Metropolitan Airports Commission

Transcription

1 Metropolitan Airports Commission Management and Operations Committee Regular Monthly Meeting Minutes Monday, December 05, :00 pm

2 REPORTS C METROPOLITAN AIRPORTS COMMISSION MANAGEMENT & OPERATIONS COMMITTEE REGULAR MEETING Monday,, 1:15 p.m. Room 3048A, Terminal 1-Lindbergh Minneapolis-St. Paul International Airport "CONSENT ITEMS" Call to Order A regular meeting of the Management and Operations Committee, having been duly called, was held, in Room 3048A, Terminal 1-Lindbergh, Minneapolis-St. Paul International Airport. Chair Landy called the meeting to order at 1:15 p.m. The following were in attendance: Commissioners: Staff: Others: Landy, King, Boivin, Geisler, Madigan, Monaco, Peilen, Rehkamp S. Busch, T.W. Anderson, T.L. Anderson, J. Hamiel, D. Probst, P. Hogan, D. Ruch, S. Wareham, E. Johnson, E. Podnieks, B. Rineer, J. Greer, J. Ostrom, P. Sichko, C. Boyd, R. Fuhrmann, B. Peters, Martt Krogh, P. Rasmussen, B. Hoyt, M. Willis, A. Sasse, J. Kosta, M. Christensen, L. Roufs, S. Lopez, M. Batt, A. Irish Frank Lorenz, Hulke & Gheer; John Bodger, Bob Craizinger, CBS Outdoor; Elizabeth Emerson, OTG Lockridge Grindal Nauen; Vivian Starr, Anoka County Aviation Association (ACAA); Hank Moody, Mary Loeffelholz, Jeff Davidman, Delta OPEN FORUM The Open Forum is a portion of the Committee meeting where persons are allowed to address the Committee on subjects which are not a part of the meeting agenda. Public comments were received from Frank Lorenz of Hulke & Gheer who had questions regarding property adjacent to the airport. Given that MAC has spent a great deal of money on noise abatement in communities near the airport, he wondered if MAC might be involved in noise abatement with future development adjacent to the airport. Mr. Denny Probst, Deputy Executive Director Planning/Environment, confirmed that MAC has participated on the development task force and have shared the noise contour information. Regarding the Crystal airport, there isn t much air activity and Mr. Lorenz wondered if MAC would sell this property. Mr. Probst indicated that the Crystal airport Long Term Comp Plan will be updated starting in 2012, and mentioned that it is the sixth busiest airport in the metro area, so there are no plans to sell it. Public comments were also received from John Bodger of CBS Outdoor. Mr. Bodger asked the Committee to take up the issue of CBS Outdoors request for a modification to the Term of Agreement between them and the MAC. A Committee member asked what MAC s policy is regarding requests of this nature, and it was decided that the issue would be placed on the January M&O agenda for further discussion.

3 Page 2 AGENDA ITEMS C1. REQUEST TO RENEW THE ENTERPRISEONE SOFTWARE SUPPORT AGREEMENT CF 2280 Staff is requesting to renew the software maintenance agreement with Oracle Corp. for support of the EnterpriseOne system that provides accounting, finance, human resources, purchasing, property management, maintenance management and other back office functions. This is a sole source purchase; software maintenance for this product is only available from the Oracle Corp. This is an annual expense and is included in the proposed 2012 Operating Budget. COMMISSIONER KING MOVED AND COMMISSIONER MONACO SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND TO THE FULL COMMISSION THAT STAFF BE AUTHORIZED TO EXPEND $ 128, FOR ENTERPRISEONE SOFTWARE SUPPORT FROM JANUARY 15, 2012 THROUGH JANUARY 15, 2013, AND THAT THE EXECUTIVE DIRECTOR OR A DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. C2. RECOMMENDATION TO ADOPT ELECTRIC CART ORDINANCE CF 2281 The Management & Operations Committee held a public hearing on November 7, 2011 to amend MAC Ordinance 86 governing the operation of electric carts in the terminals. Electric carts are used by airlines and other tenants to assist passengers who cannot walk great distances in Terminal 1 Lindbergh. Service carts are utilized by selected vendors and MAC maintenance staff in both terminals. Following the public hearing, staff prepared a proposed Hearing Officers Report outlining the ordinance adoption process. If adopted, the proposed new ordinance will replace Ordinance 86 and take effect January 1, COMMISSIONER KING MOVED AND COMMISSIONER MONACO SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND THAT THE FULL COMMISSION: 1. ADOPT THE ATTACHED HEARING OFFICERS REPORT; 2. RECOMMEND THAT THE FULL COMMISSION: a. APPROVE THE ATTACHED FINDINGS, CONCLUSIONS AND ORDER RELATED TO THE ADOPTION OF THE PROPOSED ELECTRIC CART ORDINANCE; b. ADOPT THE PROPOSED ORDINANCE AS ORDINANCE NO. 113; AND c. AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS.

4 Page 3 C AVIATION LIABILITY AND CASUALTY (WORKERS COMPENSATION) INSURANCE RENEWALS CF 2282 The integration of risk management measures by MAC staff into all aspects of the organization has directly impacted MAC s cost control measures and relationship with all individuals impacted by the MAC. This has allowed the Insurance Risk Management Department to control self-funded costs and negotiate favorable insurance rates and coverage. More importantly, it enhances the safety of MAC employees and the public we serve. MAC continues to obtain aviation liability insurance from worldwide markets that are financially stable. However, an analysis of the market indicates a catastrophic event within the aviation industry would result in an increase in insurance costs. Thus, a guaranteed cost multi-year insurance contract for entities with a favorable risk program is recommended. Aviation Liability Insurance MAC procures $500,000,000 in aviation liability insurance, which provides coverage as outlined in the policy for MAC operations on or about our airport system. The insurance coverage is through ACE USA, which retains the first $100,000,000 of primary insurance, and $400,000,000 of excess insurance through Lloyds of London. ACE USA has previously agreed to a guaranteed cost on the primary insurance through January 1, 2013 and no change in coverage unless required by law. For this renewal, staff negotiated an extension of this guarantee through January 1, ACE USA is endorsed by ACI-NA and within the policy is an endorsement that provides an insurance premium incentive program for participating airports. MAC s 2011 incentive pay-back is $2,740. Workers Compensation Insurance The MAC continues to self fund this statutory insurance and obtains reinsurance through the Workers Compensation Reinsurance Association (WCRA) at the lowest limit allowed. Berkley Risk Administrators Company (BRAC) is retained as MAC s Third Party Administrator to process claims to their resolution. For litigated claims BRAC retains, with MAC s approval, the services of MacMillan, Wallace, Athanases & Patera, P.A. MAC has also retained the services of ENCORE Unlimited LLC to provide case management for problematic claims. The WCRA continues to recover from the financial issues attributed to investments, medical inflation, etc. Included in the premium is a deficient premium assessment to be paid annually through 2014 and an annual adjustment premium. COMMISSIONER KING MOVED AND COMMISSIONER MONACO SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND TO THE FULL COMMISSION THE FOLLOWING INSURANCE RENEWALS, THE USE OF ALLIED ADJUSTERS TO HANDLE AVIATION LIABILITY CLAIMS, AND AUTHORIZATION FOR THE EXECUTIVE DIRECTOR OR A DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS AVIATION LIABILITY ACE USA $ 480,158 TERRORISM LIABILITY ACE USA $ 38,444 LOSS DEPOSIT FUND ACE USA $ 54,640

5 Page 4 WORKERS COMPENSATION ADMINISTRATION BERKLEY RISK ADMINISTRATORS $ 28,229 WORKERS COMPENSATION REINSURANCE WCRA $124,961 TOTALS $726,432 C4. REQUEST TO ISSUE A REQUEST FOR PROPOSALS FOR AN EVENT PLANNING AND MANAGEMENT SYSTEM CF 2283 Mr. Dave Ruch, Director Information Systems, presented background on this item. This is a request to issue an RFP for a system that will support the business activities of the Airport Conference Center (ACC) and the Airport Director s Office (ADO). Background The Airport Conference Center is a revenue-generating customer service based concession, owned and operated by the Metropolitan Airports Commission. The ACC leases meeting space at both Terminal 1 and 2 ranging in size from private workstations to large meeting rooms and offers on-site catering services, a/v equipment rentals and administrative assistance. The ACC has a well established client base including Minnesota based Fortune 500 Companies, law firms for depositions, pharmaceutical companies, in/out of state universities and airport tenants. The ADO provides services including booth rentals for meters and greeters for local events, photo shoot and filming facility rental, and the annual camping program facility rental. Both the ACC and the ADO accept a credit card pre-payment to hold the reservation, cash as form of payment, and checks on a limited basis. Staff accepts reservations, schedules facilities and equipment, purchases and manages inventory, tracks and maintains customer records, makes staffing plans, issues invoices, processes payments and keeps financial records in order to operate the business. To handle reservation and transaction management staff utilizes manual records and multiple systems including Microsoft Outlook, two Access databases, Word and Excel. Credit card accounts are charged by using merchant credit swipe machines both in the ACC and the ADO. All transaction data is compiled in Excel and financial totals are manually entered into the MAC accounting system, EnterpriseOne. Credit card data is stored by MAC s systems as a requirement of the business. Final charges are not known until sometime after the credit card is submitted by the customer, creating the data storage need. The credit card brands have formed a Payment Card Industry (PCI) association that publishes security standards for credit card merchants to protect cardholder data from loss by mandating specific security measures. MAC is presently PCI compliant as a Level 2 merchant. The ACC and the ADO are areas where more work is needed to retain that compliant status going forward. The event planning and management system being sought would greatly improve the ACC and ADO functions by providing one comprehensive centralized solution, and

6 Page 5 would reduce staff time spent on administrative functions stored in segregated software systems. A centralized system would free a portion of staff time to be redirected toward marketing and revenue development. MAC Finance would also recognize a decrease in department staff time necessary to reconcile data. Commissioners discussed the possibility of staff using the option of a sole source provider rather than an RFP process. Commissioner Rehkamp expressed concern regarding the cost of this system, given that the conference center has not been profitable in the past. Chair Landy supported the RFP but also held reservations about the cost of the proposed payment system, as it would cost about half of the Conference Center income. Mr. Ruch responded that staff has looked at alternatives such as accepting cash or checks or invoicing customers, but this could create costs for accounts receivable and/or MAC audit. Mr. Steve Busch indicated that the current procedures do not allow time for Conference Center staff to market their services. The proposed system would allow staff the time to market the Conference Center services to additional Fortune 500 companies in the metro area, which could increase revenues more than enough to pay for the proposed system. Mr. Jeff Hamiel noted that the proposed system would enhance the customer service experience at MSP, a critical aspect in retaining clients and revenues. Commissioner Rehkamp requested that staff bring forward a marketing plan at a future Committee meeting. COMMISSIONER REHKAMP MOVED AND COMMISSIONER GEISLER SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND TO THE FULL COMMISSION THAT STAFF BE AUTHORIZED TO ISSUE A REQUEST FOR PROPOSALS FOR AN EVENT PLANNING AND MANAGEMENT SYSTEM, AND THAT THE EXECUTIVE DIRECTOR OR A DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. C5. RECOMMENDATION REGARDING USDA WILDLIFE SERVICES CONTRACT CF 2284 Mr. John Ostrom, Manager Airside Operations, spoke to Commissioners on this item. Federal Aviation Regulation Part requires a certificated airport to create and implement a wildlife hazard management program. FAA Advisory Circular 150/ strongly urges airport operators to seek specialized assistance in developing wildlife management plans. Since 2001, the MAC has contracted with the United States Department of Agriculture, Wildlife Services (USDA-WS) to provide consultation services, conduct wildlife population surveys and provide on-airport wildlife management services. The contract was expanded in 2005 to include the reliever airport system. Previous contracts have been of great benefit to the MAC and airport tenants. Staff is seeking approval to enter into an agreement with USDA-WS for calendar years 2012, 2013 and By entering into a three-year agreement, instead of multiple single-year contracts, the MAC will experience a cost savings of approximately 5%. The scope of the agreement covers staff time for wildlife biologists and wildlife specialists assigned to MSP and the Reliever Airports, vehicle operations, communications equipment and supplies.

7 Page 6 In response to questions from Commissioners Mr. Ostrom explained that this wildlife service allows staff to target efforts to manage the various species in the most effective way. Staff relocates raptors and employs other removal processes for other species. Chair Boivin remarked on the extensive damage from a recent hit on an aircraft by a tundra swan, indicating his admiration for staff s efforts to prevent such strikes. COMMISSIONER GEISLER MOVED AND COMMISSIONER KING SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND TO THE FULL COMMISSION APPROVAL FOR THE MAC TO ENTER INTO A THREE-YEAR CONTRACT WITH THE UNITED STATES DEPARTMENT OF AGRICULTURE-WILDLIFE SERVICES IN AN AMOUNT NOT TO EXCEED $409,735 AND THAT THE EXECUTIVE DIRECTOR OR A DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. C6. UPDATE: REQUEST TO ISSUE AN RFP FOR THE OPERATION OF WI-FI AND SHARED DISTRIBUTED CELLULAR ANTENNAE PROGRAMS CF 2285 Mr. Bruce Rineer, Manager Concessions and Business Development, gave a summary presentation of this item. The agreement that established Concourse Communications (now a subsidiary of Boingo Wireless) as the provider of Wireless Internet Access (Wi- Fi) and DAS services at MSP began in July 2001 and expired in July 2011, currently remaining in effect on a month-to-month basis. Staff is requesting updated Commission approval to issue a Request for Proposals ( RFP ) to identify a firm to operate a Wi-Fi system on MAC s behalf. At MSP, there are two separate systems that comprise the Commercial Wireless Access System ( CWAS ). Those systems are the Wireless Internet Access System ( WIAS ) and the Distributed Antenna System ( DAS ). The high profile system is the WIAS which provides Wi-Fi throughout both Terminals at the airport. The initial request to the Commission in October 2010 was to issue the Wi-Fi portion of the RFP as a tiered system. Providing Wi-Fi at different tiers is also known in the industry as a hybrid model. The proposed tiers would be based on bandwidth with more bandwidth provided at each level. The first tier would be offered for free to the user and provide limited bandwidth and would be supported by advertising. Costs for tier 2 and tier 3 would be part of each proposal. Staff research of other airports providing hybrid models of Wi-Fi operations showed that those airports did not limit the tiered levels by bandwidth. In all cases the tiers were limited by time. As large airports switch to free Wi-Fi, or a hybrid model, providers of the service are becoming more creative in their offerings to the airports. Some airports provide Wi-Fi service through in-house management and others contract out and pay for the service. Some systems are ad or sponsorship supported through providers such as Boingo. LAX has contracted with their in-terminal advertising company to be responsible for the system and sell advertising or sponsorships onto it. These examples demonstrate that MAC should not limit the RFP responses to one type of system. The RFP should be

8 Page 7 broad enough such that MAC receives the maximum number of proposals to review which would ensure the best possible system for MSP. The DAS is a stand alone system and can be operated and maintained separately from the Wi-Fi System. Staff has thoroughly reviewed the operations of this system and has concluded that bringing the management and operations of the DAS in-house is in MAC s best interest. MAC would receive the benefit of increased revenue from the DAS program as well as greater authority over Cell Carriers and the Carrier Access Agreements. MAC s Concessions Department along with MAC s IS Department would work cooperatively in the management of the DAS system. The Concessions Department will manage the Carrier Access Agreements to ensure lease compliance and would handle future lease negotiations. The IS Department would be in charge of the technical operations of the DAS. Staff recommends issuing an RFP for Wi-Fi services only, and recommends broadening the scope of the Wi-Fi RFP to allow for various proposal options. Offers may include a completely free option, a tiered option, or other options as proposed. The review team will evaluate each proposal and choose the one that best aligns with MAC s program goals and objectives. The Wi-Fi RFP opportunity will be advertised in the Twin Cities Business Journal, on the MAC web page, and in other publications to be determined. Each proposal will be evaluated by a review team using criteria to include, but not limited to: financial projections; qualifications and experience; design and implementation plan. In response to questions from Commissioners Mr. Rineer confirmed that staff is looking at a variety of solutions for WiFi service at MSP. Mr. Hamiel expressed that he is a staunch advocate of providing free or low-cost WiFi for the traveling public and stated that it enhances the customer experience at MSP, leading MSP to be an airport of choice. Mr. Tim Anderson noted that about 50% of major airports offer some form of free WiFi, and the lack of free WiFi is a major complaint of passengers at MSP. COMMISSIONER KING MOVED AND COMMISSIONER PEILAN SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND THAT THE FULL COMMISSION APPROVE THE MINIMUM QUALIFICATIONS, EVALUATION CRITERIA AND REVIEW TEAM, AND AUTHORIZE STAFF TO ISSUE A REQUEST FOR PROPOSALS FOR A COMPANY TO OPERATE MAC S WI-FI SYSTEM AND THAT THE EXECUTIVE DIRECTOR OR A DESIGNEE BE AUTHORIZED TO EXECUTE THE NECESSARY DOCUMENTS. C7. APPROVAL OF DELTA AIR LINES/OTG CONCESSIONS AGREEMENT CF 2286 Thomas W. Anderson, General Counsel, gave an overview of this agreement. In July 2011 the Commission approved a Term Sheet between MAC, Delta Air Lines, Inc. and OTG Management, Inc. regarding the new G Concourse concessions program, directing staff to negotiate final agreements and bring them back to the Commission for approval. The agreements have now been finalized and take the form of a Fifth Amendment to

9 Page 8 Airline Operating Agreement and Terminal Building Lease-Minneapolis/St. Paul International Airport ( 5 th Amendment ) between MAC and Delta and a Concession Agreement for Food and Beverage, Retail and News Concessions ( Concession Agreement ) between MAC, Delta and a wholly owned OTG subsidiary named OTG Management Midwest, LLC. The two new agreements preserve the financial and business terms set forth in the Term Sheet in all respects. Of necessity, the agreements expand on the Term Sheet provisions in many areas. For example, to address the requirement contained in the Term Sheet for revenue neutrality to both parties associated with the transition in 2016 of the G Concourse from the current arrangement to the approach taken throughout the remainder of Terminal 1-Lindbergh, the 5 th Amendment makes certain adjustments to the square foot rate formula. In addition, for convenience, the 5 th Amendment includes a section memorializing an MOU with Delta regarding maintenance and ownership of passenger boarding bridges in Terminal 1-Lindbergh and a provision providing for the expansion of similar gatehold restaurant service programs (such as HMS Host s B4 You Board app) into other areas of the terminal complex, which will also be included in airline agreement amendments with the other carriers in the terminal. The Concession Agreement is patterned on the General Terms and Conditions in place with other MAC concessionaries, but has been modified in a few respects beyond the provisions in the Term Sheet to address special circumstances. For example, (1) MAC s standard requirement of a six-month security deposit (versus Delta s three month requirement) will not come into effect until MAC becomes the Concessions Lessor in 2016, and (2) MAC will allow up to 15% of OTG s initial capital investment for architectural, engineering and software development costs (versus MAC s standard of 10%). In response to questions from Commissioners, Mr. Tom Anderson and Mr. Cameron Boyd explained that, pursuant to the Term Sheet, 12% percentage rent will be paid beginning the first day stores are opened and will continue until the final unit is open for business, or after 18 months, whichever happens first, at which point the new rent structure (including the MAG) will begin. Mr. Anderson also pointed out that MAC will receive 15% of those revenues until COMMISSIONER REHKAMP MOVED AND COMMISSIONER KING SECONDED THAT THE MANAGEMENT AND OPERATIONS COMMITTEE RECOMMEND TO THE FULL COMMISSION APPROVAL OF THE FIFTH AMENDMENT TO AIRLINE OPERATING AGREEMENT AND TERMINAL BUILDING LEASE-MINNEAPOLIS/ST. PAUL INTERNATIONAL AIRPORT AND CONCESSION AGREEMENT FOR FOOD AND BEVERAGE, RETAIL AND NEWS CONCESSIONS ON THE BASIS OUTLINED, AND AUTHORIZE THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO EXECUTE THE NECESSARY DOCUMENTS. The meeting was adjourned at 2:27 pm.