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HomeMy WebLinkAbout _ 4.2(b)--Adopt Budget Resolution and Approve Authorization of Service (AOS) � � �' � � � � � � ' � �' � � ' � ` CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: October l,2024 FROM: Steve Bade, Assistant City ITElVI NO. 4.2(b) Manager ***APPROVED BY*** n � t��� ; s' �r 9/2�31�C�?4 rS' �P�it�,C�i �� � �,'2:?;'2{�? sbade@cityofredding.org btippin@cityofredding.org SUBJECT: 4.2(b)--Approve Authorization of Service with Mead & Hunt, Inc. and adopt Bud et Resolution Recommendation Authorize the following actions relative to Air Service Development Consulting Services for Fiscal Year 2024-25: (1) Approve the Authorization of Service #24-01 Air Service Development Consulting Services contract with Mead & Hunt, Inc. (C-89�6) for air service development consulting services at Redding Regional Airport; (2} Authorize the Mayor to execute the contract; and (3) Adopt Resolution approving and adopting the 54th Amendment to Budget Resolution No. 2023-060 appropriating $38,400 in funding for the contract. Fiscal Impact The Authorization of Service (AOS) #24-01 Air Service Development Consulting Services contract (Contraet) with Mead & Hunt is in the amount of$103,400 to support annual air service development. The Airports Division has identified $65,000 of operating revenues which are available to dedicate toward this contract through appropriations transfers leaving a funding gap of $38,400. The gap will be funded by two sources: $18,400 wi11 be funded by revenues generated by new ground lease agreements with the City of Redding's (City) Wastewater Utility and Redding Jet Center; and $20,000 will be funded with available rolling stock funds. The City's Airports Division is requesting to use rolling stock funds for a non-rolling stock purchase as alternative grant funding through the California Aid to Airports Program Annual Credit Grant has been identified to cover the intended vehicle replacement for whieh these funds were reserved. Alternative Action City Council may choose not adopt the budget resolution or to disapprove the contract u�ith Mead&Hunt, Inc. and provide alternate direction to staff. Report to Redding City Council September 25, 2024 Re: 4.2(b)--Adopt Budget Resolution and Approve Authorization of Service(AOS) Page 2 Background/Analysis The Airports Division utilizes air service development consulting services in order to enhance the efforts of staff in developing leads for new commercial air service routes through the Redding Regional Airport (RDD). A robust air service development program enhances the ability of an airport to attract the attention and interest of airline network planners and has yielded successful results in the past for RDD including new services from United Airlines/Skywest Airlines, A1aska Airlines, and Ave10 Airlines. The scope of the consulting services includes: 1. True Market Estimate to identify the catchment area for passenger air travel at RDD; 2. True Visitation Estimate which provides valuable indicators about all visitors to the Redding area; 3. Destination Analysis which utilizes GPS data to analyze travel trends emphasizing identification of top destinations for outbound travelers; 4. Representation and presentation support at airline's headquarter meetings; 5. Representation at airline industry eonferences; 6. Community meeting(s); 7. Quarterly performance reporting; 8. Airfare inonitoring; and 9. Additional services as requested. Envi�onmental Review This activity, adoption of the budget resolution and approval of the Authorization of Services, is not a project as defined by the California Environmental Quality Act, and no further action is required. Council Priority/City ManageN Goals • Economic Development — "Facilitate and become a catalyst for economic development in Redding to create jobs, retain current businesses and attract new ones, and encourage investment in the community." Attachments ^Resolution RDD MH AOS 24-01 (C-8976) RESOLiJTION NO. 2024- A RESOLUTION OF THE CITY OF REDDING APPROViNG AND ADOPTING THE 54TH AMENDMENT TO CITI' BUDGET RESOLUTION NO. 2023-060 APPROPRIATING $38,400 IN FUNDING FOR AN AIR SERVICE DEVELOPMENT CONTRACT FOR FISCAL YEAR 2024-2025 BE�T RESOL VE�BY THE CITY COUNCIL OF TH� CITY OF REDDING THAT Budget Resolution No. 2023-060 be and is hereby amended as follows: FUND DIVISION DESCRIPTION INCREASE DECREASE 201 '7101 Redding Regional Airport $38,400 THAT account titles and numbers requiring adjustments by this Resolution are as follows: OF FUNDS OF FUNDS Increase(Decrease)Revenues 201-�101-35'17850-00000 Transfer from Rolling Stock 20,000 201-7101-3172401-00000 Ground Lease 18,400 Increase(Decrease)Expenditures 201-7101-5037550-00000 Air Service Development $ 38,400 Total $ 38,400 $ 38,400 THAT the purpose is to appropriate $38,400 in funding for an Air Service Development contract for fiscal year 2024-25. I HEREBY CERTIFY that the foregoing resolution was introduced at a regular meeting of the City Council of the City of Redding on the lst day of October, 2024, and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: TENESSA AUDETTE,Mayor ATTEST: FORM APPROVAL: SHARLENE TIPTON, City Clerk CHRISTIAN M. CURTIS, City Attorney AUTHORIZATION OF SERVICE #24-01. AIR SERVICE DEVELOPMENT CONSULTING SERVICES (C-8976) This Authorization of Service #24-01 is made at Redding, California, by and between the City of Redding (City), a Municipal Corporation, and 1Vlead & Hunt, Inc. (Consultant), whose address is 2440 Deming Way, Middleton, Wisconsin 53562, collectively the "Parties", individually a "Party", for air service development consulting services at Redding Regional Airport. RECITALS WHEREAS, on July 23, 2021 the parties entered into that certain Consulting and Professional Services Contract (C-8976), and whereas, that Consulting and Professional Services Contract contemplated that the parties would, from time to time, enter into one or more specific Authorization of Service Agreements. NOW THEREFORE, IT IS AGREED AS FOLLOWS: 1. Introduction. In entering into this Authorization of Service ("AOS #24-01 "), the Parties agree that each and every term of the Consulting and Professional Services Contract (C-8976) between the Parties dated Ju1y 23, 2021, is binding upon the Parties hereto. Ifany term or covenant made in the Contract conflicts with a term or covenant of this AOS #24-01, the language of the Contract, as amended, shall prevail. Ifthis AOS #24-01 is silent on an issue addressed in the Contract, then the terms and covenants contained in that Contract sha11 control. This AOS #24-01 is hereby added as an addendum to the Contract. 2. Scope of Work. The Scope of Work for this AOS #24-01 is set forth in Exhibit A, attached hereto and incorporated herein by reference, and includes airport consulting services. 3. Fee for Services. Consultant shall be compensated for services to perform the scope of work on a lump sum basis that shall not eighty-seven thousand three hundred sixty dollars ($93,600) plus an additional sum of seven thousand three hundred ($9,800) to be billed at cost, for a total AOS #24-01 cost of one hundred three thousand four hundred dollars ($103,400). These fees may not be exceeded without the written authorization from the City and Federal Aviation Administration. 4. Consultant Responsibilities for Compensation. The Consultant shall prepare monthly invoices and progress reports which clearly indicate the progress to date and the amount of compensation. Consultant shall provide a final invoice upon completion of services after which no later invoices wi11 be paid by the City. 5. City Responsibilities for Compensation. The City agrees to pay the Consultant's invoices net upon receipt. At no time will payment of requisitions exceed thirty (30) days from the date of the invoice without notification to the Consultant. It is expressly understood that the City has the right to withhold payment on any invoice if City feels that the Consultant has not performed the requisitioned work efforts in a satisfactory manner. If the City does decide to withhold payments to the Consultant for any reason, City must provide written notification and an explanation to the Consultant within ten (10) days of the date of the invoice. 6. Subcontracts. At the time subcontracted services are anticipated, the Consultant shall notify the City of the nature of such services and identify the proposed subcontracting firm. The Consultant must receive approval in writing from the City prior to utilization of a subcontractor. Any subcontractor shall have the same responsibility and obligations as Consultant to comply with the provisions herein. Consultant shall remain solely and wholly responsible for all the acts or omissions of subcontractors as if they were the acts or omissions of Consultant and ensure that any such subcontractor is in position to comply with all its obligations under this AOS #24-01 and the Contract. 7. Effective Date of Authorization of Service #24-01. The effective date of this Authorization of Service shall be the date it is signed by the City. Signature Page to Follow IN WITNESS WHEREOF, City and Consultant have executed this Contract on the days and year set forth below: CITY OF REDDING, A Municipal Corporation Dated: ,2024 By: Tenessa Audette,Mayor ATTEST: APPROVED AS TO FORM: CHRISTIAN M. CURTIS City Attorney SHARLENE TIPTON, City Clerk By: Christian M. Curtis, City Attorney CONSULTANT Mead & Hunt, Inc. � � � q �%�. �� ,�"�, ���.����-����.. By�JOSEPH R. PICKERIN�G Vice President,Air Service Consulting Attachment: Exhibit A (Scope of Work and Fee Estimate) Exhibit A .... �44t1�eming 4Yap .. .. . � (v#+dcilcEoaa,N`isc�nsfn�3'z52 .. ��t��' £�t79 j73-fi3JCt .. s � � ' mead(iunt c�nx �� ss �S���irmr�"�'�'rn � ... April $, 2024 Steve Bade Deputy City Manager City of Redding P. O. Box 496071 Redding, CA 96049-6071 Subject: Proposal for Air Service Consulting Services Dear Steve: It is my understanding that the City of Redding on behalf of Redding Regional Airport(RDD) is interested in a proposal for air service consulting services for the July 1, 2024, to June 30, 2025, fiscal year. Mead & Hunt is pleased to submit this proposal for your review, which includes a scope of services and compensation. Scope of Services The suggested scope of services includes assisting RDD in air service development efforts for a 12- month period, beginning July 1, 2024, and ending June 30, 2025. AttachmentA includes a description of tasks over the term of this agreement. Compensation Mead & Hunt will be compensated for the work described under the Scope of Services (Attachment A}for a lump sum monthly retainer of$7,800 for the 12-month period, totaling $93,600. Mead & Hunt will bill associated expenses (e.g., pro-rated registration, airfare, hotel, meals, printing)at cost. Expenses for the 12-month period are estimated to be an additional $9,800, with a total contract amount not to exceed $103,400. Additional services provided by Mead & Hunt not described above or in other supporting documentation will be accommodated by an amendment to this agreement or billed in accordance with the Standard Billing Rate Schedule, attached hereto and incorporated herein by reference. The following are Mead & Hunt's Standard Billing Rates for services billed on a time-and-materials basis. Standard Billing Rates Clerical $90/hour Accounting/Administrative Assistant $110/hour Analyst $120/hour Senior Analyst $160/hour Consultant $190/hour Steve Bade April 8, 2024 Page 2 of 5 Standard Billing Rates Managing Director $2251 hour Project Manager $235/hour Vice President $255/hour Expenses Company or Personal Car Mileage IRS Rate Air and Surface Transportation Cost �odging and Subsistence Cost Out-of-Pocket Direct Job Expenses Cost Please send all correspondence to my attention at the following address: Mead & Hunt, Inc. 476 Salty Way Eugene, OR 97404 541-521-5962 trina.froehlich@meadhunt.com We appreciate the opportunity to submit this proposal to RDD. Respectfully submitted, MEAD & HUNT, Inc. u,lie� ����,�� � �� Trina Froehlich Project Manager Attachment A Scope of Services Page 3 of 5 After acceptance of this proposal, Mead & Hunt shall complete the following tasks: 1. True Market Estimate (1 per 12-month period) Mead & Hunt will obtain Airline Reporting Corporation (ARC)data. The RDD catchment area will be identified by zip code. ARC data will represent a statistically valid sample of airline tickets written by travel agents in the airport catchment area. Data collected will include, but is not limited to, the originating airport, destination, and airline. In addition, Mead & Hunt will use Diio Mi sources and U.S. Department of Transportation (DOT)airline report data to determine passenger retention and diversion by destination, airline use by airport, and the total domestic and international true market estimate (i.e., passenger potential by market). RDD will provide supplemental assistance as needed. The output of this effort will be PowerPoint slides to be used in airline presentations. Mead & Hunt will provide RDD a draft in PDF within 90 days of data availability for calendar year 2024, estimated to be in April 2025. 2. True Visitation Estimate(1 per 12-month period) While the True Market Estimate analyzes the air travel market, the True Visitation Estimate includes both the drive and fly market and provides an indicator of continued visitation recovery. It is recommended that RDD continues to update this information annually. The True Visitation Estimate will identify preferred travel patterns by visitors from the U.S. using Global Positioning System (GPS)data and will measure the number of people coming to the destination for calendar year 2024. The level of visitation will be determined, market-by-market, on a monthly and seasonal basis. The output of the True Visitation Estimate will include visitation to the Redding area broken down by region, state and metropolitan statistical area. The report will be delivered in PDF. Mead & Hunt will provide RDD a draft of the True Visitation Estimate within 90 days of the availability of calendar year 2024 GPS data, anticipated in mid- January 2025. 3. Destination Analysis (1 per 12-month period) Like the True Visitation Estimate, the Destination Analysis uses GPS data to analyze travel trends; however, this analysis analyzes outbound trends to top destinations. The data will capture a representative sampling of visitation to a destination, regardless of the mode of transportation used, while identifying seasonality trends. The findings will be used to strengthen the airline route business case for nonstop air service to destination markets. Up to 10 domestic destinations that people from the Redding area travel will be reviewed, including volume of demand by month, providing a month-over-month recovery comparison. Mead & Hunt will provide RDD a draft of the Destination Analysis within 90 days of the availability of calendar year 2024 GPS data, anticipated in mid-January 2025. 4. Airline Headquarters Meetings (2 in-person/2 virtual per 12-month period) Airline headquarters meetings are recommended for incumbent airlines and are typically held in the second half of the calendar year due to many industry conferences held in the first half of the year. Incumbent airlines include Alaska Airlines, Avelo Airlines, and United Airlines. In addition to incumbent airlines, meetings with targeted new carriers, such as American Airlines, Delta Air Lines, and SkyWest Airlines, are recommended when accepted by the airline. Attachment A Scope of Services Page 4 of 5 Mead & Hunt will provide the analysis, preparation, presentation and consulting services associated with the airline meetings. It is anticipated that RDD representatives and Mead & Hunt staff will meet with the airline. The existing RDD airline presentation format will be updated for the meetings. Updates will include community updates, market performance information, market opportunities and the incentive program. Once meeting dates are secured, Mead & Hunt will complete the presentations. The schedule is dependent on RDD's timely response to Mead & Hunt requests for airport and community provided information. �ikewise, airline management availability and the ever-changing airline environment may impact the schedule. 5. Airline Industry Conferences (3 per 12-month period) We recommend continuing to attend air service development conferences, including TakeOff North America (October 2024), Mead & Hunt's Air Service Conference (March 2025), and ACI-NA JumpStart Air Service Development Conference (June 2025). While some duplication may occur in the airline meetings, it provides an additional opportunity to present RDD's business case. Mead & Hunt will prepare custom presentations for each meeting highlighting RDD and the community for use at the airline meetings and assist with airline meetings. Mead & Hunt will complete the presentations no later than the week prior to the date of the conference. Keep in mind schedules change frequently at these conferences. Mead & Hunt will do our best to attend all of the airline meetings considered a top priority for RDD. 6. Community Meeting (1 per 12-month period) Mead & Hunt will prepare a PowerPoint presentation and participate in a community meeting held in Redding to help educate key stakeholders on industry changes as well as specifics regarding RDD's air service development strategy. The meeting will also be useful for sharing results after the completion of key air service development tasks. Mead & Hunt anticipates that, in general, the presentation to the community will cover an overview of the airline industry, airline performance in the RDD market, air service development strategies and air service opportunities. The date of the project meeting will be determined based on a mutually agreed upon date. 7. Quarterly Performance Report(4 per 12-month period} The goal of monitoring perFormance is to stay informed about and identify airline issues in the RDD market before they become problematic. U.S. DOT origin and destination data is available on a quarterly basis and is approximately six months behind. Onboard information (e.g., load factor, onboard passengers, available seats) has a three-month lag and is available monthly. On a quarterly basis, Mead & Hunt will provide the following: • Seats, onboard passengers and load factor trends for the past five years on a 12-month ended basis • Current and historical passenger market share by airline • Year-over-year change in RDD's six-month forward-looking schedules for flights and seats • Seat per capita comparisons for RDD compared to markets of similar size • Year-over-year comparisons to similar markets, including the number of nonstop destinations, passengers and seats • Load factors for each of RDD's nonstop markets on a quarterly basis Attachment A Scope of Services Page 5 of 5 • Revenue per available seat mile (RASM)for each of RDD's nonstop markets for the most recent yearended The output of this effort will be a Quarterly Performance Report provided in PDF. Quarterly reports will be completed within 30 days of receipt of the quarterly data from Diio Mi. 8. Airfare Monitoring (4 per 12•month period) The primary purpose of monitoring airfares at RDD is to identify non-competitive airfares with competing airports to prevent local passenger diversion. Local passengers that are using competing airports for their air service needs often do so because of differences in airfares. To reduce passenger diversion, periodic tracking of airfares and follow-up communication with air carriers may minimize pricing disparities. To monitor airfares at RDD, Mead & Hunt recommends comparing local business and leisure airfares with airFares at Sacramento International Airport(SMF)and California Redwood Coast-Humboldt County Airport(ACV). Mead & Hunt will compare Alaska Airlines and United Airlines business and leisure airfares with airfares that Alaska and United offer at the competing airports. This comparison provides the airfare information needed for follow-up communication with Alaska and United. Mead & Hunt will provide the airfare comparisons in PDF quarterly. 9. Additional Services (20 hours per 12-month period) Additional services may be requested by RDD that are not described above. Additional services may include, but are not limited to, monthly load factors and on-time data; the preparation of ad hoc reports; communication with airlines; coordination with RDD; revenue guarantee negotiations and other elements as identified on an as needed basis.