

 

October 20, 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                        Absent & Excused          Staff                               Guests                             

Tom Adams                George J. Biltz                 Jeff Nagel                      Mark Wilcer, RS&H

Bregitte Braddock                                               Andre R. Borrello          Steve Westerbeke, RS&H

Greg Branch                                                         Ryan Riesinger              

Kim Coonan                                                         Debbie Meisel               

Darnell Earley                                                                                            

Ernie Krygier                                                                                             

Tom Ryder                                                                                                

Paula Whittington                                                                                     

                                                                         

PLEDGE OF ALLEGIANCE 

 

MINUTES:  Mr. Coonan made a motion to approve the minutes of the Regular Commission Meeting held on August 18, 2011.  Mr. Krygier seconded the motion.  The motion was unanimously approved by the Board.

 

AUGUST & SEPTEMBER 2011 WARRANTS AND CASH & INVESTMENT SUMMARIES:  Mr. Krygier made a motion to approve the Warrant Registers for the August Payroll Account Check Numbers 86395-86455 and September Payroll Account Check Numbers 86456-86531; the August Operations and Maintenance Check Numbers 41523-41595 and September Operations and Maintenance Check Numbers 41596-41676; and the August and September Cash and Investment Summaries.  Mr. Branch seconded the motion and the Board unanimously approved it.

 

PUBLIC COMMENT:  None

 

GREAT LAKES BAY ALLIANCE LEASE:  Mr. Nagel stated that the Great Lakes Bay Regional Alliance has leased an office on the second floor of the terminal building for two years.  This location has worked well for the Alliance as they wanted to stay in the middle of the Great Lakes Bay Region.  The Alliance has added an additional part-time position and they routinely need a conference room for meetings.  Therefore, they have been looking for a new office location.  They have settled on a new location in Freeland and will be moving out in the next several months.

 

The current rent is $466.33 per month and the official lease expires at the end of October, 2011.  The Alliance has requested that their lease be extended on a month-to-month basis to allow them time to finish their new office build-out and allow time for the move.

Although this partnership has been very beneficial for both parties, it was known that there would come a time when they would need to relocate their operation.  Mr. Coonan made a motion to extend the existing lease of the Great Lakes Bay Regional Alliance on a month-to-month basis to accommodate their move to the new office location.  Mr. Ryder seconded.  Mr. Branch abstained.  The vote was seven yeas, zero nays, and one abstention; motion carried. 

 

Mr. Nagel stated that the Great Lakes Bay Regional Alliance Board met in the Skyroom last week.  He updated the board on the new terminal and also gave a tour to 18-20 members.  The board was very impressed with the building and excited about the future of the airport.  They offered anything they can do to help the airport.  There have been other tours.  He is getting public input in the building and the feedback he is hearing is very positive.

 

AIRLINE LEASES:  Mr. Nagel stated that the airline leases expire on November 30, 2011.  It has always been the intent to negotiate fair lease rates which also keep MBS competitive with other Michigan airports.  Discussions have taken place with the carriers and a 3% increase has been proposed.  These new rates would take MBS to the opening of the new terminal building.

 

In the meantime, staff will begin the process of a thorough evaluation of the airport’s overall rates and charges.  This will involve the use of a consultant and will take place over the winter.  The goal of this study is to provide fair and equitable rates for the new building.  The rate structure will be different as various items which are included in the new lease vary from the existing lease.  Mr. Branch made a motion to approve a 3% increase to the airline rates and charges and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Adams seconded.  After discussion and requesting Mr. Nagel to report back to the board the dollar amount the percentage increase represents, the motion passed unanimously.

 

PHASE V CHANGE ORDERS #09 AND #10:  Mr. Nagel stated that the ongoing Spence contract requires two more change orders.  Both were included with the Exhibit.

 

In summary, Change Order #09 is dedicated to Notice-To-Proceed #01 and includes modification to the garden masonry wall, modification to the dining area soffit, the addition of a sink and floor drain in the maintenance room, lighting switch modification, adjustments to some ceiling panels and modification to the apron light pole bases.

 

The total for this change order is an additional $34,550.74.  Although this is most-likely a local expense, it should be noted that the overall Spence contract is still under the original amount.

 

Change Order #10 is for Notice-To-Proceed #02 and includes some interior framing revisions, installation of maintenance area handrails and additional bracing for the roof access stairs.

 

The total cost impact for this change is an additional $17,918.47.  Since this NTP is funded through the second ARRA grant, these costs will also be local.  Again, it should be noted that the overall contract amount is under the original amount.

Both of these change orders were discussed with the Operations Committee at the meeting held on October 13, 2011 and the committee agreed that these should be brought to the full commission for approval.  Chairman Earley, as a member of the Operation Committee, added it was the consensus of the committee that the intent regarding this item and the next two items is to keep the project moving forward.  Mr. Nagel, staff, and the consultants are doing their due diligence that is necessary in order to get these matters before the board and keep things moving.  He stated that the committee feels that they need to be less cumbersome and more facilitative as possible to make sure the project stays on schedule.  Also, if it means alternative looks at funding mechanisms, the committee wants to support that.  Chairman Earley asked the board to indulge and bear with the committee as they work with the staff to get these items on a fast track so the project can continue moving.  Any recommendations will be brought back to the full commission. 

 

Mr. Coonan made a motion to approve Change Order #09 and #10 to the Spence Brothers contract and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Krygier seconded and the motion passed unanimously.

 

PHASE XII AND PHASE XIII BIDS:  Mr. Nagel stated that the MBS staff worked with RS&H to bid the final two pieces of terminal work which are eligible for FAA funding.  This included the terminal security system and the relocation/installation of the passenger boarding bridges.  These projects were bid in early September with the hope of obtaining any leftover FAA discretionary money before the end of the federal fiscal year, September 30, 2011.

 

The bids received are listed below:

 

SECURITY:              Midstate Security                                $1,634,362.00

                                    Video and Sound Services (VSS)      $1,867,880.00

 

The engineer’s estimate for this work was $1,710,000.00.

 

PASSENGER BOARDING BRIDGE INSTALLATION:

                                    Thyssenkrupp                                          $224,167.00

 

Although the airport was very successful in getting 2011 discretionary funds (nearly $12 million in all), MBS did not receive FAA discretionary money for these last two projects.  Therefore, the following options are:

 

-        Do not award these contracts and re-bid next year.

-        Award the contracts and pay with 100% local funds.

-        Award the contracts and pay with local funds and reimburse ourselves with future PFC dollars.

-        Award the contracts and pay with local funds and reimburse ourselves with 2013 AIP entitlement funds.

 

These options were discussed in detail with the Operations Committee on October 13, 2011.  The committee agreed to the recommendation to fund the work with local money and seek reimbursement through the 2013 AIP program and PFC dollars.

 

Chairman Earley again stated that these items are intricate to keep the project moving.  Because of the relationships and discussions that Mr. Nagel has had with the FAA, they are working with MBS as best as can be expected.  The committee is convinced that this is necessary to keep the project moving forward and that is the priority.

Mr. Adams made a motion to approve the bid of Midstate Security and to approve the bid of Thyssenkrupp for the above amounts.  The motion authorizes the Chairman, or in his absence the Vice Chairman, to sign the related grant/contract documents and also authorizes the Airport Manager to pay for this work with local funds and submit for reimbursement utilizing 2013 AIP entitlements and future PFC dollars.  Mr. Branch seconded and the motion passed unanimously.

 

PHASE XII AND XIII CONSTRUCTION ADMINISTRATION:  Mr. Nagel stated that as has been done with each individual phase of construction, a separate agreement needs to be approved with RS&H to provide the Construction Administration Services for this work.  The cost for these services is broken down as follows:

 

         Phase XII - Security System Installation                                            $210,864.00

         Phase XIII - Passenger Boarding Bridge Installation                          $80,000.00

 

This cost includes the on-site project supervision and associated FAA-required documentation involved in these phases of work.  Both contract amendments were included with the exhibit.

 

These contracts were discussed at the Operations Committee meeting held on October 13, 2011 and the committee agreed to recommend approval of these contracts to the full commission.  Mr. Nagel stated that the $2.2 million that covers Phase XII and XIII does include these amounts for construction administration. 

 

Chairman Earley added that it is important to have a good working relationship when you are involved in a project of this complexity.  He has been impressed with RS&H in their willingness to work things out and take the lead in advising based on their expertise and experience in these kinds of projects.  Mr. Nagel added that the airport is currently at 12 grants which is a result of activity or inactivity in Washington.  That was not the intent or expectation when the project was started.  RS&H has been able to piece the project together, take recommendations to the committee and then to the full board.

 

Mr. Coonan asked whether RS&H will have a role after the project is completed.  Mr. Nagel stated that RS&H will complete the punch list and train on the equipment.  The airport will be going through a selection process in the near future for a new general consultant for the overall day-to-day assistance with the airport.  Mark Wilcer added that there is a one year warranty and RS&H expects to be involved regardless of the general consultant selection for any items during that year.     

 

Ms. Braddock made a motion to approve RS&H to provide Construction Administration services for the above-stated amounts for Phase XII and Phase XIII and authorize the Chairman, or in his absence the Vice Chairman, to sign the related documents.  The motion also authorizes the Airport Manager to pay these bills with local funds and submit for reimbursement through the 2013 AIP grant process and future PFC dollars.  Mr. Branch seconded and the motion passed unanimously. 

 

ALLEGIANT LEASE:  Mr. Nagel stated that Allegiant Air announced new service from MBS to Orlando beginning on Thursday, November 3rd.  This service will be less-than-daily with flights originally set to operate on Thursday and Sunday.  The service is now available through the end of May and this includes the Spring Break periods in March and April.  The service should be beneficial to the region.

Since Allegiant will operate a less-than-daily schedule, the lease they sign will differ slightly from the standard lease utilized by United Express and Delta.  Allegiant will pay landing fees and rents and charges which more closely correlate to their operation.  A draft lease has been sent to Allegiant and comments have been received back.  At this time, the lease has not been finalized.

 

However, it is important that the Airport Commission consider approval of the lease which is subject to the Airport Manager’s approval for substance and to the Airport Attorney as to form.  Taking this action will allow the Allegiant service to begin on schedule with a signed lease on file.

 

Mr. Adams made a motion to approve a lease for Allegiant Air for less-than-daily service which incorporates rates and charges in-line with their operation.  The motion also states that approval of the lease is contingent on the Airport Manager’s approval as to substance and the Airport Attorney as to form and shall authorize the Chairman, or in his absence the Vice Chairman, to sign the lease.  Ms. Braddock seconded the motion. 

 

Chairman Earley asked whether the airport has a role in public relations with Allegiant.  Mr. Nagel stated that the commission passed an air service incentive program several years ago.  It includes a waiving of landing fees for any new service initiated from MBS for six months.  It was very broad because it had to include Delta and United.  The program also includes marketing assistance.  Mr. Nagel has agreed with Allegiant to co-op with radio ads and TV ads.  Allegiant prepared the marketing.  Mr. Nagel stated that he feels strongly that if the service doesn’t get advertised and get used, it will not last so he has independently started a $15,000 radio buy with ads that Allegiant had produced.  Chairman Earley stated that MBS should do all that it can to make it a successful venture.  Mr. Krygier suggested a press release regarding first flight.  Mr. Nagel stated that he will be working with Allegiant on a press release and he also stated that Allegiant makes a big presentation for the first flight.  There being no further discussion, the motion passed unanimously.       

GROUND HANDLING AGREEMENTS:  Mr. Nagel stated that the initial proposal to Allegiant included a plan where MBS would provide the ground handling services for Allegiant and in turn, MBS would subcontract those services to Avflight, the local fixed base operator.  This arrangement assisted Allegiant with their decision to enter the market plus it made the billing for these services simple.  MBS would contract with Avflight and “pass-through” their costs with no mark-up.

 

The following two agreements are required:

 

The first is a two-part agreement between Allegiant and MBS.  MBS has reviewed the proposal and provided comments back to Allegiant.  Negotiations are currently still taking place for this agreement.  These talks should be concluded soon.

 

The second agreement is a ground handling agreement between MBS and Avflight.  This document is being discussed currently and should be concluded soon.

 

Mr. Krygier made a motion to approve the ground handling agreement between MBS and Allegiant and the ground handling agreement between MBS and Avflight to provide above-wing and below-wing services for the less-than-daily flights.  Final approval shall be subject to the Airport Manager approval as to substance and the Airport Attorney as to form.  The motion authorizes the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Mr. Branch seconded the motion.

 

Mr. Borrello added that he wants to assure the board that both he and Mr. Nagel feel it is very important that interest is taken in the agreement with Avflight to make sure that they understand, agree and are held responsible for the responsibility that the commission is taking on as the ground handler.

 

Chairman Earley asked if Mr. Nagel was able to quantify what the service is worth in terms of cost.  Mr. Nagel stated that the cost per turn is $630.  This includes passenger processing at the counter and the gate and also time to sell tickets during the time around the flights.  It also includes an in-to-plane charge which is a charge for a fuel truck to come to fuel the plane.  This fee is what Avflight will charge the airport and MBS will bill Allegiant.   There being no further discussion, the motion passed unanimously.    

 

AIR SERVICE GRANT AGREEMENT:  Mr. Nagel stated that when Allegiant announced service into MBS they requested the use of the MBS Department of Transportation Small Community Air Service Grant.

 

This grant was originally approved in 2007 and was extended for 12 months in January, 2011.  The initial concept of this grant was to assist a new entrant carrier into the MBS market with both marketing dollars and with a form of revenue guarantee.  Since these agreements are very specialized, MBS contracted with The Boyd Group, air service consultant, to conduct negotiations and draft an agreement with Allegiant.  Unfortunately, with the new markets Allegiant has announced, these negotiations have gone slower than expected.

 

However, it is important to have the Airport Commission provide their approval of the concept of Allegiant using this grant.  This service fits our initial application requirements and will meet the three goals of the grant:

 

-        Provide additional competition in our market

-        Provide additional non-stop service to a new market

-        Introduce lower fares into the market.

 

It should be noted that the original MBS grant was $500,000 federal and $100,000 local, of the $100,000 local $70,000 is the responsibility of MBS.  The remaining $30,000 was pledged from the three Chambers and the three Economic Development Groups.  The maximum exposure of MBS will be $70,000 which is available in our 2011 marketing budget.

 

Mr. Nagel stated that he spoke with the DOT in Washington during the process and they are in complete agreement that the Allegiant service meets these goals and are eligible.  This is a very complicated contract so he contracted with the Boyd Group who has been used in the past as an air service consultant.  Due to the number of cities that Allegiant has announced, negotiations have been slow, but Mike Boyd continues to work with Allegiant to develop an agreement that meets the financial conditions of the grant.  Mr. Nagel talked to the DOT and verified that the contract does not need to be completed before the start date; however it does need to be completed before January, 2012. 

 

Mr. Krygier made a motion to approve the use of the MBS Small Community Air Service Grant by Allegiant with final approval of the agreement contingent on the Airport Manager as to substance and the Airport Attorney as to form.  The motion also authorizes the Chairman, or in his absence the Vice Chairman, to sign the related documents.  Ms. Braddock seconded and the motion passed unanimously. 

 

OLD BUSINESS:  Mr. Nagel stated that the Airport Improvement Program is in another short-term extension with no talk of a multi-year deal in Washington.  He updated the board that the 2011 entitlement dollars were earmarked for and approved by the board for reimbursement of some of the expense for the Spence project.  That grant has been received.  The 2012 entitlement dollars are also pledged toward the Spence phase and was approved by the board.  The 2013 entitlement dollars the board just approved for Phase XII and XIII.  The lack of a multi-year bill should not hold up construction.

 

NEW BUSINESS: 

 

Allegiant:  Mr. Nagel reminded the board that the Allegiant service starts Thursday, November 3rd.

 

Packets:  Mr. Nagel stated that there has been some interest in the packets being emailed.  The office is able to meet that request for those who are interested.

 

MERS Pension:  Mr. Coonan stated that he had talked to Mr. Nagel regarding if there is a policy in the pension plan that would allow the purchase of generic time, prior service time, or military time.  Mr. Coonan said that people purchase time and pay for it all themselves through various pensions.  Mr. Coonan’s question is there a policy in the existing retirement system allowing for the purchase.  Mr. Borrello stated that he is not sure if there is anything statutory; he normally goes to the MERS plan that the employees are under.  Mr. Nagel stated that about five years ago an employee requested to buy generic time.  The board needs to pass a resolution which indicates how much time is allowed to be purchased and what kind of time such as generic or military.  That would open up the policy for everyone.  In 2006 this was brought up at a Personnel Committee meeting consisting of Darnell Earley, Jon Lynch, and Pat Beson.  It was discussed and at that time the committee decided not to move forward.  Mr. Nagel told Mr. Coonan yesterday that he would be happy to take it back to the Personnel Committee for discussion.  Chairman Earley recommended that Mr. Nagel gather the research materials and the Personnel Committee meet to discuss and then bring a recommendation to the full board.  Mr. Borrello asked if the goal is to see some kind of benefit for the airport.  Mr. Coonan stated that this could be possibly a win/win situation for the employer.  Mr. Borrello also stated that it may be a benefit to call MERS.     

  

ADMINISTRATIVE MATTERS:  Next regular meeting is scheduled for November 17, 2011.

 

ADJOURNMENT:  There being no further business, Mr. Krygier made a motion to adjourn.  Ms. Braddock seconded and the Board unanimously passed the motion.  The meeting adjourned at 1:57 p.m.

 

 

                                                                                                                                                            Ernie Krygier, Secretary