MEETING OF THE BOARD OF GOVERNORS. July 22, 2014

Transcription

1 MEETING OF THE BOARD OF GOVERNORS July 22, 2014 The Lehigh-Northampton Airport Authority Board of Governors convened a regular meeting of the Board at 12 noon on July 22, 2014 at the Lehigh Valley International Airport. Members Present: Jane Baker, Anne Baum (via phone), William Berger, Anthony Boyle, Dean Browning, Bert Daday, Michael Dowd, David Haines, Jeffrey Matzkin, Ed Pawlowski (via phone), Michael P. Schware, Marc Troutman and Christopher Werley. Staff members present: Charles Everett, Tom Stoudt, Todd Quann, Ryan Meyer, Paula Bonstein, Ashley Hari and Sylvette Rivera. Also in attendance: Solicitor Robert Donchez, Jim Bova (Campbell, Rappold & Yurasits, LLP) and Clarissa McIntosh (LVGAA). Chairman Marc Troutman presided and called the meeting to order at 12 p.m. After the Pledge of Allegiance, the Chairman called the roll and noted that a quorum was present. PUBLIC COMMENT: Clarissa McIntosh (LVGAA) addressed the Board regarding Public Comment and Queen City Airport. APPROVAL OF MINUTES: Minutes of the June 24, 2014 Board Meeting were reviewed. (#4919) RESOLVED, that the minutes of June 24, 2014 be accepted as presented. TREASURER S REPORT: William Berger submitted the monthly Treasurer s Report for the period ending June 2014, a copy of this report was provided to the Board of Governors.

2 LVIA Net Income (Loss) is $508,233. Queen City Income (Loss) is $38,036. Braden Airpark Income (Loss) is (25,667). The Operating account balance is $2,971,909 and PFC account has a balance of $398,507. William Berger reported that for June 2014, airline traffic consists of about 14% of the total traffic, the balance being general aviation. Year to date is 16% of the total traffic. Mayor Ed Pawlowski requested that the true cost be built in for the general aviation system users to determine if all three (3) airports are making profit. Staff stated that the Authority is establishing a new chart of accounts which will reflect the true cost as requested. The new chart of accounts will be implemented in January The reason being is that the information is not being captured on the front end. (#4920) RESOLVED, that the Lehigh-Northampton Airport Authority Treasurer s Report be accepted as presented. REPORTS OF COMMITTEES, OFFICERS AND STAFF: A. Braden Ad-Hoc Committee - Marc Troutman, Chairman Chairman Marc Troutman stated that the Braden Ad-Hoc Committee meeting took place on July 17, LNAA did receive a proposal for a Fixed Based Operator (FBO). Staff and Committee members are reviewing the proposal. Staff was asked to follow up with the recipients that have not submitted a proposal. Responses to an RFP for the sale are due back August 7, Letters of interest were sent out to Northampton County, Forks Township and Lafayette College. LNAA received a response letter from Forks Township and Lafayette College saying they were not interested in Braden Airpark. Chairman Marc Troutman sent a follow up letter to Northampton County requesting their response by August 7, B. Business & Finance Committee - Mike Dowd, Chairman 1.) 2013 Audit Update & 2.) Approval of Unrestricting $500,000 from Reserve Account Mike Dowd reported that the Business & Finance Committee took place on July 17, The 2013 Audit was received by the Committee and approved. There was one particular issue, which was the need to reclassify $500,000 from the reserve account.

3 Jim Bova (Campbell, Rappold & Yurasits, LLP) asked the Board to refer to the audit. A summary of restricted and designated cash balances were discussed. There is an operations and maintenance reserve of $2,062,702 of cash reserve that is required. The fund deficiency line item is (384,444). There is a renewal and replacement line item of $500,000; a cash reserve item from the 1993 Bonds. Under the Bonds, the Authority is required to have cash reserves in hand by December 31. There was sufficient cash for the two (2) bond requirements; however, the Authority has designated certain money, such as the renewal and replacement fund of $500,000. In 1997, the Board requested to have a general designation of cash at year end for the renewal and replacement fund. There is an AEP Scholarship fund of $10,000 and they have included a leasehold security deposit that is restricted cash. There is a contractual or statutory requirement to keep those security deposit funds in place. The total cash reserve requirements came up $384,444 short of what is required. The Business & Finance Committee recommended that the Board consider undesignating the renewal and replacement of $500,000. Mike Dowd stated that the Bonds are fully secured. The $500,000 was an allocation that the Board in 1997 recommended when the Authority was in a significantly better financial position. The $500,000 was not there for any particular purpose other than a restricted fund. The Committee reviewed it and recommended its undesignation to the Board. The funds did not serve a purpose. There is no record as to what those funds were allocated to or for. The issue of that fund being short is a matter of cash flow. (#4921) RESOLVED, that the Lehigh-Northampton Airport Authority approve unrestricting $500,000 from the reserve account. (#4922) RESOLVED, that the Lehigh-Northampton Airport Authority approve the 2013 Audit. EXECUTIVE SESSION Upon a motion duly made and seconded, the Board went into Executive Session at 12:20 p.m. to discuss anticipated litigation related to Real Estate land use and returned at 12:45 p.m. Chairman, Marc Troutman introduced and welcomed a new Board member, Jeffrey Matzkin. Jeffrey Matzkin is an attorney and a pilot. He made a comment, that in light of the changes that have been made in the airline industry, there are a new set of problems and he is confident that the LNAA Board of Governors will address them and create a brighter future.

4 C. Executive Committee Marc Troutman, Chairman 1.) Approval of Tri-Party Agreement with the Rockefeller Group and Fedex Ground The Tri-Party Agreement was requested by FedEx Ground (FXG) and gives them certain protection in the event Rockefeller Group is not able to complete the transaction with the Airport Authority. It also gives FXG the ability to complete the transaction with the Airport Authority in the absence of Rockefeller. (#4923) RESOLVED, that the Lehigh-Northampton Airport Authority approve the Tri- Party Agreement with the Rockefeller Group and FedEx Ground conditioned upon legal review to be approved and executed by the Executive Director. 2.) Approval of Purchase and Sale Agreement with Rockefeller Group Staff reported that on October 2013, the Board approved the form agreement of sale with the Rockefeller Group. This agreement determines the acreage to be 260 acres that will be acquired for the FedEx Ground development. The purchase price is $9,880,000. The Rockefeller Group has agreed to provide funds to the Authority for the cost of the ongoing Environmental Assessment (EA), which is the Authority s responsibility. The Airport Authority will then reimburse Rockefeller for the cost of the EA at closing. In the event, the Authority defaults, the payment may be made within one (1) year. If Rockefeller or FedEx Ground defaults, the Airport Authority will not be required to pay back the funds for the EA. Solicitor Robert Donchez added that the form agreement of sale will remain substantially as is. The reimbursement for the audit of this specific parcel will be a provision in the agreement. Also, there will be a provision that will allow Rockefeller Group to terminate the agreement of sale in the event there end user defaults or terminates. The Airport Authority will then be entitled to the reimbursement for certain third party costs incurred in connection with the deed of release. The timeline set forth in this agreement states that once this agreement has been executed, there is a twelve (12) month period built in for governmental approvals subject to two (2) three (3) month extensions. The closing under the agreement is thirty (30) days after those three (3) conditions (i.e. Off-Site Rights of Way, Governmental Approvals and the FAA Deed of Release) have been satisfied and the government approvals are under way.

5 (#4924) RESOLVED, that the Lehigh-Northampton Airport Authority approve the Acquisition Agreement with the Rockefeller Group Development Corporation subject to legal review to be approved and executed by the Executive Director. 3.) Approval of Fuller Release Agreement Staff reported that the Airport Authority s Solicitor has been negotiating an agreement with the Fuller family that will release a restrictive covenant preventing industrial development on the Authority s land. The agreement accomplishes the following objectives; conveys the right of way that is needed for the FedEx project to the Authority, releases any deed restrictions or covenant on LNAA properties, grants an easement on the Fuller property for roadway construction and relinquishes any remaining rights that the Fuller family may be entitled to under the Eminent Domain Code. (#4925) RESOLVED, that the Lehigh-Northampton Airport Authority approve the Fuller Release subject to legal review to be approved and executed by the Executive Director. 4.) Approval of Right of Way (ROW) Acquisition Services Agreement Staff reported that the 2 nd amendment to the Master Agreement with the Rockefeller Group has designated Rockefeller as the Authority s agent for the Right Of Way acquisition (ROW). The Rockefeller Group has decided to contract with Interstate Acquisition Services (IAS) to assist in the ROW acquisition. The contract will be between the Authority and IAS but, the cost of the services will be passed through from the Authority to Rockefeller. (#4926) RESOLVED, that the Lehigh-Northampton Airport Authority approve the Right Of Way (ROW) Acquisition Services Agreement with Interstate Acquisition Services (IAS) subject to legal review to be approved and executed by the Executive Director. 5.) Approval of Lease Terms for Bank Property Staff reported receiving an offer for the Bank property on Airport Road. The property has been sitting vacant for quite a few years. The LNAA s broker has been working on it for over six (6) months. They have brought in an undisclosed financial services company,

6 represented by Feinberg Real Estate Advisors. The lease rate, net worth is approximately $4,564 a month. There is about $200,000 of improvements that the lessee will be performing on the property. The Airport Authority will credit the tenant $125,000 over a ten (10) year period. It is a five (5) year lease with two (2) five (5) year renewals. If the lessee leaves after five (5) years, LNAA is only responsible for reimbursement of fifty percent (50%) of the unamortized portion. The Executive Committee reviewed and recommended to the full Board for approval, after addressing a few issues. Key terms included no lease payment during construction (90 days) and lessee is responsible for repairs up to $3,000. The Authority is responsible for snow removal and lawn care and a NNN Lease where the tenant is responsible for all utility expenses and taxes. Staff disclosed a few of the Committees concerns; one is that the interested party is a community bank with twenty six (26) branches and over a billion dollars in assets, making them a legitimate client. Second concern, was a right of first refusal in the agreement. They are not willing to remove it from the agreement. The chances of selling the property are very slim. The FAA will not permit the Authority to sell that property due to its location and why it was acquired. They tenant will give the Authority a thirty (30) day notice period. The last concern was the Authority having the ability to terminate the lease after five (5) years, which was a deal breaker. The proposed tenant is investing in a community and a property in which they do not currently have a presence. The Airport Authority is proposing a five (5) year term with five (5) year extensions at their options. Discussion took place. Upon a motion made and seconded, it was: (#4927) RESOLVED, that the Lehigh-Northampton Airport Authority approve the Lease Terms for the Bank Property. Two (2) members opposed. 6.) Approval of LANTA / Trans-Bridge Agreement Staff reported working with LANTA. The transportation Authority along with Trans Bridge have been trying to link local transit with inner city bus at the Airport Authority. The government and LNAA are in support of these types of projects. This will be positive for the Airport. The terms will be approximately 160,000 square feet of the economy parking lot, with the hopes of a multi-modal facility that they will move into, in the near future. The Authority will be leasing to LANTA who will in turn lease to Trans Bridge. David Haines stated that he is in support of a multi-modal facility, but will need a diagram and more information before making a decision. David Haines made a motion that was seconded, to table the approval of a potential lease with LANTA/Trans Bridge for further review.

7 D. Pension Committee Dean Browning, Chairman / Todd Quann Dean Browning reported that there are roughly $11 million in the Pension Fund. It falls between the Non-Union and Union Pension Funds. The funds are 95% and 92% funded respectively. The fund has been owned and managed by Wells Fargo for many years. The intention is to keep the Custodial portion with Wells Fargo. The Airport Authority received a number of proposals. Staff narrowed it down to three (3). The Committee met on August 17, 2014 to review and receive presentations. There were two (2) firms that met all of the criteria that the Authority was looking for in Pension Fund management, assistance with the investment policy and assistance with asset allocation. The decision was referred to the Union and Non- Union representatives on the Committee and through that process, the Oakmont firm was selected. DIRECTOR S REPORT: Charles Everett recognized the Employee of the Quarter, Barbara Bauer. She has been with the Airport Authority for twenty-seven (27) years. Charles Everett reported on the Airshow. The event will be taking place August 23 and 24, In terms of sponsorships, the Authority has $97,000 in cash commitments and roughly $132,000 of in-kind service. One of the many changes being made this year is bringing parking on site with 11,000 spaces which will help mitigate traffic issues. A presentation was made of the Harrier aircraft which will be performing at the Airshow. Michael Schware left the meeting at 1:08 p.m. Staff reported on the Delta Mainline. The Airport Authority will be receiving additional air service at the end of August. The aircraft will be upgraded to Atlanta on various flights. There being no further business, the Board unanimously agreed to adjourn at 1:15 p.m. Recording Secretary