CITY OF LOS BANOS AIRPORT ADVISORY COMMISSION MEETING MINUTES MARCH 16, 2010 ACTION MINUTES - These minutes are prepared to depict action taken for agenda items presented to the Airport Advisory Commission. CALL TO ORDER: Chairperson Leonardo called the Airport Advisory Commission Meeting to order at 5:00 p.m. PLEDGE OF ALLEGIANCE: Commissioner Anderson led the pledge of allegiance. ROLL CALL MEMBERS OF THE AIRPORT ADVISORY COMMISSION PRESENT: Anderson, Wilber, Leonardo; Aguilar absent. STAFF MEMBERS PRESENT: Public Works Director/City Engineer Fachin, Parks & Recreation Operations Manager Cardoza, Public Works Office Manager Hogan. CONSIDERATION OF APPROVAL OF AGENDA: Motion by Wilber, seconded by Anderson to approve the agenda as submitted. The motion carried by the affirmative vote of all Airport Advisory Commission Members present; Aguilar absent. CONSIDERATION OF APPROVAL OF THE ACTION MINUTES FOR THE REGULAR MEETING OF FEBRUARY 16, 2010: Motion by Wilber, seconded by Anderson to approve the minutes as submitted. The motion carried by the affirmative vote of all Airport Advisory Commission Members present; Aguilar absent. PUBLIC FORUM: MEMBERS OF THE PUBLIC MAY ADDRESS THE COUNCIL ON ANY ITEM OF PUBLIC INTEREST THAT IS WITHIN THE JURISDICTION OF THE CITY; INCLUDES AGENDA AND NON-AGENDA ITEMS. NO ACTION WILL BE TAKEN ON NON-AGENDA ITEMS. SPEAKERS ARE LIMITED TO A FIVE (5) MINUTE PRESENTATION. DETAILED GUIDELINES ARE POSTED ON THE COUNCIL CHAMBER INFORMATIONAL TABLE. No one came forward to speak at this time and the public forum was closed. THREE YEAR LEASE RENEWAL WITH SAGOUSPE ENTERPRISES LLC. Public Works Director/City Engineer Fachin reported that at the last City Council meeting, the Council approved a three year lease extension with Sagouspe Enterprises, and continued with a 4% increase yearly, as were the terms in the current lease agreement; the lease extension will end on June 30, 2013;
Commissioner Anderson commented that on section 1.02 he did not see a figure carried over for holding over in the three year lease extension. CONSIDERATION OF RENTAL RATE ADJUSTMENTS TO THE LOS BANOS MUNICIPAL AIRPORT HANGARS. Public Works Director/City Engineer Fachin stated that staff is presenting a hangar rental rate adjustment of $250.00 per month for the older 944 square foot hangars, and $325.00 per month for the newer 1,134 square foot hangars, with a CPI increase annually, for Commission's approval and recommendation to present to City Council at their next meeting for approval; staff is recommending that the rental rates be adjusted for new tenants immediately, and for existing tenants, rental rates be adjusted to the new amounts effective on July 1, 2010; the CPI would not be looked at for 18 months, not until December 2010, which Council would have to approve; Fachin gave a background on the hangar rental rates; in June 2001 the City Council approved the rates of $205.00 and $216.00 per month for the older hangars, and $325.00 per month for the newer hangars, with an annual CPI increase that was suppose to be included yearly; the Airport Consultant, in April 2007, did a review of hangar rates and he recommended that all new hangar rentals be rented at $450.00 per month, and also included an annual CPI; currently, there is one tenant who has stayed at the Airport paying the rental rate of $450.00; the other newer hangars that are occupied are already renting at $325.00 per month; staff did a review and compared rates of other local Airports; staff is recommending the newer 1,134 square foot hangars be adjusted from $450.00 to $325.00, and the older 944 square foot hangars rental rate be adjusted to $250.00 per month; currently, tenants in those hangars are paying rates of $205.00 and $216.00 per month; this adjustment would include an additional rental charge of $34.00 and $45.00 per month; the CPI index wasn't adjusted by staff over this period of time and if the CPI increase would have been included annually in the last 8 1/2 years, the CPI increase would have adjusted the older hangar rates to between $240.00 - $250.00 per month; part of the assurances for FAA loans is that all rental charges should have the same rate for similar hangars; it does not matter if the tenant is just starting a rental agreement or if the tenant has been renting for several past years; currently, the Airport has a 75% occupancy rate and with two more hangar rentals, occupancy would get to 80%; trying to make the Airport Enterprise fund fiscally sound; staff's time has not been billed in the Enterprise fund; will need to work towards having staff's time coming out of the Enterprise fund; need to start building up the 5% matching funds for FAA grants; the next grant is the runway overlay, which is a $650,000 to $800,000 project that requires quite a bit of matching funds; staff estimates $35,000 - $40,000 in revenue lost for the Airport as a result of no CPI increases over the last 81/2 years; Commissioner Wilber asked what happens if the CPI goes down; staff stated that the CPI is usually not adjusted down, but the rent would stay the same, based on the cost to run the Airport; Commissioner Anderson stated that Gustine was not on the list for comparison; staff stated that the City of Gustine was contacted, but they did not have advertised hangar rates; staff stated that
set leases and ground leases are set on prices, and special hangars that are different sizes are a special lease agreement that are negotiated with the owners; these recommended adjustments do not effect anyone who has a long term lease. The Chairperson asked if there was anyone in the audience who would like to speak on this agenda item: Airport tenant, Darryl Crain, asked what the occupancy rate is on the older 944 square foot hangars: Fachin stated two out of the fourteen 944 square foot hangars are unoccupied, and four out of the eight larger hangars are unoccupied; Airport tenant, Tony Whitehurst, stated his family and business have had hangars at the Airport for 50 years; have a ground lease for a hangar the family built, and a T-hangar since its construction; he is bringing forward observations and comments by pilots and Airport users; very happy with the Airport Manager's efforts to apply his budget skills to disclosing the fact that the Airport is not a burdensome loss to the City; not a useless zone of land in our community; extremely valuable asset; believes there are two very distinct approaches to the survival of an Airport: the municipal approach, government driven, in which you have an asset in that there is a cash flow; need to make sure the fees reflect the bills and fees cover the cost; users of the Airport (business and private individuals) look at it as a business user and understand costs need to be lower than income, but rather than raise fees, raise income; concerned with this rate adjustment; we're aware of sensitivity to local economic conditions; users being gouged on CPI for all urban consumers in the San Francisco, San Jose, Oakland area; local economic conditions aren't well reflected in that index; Modesto, Stockton, Tracy, and Merced are more comparable rates to Los Banos; Modesto is.21 cents square foot average; Stockton is.14 cents square foot average; Merced is.17 cents square foot average; Los Banos' rate is.26 cents square foot on the lowest hangar, as proposed; the 1,134 square foot hangar rate is.39 cents square foot; to bring the 1,134 hangar to.26 cents brings the rate down to $305; to lower the 944 square foot hangar to.21 cents brings it to $198; keeping the cost as low as possible will fill those hangars up. and demand will be greater; those of us who built our hangars are renting ground space; other source of income is gas; 100LL fuel is.45 cents gallon higher than Tracy; Los Banos always had the lowest gas prices; advertise lowest possible price, and do cost averaging on a more frequent basis; get rates appropriate by promotion and increasing the sale of fuel, and make the Airport healthier and stay solid; longevity should have some benefit to sticking to it; like to see the burden placed where it exists; Commissioner Wilber stated he tends to agree with Mr. Whitehurst; CPI is like a false, positive; gas and CPI should be based on Merced statistical, not the greater Bay area; Fachin stated the San Francisco based CPI index we use is what the City Attorney uses in all our agreements; the land leases will be negotiated when the terms have expired; other Airports are subsidizing fuel because of their quantity of hangar rentals; staff will look at the sale price and mark-up for 100LL fuel for possible adjustment; Commissioner Anderson asked how long the two smaller hangars have been vacant; Fachin stated since the rental rate went to $450.00, there has been a consistent five or
six vacancies total; Commissioner Anderson stated that with the office vacant, maybe Merced College would be interested in using it for an aviation class; Chairperson Leonardo asked if staff could investigate the CPI for this area for Commission's review; Fachin reminded the Commission that the CPI increase would not be looked at for eighteen months, with Council's approval, and every year thereafter staff will bring forward the CPI to the Commission for their review; Chairperson Leonardo expressed the importance of the need for cash flow to keep the Airport afloat, and the need for revenue to be addressed now. AIRPORT 2009/2010 REVENUE/EXPENDITURE UPDATE. Public Works Director/City Engineer Fachin reported that the Airport budget looks really healthy; so far the Airport has generated $302,000 in revenue versus $251,000 in expenditures; the facility is projected to take in about $411,000 and spend nearly $406,000 this fiscal year. AIRPORT FACILITY MAINTENANCE REPORT. Parks and Recreation Operations Manager Cardoza reported that the Airport will be mowed starting next week, and disced on the East side; fuel sales have slowed down; Hangar #5 had a leak, which has been repaired; Chairperson Leonardo appreciates staff's help and cutting back on expenses to keep the Airport in the black. PUBLIC WORKS DIRECTOR/CITY ENGINEER REPORT. Public Works Director/City Engineer Fachin stated that if Council does approve the rate adjustments, revised rental agreements will be sent to the tenants and the advertising rates will be changed on the web site; Leonardo suggested utilizing the pilots to get the word out to other pilots on the new hangar rental rates. COMMISSION MEMBER REPORTS. AGUILAR: Absent. ANDERSON: Last night at the Fire Station there was a class on weather spotting; weather service in Hanford is not able to pick up data at our Airport; looking forward to working with the pilots; Airport is a very big asset to the City. WILBER: Thanked pilots for attending the meeting. LEONARDO: Thanked pilots for attending the meeting, and giving their perspective on rate adjustments; like to see input from the Commissioners; thanked staff for their work. ADJOURNMENT: The meeting was adjourned at the hour of 6:22 p.m.
APPROVED: ry Leonardo, Chairpe son ATTEST: Sharon Hogan, Secretary