01/12/2010

Meeting Minutes for:
Monthly Board Meeting
Yuma International Airport, Conference Room
Tuesday, January 12, 2010 at 04:16 PM

Call to Order:
Minutes for Board Meeting held at 4:00 PM on Jan 12, 2010

CALL TO ORDER
The Yuma County Airport Authority, Inc. (YCAA) Regular Board of Directors Meeting was called to order at 4:16 PM on Jan 12, 2010 in the Yuma International Airport Conference Room, 2191 E. 32nd Street, Suite 218, Yuma, Arizona 85365. The Presiding officer was William Gresser, President.

YCAA MEMBERS PRESENT WERE:
William Gresser President
Rob Ingold 1st Vice President
Albert Gardner 2nd Vice President
Ed Whitehead Treasurer
Dr. Brian Cullen Secretary
Harry Hengl, Director
Robert McLendon, Director
James Carruthers, Director
Jeanine Rhea, Director
Mike Taylor, Director
Karl Moedl, Director
Jesse Haines, Director
Mikel Smith, Director
Larry Gould, Director

ALSO PRESENT WERE:
Mr. Williams, Airport Director
Gerald Hinkle, Jr., Chief Financial Officer
Gladys Wiggins, Airport Operations Director
Gen Grosse, Corporate Account Manager
Lynn Hall, Director of Maintenance
Andrea Lopez, Executive Assistant
Gabriella Reyes, Office Manager
Maria Gonzales, Bookkeeper
Adriana Alcalde, Customer Service Representative
Lt. Col. Workman, Military Liaison
Greg McShane, MCAS Operations Officer
Wayne Benesch, Airport Counsel
Joe Gamez, CareFlight
Sandra Schot, CareFlight
Julie Engle, GYEDC
Gill Garza, Garza Aviation
George Ehrich, NEI
Marisol Canalis, NEI
John Ewing, Dallas Aviation
Leo Pilkington, PPC
Steve Tait, WCA
Jerry Lococo, Lococo Pilkington
Drew Pilkington, Lococo Pilkington
Christopher Thompson, Patterson Thompson Architects

APPROVAL OF MINUTES
The President called for a motion to approve the minutes of the Previous Board Meeting. Mr. Hengl so moved. Mr. Whitehead seconded the motion. Motion passed unanimously.

CONSENT AGENDA

1) Discussion and Possible Action to authorize the YCAA President to sign Amendment 2 to US Government Lease Number NOy (R)-56055 to extend the lease with the Department of the Navy on 52 acres of patented land until December 31, 2010.

Background: Last July, MCAS requested a lease extension on the remaining 52 acres in their original lease with Yuma County, which the Board Approved, to allow NAVFAC, MCAS and YCAA staff an opportunity to consolidate all remaining lease questions into a Master Real Estate Agreement. That process is still underway and many technical questions are under review. In the interim, NAVFAC has requested a second extension on the 52 acre lease while we continue to work on the details.

REGULAR AGENDA

1) Discussion and possible action for the Board of Directors to accept the FY09 Independent Audit Report performed and prepared by Walker & Armstrong.

Mr. Williams introduced Mr. Steve Tait of Walker & Armstrong to review our required annual Independent Audit of our books and records as required by our By-Laws and our Grant funding sources. Mr. Tait provided an in depth review of the audit and what is entailed in completing the final documents and reaching the unqualified findings.

The successful completion of our Independent Audit is essential to our capital funding sources as well as to ensure public confidence in our financial operations.

2) Monthly report by Chief Financial Officer on current financial status and recent activities.

Mr. Williams briefed that overall, revenues and expenses are within acceptable parameters as compared to our budget. A detailed budget report along with a breakdown of working capital, notes payable and a summary of our grant activity was provided to the Board. There were no questions.

3) Discussion and Possible Action to establish a policy either for or against T-Hangar Inheritance.

Mr. Williams briefed that our existing T-Hangar waiting policy is vague on the matter of "Inheritance." The current rule is that to obtain a T-Hangar you must sign up for the list and no one can move up the list until it is their turn. No leapfrogging the list for any reason. However, the question has come up about the sale of an airplane. If a current T-Hangar tenant sells his aircraft to another, does the new owner, who is likely not at the top of the waiting list, and in fact, might not even be on the waiting list, get to stay in the hangar, or must they be required to move out, and free up the T-Hangar for the next person on the list?

CONSIDERATIONS:

MAKE THEM WAIT: By policy, the T-Hangar list has always been the last word. When someone signs up on the list they are assured that the list is inviolate. This is very important to people who have, in many cases, been waiting on the list for years. Knowing exactly where they stand on the list, and having confidence that the Airport is never going to "do a deal" behind their back, gives them confidence in the Airport Authority.

LET THEM STAY: A T-Hangar lease is valuable property. Some of our current tenants have had to wait for months, and in many cases, years, to get into the Hangar. Now that they are in, they can attach some of that value to the aircraft itself. Then, if they wish to sell their aircraft, for any reason, they can tell a prospective buyer that the T-Hangar lease goes with the aircraft, and that value makes it a much easier sale. The new owner would "Inherit" the lease.

After much discussion the Board instructed the Airport Director to establish a policy in our minimum standards to NOT ALLOW T-Hangar Inheritance. If a T-Hangar tenant sells his aircraft, the new owner MAY NOT take over the T-hangar. The T-Hangar is leased to the tenant and does not attach to the aircraft in any way. The Board further instructed staff to make an examination of current tenants to determine if they are authorized tenants. If our lease records do not match the current tenants, those individuals must be removed from the T-Hangar so it can be leased to the next person on the list.

4) Discussion and update regarding current construction projects, associated contracts, grant status, general aviation, marketing efforts, conferences and meetings and items with the city and county.

Mr. Williams gave a general update on current grant and construction projects plus other pertinent activities by the airport staff.

CUSTOMS AND BORDER PROTECTION

Mr. Williams stated that the 35% design work has been completed and the invoice has been submitted. He informed the Board that there are few new requirements for the Turner Building.

TAXIWAY Y

MR. Williams stated that the design is approaching 90% completion. He explained that NAVFAC has more requirements. Currently we are stuck between NAVFAC and the FAA.

SCORPIONS BASEBALL

Mr. Williams explained that the Buyout Game is coming soon. The Board was provided with tickets to the game and informed that if they need more to contact Andrea.

5) Discussion and Possible Action to authorize the continuation of the renovation of the proposed GA Terminal.

Mr. Williams briefed that we are discovering some funding limitations in our plan to renovate the Bet-Ko Hangar into the new GA Terminal. Essentially, we had planned to do a "first class" job with the appropriate "first class" finishes like wood flooring, ceramic floor tile, very nice carpet, solid surface countertops, etc.

Mr. Williams explained instead, due to the costs, we can only afford "not quite first class" finishes, like no wood flooring and "nice carpet" instead of "very nice carpet". We can afford wood and laminate surfaces instead of solid surface countertops, etc. We can afford metal siding, but not stucco. We can afford a modest overhang instead of the driveway roof; we can afford a painted ceiling instead of an acoustical tile or wood ceiling; and we can only afford a 30 foot expanse of glass entryway at the front and back instead of a 40 foot expanse.

In all, we should still wind up with an attractive General Aviation Terminal that we can be proud of. But staff's expectations have suffered some setbacks and we want to be sure the Board is still happy with the proposed solution prior to issuing a Notice to Proceed. The board was satisfied with the reduced quality concept and authorized Mr. Williams to sign the Notice to Proceed through the Detailed Design Phase.

6) Discussion and Possible Action to approve APS contract and to authorize the YCAA President to sign the Solar Renewable Energy Credit Purchase Agreement #8310 between Arizona Public Service Company ("APS") and Yuma County Airport Authority for the sale to APS of certificates representing the Environmental Attributes associated with the production of Solar Power for up to 1,471,693 kWhs per calendar year at a price of $0.162 per kWh for twenty years.

Last month Mr. Williams briefed that we anticipated having the final PPA contract ready for the January Board but the scope of our required changes has them still at work. Unfortunately, we have an intervening deadline that cannot be adjusted; specifically, the CPA with APS. Our requirement to APS is to sign their CPA not later than Jan 23.

Staff requests approval from the Board of Directors for the YCAA President to sign the APS contract as it exists today with the understanding that the Board may reverse that approval in February if not happy with the final proposal from PPA, or if the Bank does not provide the required waiver.

7) Presentation concerning FAA's expressed concern over the sale of land by Yuma County to MCAS Yuma

Mr. Williams briefed that an anonymous complaint to the FAA alleged that the YCAA has sold airport land to MCAS Yuma in violation of our grant assurances. Unfortunately, the complaint has been received as authentic and the FAA has issued a letter of concern to the Airport Director questioning "the airport's sale of FAA conveyed land." If that had actually happened it would violate our grant assurances, Their concern is completely misplaced and a cursory review of public documents would verify the true facts of the situation. Staff is preparing a detailed response to the FAA's letter, along with a power point presentation and has scheduled a briefing for the benefit of the LAX FAA staff on January 28, 2010.

8) Discussion of The Kiernan Companies as a developer for the DCC

Mr. Williams briefed that Airport staff has continued to recruit qualified investors for hangar development in the DCC. We recently met with Mr. Kevin Kiernan, owner of The Kiernan Companies. He has a distinguished record as a property developer across several industry groups, including Build to Suit, Hotel, Commercial and residential. He was impressed with the Authority's concept and vision of the future.

Our presentation included our recently developed concept of operations, that is, the Airport would act as his property manager on airport development projects. Essentially, we would assist him with marketing Kiernan property's and when clients moved in; we would manage billing, maintenance and any other required services. We would then pay him from the receivables after deducting our own ground rent fees and other charges.

Staff has prepared a new "Developer's Lease and Property Agreement" based on these concepts. The current draft is presented as a separate document for review. A draft lease was prepared to explore as many details as possible to see if the concept was going to be acceptable to both parties. Now that our initial review has been successfully completed, the airport staff requests a meeting with the new Strategy Committee to finalize a recommendation for the Board at the February Meeting. Our proposed roadmap is that if the Strategy Committee is satisfied with our proposal and the terms, the Strategy Committee would make a recommendation at the February Board Meeting to execute the agreement, with construction to start soon thereafter.

After some discussion the consensus of the Board was that this was a creative approach to obtain financing for the DCC and agreed for the Strategy Committee to meet with Mr. Kiernan on January 20.

9) Discussion and Possible Action to authorize the Airport Director to schedule a Strategy Committee meeting with representatives from Freeman Holdings LLC, a Million Air FBO franchise, to discuss a possible new Fuel Sales FBO in the DCC with a focus on providing superior customer service to military and government contractors in addition to their normal high end FBO operation.

Just before the holidays we had an inquiry from the Million Air FBO about the possibility of setting up at our airport. We arranged for a visit which took place on Thursday, January 7. The meeting was attended by airport staff, Mr. Harry Hengl and Mr. Bill Gresser.

BACKGROUND: Million Air FBO is a franchise operation. Their standards are very high, their service is at the top of the scale and they are generally considered one of the premier brands in aviation. In this case, the largest Million Air franchisee, Freeman Holdings, LLC, is the interested party. Their franchise locations include six airfield operations that are particularly well regarded by the Military. Visiting us on Thursday were the owner, Mr. Chris Freeman, his partner and son, Mr. Scott Freeman, his chief of operations, Major General Karl Custin (retired), Mr. Bob Lendisk, his Chief Financial Officer and additional staff.

Mr. Freeman (senior) made an impressive case as to their plans. He is excited about the opportunity and is willing to make a significant investment, particularly because, as he related to us, it was the Military Fuel Sales office in Washington DC that called him, and asked him to come to Yuma and set up an operation. Clearly there is a significant need by the military that our previous FBO's have not been able to meet.

Their visit held two big surprises. First, they are not willing to move into an airport unless they are the only provider of Jet Fuel. To them, that is a deal killer. This stipulation was presented as a matter related to the acquisition of the military fuel contract.

Secondly, he is only interested in establishing his FBO in the DCC area. He sees that location as the biggest opportunity because of the bearing capacity of our DCC ramp and the location of our new fuel farm, which is vital to their plans to have up to a million gallons of fuel available.

The Million Air meeting ended with great potential but without any conclusions. After our mutual briefings, an extensive question and answer period, and an airport tour, they jetted off to Bullhead to speak with Dr. Stamper about the potential of purchasing his fuel rights.

After much discussion and a great deal of interest by the Board, airport staff was directed to schedule a strategy committee to further investigate this possibility.

10) Discussion and Possible Action to authorize the Airport Director to use the Love Hangar as a facility for Defense Contractors.

Mr. Williams briefed that As a result of Lux Air's termination, YCAA inherited the Love Hangar which was previously used to house three aircraft and unrelated miscellaneous equipment. The equipment has been removed as it was the property of Lux Air or related entities. The aircraft owners have been allowed to remain in the facility without cost until the question of how best to use this hangar has been decided.

There are two potential uses for this hangar. First, the airport could continue to use it as an aircraft storage unit, i.e., make it available to local aircraft owners for a monthly rental fee. Under this scenario the airport could expect annual revenue in a range of ten to fifteen thousand dollars per year.

Second, the airport could add the hangar to our list of available spaces for use by Defense Contractors from either YPG or MCAS. YPG test directors are looking for available hangar space with offices. YPG personnel are very aware of the Love Hangar, and said it was the right size for a variety of operations and that they would like to lease it permanently on an annual basis. YPG's client's general requirements often include a hangar the size of the Love Hangar. It would be relatively simple for our Maintenance department to build some offices with internet connections and phone conferencing in to the interior of the Hangar.

The second option was immediately seen as the best course of action for the airport and airport staff was instructed to move forward with build out and marketing the Love Hangar.

11) Introduction by Mr. Albert Gardner of the concept to allow the development of shared ownership hangars, such as condominium style T-Hangars on the Airport

Mr. Gardner gave a presentation to the Airport Board on the topic of allowing aircraft owners to team together and to collectively build a unit of aircraft T-Hangars as a non-commercial development.

If there is an interest in this concept Mr. Gardner and Mr. Whitehead would like to schedule a strategy committee meeting to review the concept further.

12) The item concerning Lux Air was delayed until after Public Comment and voting on scheduled action items to allow the public to stay until all other matters were completed.

MILITARY LIAISON

Lt Col Workman reported that Col. Werth is very unhappy with the FAA's mistaken impression concerning the recent sale of land by the County. He will send a representative with Mr. Williams for the scheduled meeting.

He also stated that MCAS Yuma will provide whatever assistance they can for GYEDC's new JSF Action Committee scheduled meeting on Feb 9th. His office will be helping her with whatever information she needs.

Mr. McShane provided a very interesting briefing on the upcoming air show. He reiterated the appreciation of Col Werth and MCAS Yuma for the Airport's fabulous sponsorship of the air show for the last three years. This year, the air show is planned to be bigger and better than ever and will feature a performing Jet Team. The aerial displays will start at 10 in the morning and continue non-stop until 3:00 PM that afternoon. The Airport will have a bigger and better chalet at show center as part of their sponsor package and he encouraged everyone present to come out and watch the show.

CALL TO THE PUBLIC

Mr. Ewing stated that he is making progress on getting his aircraft repaired. He explained that on Friday he was able to get signed off on the insurance.

ACTION

Mr. Hengl made a motion to authorize the YCAA President to sign Amendment 2 to US Government Lease Number NOy(R)-56055 to extend the lease with the Department of the Navy on 52 acres of patented land until December 31, 2010. Mr. Haines seconded the motion. The vote was unanimous.

Mr. McLendon made a motion to Motion to accept the FY 09 Independent Audit Report from Walker & Armstrong as presented. Mr. Hengl seconded the motion. The vote was unanimous.

Mr. Gould made a motion to Motion to Authorize the YCAA President to sign the Solar Renewable Energy Credit Purchase Agreement #8310 between Arizona Public Service Company ("APS") and Yuma County Airport Authority for the sale to APS of certificates representing the Environmental Attributes associated with the production of Solar Power for up to 1,471,693 kWhs per calendar year at a price of $0.162 per kWh for twenty years. Ms. Rhea seconded the motion. The vote was 13 in favor with Mr. Ingold voting against the measure. The motion passed.

Mr. McLendon made a motion to authorize the Airport Director to sign the necessary contract documents to complete the design for the renovation of the GA Terminal, when appropriate considering other factors currently under review. Mr. Hengl seconded the motion. The vote was unanimous.

Mr. Gardner made a motion to Motion to authorize YCAA the Airport Director to use the Love Hangar as a facility for Defense Contractors. Mr. Whitehead seconded the motion. The vote was unanimous.

RESUMPTION OF SCHEDULED AGENDA FOLLOWING THE ACTIONS

12) Discussion concerning the Lux Air FBO Claim against the YCAA. The Airport Board of Directors may vote to enter Executive Session for the purpose of obtaining legal advice from the Board's attorney, pursuant to Arizona Revised Statutes paragraph 38-431.03.A. subparagraphs 3, 4, and 5.

Mr. McLendon moved to go into Executive Session. Mr. Hengl seconded the motion. The public was excused and the Board entered an Executive Session at 5:54PM

The Board returned to public session at 6:30 PM. The doors of the conference room were opened and an examination was made of the public area. No one was waiting to enter.

No action was required from the executive session.

ADJOURNMENT

There being no further business before the Board, Mr. McLendon made a motion to adjourn Mr. Hengl seconded the motion. The vote was unanimous. The meeting adjourned at 6:31PM.



// Approved //
Craig Williams
Airport Director
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