04/21/2015

Meeting Minutes for:
Strategy Committee Meeting
Yuma International Airport, Conference Room
Tuesday, April 21, 2015 at 02:02 PM

    Call to Order:
    The Yuma County Airport Authority, Inc. (YCAA) Strategy Committee of the Board of Directors was called to order at 2:02PM on 4/21/2015 in the Yuma International Airport Conference Room, 2191 E. 32nd Street, Suite 218, Yuma, Arizona 85365. The Presiding officer was Dean Hager, Chairman.

    YCAA MEMBERS PRESENT WERE:
    Ronald Rice, President
    Albert Gardner, 2nd Vice President
    Dean Hager, Treasurer
    Charles Balch PhD, Director
    Randall Nelson, Director

    YCAA MEMBERS ABSENT WERE:
    Jonathan Matheus, Director

    ALSO PRESENT WERE:
    Gladys Wiggins, Airport Director
    Gerald Hinkle, Jr., Chief Financial Officer
    Andrea Lopez, Executive Assistant
    James Combs, Million Air
    Ken Scott, ASN Volunteer

    REGULAR AGENDA

    1) Strategic Planning Committee discussion and possible recommendations to the existing six (6) key strategic planning goals for the Yuma County Airport Authority.

    Ms. Wiggins explained that in December 2013, the YCAA modified the key points to assist the YCAA strategic planning and focus. The Committee reviewed and discussed modification to the existing key points as modified below:

    1. Expand aviation related business (MCAS, general aviation, government, etc.), maintaining full service fixed base operators, and air freight business opportunities by partnering with existing businesses or attracting new businesses.
    2. Stay abreast of community growth and needs by partnering and/or leading with our community for economic development.
    3. Market the airport throughout the local and surrounding communities to promote air service, availability of aviation facilities, encourage general aviation, and capabilities for future expansion opportunities.
    4. Promote international airport status and seek International flights.

    Final recommendation will be provided once the Committee Chairman reviews final modifications to the key strategies which will be presented to the Board during the May 2015 Monthly Meeting.

    2) Strategic Planning Committee discussion and possible recommendation regarding the Enterprise Car Wash Facility proposal.

    Ms. Wiggins briefed that in early 2009, the YCAA re-located its facilities and vehicle/equipment maintenance operation from its existing facility just Northeast of the passenger terminal to a hangar/office building best known as the Quimby Aviation Center (QAC) west of the airport terminal. The building which previously housed our maintenance department is currently being leased to Hertz for the purpose of a rent car service center.

    She explained in March of 2014, the rent car maintenance facility lease for Hertz had expired and was made available to all rent car tenants in the terminal through a sealed bid process. The YCAA received two bids one from Hertz, the current tenant, and Enterprise. As a result of this process, the rental car agencies were very competitive in the bids provided. Recent inquires by Enterprise support the continued interest in a facility to assist them with cleaning/washing their rental cars and through staff recommendations the QAC appeared to be most cost effective facilities.

    During this discussion, it was proposed for the Committee to consider the concept of relocating a portion of the YCAA Maintenance Department to make room for the rental car service facilities. The QAC is large enough to continue to provide space to support the airport Janitorial operation while providing Enterprise what they need.

    Ms. Wiggins explained the improvements necessary along with the costs to make the space functional for Enterprise

    She further explained the capital required for this investment could potentially come from our existing construction loan with 1st Bank Yuma originally obtained for the development of the Joe Foss Hangar.

    After much discussion the Committee will recommend the cost for improvements be forwarded and presented to the Finance Committee prior to presenting it to the Board for authorization.

    3) Strategic Planning Committee discussion and possible recommendation to the proposed relocation of the YCAA Maintenance facility.

    Ms. Wiggins briefed in order to take advantage of the revenue opportunity discussed in Agenda Item #2, the airport would need to relocate the vehicle/equipment portion of the maintenance operation to another facility. The Airport staff recommended if the QAC is viable for Enterprise, then it is in the best interest for the airport maintenance to move its operation to the F-1 GA Hangar in the Martha Taylor Aircraft Storage Facility.

    After much discussion the Committee has recommended to move this item to the Finance Committee for consideration prior to taking it to the Board for approval.

    4) Strategic Planning Committee discussion and possible recommendation regarding necessary improvements to the Joe Foss Hangar facility and infrastructure.

    Ms. Wiggins explained the YCAA borrowed $2M from 1st Bank Yuma for the purpose of meeting our required match on the development costs as well as to provide for tenant improvements for the Joe Foss Hangars. The construction loan has remained open with a balance of approximately $583,000 to complete additional construction. CFO Hinkle provided that the terms of the loan establish an elevated rate of interest during construction while allowing interest only debt service payments for a period of two years. The date of completion indicated within the note payable to the bank has come and gone. However since there has not been an established long term tenant for the facility who can assist with identifying related needs for tenant improvements, the bank agreed to leave the remaining balance available even after the construction loan closing date subsequent to when regular principal and interest debt service payments had commenced. Since the note calls for a fixed monthly payment, regardless of the balance due or the effective interest rate, the bank was willing to concede to the continued availability of the remaining funds without modification of the existing loan documents.

    It was discussed by Airport staff that although we have not been able to locate a long term tenant for the Joe Foss, there has been a number of short term tenants. The good news is that the number and duration of these short term tenants have generated revenues close to providing for the debt service requirements on the facility. It was discussed by the committee that the loan cannot be kept open indefinitely.

    CFO Hinkle provided that the cost of this capital is currently approximately 5%. The terms contained in the construction loan portion of the deal is simply not designed for long term utilization. Closing out the remaining balance can either by spending it on improvements or simply paying down the balance due establishes the start date of the long term note. Once this note is established, the favorable rates dictated in our agreement allow for a significant reduction of the cost of this capital. This variable rate if established today would be less than 3%. The difference of a couple points is significant over time with a balance due of approximately $1.5M.

    Further discussion on the move toward closing out the construction loan is due to the markets. All indications are that the Fed is nearing implementation of an increase in the rate of interest. Based on market information it is anticipated that interest rates are expected to increase in September 2015. Closing the construction loan and locking in these historical interest rates as provided for in our note would be financially advantageous before interest rates increase. President Rice has requested that prior to locking in any rate that he would like to be directly involved along with the Finance Committee chairman.

    Staff is proposing that we move ahead on final improvements to the Joe Foss hangar which has been postponed until a long term tenant is established.

    The wireless data stream system essentially provides for wireless data access throughout the facility. The challenge of establishing a state of the art wireless data access is complicated due to the size of the facility. The proposed system will also allow wireless access without interruption even as a user may move about the facility. This capability requires a system wireless routers and switches that “hand off” wireless connections as a device moves around the facility.

    The investment in LAN room data switches will provide equipment necessary to “light up” each of the hundreds of data ports installed throughout the facility. The building was constructed with hundreds of ports wired to secure LAN rooms where the ultimate connection with our fiber optic system is made. The Authority has held off on the purchase of the switch gear necessary for all the connections not entirely due to the cost but with the concept that a major long term tenant would not be interested in using all the switches due to security concerns. A major defense contractor working with sensitive data would want to install their own switches with certified custody trails to ensure compliance with security regulations or policies. Staff has been using a limited number of switches to make a number of ports available to short term tenants but this process is tedious and having to identify a single port in a room that contains dozens does not show well to the client. It is our intent to purchase and install the necessary equipment to get all of the ports up and running before the funding source goes away. If in fact a long term tenant comes along that would not utilize the switches, we can use them elsewhere at the airport.

    With the necessary cleaning of the large hangar bays, the acquisition of an industrial floor scrubber is being proposed. Staff is currently utilizing a 20 inch wide unit located at a different facility to accomplish cleaning those TWO hangar floors. This task has proven to be a challenge requiring large numbers of man hours which could be eliminated with an investment in the proper equipment which would remain in the facility.

    There was further discussion on utilizing the current balance to finish out the facilities with audio visual additions such as monitors in the office/conference areas, break room, and main conference room. The itemization will be provided to the Finance committee for review and recommendation.

    After much discussion the Committee supports the staff proposal to be placed before the Finance Committee.

    5) Strategic Planning Committee discussion and possible recommendation to the existing COY development agreement for the property being developed on the 4th Avenue Extension by Freeman Holdings.

    Ms. Wiggins briefed on the current development agreement and the new proposed plan. Airport staff presented the changes and discussed the proposed amendment to the existing agreement to not require the turn lane at this time. This will assist with the contractor and developer to continue with their construction as proposed. Ms. Wiggins has a meeting set-up with the predevelopment and engineering personnel with the COY for consideration and direction.

    ADJOURNMENT

    There being no further business before the Committee the meeting adjourned at 3:32PM.



    // Approved //
    Dean Hager
    YCAA Treasurer and Strategic Planning Committee Chairman; YCAA Treasurer
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