HomeMy WebLinkAboutAirport.Minutes.03-23-1977 �� ��
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April l, 1�77 ��
MEETING OF CITY COUNCIL AND AIRPORT BOARD
Wednesday, r,�larch 23, 1977 at Ramada Inn
Cape Girardeau, Missouri
Present for the luncheon and/or the discussion period were:
Airport Board: Paul D�Iiles, President� Truman Cole, Secretary; and
Dr. Paul Grisham.
City Council: Mayor Howard Tooke, Pau1 Stehr and Oliver Hope.
Fixed Base Operator: David Little, President and James Estes,
Vice-President.
Representatives, Airport Owners: Bob Drury of Drury Companies.
City Staff: Bob Gass, Director of Aviation and Cecelia Sonderman,
Administrative Assistant. (City lt�a.nager was out of
town at MCMA meeting in Columbia)
(Pat Coracan, T:4issourian Staff, present ).
Mr. Miles opened the meeting and turned it over to Mr. Estes.
Mr. Estes said:
l. Cape Central desires a new lease as the Fixed Base Operator
at the Airport.
2. There is a need for T-hangars. In order to amortize its
investment and to get necessary financing, Cape Central needs a 30-year
lease -- or two 10-year options beyond the base 10-year period of the
contract it hopes to obtain by now exercising the option under the 1967
contract.
3• Cape Central now pays $1,7l+0 per month rent to the City
and under the present arrangement, this rent figure would run through
the next 10-year base period as well as the few months (until P�fay 31 )
remaining on this 10-year contract.
/+. Cape Central would like the amount of rent paid to the
City to be reduced to $1,000 per month and surrender the �700 per month
the Fixed Base Operator is paid as Airport P�2anager. He said the end
result would be about the same.
5. In effect, he said Cape Central would like to do away with
the current lease and start over under these terms:
a. Starting now, if possible, the FBO would pay the City
$1,000 per month rent for the first 10-year period
and surrender the $700 11�anager payment it receives
from the City.
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Meeting of March 23, 1977
City Council and Airport Board
Page 2
b. For the first 10-year option (or second 10-year
period), Cape Central would pay �2,000 per month
rent plus 1¢ per gallon on all fuel sales.
c. For the second 10-year option (or third 10-year
period), Cape Central would pay �3,000 per month
rent, plus 2¢ per gallon on all fuel sales.
(Mr. Estes said about 50,000 gallons of fuel are sold
each month, which he claimed, would result in the City
realizing $2,500 per month in the first 10-year option
period ($2,000 + $500) and $/�,000 per month in the second
10-year option period ($3,000 + $1,000).
6. In return for its investments on the T-hangars, Cape
Central would like �o maintain ownership of the hangars in order to
build equity in its investments.
7. Cape Central would like to be able to sub-lease any part
or all of its operations subject to City approval with such approval not
to be unreasonably withheld. Cape Central would expect that whoever the
operations were leased to would be in the field of aviation.
�. Cape Central don't want exclusive rights to business at
the Airport. However, the FB0 thinks the Airport is currently only
large enought to support one Fixed Base Operator, but it may someday
become large enough to support more than one.
9. Cape Central thinks that anybody wanting to operate an
aviation business at the Airport should be required to offer all the
services now offered by the FBO -- no person or firm should be permitted
to offer just one or two services, such as fuel sales, storage, student
training, or maintenance, etc.
10. Cape Central is not afraid of competition if it is on an
equal basis and would like a clause written into its lease with the City
to give the FBO some security along these lines. r:4r. Estes said this is
the way it is operated at most Airports and Cape Central was interviewed
by the Paducah, Kentucky Airport and requirements were such to locate
there, Cape Central would be required to offer all services, including
fuel services, even buildng its own ramps.
Mr, Estes then asked, "What is the incentive for the City?" He
listed:
l. The City would get rid of the Airport r.4anager contract
with Cape Central, under which the City is paying the FBO $700 per
month.
2. The issue facing both Cape Central and the City regarding
the old hangars could be disposed of.
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Meeting of March 23, 1977
City Council and Airport Board
Page 3
Mr. Estes said that Cape Central and its attorneys interpret the
current lease to read that it is the City's obligation to repair the
hangars at the Airport. If they were repaired, �600 to �700 or $$00
rent could be realized from the hangars. (It was assumed that he meant
$ per month).
Ma.yor Tooke said:
l. Rent on the new hangar (maintenance) building alone is
computed around $1,140 per month, figured on the basis of 8% of the cost
of the new building.
2. The $600 remaining covers all other facilities used by
Cape Central, such as the terminal building, ramps, etc. , and therefore,
the $600 cannot be allocated to just the old har�ars.
3. The City has the right to tear down the old hangars as
well as maintain them and it doesn't make much sense to maintain them
for the amount of rent per month.
Mr. Estes said the City has not maintained the two buildings (hangars )
which it contracted to do.
Ma.yor Tooke said he would deny that and ask any member of the
Airport Board if they thought the City did not do what it contracted to
do.
Mr. Cole and Mr. Miles said wordin� in the Airport lease with the
FBO is contradictory and Mr. Miles suggested this might be a good time
to have an outsider look at the lease and give his opinion as to what
the wording actually means.
TJtr. Drury asked if the lease did not say, "If it becomes unfeasible
to repair the hangars, they should be torn down" -- a useful life clause.
Mr. Dti.les said a number of contractors over the years have given
opinions on the hangars, some saying that parts of the hangars could
have been repaired, but the hangars have reached a point where they were
not in a condition for repair.
Mr. Estes said that a few years ago, the repair could have been
done for $60,000 and whether it is economically feasible or not is of no
consequence since the contract states that the City shall repair them.
Mr. Stehr said the City has the right to tear down the hangars and
when the recommendation was made could not justify spending $60,000 of
taxpayers' money and not getting more rent; a suggestion (for more rent )
which the FBO had objected to.
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Meeting of March 23, 1977
City Council and Airport Board
Page !�
Mr. Estes said the City also has a moral obligation to repair the
hangars.
Discussion continued on whether or not the City should repair the
hangars.
Mayor Tooke said the question to be considered is, "Will the Airport
be better served by fixing up those two old, dilapidated buildings? --
Will that be an asset to the City of Cape Girardeau?"
Mr. Estes said that Cape Central recently had two architechts, (Tom
Phillips and Tom Holshouser) appraise the old hangars and make recommendations.
He said their consensus was that the hangar the greater distance from
the maintenance building was beyond repair, but the hangar nearest the
new maintenance building could be repaired much easier than being replaced.
Mr. Little estimated the cost of repair at $56,000.
Mayor Tooke said that if this amount was spent, cost of the improvements
' must be insured. He said that from the City's standpoint, the question
was whether to spend $56,000 plus insurance costs for only the amount of
total lease money the City would receive. He said Cape Central wants
the hangars saved; the City wants them torn down.
In discussion it was brought out that insurance companies previously
would not insure the buildings because there was no water available at
the Airport, but plans are to install a water tank.
Mr. Cole expressed the opinion that he did not think the City had
developed the Airport properly and said that if land had been made
available for T-hangars, some private group would have built them, but
proper financing could not be obtained with the City owning the land.
Mr. Miles asked if the City and Airport Board feels a need or has
an obligation to provide facilities and necessary equipment at the
Airport the same as it provides tennis cou.rts etc. , in the parks. He
said he thinks whoever rents such hangars should pay for them. He also
later said there is a Master Plan for the Airport.
Mayor Tooke said the taxpayers spent a great deal at the Airport
and there is no obligation for the City to provide subsidized housing
for airplanes anymore than for buses, or his private car.
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Meeting of Ma.rch 23, 1977
C'ity Council and Airport Board
Page 5
There was discussion on money spent by the City on the new mainten-
ance building and Ma.yor Tooke said there was a liberal adjustment in the
FBO's rent at that time. Also discussed was money spent on the terminal
building (bond issues) etc. , with the Council pointing out that most of
the money the City has spent at the Airport benefits general aviation,
and that commercial Airlines are charged landing fees and security fees,
etc.
Discussion returned to the problem at hand -- a need for hangars
and Bob Drury said he thought some concrete idea should come out of the
meeting as he outlined deterioration to Drury Compar�y's most expensive
plane which is sitting outside.
Mayor Tooke said the City had already extended a proposal to build
a building, but wants a reasonable return on the investment. He said he
thought the best situation would be for the FBO to be in charge of the
hangars and he thought the City can negotiate a lease, but not by cutting
rent from $1,7/�0 to $1,000. Cape Central said it would pay the same
rent as now, but also continue to draw the $700 for managing the Airport.
Ma.yor Tooke said the ma.tter of the management contract is separate
from the rent of the hangars or the FBO's lease. He said he did not
think the FBO was managing the Airport now and is not providing the
services that the City is paying for.
Ma.yor Tooke said if they were going to look 30 years into the
future, then they would have to talk about something besides flat rental
figures -- a figure that goes up with the cost of living, the inflationary
trends, amounts of revenue or such. He pointed out that there were
other problems besides Cape Central obtaining financing that makes it
necessary for the FBO to have a longer lease, He said the City could
arrange for financing -- one possibility being for the City to agree to
assume loan payments if the FBO defaults.
Mr. Drury suggested Cape Central consider a proposal to lease the
new hangar for X dollars per X square feet, r,Rr. Estes said that if they
got into this aspect, Cape Central would want individual T-hangars
instead of a large building. Mr. Drury estimated the hangar could be
built for less than $10 per square foot since the floor is already
there.
Mr. Stehr asked Mr. Estes if the FB0 would be interested in getting
rid of part of the services it provides at the .Airport. Mr. Estes said
if the City "starts piece mealling: the services, it will weaken the
structure of the FBO to the extent that the City would not want it.
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Meeting of March 23, 1977
City Council and Airport Board
Page 6
In further discussion, the Mayor said it would be difficult to
negotiate a 30-year lease, and noted there is a difference in a public
body and private operator in this respect as the profit motif is out as
far as the City is concerned.
Mr. Estes said Cape Central will make a study as to whether it
wants a large facility and several T-hangars which would cost the City
so much to build and which Cape Central would rent for so much.
Mr. Estes asked if the City would prefer this type of proposal to
extending the lease, even if the lease were based on a sliding index.
Mayor Tooke said the City would prefer a choice between the two.
Mr. Stehr said he was not prepared to answer.
Mr. Estes said he would rather make a proposal to the City based
upon cost-of-living index as opposed to giving the City a percentage of
"our business. " He said, "You open a can of worms when you get into
percentage of business. "
On profits, Mr. Estes said profits can be manipulated and there is
also questions as to "What is gross profit -- net work?"
Mr. Estes also asked if the City would prefer a 20-year lease as
opposed to a 30-year lease. Both Mr. Tooke and Adr. Stehr said "Yes, as
one councilman."
Mr. Estes said he thinks Cape Central should have a firm 10-year
period and asked if the City would prefer options to be at 5-year
increments instead of 10-year ones.
P,�ayor Tooke said that all present had some idea on what the needs
are but the City Manager was not present and he (the City lldariager) needs
to advise the Council on such matters.
The meeting ended with the understanding that in addition to the
proposal the FBO presented at the beginning of the meeting, the FBO
would present some alternate proposals and the City will give an answer
to the proposal made that day by Cape Central and, perhaps, present a
counter-proposal.
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