Airport Authority - March 7, 2017 Minutes

The Regular Meeting of the Municipal Airport Authority of the City of Fargo, North Dakota, was held Tuesday, March 7, 2017, at 8:00 a.m. in the Airport Boardroom.

The members present or absent were as follows:
Present: Clark, Pawluk, Haugen, Blazek, Kilander (via phone)
Absent: None
Others: Gehrig, Bossart
Chairman Blazek presiding.

Approved the Minutes of the Regular Meeting of the Municipal Airport Authority Held February 14, 2017:
The minutes of the Regular Meeting of the Municipal Airport Authority held February 14, 2017, were approved without objection.

Approved the Airport Vouchers Totaling $63,076.43:
Mr. Pawluk moved to approve the airport vouchers totaling $63,076.43.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Mead & Hunt:
Gen. Haugen moved to approve the individual voucher in the amount of $6,670.00 to Mead & Hunt for partial payment request for engineering services in connection with the Taxiway A & A1 Reconstruction - Design, AIP47.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Mead & Hunt:
Gen. Haugen moved to approve the individual voucher in the amount of $5,984.00 to Mead & Hunt for partial payment request for engineering services in connection with the PFC Application #8, APFC08.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Mead & Hunt:
Gen. Haugen moved to approve the individual voucher in the amount of $10,399.77 to Mead & Hunt for partial payment request for engineering services in connection with the Taxiway A Reconstruction Project, AIP45.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Mead & Hunt:
Gen. Haugen moved to approve the individual voucher in the amount of $9,743.45 to Mead & Hunt for partial payment request for engineering services in connection with the Terminal Taxiway and Taxiway A Reconstruction Project, AIP46.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Mead & Hunt:
Gen. Haugen moved to approve the individual voucher in the amount of $1,759.92 to Mead & Hunt for partial payment request for engineering services in connection with the Access Road, Apron Lighting and Sanitary Sewer Improvements.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Flint Communications:
Gen. Haugen moved to approve the individual voucher in the amount of $56,229.19 to Flint Communications for partial payment request for 2017 Airport Marketing Program.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to Sixel Consulting Group:
Gen. Haugen moved to approve the individual voucher in the amount of $1,956.68 to Sixel Consulting Group for consulting services in connection with the Routes Americas Conference, Las Vegas, NV.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Approved the Individual Voucher to FTZC Consulting & Operations:
Gen. Haugen moved to approve the individual voucher in the amount of $650.00 to FTZC Consulting & Operations for consulting service in connection with the Foreign Trade Zone.
Second by Dr. Clark.
On the call of the roll, members Clark, Pawluk, Haugen, Blazek, Kilander voted aye.
No member being absent and none voting nay the motion was declared carried.

Reviewed Parking Project Update:
Chairman Blazek welcomed Mayor Mahoney to the Airport Authority meeting today and reviewed the recent history on airport parking that brought us to this discussion today. He stated in 2013 the board acknowledged that our passenger growth was very sharp and that we could quickly run out of parking. He stated we looked at all options, a parking ramp, additional surface parking with shuttle service, etc. and came to the conclusion at the time we had enough parking. He stated as Gen. Macdonald, in his wisdom, told us that this sharp increase would not last and he was right.

He stated since passenger growth has leveled off for now we have some time to decide what we want to do for additional parking. He stated the Airport Authority has had some meetings with the Mayor and city staff regarding our decision not to move ahead with a parking ramp at this time. He stated it is still in our plan to have a parking ramp at some time in the future but economically it is not a feasible option at this time. Chairman Blazek stated Mr. Pawluk met with the Mayor and indicated the City would like to present some options and ideas on a ramp.

Mayor Mahoney was recognized and stated there has been some controversy on this matter but he thought the last meeting with the City Commission and the Airport Authority went very well. He stated Mr. Dobberstein has indicated that the Airport Authority has not had the public contacting its office requesting a parking ramp but he stated he does get those comments from the public. He stated the public he is talking about has indicated that they would not mind having an enclosed area in which to park. He stated while the skyway the board is planning may well work he would like to see the board consider a parking ramp with bond rates where they are right now. He stated they worked with some numbers for a parking ramp that was smaller than what was originally being considered by the Airport Authority. He stated he would like the board members to take their shutters off a little bit, consider this as an opportunity, and consider it as an option. He stated there was discussion on the effects of online ride services such as Uber, but a lot of people parking at the
airport are coming from outside of the city and that type of ride service is not an option to them.

Hestated he does not disagree with the fact that we do not know the impact of millennials. He stated part of the thought of parking structures is don't build it too big. He stated perhaps if we built it smaller that would help. He introduced Mr. Jim Gilmour, Director of Planning and Development, City of Fargo.

Mr. Gilmour was recognized and stated his office manages the downtown parking facilities. He stated they contract with Interstate Parking to do the day-to-day management of those facilities. He stated the City paid Interstate $460,000 to manage the parking lots last year. He stated there is a big demand for parking downtown and they are having a hard time meeting that. He stated they find that downtown people are not as concerned about the rate for parking as they are with quality of the parking spot, convenience and safety. He stated the airport could look at its parking rates and also the current management contract to see what could be done to finance a facility. He introduced Mr. Paul Schnettler, Operating Partner, Interstate Parking.

Mr. Schnettler was recognized and stated he is one of the owners of Interstate Parking and has been doing commercial parking for 28 years. He stated that about a month ago the Mayor asked him to look at the parking operation at the airport and see if it could support a parking garage. He stated he does not know the inner workings of the facility or the enplanements and customer mix.

He stated with over $3 million in revenue and a couple of thousand spaces, knowing the weather in Fargo, it was his opinion that with some rate adjustments and some automation it could support a parking garage. He stated there has been discussion on how big and how close. He stated no one is coming to the airport to park but they are coming because they are flying somewhere. He stated there is a segment of the population that will get a ride to the airport but there is also a large population that is captive and they are coming here no matter what. He stated business travelers will park as close and as convenient as possible and often price is the last thing on their list. He stated without a lot of in-depth details their long look is that right now it looks like a parking garage could be supported with the number of parkers and the rates and the possibility for automation and synergies in management.

Mayor Mahoney asked what size parking garage he would recommend.

Mr. Schnettler stated probably 300-500 spaces but the devil would be in the details. He stated you get into the design build conversations. He stated they do own several of their own properties and have developed their own parking garages. He stated that is based on their recent experiences. He stated maybe the discussion is "yes" it is worth spending the money to hire the engineers and design architects to see what will pencil out. He stated in the model he was envisioning there was still an area where you could maintain that $18-$20 short-term visitor traveler and maybe have a separate entrance on the backside of the garage and the general population fills the rest of the garage. He stated he does quite a bit of traveling and Fargo is doing nothing but growing.

He stated as a somewhat outsider looking in, if he was a business traveler and he lived in Fargo he is not going to park at the airport because his car is nice and he does not want to park it outside. He stated if he had the option of parking in a garage, he would park at the airport every time.

Mayor Mahoney stated Commissioner Gehrig was concerned that in order to do a parking ramp the airport would have to increase its mill levy, which it has the authority to do, but at the last meeting with the City Commission the Authority indicated they did not want to do that. He asked Mr. Schnettler if he was saying the operation could handle the debt responsibilities.

Mr. Schnettler stated right now it looks like the airport's net profit on the parking lot is about $3 million per year and asked if it would be the goal to maintain the $3 million or to get a garage and maintain $1 million. He stated it is their opinion that the airport would not lose money by building a garage and would still be profitable every year. He added he does not see the airport going into the red to build a garage.

Chairman Blazek stated it is unfortunate that enough information did not get to Mr. Schnettler to make a presentation that would propose a parking ramp, show how much it would cost and show whether or not we could afford it. He stated the Airport Authority has already hired architects and engineers to go through that exercise. He stated we need that $2.5 to $3 million revenue each year to sustain operations so it is not cash that is available to service debt on a bond. He stated it would need to be net neutral or just slightly negative net neutral and that has been our struggle. He stated we cannot financially do the parking structure right now. He stated constructing a 500-stall garage would require taking out 150 existing spaces so we would be netting only 350 spaces.

Mr. Schnettler stated in his model he did have rate increases. He stated right now the Economy Lot is $6 and is just as close to the terminal as some of the $18 spaces. Chairman Blazek stated we did do a survey of our clients and they spoke loudly as to what they would be willing to pay for parking. Mr. Dobberstein stated the survey was put together by SP+ and it was distributed through Chamber members and Economic Development Corporation members and the survey showed the most the participants would be willing to pay for parking at the airport was $9 per day.

Mr. Pawluk asked what are the rates at our competing airports. Mr. Dobberstein stated that is completely irrelevant. He stated an airport charges what they
need to in order to maintain their operations at the airport. Mr. Pawluk asked if we could consider a rate increase.

Mr. Dobberstein stated our current rates are $18, $8 and $6. He stated the next rate review is due in July. He stated if there is a need for an adjustment SP+ will provide that to us. Mr. Schnettler stated the Duluth airport has a parking garage and he was told that the parking garage fills up before the surface lot does. He stated he does not know their rate structure and why that is happening.

Mayor Mahoney stated he does not disagree that it would be a jump to get a parking ramp but sometimes you need to look at those things a little bit just to keep our environment competitive. Mr. Schnettler stated another thought he had was the possibility of putting a 50-room hotel and conference center on top of a parking garage. He stated he is not an expert on the hotel market but someone could analyze that. He stated it was just an idea.

Gen. Haugen stated his concern is transferring that income for operating the airport to debt service. He stated everyone would like an enclosed space in which to park their car but we have to look at the fiduciary responsibility to the citizens and ask what we can and cannot afford. He stated the busiest lot on the airport is the $6 Economy Lot. He stated here we have land and a lot of room. He stated a lot of airports that construct parking garages are limited on space.

Mr. Pawluk stated these discussions started when we were experiencing rapid growth and we recognized that at some point we would need more parking. He stated we looked at both a parking ramp and surface parking and after doing the math, we realized that for a 1200 space facility that ourmonthly debt service would be $155,000 and we could not afford that. He stated we then began looking at how we could make the parking experience better and connect with the ultimate extension of surface parking south of the cross over road. He stated the skywalk does not add any parking but it does improve the parking experience and allow us to expand to the south. He stated he maintains the first thing we will need to do is expand surface parking to the south and then from there improve the parking experience.

Mr. Pawluk stated for a long time he has felt the least expensive solution is to build a surface lot south of the crossover road and make it the "cheapskate" lot. He stated if that lot was free or $1 that would free up the other lots to provide an improved parking experience. He stated he is not sure we have the courage to try that but that is no further distance than from the furthest spot at the Fargodome or West Acres.

Mayor Mahoney stated he had to get to another meeting and thanked the board for their time.

Received Request from NW Leasing (Bernie Ness) to Extend South General Aviation Area Building Ground Lease:
The communication from Mr. Bernie Ness, NW Leasing, dated February 21, 2017, was received and filed without objection. Mr. Dobberstein stated this lease is for the former Avis service facility in the south general aviation area. He stated Mr. Ness is requesting a five-year extension.

Gen. Haugen moved to approve the five-year lease extension requested by NW Leasing.
Second by Dr. Clark.
All members present voted aye and the motion was declared carried.

Received Request from Enterprise to Extend South General Aviation Area Building Ground Lease:
The communication dated March 2, 2017, from Enterprise Rent a Car was received and filed without objection. Mr. Dobberstein stated Enterprise Rent a Car is requesting a five-year extension to the lease for their service facility in the southeast general aviation area.

Dr. Clark moved to approve the five-year lease extension to Enterprise Rent a Car for their service facility ground lease.
Second by Mr. Pawluk.
All members present voted aye and the motion was declared carried.

Received Request from Sanford to Extend Eastside Terminal Lease:
The communication from Mr. Tim Meyer, Sanford AirMed, dated February 27, 2017, was received and filed without objection. Mr. Dobberstein stated Sanford's lease in the Eastside Terminal expires April 30, 2017, and they are requesting a month-to-month renewal with the standard 3% increase. He stated it is their plan to move into the Bravo Sierra LLC (Rick Berg and David Sahl) hangar once the project is complete.

Mr. Pawluk moved to approve the one-year lease extension with a 30 day out for Sanford AirMed.
Second by Gen. Haugen.
All members present voted aye and the motion was declared carried.

Received Request to Expand Cargo Apron:
The communication dated February 27, 2017 from Mr. Spencer Evans, FedEx Express, was received and filed without objection. Mr. Dobberstein stated FedEx is requesting an expansion of the cargo apron. He stated the current configuration of the ramp is not conducive to properly accommodating all of the feeder aircraft. He stated this letter ties in with the next item on the agenda. He stated they are looking for a 210' extension of the cargo apron to the west. He stated yesterday we received a revised concept drawing showing the proposed Corporate Air hangar in line with the west edge of the apron expansion.

He stated FedEx is requesting to reserve the existing farmland between their current ground service equipment facilities and the proposed Corporate Air hangar for future expansion. He stated MDC Fargo LLC would have a right of first refusal on that property (approx. 127,000 sf) and would pay us the current farm lease rate.

Chairman Blazek asked if FedEx would be maintaining the space. Mr. Dobberstein stated we could propose that. He stated it would be hard to continue to farm the space because of access. Mr. Dobberstein stated without reserving that space FedEx would have no room for growth. He stated one of the reasons they located in Fargo was that there was
room for growth.

After further discussion, Mr. Pawluk moved to approve the site plan concept presented and to authorize the airport attorney to move forward with a lease for MDC Fargo LLC.
Second by Gen. Haugen.
All members present voted aye and the motion was declared carried.

As a point of clarification, the motion approved the concept of a ground lease for the proposed Corporate Air hangar and a right of first refusal for MDC Fargo LLC on the parcel shown
with green hash marks on the site plan for future expansion of FedEx operations, and agreeing to expand the cargo apron.

Airport Construction and Security Update:
Mr. Jeff Klein, Mead & Hunt, was recognized and stated they are continuing to work on the Taxiway A Project and also the PFC Application #8. He stated last week their staff, along with airport staff met with representatives from the Bismarck FAA Airports District Office (Laurie Suttmeier and Dave Anderson) and the Minneapolis ADO Office (Andy Peek) to discuss the Taxiway A Project. He stated there are concerns about the impacts of the approaches during the taxiway project.

Other Business:
Mr. Dobberstein stated our Certificate of Deposit with First International Bank matures on April 8, 2017. He stated this is the CD in which we have our Parking Construction and Maintenance Funds deposited. He stated right now we are not certain about what we will be doing as far as the skywalk and we are also going to need some of those funds for improvements to the employee parking lots this year. He stated because of that uncertainly as to when exactly we are going to need that money and also the fact that the cargo ramp expansion will take some of our Operations and

Maintenance Funds reserves we will probably not be able to add any funds to the CD this year. He stated for the interim, First International Bank has a program to create a money market fund or something of that nature to just let it float for another two or three months until we decide how much we want to put into a CD for a new term. He stated we should know more in June or July what amount we will need from that fund.

It was the consensus of the board to not renew the CD on April 8, 2017, but to hold the funds at First International Bank until such time as the board knows what funds will be needed for parking improvements, etc.

The meeting of the Municipal Airport Authority was adjourned until the next Regular Meeting to be held Tuesday, March 28, 2017.

Time at adjournment was 9:03 a.m.