Airport Authority - December 11, 2018 Minutes

The Regular Meeting of the Municipal Airport Authority of the City of Fargo, North Dakota, was held Tuesday, December 11, 2018, at 8:00 a.m. in the Airport Boardroom.
The members present or absent were as follows:
Present: Linn, Blazek, Lind, Haugen
Absent: Clark
Others: Bossart
Vice Chairman Haugen presiding.

Approved the Minutes of the Regular Meeting of the Municipal Airport Authority Held November 27, 2018:
The minutes of the Regular Meeting of the Municipal Airport Authority held November 27, 2018, were approved without objection.

Approved the Airport Vouchers Totaling $82,676.58:
Mr. Lind moved to approve the airport vouchers totaling $82,676.58.
Second by Ms. Linn.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to Sixel Consulting Group:
Ms. Linn moved to approve the individual voucher in the amount of $3,514.00 to Sixel Consulting Group for November passenger enplanement fees for Frontier Airlines.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to Cass County Treasurer:
Ms. Linn moved to approve the individual voucher in the amount of $56,841.86 to the Cass County Treasurer for 2018 property taxes and drain taxes.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to the City of Fargo:
Ms. Linn moved to approve the individual voucher in the amount of $37,179.65 to the City of Fargo for special assessments (paid in full) for PR-17-H, asphalt mill and overlay.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to Flint Communications:
Ms. Linn moved to approve the individual voucher in the amount of $30,653.90 to Flint Communications for partial payment request for the 2018 Airport Marketing Program.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to Fargo Jet Center:
Ms. Linn moved to approve the individual voucher in the amount of $32,638.08 to Fargo Jet Center for 2018 co-op marketing.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to TL Stroh Architects:
Ms. Linn moved to approve the individual voucher to TL Stroh Architects for partial payment request for architectural and engineering services in connection with the Elevated Walkway.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Approved the Individual Voucher to Northern Improvement Company:
Ms. Linn moved to approve the individual voucher to Northern Improvement Company for Partial Payment Request No. 8 (Final) for construction of the Taxiway A and A1 Reconstruction Project, AIP47.
Second by Mr. Lind.
On the call of the roll, members Linn, Blazek, Lind, Haugen voted aye.
Absent and not voting: Clark
The motion was declared carried.

Received Communication from COGI, Inc. Requesting Eastside Terminal Lease Extension:
The communication dated November 27, 2018, from Mr. Mark Cromack, Cogi, Inc. was received and filed without objection.
Mr. Dobberstein stated Cogi, Inc. is requesting a one-year extension of their lease effective December 1, 2018.
Ms. Linn moved to approve the request for a one-year extension to the lease with Cogi, Inc.
Second by Mr. Lind.
All members present voted aye and the motion was declared carried.

Approved Eastside Terminal Lease Extension for Altig, Inc., Subject to Review:
Mr. Dobberstein stated we have had initial conversations with Mr. Brian McTernan of Altig, Inc. regarding an extension of their lease in the Eastside Terminal. He stated we do not yet have a written request but it sound as if they will be requesting a one-year extension.
Mr. Blazek moved to approve a one-year lease extension for Altig, Inc., subject to legal review.
Second by Ms. Linn.
All members present voted aye and the motion was declared carried.

Received Communication from Spectrum Aeromed:
The communication from Spectrum Aeromed dated December 5, 2018, was received and filed without objection.

Mr. Dobberstein stated the current owners of Spectrum Aeromed (Snaky Creek Enterprises, LLC) are negotiating the sale of the business to Heartland Equity Partners II, LLC and the name of the business will remain Spectrum Aeromed, LLC. He stated Mr. Thomas Ahonen is here representing Heartland.

Mr. Dobberstein stated Heartland is proposing to assume the current Spectrum leases with some minor revisions. He stated Attorney Bossart has reviewed the proposal and has been working with their legal counsel. He stated the current leases with Spectrum had different expiration dates for the office space in the Eastside Terminal and the lease for Hangar #9 but those will be changed so they are the same. He stated the buyers are proposing the same lease rate for the office space with the standard 3% escalator, but they are asking for consideration that the renewal rate increases for the hangar be changed from the 3% to CPI. He stated the Airport Authority currently owns three hangars that are leased to tenants. Hangar #9 to Spectrum and Hangars #3 and #4 to Fargo Jet Center. He stated none of those leases use CPI as the basis for annual increases. He stated making a change on this lease would set a precedent.

Vice Chairman Haugen stated the variance between 3% and CPI is not much.

Mr. Blazek stated CPI is 2% or less and shrinking.

Mr. Thomas Ahonen was recognized and stated first that Heartland Equity Partners is delighted to be investing in this business in Fargo. He stated with regard to CPI, that is common in all of the leases they do and they feel it is a fair escalator for a lease. He stated CPI has been lower in the last couple of years but no one knows what it will do in the future.

Mr. Dobberstein stated the lease agreement is five years, with some options, and the target date for the assumption of the lease is December 31, 2018.

Mr. Lind asked if they will be running aircraft out of the hangar.

Mr. Ahonen stated no. They will be continuing the business as it is being operated now.

Mr. Blazek stated he is inclined to retain the 3% escalator. He stated he does not want to set precedence as we will have other tenants asking for the same, and then if the CPI goes above 3% we will get requests to lower increases to a percentage.
Mr. Lind stated he agrees.

Mr. Blazek moved to approve the assignment of lease from Snaky Creek Enterprises, LLC dba Spectrum Aeromed to Heartland Equity Partners II, LLC, dba Spectrum Aeromed, LLC, leaving the 3% annual escalator in place on both the office space and the hangar.
Second by Mr. Lind.

Mr. Dobberstein stated it is probably in our best interest to leave the 3% escalator in place, but as with any of our leases, we can review the terms at the end of the current term.

Mr. Rick Flacksbarth, Cityscapes Development, was recognized and stated basing a lease rate on CPI is a lot like an adjustable rate mortgage. Sometimes the tenant will come out ahead and sometimes the property owner will come out ahead. He stated if you are looking for continuity, you set it at a percentage and leave it at that. He stated locally we are finding a trend away from using CPI.

Mr. Jim Sweeney, Fargo Jet Center, was recognized and stated they would love to see a CPI, but the board may want to do some research on what other airports are using.

Mr. Lind stated his opinion is that Spectrum is not running aircraft out of the hangar so they are not using it as an aircraft base hangar so if they are getting charged another percent or so and are not happy about it they are able to find suitable space elsewhere.

Vice Chairman called for the vote on the motion.
Linn, Blazek, Lind voted aye.
Haugen voted no.
The motion was declared carried.

Mr. Dobberstein stated there is one other item related to this, a Landlord's Consent for the leases, which has been reviewed by Attorney Bossart. He stated Choice Financial Group has been granted security interest in the assets described for Spectrum Aeromed, LLC. He stated this document is similar to many we have approved for other tenants.

Mr. Blazek moved to approve the Landlord's Consent agreement requested by Choice Financial Group in case of default by Spectrum Aeromed, LLC.
Second by Ms. Linn.

All members present voted aye and the motion was declared carried.

Received Request from CenturyLink for Easement (South General Aviation/Eastside Terminal Area):
The communication from Matt Potter, CenturyLink, dated December 3, 2018, was received and filed without objection.

Mr. Dobberstein stated CenturyLink is requesting an easement along the south side of 23rd Avenue North about 1000' from the gate on 23rd Avenue toward the west. He stated this is for a request they received for facilities in the Eastside Terminal Building. A diagram of the proposed easement was included.

Mr. Blazek stated he recalls an existing easement in that area and recommended the item be tabled until we can get some further information as far as available space in the existing easement.
The item was tabled.

Received and Approved Parking Concession Contract with SP Plus:
Mr. Dobberstein stated the board recently selected SP Plus for a five-year contract for the public parking facilities. He stated he and Attorney Bossart have been working with Jason Finch, SP Plus, on the contract document and everything is in order. He stated SP Plus plans to start the shuttle service in the next week and they will also be spending another $100,000 on other improvements, such as a corporate parking program.

Ms. Linn moved to approve the five-year parking concession contract with SP Plus.
Second by Mr. Blazek.

Mr. Lind stated he would like to see us add the new parking lot services to our airport marketing program so the public is aware of the added service.

Ms. Linn suggested adding a crawler on the bottom of the current commercials announcing those services, which would be a less expensive option than changing the commercials as they have probably already been produced. She recommended also incorporating that information on printed advertisements.

Mr. Dobberstein stated we plan to work with Flint and the SP Plus communications people to announce the additional services once the dates are firm.

Vice Chairman Haugen called for a vote on the motion.

All members present voted aye and the motion was declared carried.

Received Update on the Renewal of the Airport Liability Insurance Policy:
Mr. Dobberstein stated our Airport Liability Policy is up for renewal on January 1 and AIG is not yet ready to give Northstar Aviation Insurance a firm price . He stated the premium in 2018 was just over $37,000. He stated for the new term, if we elect to have a $5,000 per occurrence deductible the premium will probably be in the range of $43,000-$45,000. He stated if we elect not to have a deductible the premium would be $49,000-$51,000. He stated he hopes to have more information this week.

Mr. Blazek moved to approve the renewal of the Airport Liability Policy with a $5,000 per occurrence deductible, subject to final review.
Second by Mr. Lind.

All members present voted aye and the motion was declared carried.

Adopted Resolution of Appreciation for Retiring Airport Assistant Fire Chief, Barry Reitan:
Mr. Dobberstein stated Assistant Fire Chief, Barry Reitan, will retire on December 14, after 29 years of service on this airport.
Mr. Blazek offered the following resolution of appreciation and moved its adoption:
WHEREAS, Airport Assistant Fire Chief, Barry Reitan, will complete his last shift as an airport firefighter at Hector International Airport on December 14, 2018, and
WHEREAS, Barry Reitan has served as a firefighter at Hector Airport for 29 years, first serving with the ND Air National Guard Fire Department and then with the Airport Fire Department, providing valuable experience during the transition in 2014, and
WHEREAS, Barry Reitan has been a dedicated and valued employee on the airport, being an important asset to the fire department and his service has been greatly appreciated and will be missed.
NOW THEREFORE, BE IT RESOLVED, That the Municipal Airport Authority thanks Mr. Barry Reitan for his many years of service and extends its best wishes in his retirement and his future endeavors.
Second by Ms. Linn.

All members present voted aye and the resolution was declared duly passed and adopted.

Received Updated on Proposed MOU and Compensation Study:
Attorney Stacey Bossart was recognized and stated she and Chairman Virginia Clark met with Mayor Mahoney and City Attorney Erik Johnson in the mayor's office for about an hour and a half last Thursday. She stated the two subjects were the very antiquated and outdated Memorandum of Understanding, which was drafted in 1969, as well as the amendment, which removed the expiration date of the original agreement, essentially meaning the original agreement is in place. Attorney Bossart stated the MOU provided that the MAA would pay the City of Fargo $30,000 annually for services provided and that amount was increased to $50,000 by board action in 1986.

Attorney Bossart stated the discussion was basically; can we arrive at some sort of understanding where the MAA continues its relationship with the City of Fargo or do we part ways and hire independent entities to perform those functions? She stated the biggest rub seems to be that the City of Fargo deems the airport employees as City of Fargo employees. She stated both the mayor and Mr. Johnson absolutely acknowledge the state statute (2-06) and the autonomy and powers of the Airport Authority.

Attorney Bossart stated the issue of the compensation study came up and she stated the position of the Airport Authority remains the same. She stated the information requested by the City was provided to the City and they did not find it acceptable. She stated the mayor is now requesting another compensation study be done, with the involvement of the Human Resources Office.

Attorney Bossart stated it seems as though what the MAA proposed as far as the MOU is not on the table, however, discussions were not shut down. She stated they discussed the matter of the increased fee and the fact that it is up to the City of Fargo Finance Office to present justification to the FAA for the increase. She stated she offered to work as a liaison between Kent Costin and Dave Anderson with the FAA. She stressed to them that the Airport Authority is absolutely willing to pay the proper amount for the services.

Ms. Linn stated she would like to note that it was one year ago this January that we sat in this office with Mr. Don Kilander and redlined a proposed MOU and now more than ten months later they are wanting to go backwards.

Attorney Bossart stated she does not feel it would be going all the way back, but it seems to be in limbo. She stated the two options are to work out an agreement or part ways.

Vice Chairman Haugen stated it seems to be a great way to stall any decision on a compensation package. He stated we will have another study done and that will not be acceptable. He stated he is also concerned that we are being asked to increase our payment to the City from $50,000 to over $90,000, yet nothing has changed and we are not getting anything more. He stated the FAA may see that as just a transfer of airport funds and if they do not approve the increase what happens then?

Mr. Blazek stated we have a vendor (City of Fargo) providing human resources/payroll services for a fee and they are not meeting our expectations. He stated we actually had an airport employee that brought some issues to the Human Resources Office and those correspondences were never even brought to Mr. Dobberstein's attention. He stated that is a big red flag to him that we should have terminated the services at that time. He stated he agrees with Vice Chairman Haugen.

Mr. Lind stated we have a good quote from ProResources for the human resources and payroll functions, but we do not have a quote for the accounting or IT services. He stated he would like to see us get an idea of the cost for those services.

Mr. Blazek asked if we could still use the City for those services but contract with someone else for our payroll and human resources functions.

Attorney Bossart stated Attorney Johnson did not have the answer for that, whether it would have to be a total or partial carve out.

Vice Chairman Haugen stated this discussion on who owns the airport, the City of Fargo or the Municipal Airport Authority, spurred him to go to the Cass County Auditor's Office and reviewed all of our tax statements and they all show the property owner as the Municipal Airport Authority. He stated he then took the tax statements to the Registrar's Office and all of the plat books show the parcels at Hector International Airport as being owned by the Municipal Airport Authority, even the land deeded to the Airport Authority by the City of Fargo. He stated there is fact and then there is assumption. He stated the confusion that is raised here needs to be resolved. He stated to maintain ties with the City for payroll and the rest of the services just adds to the confusion. He stated he agrees we need to find out the least expensive and best ways for our employees, but we have a responsibility to do it in a manner that is best for the Municipal Airport Authority and the traveling public. He stated he would be willing to see if we could carve out something, but this confusion/animosity that continues to exist about whether or not the employees at the airport are city employees or not needs to be resolved.

Ms. Linn now absent.

Attorney Bossart stated she got the feeling in the discussion that there is an acknowledgement that the MAA is clearly a separate and distinct municipal entity and the autonomous power of the Authority. She stated there is also the part of the statute where the mayor, with the vote of the commission, can dissolve the board and appoint themselves as the authority, which was spoken of very briefly. She stated she had proposed that if there were to be a new MOU, including an absolute recognition of the independence and autonomy of this board, and then only for purposes of the services the City would provide, airport employees would be deemed city employees for that purpose only. She stated she did not get a yea or nay there, nor does she have one here. She stated the relationship between the City of Fargo and the Municipal Airport Authority started out as a very symbiotic relationship and for whatever reasons over the years it has eroded.

Vice Chairman Haugen stated he would like to further consider contracting with a firm to handle our human resources and payroll service. He stated if it is possible to continue to contract with the City for the other services we can look into whether that is possible.

Mr. Blazek stated he agrees the City has met our expectations with the services provided for accounting and IT, but they have not met our expectations as far as human resources and payroll. Mr. Dobberstein stated we did receive the proposal from ProResources for human resources and payroll services. He stated the pension plan for employees would not change. He stated precedence for that has already been set. He stated Fargo Park District employees are also on the City of Fargo Pension Plan. He stated if we were to move ahead with that we would have to put out a request for proposals, but he is not aware of any other company in the area that provides the services that ProResources provides. He stated there are many companies that do just payroll but not the full line of human resources services.

Mr. Dobberstein stated we still have an agreement with the City in place, nothing has changed. He stated the FAA needs to receive the City's rationale for the increase from $50,000 to $90,000+ and once they do receive it he does not know how long it will take for them to review it.

Attorney Bossart stated she explained to them that the airport has budgeted for the increase and is able to pay it, as soon as it is approved by the FAA, but not until then.

Mr. Lind stated that has been more than explicitly explained to them a number of times. He stated the question seems to be more when will the City Finance Office finalize their justification.

Vice Chairman Haugen stated he would like to look at the IT piece separately from payroll and the other services.

Mr. Blazek stated he has not heard of any issues with the IT or accounting services.

Mr. Dobberstein stated he feels our relationship with IT has been good. He stated we pay for our portion of the bandwidth, etc. He stated we also have a good relationship with Kent Costin and the Finance Department. He stated we do not have any issues in either of those two areas. He stated we could certainly look into some IT alternates.

Mr. Lind stated he would like to see a quote just to know what we would be getting into.

Vice Chairman Haugen stated we will continue to work with the City of Fargo on an MOU.

Attorney Bossart stated she will go back to Attorney Erik Johnson and continue discussions and see if we can carve out portions of the services and value them.

Airport Construction and Security Update:
Mr. Dobberstein stated the grant closeout for Project AIP47 (Taxiway A and A1 Reconstruction) has been submitted to the FAA. The grant was $5.8 million and we will be turning back the $41,000 we did not use.

Mr. Dobberstein stated Mr. Terry Stroh, TL Stroh Architects, will have an update on the skyway project at our next meeting in January.

Mr. Dobberstein stated our PFC #9 Application is pending with the FAA office in Bismarck.

Authorized Attendance at the AirCargo Conference, February 10-12, 2019, Las Vegas, NV:
Mr. Dobberstein stated he distributed information to the board members about the AirCargo Conference in February. He stated he was asked to attend but is not certain the scheduling will work. He stated the representatives we work with from FedEx and UPS will be attending.

Mr. Blazek moved to authorize attendance at the AirCargo Conference, February 10-12, 2019, Las Vegas, NV, by any board member or staff, at the discretion of the Executive Director.
Second by Mr. Lind.

All members present voted aye and the motion was declared carried.

The meeting of the Municipal Airport Authority was adjourned until the Annual Meeting to be held Tuesday, January 22, 2019, at 8:00 a.m.

Time at adjournment was 8:53 a.m.