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HomeMy WebLinkAboutMinutes - City Council - 1997-12-22 301 City Council, Special Meeting City Hall Conference Room A 760 Parkview Avenue Redding, California December 22, 1997 5:15 P.M. The meeting was called to order by Mayor Murray with the following Council Members present: R. Anderson, Kehoe, and McGeorge. Also present were City Manager Warren, Assistant City Manager Perry, City Attorney Wingate, Deputy City Manager Starman, Development Services Director Swanson, Administrative Services Director Kersten, Purchasing Officer Roberts, and City Clerk Strohmayer. REQUEST TO AUTHORIZE NEGOTIATIONS FOR LEASE OF THE EVERGREEN FACILITY AT REDDING MUNICIPAL AIRPORT (C-070-100 & A-090-100) City Manager Warren conveyed that this item was continued from the regular City Council meeting of December 16, 1997, to allow staff an opportunity to explore the possibility of a joint facility use by the two parties interested in leasing the Evergreen facility. Development Services Swanson stated that subsequent to the last Council meeting, staff conducted a telephone conference meeting with representatives of Airborne Express and Ascot Aviation to explore answers to questions posed at the Council meeting, and whether there was an opportunity to share the facility between the two parties. In the opinion of the Airborne Express representative, the uses are incompatible, and they are not interested in a shared use, either as a master or sub-tenant. Should they not be awarded the lease, it would be their intent to relocate off the airport due the growth of their business. They are not interested in constructing a facility. Should they need to develop additional airport-related facilities, it would not be in Redding. In staff's conversations with Robert Scott of Ascot Aviation, he indicated they would possibly be interested in constructing another facility if they could sell fuel prior to the construction of the facility because it would provide the cash flow needed. Another feature of Ascot's proposal includes a pending loan from the Small Business Administration for which the City has received evidence of a loan commitment of$250,000.00. Mr. Swanson advised that staff was not able to provide a solution for joint occupancy. Given that, staff continues to recommend Alternative No. 1 outlined in the Report to Council dated December 11, 1997, which is to authorize staff to begin negotiations with Airborne Express for lease of the Evergreen Facility. Mr. Swanson noted that copies of the proposals from both parties were provided to Council as part of the agenda Report dated December 11, 1997. Jim Kerr, 3250 Cowgill Lane, voiced his support for the City entering into a lease arrangement with Airborne Express because they are a very successful world-wide company that has outgrown their facility. Sue McCormick, 772 Kerry Jen Court, pointed out that Airborne Express will bring revenue into the area with fuel flow and landing fees with a potential for attracting other businesses in the vacant industrial park adjacent to the airport. Rogers McKinnon, 22445 Frisbie Lane, Palo Cedro, pilot and investor in ASCOT Aviation, inquired as to when Airborne Express anticipated service to Redding, the type of jet aircraft they plan to use, and the impact on employment and occupancy in the Evergreen building. Darryl Marsellus, P. O. Box 705, Palo Cedro, opined that awarding the lease agreement to ASCOT Aviation would be a win-win situation, and the favorable economic climate at the airport supports 12/22/97 r 302 • additional competition. He said ASCOT Aviation will stimulate more business with a fuel farm supported by Exxon. Steve Hoppes, 6893 Weeks Road, stated that he worked in the aviation industry since 1982, with Cal Todd and Redding Aero Enterprises. He conveyed his support for Airborne Express because they are a growing business; i.e., cargo carrier, and they provide excellent service and potential growth. David Parrish, 19289 Morning Mist Drive, Lakehead, local manager for Airborne Express, said he was contacted by members of his organization that represent Portland Freight. They are looking for additional ways of getting things out to the west coast. While he could not predict the certainty of when jets would be available to the Redding area, he said they are growing at a fast rate which will necessitate jet carriers in the near future. He did not, however, see a major change in the Redding operations for the short term. Mr. Parrish conveyed that as their operation continues to grow in Redding, the company's employee base will also expand. As to the economic gain to the community, he said the source of payroll dollars won't be revenue within community further divided but will be fresh dollars to the economic interest of the Redding area. Mr. Parrish related that his firm responded to the City's proposal based on the number of criteria listed in the proposal. He said Airborne understood they may not be the front runners but their intention was to stay at the airport for a long time. He pointed out that Airborne recognized there would be appreciable changes to the lease, the lease revenues were only one of the criteria, and their lease amount was based on what they felt was prudent. Mr. Parrish stated that had they thought the lease amount was a deciding issue, they would have approached the proposal differently. According to Mr. Parrish, the air freight industry is one of the few areas of aviation that continues to grow, it is a clean industry, and they don't have the potential of having an accident associated with large amounts of aviation fuel. Robert Scott, of ASCOT Aviation, presented visual overheads as he discussed the following issues: 1)airport development policy 2) lease alternatives 3)jobs 4) overview of ASCOT Aviation; and 5) his recommendations. Mr. Scott contended that his firm will provide at least five jobs per acre; expend $200,000 for onsite and offsite improvements; provide a revenue stream; and complete construction within 18 months. He said the airport master plan designates the northeast area of the airport for general aviation activities and the southwest for cargo operations, etc. Mr. Scott addressed new and future development areas noting that the narrowness of the new taxiway is not conducive for large aircraft. It was his understanding from City staff that a taxiway overlay would be installed, and he maintained that it is not appropriate to increase taxiway capacity through an overlay application. According to Mr. Scott, converting this area to a cargo hub, would necessitate increasing the taxiway capacity to facilitate DC9's. He suggested that the City consider the fact that because it does not have the funds to build a taxiway, Federal funds would require amending the master plan. Mr. Scott believed the other ramp to the south was a more appropriate location for an air cargo operation because it is designed for it. Mr. Scott offered the following options for the City Council to consider: 1) The City utilize the insurance funds received from the American propeller building that burned and construct a building on the same site for Airborne Express; or 2) Airborne Express locate to another site at the airport, such as the southwest airport cargo area. Relative to the creation of jobs and growth, Mr. Scott indicated his operation will provide 15 new jobs, and he has the experience to ensure that ASCOT Aviation will grow. He explained how ASCOT Aviation was formed, and said his goal is to establish an international flight training center. He said the other part of his dream was to provide service between Sacramento and Redding, and he believes there is a way of doing that. Mr. Scott requested that the City Council enter into a lease agreement with ASCOT Aviation for the Evergreen Facility no later than January 6, 1998, and negotiate a new facility for Airborne Express 12/22/97 303 utilizing the insurance proceeds. He stated that his firm is willing to pay the most, and they bid it fair and square twice. Council Member R. Anderson asked if there was anything in Mr. Scott's presentation that staff had not considered to which Development Services Director Swanson replied in the negative. In response to Mr. Scott's comments, Airports Manager Rod Dinger clarified that the Airports Master Plan is only a guide and not a policy. The northeast side is recommended for general aviation activities, however, he said the City would not discourage a small package carrier in that location. • He further clarified that there is no need to revise the Master Plan if this facility were developed into a small package operation. Presently, there is no ramp to the south which would necessitate constructing one from scratch. Mr. Dinger reported that there was a significant amount of interest in this bid with 12 bidders submitting proposals. After weighing all the issues, staff felt Airborne Express offered the most solid proposal. Relative to the taxiway overlay issued raised by Mr. Scott, Mr. Dinger clarified that the runway would require an overlay to extend its life, and Federal Aviation Administration (FAA) funds would be used for this purpose. With regard to the Propeller building that burned in 1995, Mr. Dinger advised that the City got an insurance pay off with the opportunity that if it were rebuilt, the City would receive an additional $25,000. There was, however, no interest in proceeding on this path at that time. He said in lieu of putting the proceeds into the airport fund, the City plans to construct a building and will soon go out to bid for design and construction. In response to Council Member Kehoe's question concerning the probability of Airborne Express leaving Redding, Mr. Dinger said they have exceeded their space limitations within the terminal building, and they continue to expand. As they grow, Airborne wants to bring in larger aircraft in addition to protecting their cargo sorting process from inclement weather. For these reasons, he said Airborne must look at alternative sites for their expanded operation. Council Member Kehoe stated that this issue has been characterized as a dream on one side, reality on another side, and a downside to the City if Airborne Express is not able to expand at Redding Municipal Airport. After evaluating the ability of Airborne, he was inclined to accept staff's recommendation to begin lease negotiations with Airborne Express. Council Member McGeorge concurred, stating that the addition of a second fixed base operator (FBO) does not guarantee more business. From his observations, activity has slowed down considerably, and it could put a tremendous burden on both companies. He further expressed concern about ASCOT's ability to prosper at the airport. MOTION: Made by Council Member Kehoe, seconded by Council Member McGeorge authorizing staff to begin negotiations with Airborne Express for lease of the Evergreen Facility at the Redding Municipal Airport. The vote: Unanimous Ayes. Council Member R. Anderson expressed his concurrence with the staff recommendation. He said he has flown out of Redding Municipal Airport, and it would be nice to have two FBO's, but past history has shown it was difficult for two FBO'S to prosper. In Mayor Murray's opinion, the original request for proposal (RFP) was flawed. From a business perspective, he stated that the City should not go out for bid if it does not intend to award the contract to the successful bidder. He believed the second RFP was rationally done and that the evaluation should be honored. While he supported staffs recommendation, he said ASCOT's request for an interim fueling facility needs to be addressed in some fashion. Development Services Swanson recalled that City Council Policy No. 302 concerning minimum standards speaks specifically to aviation fuel and petroleum sales. It requires anyone engaging in the 12/22/97 304 sale of aviation fuel to also provide other specifying services and be authorized to be an FBO. It would take a facility to provide specifying services in addition to the ability to sell fuel. City Manager Warren suggested that staff meet with ASCOT and report back at the next regular City Council meeting on how an interim fueling facility can be provided. Mayor Murray indicated that if ASCOT's proposal is of benefit to the City and the airport but does not fit the policy, then perhaps the policy should be examined. ADJOURNMENT There being no further business at the hour of 6:19 p.m., Mayor Murray declared the special City Council meeting adjourned. APPROVED: V 1 .i C Mayor ATTEST: A, , City Clerk / • • 12/22/97