MUNICIPAL AIRPORT AUTHORITY
The Regular Meeting of the Municipal Airport Authority of the City of Fargo, North Dakota, was held Tuesday, February 23, 2021, at 8:00 a.m. in the Airport Boardroom.
The members present or absent were as follows:
Present: Haugen, Cosgriff (via zoom), Engen, Linn, Lind
Absent: None
Others: Bossart, Strand
Chairman Lind presiding.
Approved the Minutes of the Regular Meeting of the Municipal Airport Authority Held February 9, 2021:
Mr. Engen moved to approve the minutes of the Regular Meeting of the Municipal Airport Authority held February 9, 2021.
Second by Linn.
All members present voted aye and the motion was declared carried.
Approved the Airport Vouchers Totaling $12,533.63:
Ms. Linn moved to approve the airport vouchers totaling $12,533.63.
Second by Mr. Engen.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Approved the Individual Voucher to Meinecke Johnson:
Mr. Engen moved to approve the individual voucher in the amount of $329,938.85 to Meinecke Johnson for Partial Payment Request #8 for general construction of the SRE Building Project.
Second by Ms. Linn.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Approved the Individual Voucher to Northern Plains Mechanical:
Mr. Engen moved to approve the individual voucher in the amount of $77,055.30 to Northern Plains Mechanical for Partial Payment Request #7 for mechanical construction of the SRE Building Project.
Second by Ms. Linn.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Approved the Individual Voucher to Rickard Electric:
Mr. Engen moved to approve the individual voucher in the amount of $16,605.00 to Rickard Electric for Partial Payment Request #8 for electrical construction of the SRE Building Project.
Second by Ms. Linn.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Approved the Individual Voucher to Sixel LLC:
Mr. Engen moved to approve the individual voucher in the amount of $2,724.00 to Sixel LLC for passenger enplanement fees for January (Allegiant/Nashville - $752.00, American/Phoenix - $1,972.00).
Second by Ms. Linn.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Approved the Individual Voucher to Mead & Hunt:
Mr. Engen moved to approve the individual voucher in the amount of $20,881.54 to Mead & Hunt for partial payment request for engineering services in connection with the Cargo Apron Expansion – Phase IV.
Second by Ms. Linn.
On the call of the roll, members Haugen, Cosgriff, Engen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Updated Designated Signers for First International Bank & Trust Accounts:
Mr. Dobberstein stated with the change in Chair and Vice Chair we will need to update the designated signers for the First International Bank & Trust accounts. He stated those signers would be Shawn Dobberstein, Joan Stading, Erik Lind and Richard Engen.
Ms. Linn moved to designate Shawn Dobberstein, Joan Stading, Erik Lind and Richard Engen as signers for the accounts with First International Bank & Trust.
Second by Gen. Haugen.
On the call of the roll, members Haugen, Cosgriff, Linn voted aye.
Engen and Lind abstained.
The motion was declared carried.
Presentation by SP Plus Regarding Dynamic Pricing Program and Update on Parking Access and Revenue Control System:
Mr. Dobberstein introduced individuals joining via zoom:
Mr. Brad McAllister, Regional Manager, SP Plus
Mr. Jason Finch, Senior Vice President, SP Plus
Mr. John Wildman, VP of Business Development, Manchester Airport Group (MAG)
Mr. McAllister was recognized and stated his presentation today is on Dynamic Pricing, which was included in their proposal for the current contract. He stated they feel this is the appropriate time to implement dynamic pricing given the state of revenues and the effect of the pandemic on our business. He stated dynamic pricing gives us the ability to offer rates to customers online at a discounted rate but also allows us the opportunity to implement a solution that is contactless and allows for a touchless journey for the passenger. He stated looking back at revenues in 2020, April was the height of the impact on air travel and that month, which was the lowest month, we collected 5% of the revenue compared to the same month in 2019. He stated we have climbed our way back, being very much in line with other non-hub airports and in December and January we were back to about 40-45% year over year.
Mr. McAllister stated we looking for ways to generate new revenue that we did not receive before. He stated they did perform six on site surveys over the last three years and data showed 38% of passengers were dropped off at the airport and not parking a vehicle. He stated TNC usage has grown from 2% to 8% over those three years. He stated we have also noticed that folks are dropped off more frequently in the summer than in the winter, which are passengers taking advantage of additional service during summer months.
Mr. McAllister stated the whole point of dynamic pricing is giving us the flexibility of offering prices discounted from the established posted rated. He stated once a passenger’s stay in the parking lot goes beyond three to six days it becomes an issue of cost and they will look at a different way to get to the airport. He stated that is the revenue we are trying to protect.
Mr. McAllister stated they have partnered with a company called Manchester Airport Group who has a lot of experience in Europe with airports they manage in the UK. He stated European passengers are very used to booking their parking when they book their flight. He stated MAG now has a number of airport customers in the US (Ontario, Burbank, and Houston). He stated they are starting to see smaller airports like Fargo coming on as well and capturing those passengers who are willing to book their parking online. He stated they believe these are customers that were not parking at the airport before.
Mr. McAllister stated there will be a reservation widget placed on the home page and the customer would then enter their parking dates and the system will show dynamic prices for each lot. He stated the discounts are based on how far in advance you book your stay and the length of your stay. The customer then gets a code sent to their phone or they can print out a bar code which is presented as you enter the lot and you pre-pay online.
Mr. McAllister stated MAG would install six (6) bar code readers and they would have an opportunity to recoup their costs as part of the revenue they would collect from the online reservations over the course of the contract. He stated if the service is terminated or the agreement ends before the cost of the readers is reimbursed the MAA will have the option of paying for the remaining cost of the devices or have MAG remove them from the location.
Mr. McAllister gave details on the case study done at Burbank CA, and the results of dynamic pricing. He stated very quickly they saw the average stay went from two days to more than seven days and the average transaction value increased by 85%. He stated they also did a license plate recognition (LPR) study and 81% of the bookings not been recorded in the LPR system previously.
Mr. McAllister reviewed how MAG would receive their commission. He stated the customer would have to exceed the established stay duration. He stated they have determined the average stay at each of the lots at Fargo based on 2019 data. He stated in 2019 the average stay in the Long Term Lot was 4.29 days. He stated in order for MAG to receive a commission on that transaction the customer needs to stay beyond the average stay duration. He stated this is how we protect ourselves and make sure we are not cannibalizing the revenue and not discounting customers that were already parking at the airport. He stated there are credit card fees as well and he presented some data on that.
Mr. McAllister stated this is an opportunity to capture revenue we are not currently capturing, which will certainly help the state of revenue and the challenges of the pandemic put on our facility. He stated they also believe it will improve the customer experience.
Mr. McAllister stated as far as the parking access and revenue control system. He stated the existing system is well over 15 years old and some of it is older than that. He stated we have gotten a lot of use out of the system but it has become costly to maintain and parts are getting harder to find. He stated they believe now is the time to discuss replacing the equipment. He stated they did get quotes from three vendors and they are looking closely at two of the vendors. He stated their recommendation is TIBA, but they are still working on getting the best recommendation for the system.
Mr. Finch stated he wanted to clarify that the rate the customer will receive through dynamic pricing will be much like airline reservations and how far out they are booked, but it will also depend on supply and demand. He stated when there is low activity and low volume they will be able to offer better pricing. He stated they will not always be able to offer discounted rates if the lots are full. He added that the MAA will always retain full control of pricing while working with SP Plus and MAG.
Mr. Finch stated they foresaw dynamic pricing coming years ago and so they created this strategic relationship with Manchester Airport Group and have been talking with airports about this for years.
Mr. Cosgriff asked if we would have to advertise this and request proposals since this an additional vendor tucked under an existing vendor.
Mr. McAllister stated this was part of their proposal submitted in 2018 for the new contract term effective 1/1/2019, and they identified MAG as their proposed solution provider for dynamic pricing.
Mr. Dobberstein stated that is correct. He stated MAG is SP Plus’s partner in their dynamic pricing program. He stated the other companies submitting proposals did not include dynamic pricing in their proposals and he is not certain they had any knowledge of dynamic pricing. He stated the others had the opportunity to include this in their proposal but SP Plus was the only one who offered it. He stated this was included in the proposal and he would recommend moving forward with the dynamic pricing program as proposed.
Ms. Linn stated after thorough review of those proposals in 2018, one of the things that really stood out to her as an example, in addition to dynamic pricing, was the offer from SP Plus to provide a shuttle bus from long term parking at no cost for the first two years. She stated that was not requested in the RFP but that was offered and made their proposal more competitive.
Mr. Finch stated there was a section in the RFP that allowed you to address your technological advancements and customer initiatives that would enhance the revenue stream and the customer experience. He stated these two items were not specifically called out but this section gave proposers the opportunity to address those.
Chairman Lind stated we have a number of large employers in the community that require their employees to use TNCs ad they will not reimburse for parking at the airport. He asked how those employers would be reached with this plan.
Mr. Wildman reviewed their digital/technical marketing program and what they provide.
Mr. Dobberstein stated notifying the corporations in the community will be a simple process through The Chamber and the GFMEDC so that is not an issue.
Mr. Finch stated that there is a 30 day out convenience clause if this dynamic pricing service does not work for the MAA. He stated they are bringing this to Fargo because they know that there is a huge opportunity for new revenue at this airport because four out of every ten customers aren’t parking their cars at the airport.
Mr. Cosgriff stated that our back side risk is really the $30,000 for the bar code scanners if the revenue is not sufficient to pay that back.
Mr. Finch stated the purchase of the bar code scanners will also reduce the investment on the new equipment side because you are going to need bar code readers to do touchless payments as people will continue to want that. He stated the bar code readers will be necessary anyway. He stated he feels there is very little, even no risk associated with this.
Ms. Linn asked if MAG collects the email addresses of the customers and if they can opt out of other advertising. She also asked if the MAA would have access to that contact information.
Mr. Wildman stated the customer will have the choice to opt “IN” for future marketing. He stated the MAA would have access to that information.
Mr. McAllister stated customers will also be able to purchase additional services, such as reserved parking. He stated they also plan to work with the restaurant to make offers on the widget.
Ms. Linn stated she thinks that cross marketing is important in helping all of the vendors at the airport.
Gen. Haugen moved to approve the Dynamic Pricing Program as presented by SP Plus in partnership with Manchester Airport Group.
Second by Ms. Linn.
On the call of the roll, members Engen, Cosgriff, Haugen, Linn, Lind voted aye.
No member being absent and none voting nay the motion was declared carried.
Mr. Dobberstein asked Mr. McAllister and Mr. Finch to have some pricing information on equipment replacement at our next meeting. He stated the idea is that we would reimburse SP Plus through the current management contract. He stated the MAA could advertise and take proposals on the equipment but the problem with that is we could get proposals from vendors who have equipment that would not work in our climate.
Mr. Finch stated they will come back to the board with some firm numbers so this can be addressed before we see a full recovery of travel.
Mr. Dobberstein asked how SP Plus typically handles equipment replacement at airports with which they have a management contract.
Mr. McAllister stated most airports prefer a procurement process as it is a little less cumbersome and there is a little more control over some of the points Mr. Dobberstein addressed. He stated it should not be based on low bid only. He stated they should be able to bring in relevant experience and a proven track record.
Mr. Cosgriff stated he just wants to make certain we have purchasing policies and that we follow them for all procurements. He stated his argument is not with SP Plus.
Chairman Lind stated the MAA does have purchasing policies and Mr. Dobberstein again provided them to us with our agenda packet for this meeting. He stated he would be happy to discuss them with Mr. Cosgriff at a later time.
Receive Communication from Clear Channel Airports to Extend Their Concession Agreement:
The communication dated February 18, 2021, from Thaddeus Glenn, Senior Airport Development Director, Clear Channel Airports, was received and filed without objection.
Mr. Dobberstein stated Mr. Glenn is joining the meeting via zoom. He stated our contract with Clear Channel expires April 15, 2021 and they are requesting a five year extension through April 14, 2026.
Mr. Glenn was recognized and gave a short presentation on the advertising program at Hector International Airport. He stated he was the project manager that installed the program currently in place. He stated Clear Channel and Hector Airport have been partners since 1996. He stated they recognize that airports are the gateway to the community and Clear Channel provides a custom community showcase program.
Mr. Glenn stated in 2016 they installed a state of the art digital network in the terminal at a cost of $184,000. He stated they are prepared to replace all of the digital displays so they are ready to be in working order for the next five years.
Mr. Glenn stated Hector Airport did better than the national average as far as boardings and Clear Channel in Fargo had a 9% increase over 2019, despite the decreased boardings. He stated he attributes that to their sales force that is engaged with local businesses, the long term contracts we have with advertisers, and the fact that Fargo is a community that supports its airport. He stated nationally Clear Channel lost 50% of their sales in 2020. He stated they had to make a lot of cuts in their company in order to shore up their business. He stated one of the results is that they are not in a position to respond to any Requests for Proposals. He stated if they are not successful in getting an extension the long term contracts with the current advertisers would also expire.
Cosgriff now absent.
Mr. Glenn stated they are requesting a five year extension to manage through the most vulnerable time in aviation history.
Chairman Lind stated we have been using Clear Channel for many years the world has changed a lot in the last twelve months. He has been approached by two different companies who would be interested in the advertising contract at Hector Airport. He stated he would not be in favor of granting a five-year extension. He stated if Clear Channel is not able to respond to RFPs that is their business. He would like to see us put out an RFP or grant a limited extension. He stated he does not want to limit our opportunities for growth because one company does not want to respond to an RFP.
Mr. Engen asked what type of equipment/technology they are proposing and what would be the timeframe.
Mr. Glenn stated they are proposing to replace five 82” digital displays and that would be done in October 2021 at a cost of $23,000. He added the fact that they would not be able to respond to a RFP was not meant to be a challenge. He stated it is not that they don’t want to, it is that they are incapable of responding. He stated they would be open to an extension of any length.
Ms. Linn stated as a person who has written dozens of RFPs she can understand their position and empathize with them. She stated she can see both sides and would like to consider something less than five years.
Gen. Haugen stated he would be in favor of a RFP simply because it has been a long time. He stated there may be some local companies who would be capable.
Chairman Lind stated it is not that he has a bias against any vendor but he sees this as a long term contract that needs to change.
Mr. Dobberstein stated Clear Channel has invested hundreds of thousands of dollars in the program over the years.
Mr. Engen stated his concern about making a change is the fact that Mr. Glenn clearly stated that the contracts with the current advertisers will end and those would have to be recreated. He stated it the current environment companies are more than likely going to review those contracts.
He added that he is concerned we may lose some of those contracts.
Gen. Haugen asked if the contract is up in April would we have time to request proposals.
Mr. Dobberstein stated there would not be time to accomplish that.
Gen. Haugen suggested we grant an extension of some length and then look at the RFP process when the travel industry returns.
Ms. Linn stated she would agree.
Mr. Engen moved to extend the contract with Clear Channel Airports for a minimum period of 12 months, with the understanding that there will be a review and possible RFP thereafter.
Second by Ms. Linn.
On the call of the roll, members Haugen, Engen, Linn, Lind voted aye.
Absent and not voting: Cosgriff
The motion was declared carried.
Chairman Lind asked that we look at putting out an RFP in November.
Mr. Dobberstein stated we can do that but he does not think one year will be enough time to fully recover from the pandemic.
Received Update on US Customs and Border Protection Technology Upgrade Project:
Mr. Dobberstein stated we have been discussing the matter of a technology upgrade in the US Customs office. He stated one of the requirements of the agreement was to be reimbursed for phone service back to 2013. He stated he and Attorney Bossart have had numerous phone calls with the Customs representatives regarding negotiating out the claw back clause to recoup phone costs back to 2013. He stated that clause was removed.
Mr. Dobberstein stated he has signed an agreement accepting the proposal for $26,802 for equipment and services, which is our responsibility. He stated this cost is down from the initial estimate of $50,000. He stated there will be annual recurring service costs estimated to be $5,729, which may be somewhat less. He stated this is basically the cost of the monthly fiber. He stated we are still working out details on how that will be paid. He stated this is our responsibility and without this the US Customs office would close.
APEC Update:
Ms. Linn stated the APEC met on February 16, which we thought would be our last meeting for the current assignment, but the committee will be meeting again this Friday, February 26.
Received Update Regarding Property Sale to Mathern:
Attorney Bossart stated she does not have any progress to report on this sale. She stated we are getting there.
Airport Construction and Security Update:
Mr. Terry Stroh, TL Stroh Architects, was recognized and gave a brief update on the progress of the SRE Building Project and the addition to the existing building. He stated we are still looking at a completion date at the end of March.
Chairman Lind to Discuss Strategic Planning:
Chairman Lind stated all of his military leadership training has taught him that when you are put in a position of authority you set your expectations and your vision and you set the way those will be accomplished. He stated each member of this board is a successful person and everyone has outstanding traits and he looks at each person to bring something different to the table. He outlined some of his expectations of the board members:
Come to the meetings prepared. He added we all have busy lives but he wants us to do our due diligence.
We all have different ways of seeing things but we need to get in sync with each other and get on board and play for Team Airport. He stated all other lingering outside loyalties or other teams you have played for in the past need to be left behind, even though those things have made you who you are. He stated this is meant to alleviate any biases or loyalties that don’t belong at this table.
Be open minded. He stated he wants us to put our thoughts on the table but be open to hearing other people’s thoughts. Come in with an open mind and bring view together.
Be pragmatic. He would like us to work together to find answers and solutions. Anyone can look at something and say it won’t work but finding fault in something isn’t a skill set he values. We can find fault in something but then work to find a solution. If you find a problem, bring the solution along with it.
Be decisive. At times we are afraid of making mistakes and table conversations for a much later date. He stated we need to make the best decision we can with the information we have on hand.
Get your ideas on the table and let us have thoughtful discussions and thoughtful disagreements to come to a useable conclusion. He stated once a motion has been passed the debate is over. We are back on one team, one mentality. Take our conclusion and the course we have taken and continue to evaluation our decision and make any course corrections as necessary.
He added this is meant to bring everyone together and not to alienate anyone. If we work together we will come up with great ideas.
Ms. Linn stated she would like to see “board norms” in writing. She stated expectations may not be the correct word and that is why she used “norms.” She added that she feels Chairman Lind’s thoughts are great.
Other Business:
Mr. Dobberstein stated we have provided Dakota Allied Properties a draft lease for the Bemidji Aviation maintenance hangar in the cargo area. He stated we have not heard back from them.
Mr. Dobberstein stated on February 13 the FAA notified us of two additional CARES related grants (Coronavirus Response and Relief Supplemental Appropriation Act). He stated one is for $102,970 to offset minimum annual guarantee losses. He stated we approved a waiver for Budget and we believe we can go back to the waiver to SP Plus for the months of April, May and June of 2020. He stated the other is for $3,575,842 to be used for “costs related to operations, personnel, cleaning, sanitization, and janitorial services combatting the spread of pathogens at the airport and debt service payments.”
The Municipal Airport Authority of the City of Fargo, North Dakota will meet in Executive Session to receive an update regarding on-going discussions between designated representatives of the Authority and the City as those relate to the relationship between the two political subdivisions, including an amendment to the Memorandum of Understanding signed by the parties in January 2020. These discussions have financial implications and an open meeting of these discussions, strategy and direction by the Chairman and/or the Authority’s attorney, would create an adverse fiscal effect on the bargaining position of the Authority.
This Executive Session has been authorized pursuant to North Dakota Century Code §44-04-19(9).
Ms. Linn moved to adjourn to executive session.
Second by Gen. Haugen.
All members present voted aye and the motion was declared carried.
Time at recess was 9:30 a.m.
The Executive Session began at 9:34 a.m. and ended at 10:09 a.m.
The Regular Meeting reconvened at 10:12 a.m.
Chairman Lind stated the MAA met in Executive Session and read the statement regarding the purpose for the session. He stated the MAA met in executive session to discuss continued negotiations between designated representatives of the MAA and the City of Fargo regarding a proposed amendment to the Memorandum of Understanding.
Mr. Engen moved to adjourn the meeting of the Municipal Airport Authority until the next Regular Meeting to be held Tuesday, March 9, 2021 at 8:00 a.m.
Second by Ms. Linn.
All members present voted aye and the motion was declared carried.
Time at adjournment was 10:14 a.m.