MUNICIPAL AIRPORT AUTHORITY
The Regular Meeting of the Municipal Airport Authority of the City of Fargo was held Tuesday, October 22, 2019, at 8:00 a.m. in the Airport Boardroom.
The members present or absent were as follows:
Present: Linn, Engen, Lind, Clark, Haugen
Absent: None
Others: Bossart, Piepkorn
Chairman Haugen presiding.
Approved the Minutes of the Regular Meeting of the Municipal Airport Authority Held September 24, 2019 and the Special Meeting Held October 17, 2019:
Ms. Linn moved to approve the minutes of the Regular Meeting of the Municipal Airport Authority held September 24, 2019 and the Special meeting held October 17, 2019.
Second by Mr. Lind.
All members present voted aye and the motion was declared carried.
Approved the Airport Vouchers Totaling $95,958.58:
Mr. Engen moved to approve the airport vouchers totaling $95,958.58.
Second by Dr. Clark.
On the call of the roll, members Linn, Engen, Lind, Clark, Haugen voted aye. No member being absent and none voting nay the motion was declared carried.
Received Proposed Contract from Mead & Hunt for Proposed Car Rental Ready Lot Reconstruction:
Mr. Jeff Klein, Mead & Hunt, was recognized and stated they were asked to put together a proposal to reconstruct the car rental ready lot on the west side of the terminal building. He stated the pavement has not been touched since the 1980's or early 1990's. He stated we worked with Interstate Improvements, the contractor who did the access road rehabilitation project this summer, just to patch some of the worst areas in the lot. He stated at the same time we will look at the overflow rental lot further north just to do some routine pavement maintenance. He stated the proposed engineering fee for the project is $21,100, but will probably be less since the scope of the project included some work in the SP Plus parking lots, but any work in those lots would be the responsibility of SP Plus.
Ms. Linn moved to approve the proposed contract with Mead & Hunt for design services for the car rental ready lot reconstruction and rehabilitation for a fee not to exceed $21,100.00.
Second by Mr. Lind.
On the call of the roll, members Linn, Engen, Lind, Clark, Haugen voted aye. No member being absent and none voting nay the motion was declared carried.
Received Change Order #1 from Sun Electric for South GA Apron Lighting Project, and Increase of $2,900.00:
Mr. Jeff Klein, Mead & Hunt, was recognized and stated at the August 27 meeting the board awarded the South GA Apron Lighting Project to Sun Electric, based on their low bid of $49,000. He stated the other bidder was Moorhead Electric at $58,850.00. He stated after getting into the project Sun Electric discovered that the new fixtures they are installing will not fit on the existing bullhorns. He stated the fixtures are installed on bullhorns in order to be able to rotate the lights to provide the proper illumination. He stated they are requesting an additional $2,900.00, bringing the total contract to $51,900.00, which is still lower than the other bid.
Mr. Engen moved to approve Change Order #1 from Sun Electric for an increase of $2,900.00 for the South GA Apron Lighting Project.
Second by Dr. Clark.
On the call of the roll, members Linn, Engen, Lind, Clark, Haugen voted aye. No member being absent and none voting nay, the motion was declared carried.
Received 2020-2022 Airport Concession Disadvantaged Business Enterprise (ACDBE) Goal Per 49 CFR Part 23:
Mr. Dobberstein stated the FAA requires us to set Disadvantaged Business Enterprise goals for concessionaires (car rentals, restaurant, giftshop, parking lot, advertising, vending, etc.). He stated we submitted our goal of 1% for 2020-2022 and the goal has been approved. He stated we work with our concessionaires each year to help identify disadvantaged businesses from which they can purchase goods and services. He stated we do get some good cooperation from the car rental agencies. He stated a lot of businesses that would qualify as DBEs do not want to go through the certification process with the ND DOT. He stated we document all of that and continue to work with them to meet our goal. He stated we will also publish a public advertisement in the newspaper to announce our goal. He added that the FAA has a completely separate DBE goal for construction contracts.
He stated this is for the board’s information and requires no action.
Received Update on Proposed SRE Building:
Chairman Haugen stated Mr. Terry Stroh, TL Stroh Architects, is not able to be here today so we will postpone this item until the next meeting.
Received Update on Air Cargo Apron Expansion:
Mr. Jeff Klein, Mead & Hunt, was recognized and stated they are continuing to work on the design of the Air Cargo Apron Expansion Project. He stated right now they are in the final stages of putting together the Technical Memo which addresses the capture and disposal of de-icing fluid and different method alternatives for doing that. He stated the next step would be to bring that report to the Airport Authority and then to the Wastewater Treatment Plant as the glycol fluid would be discharged to the sewage lagoon. He stated we will also engage both UPS and FedEx because the capture of that fluid directly impacts their operations. He stated after we get through that process we will finish up the plans and specifications and bid the project for construction to start in the spring of 2020.
Recognition of the Induction of Pat Sweeney and Jim Sweeney Into the UND Aerospace Hall of Fame:
Chairman Haugen stated the Municipal Airport Authority would like to recognize the induction of Mr. Pat Sweeney and Mr. Jim Sweeney (Fargo Jet Center and Weather Modification) into the UND Aerospace Hall of Fame. He stated we would like to congratulate them on this great honor both for them and for the Airport Authority, as they are the owners of two very successful businesses on the airport. He stated they were not able to be here today as they are at a conference, representing those businesses as well as Hector International Airport.
Airport Construction and Security Update:
Mr. Dobberstein stated we have already received the construction update from Mr. Klein. He stated the TSA did complete the EDS update project. He stated they will now be better able to handle large items such as golf bags.
Discussed Proposed Memorandum of Understanding from the City of Fargo:
Chairman Haugen stated we have a power point presentation outlining the history of the Municipal Airport Authority, North Dakota Century Code regarding Airport Authorities, and the relationship between the MAA and the City of Fargo. He asked that all questions be held until after the presentation.
Chairman Haugen reviewed the original Agreement Regarding Hector Airport Property entered into in September 1969 stating the Authority shall:
"Assume full responsibility and authority for operating, maintaining, repairing, leasing, insuring and collecting revenues from the properties hereinbefore described and shall operate said properties according to the provisions of Chapter 2-06 of the North Dakota Century Code and any other laws that may be applicable to the construction, maintenance and operation of said property."
Chairman Haugen stated the original agreement expired after 10 years but was amended in 1970 to remove the language involving the expiration date.
Chairman Haugen stated of the 89 public airports in the state, 84 of those have Airport Authorities. He reviewed the ND Century Code governing Airport Authorities.
Chairman Haugen stated the City of Fargo did not retain any powers unto itself when it established the Municipal Airport Authority.
Chairman Haugen pointed out that the Century Code states "An authority may employ an executive director, secretary, technical experts, and other officers, agents, and employees, permanent and temporary, as it may require, and SHALL determine their qualifications, duties and compensation." He stated he emphasized the word shall because in legal terms it means MUST. He stated this seems to be at the heart of the dispute with the City of Fargo.
Chairman Haugen stated for 50 years the Municipal Airport Authority has operated with by-enlarge a very good relationship with the City of Fargo. He stated the current five members of the MAA have all been appointed or reappointed by the current mayor and approved by the members of the City Commission. Chairman Haugen presented the Oath of Office taken by each MAA member in which they swear to perform the duties of said office according to the law.
Chairman Haugen reviewed the deregulation of the airline industry in 1978 and the effect it had on airports and how they were changed from a government business model to an entrepreneurial model.
Chairman Haugen presented the various reviews and opinions by the ND Attorney General regarding airport authorities and the confirmation of their autonomy.
Chairman Haugen reviewed the FAR Part 139 Airport Operating Certificate issued by the Federal Aviation Administration and read from the Federal Register the FAA Policy on Disputed Changes to Airport Sponsorship or Operations. The policy states that “While parties should seek technical assistance from the FAA as early as practicable, parties are encouraged to wait until a dispute has been resolved before submitting an application to the FAA seeking the agency’s approval of a change in sponsorship of, and/or operational responsibility for, and airport. In matters in which a proposed change is contested by a current sponsor or operator, the FAA will not act on a Part 139 application or a change of airport sponsorship and/or operating authority until the dispute is definitively resolved to the satisfaction of the FAA.” Chairman Haugen stated that means if the City Commission suddenly decides to dissolve the Municipal Airport Authority and it ceases to exist, the Airport Operating Certificate becomes invalid and commercial air service would cease until a proper sponsor is identified and approved and a new Operating Certificate is issued, as the Certificate is not transferable.
Chairman Haugen presented the letter dated September 27, 2019, that he hand delivered to the FAA/ADO office in Bismarck advising them that the Municipal Airport Authority is in a dispute with the City of Fargo over management, oversight, collection and expenditure of funds, as well as compliance with the ND Century Code 2-06.
Chairman Haugen stated he thinks one of the main reasons we are in this dispute with the city is that in 1969 when the MAA was created, there was a contract with the City of Fargo to provide services such as accounting, payroll, human resources, banking and IT support. He stated the initial rate was $30,000 per year the MAA paid to the City as a vendor for those services. He stated the annual amount was later increased $50,000 and now the City of Fargo is requesting $107,000 per year. He stated the MAA was asked by the City of Fargo to seek proposals from private sector vendors to see how much the services would cost, which we have done.
Chairman Haugen again stated that the relationship between the MAA and the City over the 50 years has by and large been a great relationship, with the exception of the disagreement over final approval of hiring, firing and employee compensation.
Chairman Haugen stated we have to ask the question - is the airport not being run well or is there some other issue that has come up of which the MAA is not aware. He reviewed a list of positive indicators of a well-managed airport, including the growth, the awards the airport and the Executive Director have received, as well as tenant businesses and military tenants on the airport.
Chairman Haugen stated after we received the proposed MOU from the City of Fargo, the MAA decided to seek proposals from private sector vendors who could provide HR services, banking services, accounting services and IT services, which are currently received from the City of Fargo as a vendor of those services, so that we could make a value based decision. He stated if the MAA were to decide to go with other vendors, there is the matter of time deadlines that would need to be met as it would take a while for a vendor to start processes for those services.
Chairman Haugen stated even if the MAA decides to use different vendors for services, we will still have a relationship with the City of Fargo according to NDCC 2-06 for the mill levy and bonding relationship. He reviewed the fact that any mill levy the MAA receives is used for infrastructure improvements only, not for the daily operation and maintenance of the airport. He stated state statute allows the MAA to levy up to four mills but historically the MAA asks for only two.
Chairman Haugen presented a letter dated October 11 from the mayor. In his letter he states that “the employees of the MAA are city employees, a non-negotiable fact that is not in dispute. Given this fact, the City of Fargo will not provide a la carte services to the Airport Authority.” He stated this tells us that if the MAA chooses other vendors for services, the employees of the MAA can no longer participate in the City of Fargo Pension Plan, even though the Fargo Park District employees, while not City of Fargo employees, are allowed to remain in that pension plan.
Chairman Haugen stated he has been disappointed in the negotiations as the definition of negotiation is “a process between individuals that is intended to reach compromise agreement to the satisfaction of both parties…The point of negotiating is to reach agreement rather than to achieve victory.” He added that the definition of an employer is “a person or entity who hires another to perform service under an express or implied agreement and has control, or the right to control, over the manner and means of performing the services. An Employer has the right to control an employee.”
Chairman Haugen stated the members of the MAA need to choose the most prudent strategy to move forward with meeting the needs of the airport users, citizens of the surrounding area, the employees, the vendors and other stakeholders, all governing entities (FAA, TSA, CBP, Dept. of Homeland Security, Dept. of Commerce, Dept. of Defense/ND Air and Army National Guard, etc.)., while following ND Century Code laws/statutes, and regulations.
Chairman Haugen invited comments from the board members.
Mr. Erik Lind stated the law states very clearly that the MAA is the employer of the employees at the airport. He stated the mayor’s letter of October 11 states that “the employees of the MAA are city employees, a non-negotiable fact that is not in dispute.” He stated that is clearly not the case because ND Century Code states that the airport employees are employees of the Municipal Airport Authority and we use the City of Fargo as a vendor to write their paychecks, participate in the health insurance plan and pension plan, etc. He stated the mayor indicated that if we choose another vendor other than the city for those services that he would not allow the airport employees to participate in the retirement system and the health insurance benefits. He stated that seems like a hostile action to force our hand into getting what he wants to get.
Ms. Linn stated she feels the most important issue to the end user of the airport is how this impacts the average citizen using the airport. She stated if the City Commission suddenly decides to take action at a meeting to dissolve the MAA, the FAA will cease commercial flights without an Airport Operating Certificate.
Mr. Piepkorn stated that is false. The FAA would not halt service. He stated that is a false statement and he would appreciate it if that statement were retracted.
Chairman Haugen stated he will not retract that statement because that is what he has been told by the FAA. He stated if a new applicant seeks airport sponsorship from the FAA and the matter is in dispute by the current sponsor, the FAA will not act on a change until the dispute is definitively resolved to the satisfaction of the FAA. He stated we are in a dispute.
Mr. Erik Johnson, City of Fargo Attorney, was recognized and stated it is correct to say that if a dissolution were to occur overnight that would create problems. He stated that is not how it would happen. He stated if, if, the City Commission were to make a determination about dissolution it would require payment of all of the debts and transfer of all of the airport land back to the City. He stated it would be a process that would take some time and dissolution would not occur until there was an orderly process for that occurring and the FAA would be fully involved in that. He stated the Operating Certificate is a key component to that. He stated if the parties are not able to come to some kind of coordinated effort between the MAA and the City then we would have to resort to the courts to assist in that process, but we hope that would not be necessary. He stated this is just an “if” and is hypothetical.
Chairman Haugen stated the process just explained by Mr. Johnson is different than the scenario we have been threatened with in which the City Commission could take immediate action to dissolve the MAA without a certificate in place. He stated that is the threat that has been made.
Ms. Linn stated the members of this board have been told by members of the City Commission in public settings that “we can fire all of you.” She stated everything that has been said to this point gave her the impression that it was going to be an immediate action by the City Commission and that has been the perception.
Chairman Haugen asked for any further comments. With no further comment he stated he would entertain a motion to accept or reject the proposed MOU from the City of Fargo.
Dr. Clark moved to reject the two proposed Memorandums of Understanding (June 10 and September 19) proposed by the City of Fargo.
Second by Ms. Linn.
Mr. Lind stated the Airport Authority was presented with the City’s proposed Memorandum of Understanding and it stated this is what you shall do, do, do, listing everything the airport would have to do. He stated the board reviewed it and indicated what we did not agree with and all of our disputes were negated or ignored and it came back to us almost identical to the first draft. He stated we did that more than once and it always came back with the message that there was no negotiation going on at all, and we have spent two years on this. He stated the mayor now says in his letter that "this is a complete package and not an a la carte option menu." He stated it is a "take it or leave it", this is what I am giving you and if you don't take it I am not going to let your employees be in the pension plan and I am going to take away their health insurance. He stated there are big ramifications for our employees. He stated this feels very hostile and for that reason there is no way that this has been a negotiation. It has been….you will take what I want and I will take whatever Iwant. He stated that is it. He stated he does not find any way that we can agree at this point with the "negotiation" that has gone on for the past two years. He stated there is a precedent as the Fargo Park District employees are still allowed to participate in the City of Fargo Pension Plan. He stated even with that precedent the mayor says "no, we are going to remove them." He stated this has been a very hostile process and we have very few options. He stated he does believe that if we go with other vendors for services we will be spreading that business around to local businesses. He stated the City of Fargo does not need any more business. He stated if we end our relationship for those vendor services we actually improve the private sector businesses and keep the money local, where it belongs.
Chairman Haugen called for a roll call vote.
On the call of the roll, members Linn, Engen, Lind, Clark, Haugen voted aye. No member being absent and none voting nay, the motion was declared carried.
Chairman Haugen stated before we move on, he would like to ask Commissioner Piepkorn if he would like to explain to the Airport Authority what it is about the airport that the City is trying to “fix”?
Mr. Piepkorn stated, "Nope, I'm done." Mr. Piepkorn left the meeting.
Mr. Engen asked Chairman Haugen if Mr. Piepkorn’s statement that he was done means he was resigning as the City’s liaison to the Airport Authority or that he was done with this meeting.
Chairman Haugen stated he would have to clarify that with Mr. Piepkorn.
Consider Appropriate Responses to Service Providers Submitting Proposals for IT, Banking and PEO Services:
Ms. Linn stated it is interesting to note that according to the FAA, we are supposed to have a "separate" bank account and right now our airport funds are in with the City's money and we have a separate line item.
Mr. Dobberstein stated our funds are co-mingled with City of Fargo funds but are accounted for separately.
Ms. Linn stated she feels having our own separate bank account would help us move toward being clearer and following every detail of the law.
Chairman Haugen stated we do have some issues with timing as far as selecting vendors. He stated we received only one bid for professional employment services and that was from PRO Resources. He stated they have indicated they would need at least six weeks to get everything in order for a January 1, 2020 effective date.
Ms. Linn stated the proposal from PRO Resources was excellent and very thorough and that the services they could provide would be above and beyond what we could get with our current provider.
Mr. Lind and Dr. Clark indicated they both agreed.
Ms. Linn moved to award the contract for human resources and payroll services to PRO Resources.
Second by Mr. Engen.
On the call of the roll, members Linn, Engen, Lind, Clark, Haugen voted aye. No member being absent and none voting nay the motion was declared carried.
Chairman Haugen stated we received proposals for banking services from four banks but he stated he is not ready to make a decision on that yet. He stated he would like to see us make that decision at our next meeting.
Mr. Engen asked Chairman Haugen to state which banks submitted proposals.
Mr. Dobberstein stated we received proposals from US Bank, First International Bank, Bremer Bank and Bell Bank.
Mr. Engen stated the City of Fargo's current bank is Wells Fargo and he asked if we know why they did not submit a proposal.
Mr. Dobberstein stated Wells Fargo did submit a proposal days after the deadline. He stated their representative indicated they missed the legal advertisement.
Chairman Haugen stated we have had discussions with Mr. Dave Middaugh, Middaugh Associates, regarding health insurance plans available. Chairman Haugen added that the ND Insurance Reserve Fund, of which we are a member, is currently looking at starting a health insurance plan for employees. He stated there are many schools and municipalities that have insurance coverage with NDIRF. He stated their board is looking at expanding coverage to include health insurance. He stated this could be up to 3,000 employees that would qualify for this plan, plus their family members. He stated it would be a very large pool of members. He stated their board decided just a couple of weeks ago to move forward with this and would like to have it in place by July 1, 2020.
Mr. Middaugh was recognized and stated NDIRF is looking at an association for health insurance. He stated while it is not a done deal, it is likely that it might happen. He stated if the MAA needs to secure health insurance for its employees prior to an NDIRF plan being established, since there are fewer than 50 employees involved, you would have to purchase one of the metallic plans and since everyone is accepted there is no underwriting and the premiums are based solely on age of the individual. He stated January 1 would be the best effective date for employees because of deductibles and co-pays. He added that other airport authorities have contacted him regarding organizing an association to purchase health insurance.
Mr. Dobberstein stated purchasing health insurance for our employees will cost more than what we are paying now but that should change if and when the NDIRF health plan would be established. He stated Mr. Middaugh did compare the current plan with the City of Fargo and the BCBS Platinum Plan has better coverage than the City’s plan. He added that we will also look into health savings accounts for employees.
Mr. Dobberstein stated Darren Anderson has done a lot of work on looking into what we would need as far as IT equipment and services and we still have some things to sort out there. He stated we have been looking at what some other airports use for accounting systems and a system designed for a small business should work well.
The meeting of the Municipal Airport Authority was adjourned until the next Regular Meeting to be held Tuesday, November 12, 2019.