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2018-06-14 Special Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 SPECIAL MEETING, JUNE 14, 2018 PAGE 144 ASSEMBLY The New Hanover County Board of Commissioners met for a Special Meeting with the New Hanover County Airport Authority on Thursday, June 14, 2018, at 8:00 a.m. in the Conference Room of the Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina. Members present: Chairman Woody White; Vice-Chairman Skip Watkins; Commissioner Jonathan Barfield, Jr.; Commissioner Patricia Kusek; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; County Attorney Wanda Copley; and Clerk to the Board Kymberleigh G. Crowell. New Hanover County Airport Authority members present: Chairman Carter T. Lambeth; Thomas C. Barber, II; Donna Girardot; Dan Hickman; Harry Stovall; and Thomas Wolfe. Member W. Lee Williams was absent. Wilmington International Airport staff present: Julie Wilsey, Airport Director; Gary Broughton, Deputy Director; Robert Campbell, Finance Director; Whitney Prease, Facilities Director; Carol LeTellier, Business Development Director; Gary Taylor, Chief of Public Safety; Erin McNally, Marketing and Public Relations; and Rose Davis, Executive Assistant. Chairman White and Chairman Lambeth called their respective Boards to order for the Special Meeting reporting that the purpose of the meeting is to hear the Annual Report of the Wilmington International Airport. Airport Director Julie Wilsey and Deputy Director Gary Broughton presented the annual report highlighting the following information on the operations, maintenance, development and existing projects of the airport:  Wilmington International (ILM) Employees:  Full time employees: 49  Employees hired this fiscal year: 18  Volunteers: 50 with 5,957 hours of service in 2017  Turnover in FY2017: 23.66%  Years of service: two with twenty-eight years; six with sixteen+ years; and fourteen with ten years or more  Rebranding:  New logo which has been added to all marketing materials  New tag line: “Coast on In. Coast on Out.”  Growth in Air Service:  Three network airlines: eight non-stop destinations; seven hubs; and six international gateways  Air Service Development:  ILM has 62% of the passengers per day each way (PDEW) primary catchment  38% or 650 PDEW from the primary catchment use an alternate airport:  Raleigh-Durham International (RDU): 26%  Charlotte Douglas International Airport (CLT): 5%  Myrtle Beach International Airport (MYR): 4%  Albert J. Ellis Airport (OAJ): 2%  Fayetteville Regional Airport: 1%  Economic Impact Study:  All North Carolina airports (2015): $31.1 billion and 122,000 jobs  ILM (2015): $1.6 billion and 4,910 jobs  New economic impact study update to be released at the end of 2018  2017 Aviation Statistics:  836,589 passengers: + 2.3%  57,814 operations: - .07%  103 aircraft based on the field  Military operations grew by 22% and aircraft with over 60 seats were up 3.8%. This offset declines in air taxi and general aviation.  Seeing a recovery with customs activity, clearing 1,158 planes which is best year since 2013 (1,542)  New Aviation Partners:  United: flights started April 9, 2018 with non-stop flights to O'Hare International Airport (ORD) and Washington Dulles International Airport (IAD):  Added 18 new jobs and four flights per day  Air Wilmington: Fixed-Base Operator (FBO) ownership transferred to Modern Aviation, Inc. on February 22, 2018  Air Wilmington entered into an agreement with All American Aviation Services to open a flight school on June 15, 2018  Supporting Business Aviation:  Live Oak Bank moved into its $6.2 million hangar in May 2017 with annual ground rent over $32,000  Property tax is about $35,000 annually  Live Oak Bank’s flight activity: In 12 months, Live Oak Bank’s fuel consumption has increased from 27,000 to over 40,000 gallons per month  Supporting the Professional Golfers Association (PGA) Event: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 SPECIAL MEETING, JUNE 14, 2018 PAGE 145  87 aircraft carrying players and caddies  Wells Fargo had two corporate jets stay all week  Four of the players had their privately owned jets stay all week  Fuel flowage – 30,000 gallons  Financial Highlights for Fiscal Year Ended June 30, 2017:  Operating Revenue of $10,016,074 (5.2% increase over FY 2016):  Aviation: 15.3% (all aviation)  Parking lot: 39.3% (greatest revenue producer for ILM)  Rent: 21.5% (business park)  Commissions: 13.9% (rental cars and concessions; pay commission rather than square foot rent)  Security: 6.9% (fee paid by airlines for security checkpoints and security services provided by ILM)  Other: 3.1%  All sections are operating at a profit  Unqualified audit option on all reports:  Financial Statements  Internal Control Over Financial Reporting and Compliance and Other Matters  Compliance on the Major Federal Program and the Passenger Facility Charge Program  Compliance on the Major State Program  Funding Our Growth:  User fee based system  ILM will not ask New Hanover County government for funding unless for a loan and will pay back the loan amount with interest  FY 2017 Actual Cash Inflows:  Operating Revenues: 57.6%  Federal Grants: 18%  State Grants: 8.4%  Passenger Facility Charges: 9.9%  Contract Facility Charges: 6.1%  FY 2019 Projected Cash Inflows:  Operating Revenues: 38.3%  Federal Grants: 20.2%  State Grants: 30.4%  Passenger Facility Charges: 6.9%  Contract Facility Charges: 4.2%  Facility Development:  Two major funding sources for capital projects at ILM include the Federal Aviation Administration (FAA) and State of North Carolina (NC):  FAA funding is typically $2.8 million per year in entitlement funding but discretionary funding varies from year to year based on how a project is graded against FAA funding criteria.  NC funding is typically administered through the State Transportation Investments (STI) program. Recently, ILM was legislatively appropriated $11.9 million through Senate Bill 257.  Current and Planned Projects:  FAA Funded Projects:  Wildlife Mitigation Phase 1: $ 1.5 million  Wildlife Mitigation Phase 2: $ 1.0 million  Security Fencing: $ 0.5 million  Runway Lighting Rehab: $ 1.7 million  Terminal Expansion 1B: $30.4 million  North Carolina Funded Projects:  Gate 1 Boarding Bridge: $ 1.0 million  North General Aviation Ramp Expansion: $ 1.5 million  North General Aviation Ramp Pipe Ditches: $ 0.5 million  Runway Lighting Rehab: $ 0.5 million  Terminal Expansion 1A: $10.9 million  Terminal Expansion:  Project Timeline:  Phase 1A for airline ticket offices, lobby and baggage system:  July 2018: Bid Opening  October 2018: Construction Notice to Proceed  February 2020: Construction Complete  Phase 1B for new concourse and gate areas:  July 2019: Bid opening  November 2019: Construction Notice to Proceed  May 2022: Construction complete  Project Funding:  Phase 1A for airline ticket offices, lobby and baggage system ($13.5 million):  NC legislative appropriations: $10.9 million (distributed over two-year period)  Passenger facility charges funds: $2 million  New Hanover County Airport Authority: $0.6 million NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 SPECIAL MEETING, JUNE 14, 2018 PAGE 146  Phase 1B for New Concourse and Gate Areas ($40 million):  Airport Improvement Program (AIP) Entitlement and Discretionary funding of $30.4 million:  Four years of AIP entitlements and discretionary split over two-year period  Passenger Facility Charges Funds: $5.0 million  New Hanover County Airport Authority: $4.6 million  Request additional NC Legislative appropriations  Growth in ILM Business Park:  AVIS Consolidated Rental Car Facility:  Brings maintenance of the AVIS Fleet to the consolidated Rental Car Facility  $2.3 million construction cost and completion expected August 2018  Storage for 174 Rental Vehicles  Fueling/ Vacuum Station  4,200 square feet of building space: office and reception; two maintenance bays; and car wash bay  Social Bark:  Pet kennel and daycare  Family owned business with an existing store in Southern Pines, NC and a location in development in Charleston, SC  2.4-acre land lease for a 17,000 square feet pet lodge with 66 kennels (20-year term and $13,000 annual rent)  Owner constructing facility at own expense  Groundbreaking targeted for summer 2018  Accolades for ILM Partners:  KBT Realty and Shaw Real Estate, LLC:  30 associates (independent contractors and employees)  $43,041,070 in sales volume in 2017  Lease term: five years  $40,000 annual rent to ILM  Opened in October of 2017 in the flex building  Tailwind (Innovative Airport Concessions):  21 locations around the country  World headquarters in Wilmington with 71 local employees; 496 in the US  Tailwind Deli News and Gifts, Inc. moved to Wilmington in 2004 and opened ILM concessions in 2005  rd Opened first non-airport venues in Wilmington: Scratch on 23 in March 2017 in the business park and Shark Bar and Kitchen opened in September 2017 in Wrightsville Beach.  ILM in the News:  Events welcoming new air service (United launch):  New airline press announcement, inaugural flight, and ribbon cutting  Reception for Grant Whitney  Keynote at Chamber of Commerce annual event  Meeting with ILM Business Traveler Group GENERAL DISCUSSION In response to questions about the change in the customs designation and the impact to ILM, Director Wilsey stated ILM continues to be a landing rights airport. Corporate flyers can apply for overflight exemption and if the exemption status is granted they do not have to land in the US and can go to their final destination. Not everyone receives the exemption status. This is where ILM is seeing some reduction in traffic at the customs facility. ILM continues to work with customs partners to provide a top notch facility. Air Wilmington providing quick refueling and turnaround time for these flights has put ILM on the map for ease to get in to get fuel and get out to the final destination. Regarding what ILM is doing in response to losing customers to RDU, Director Wilsey stated that RDU is doing an incredible job in air service development in Raleigh. ILM is also working on air service development. Strengths RDU has that ILM does not is that RDU has a larger population and ILM is losing some travelers to RDU because of the low fare carriers. The other challenge ILM has is that RDU is gaining ground on non-stop flights to Europe and Asia. RDU recently secured a Paris non-stop on Delta and a Heathrow non-stop on American Airlines. Due to this community’s size and market and load demand, that will probably not happen here for a long time. There may be a loss of some customers who chose to fly non-stop. A business case has to be made when approaching the airlines. Airlines have constrained resources in planes and staff and they have to make a profit in order to fly. ILM only proposes destinations, flights, and routes that will make money for an airline and does hope to have a low-fare carrier again in the future. Regarding the new security requirements, Director Wilsey stated that the new program people are familiar with is enhanced personal property screening (EPPS). If a person is a not a pre-check customer, then any electronic device larger than a cell phone has to be removed from the bag and items larger than eight ounces get an additional screening with a trace machine. EPPS is happening across the country and the best way to combat it is to obtain pre- check status clearance. With pre-check status clearance, a person can go into the pre-check lane, leave jacket and shoes on and the lane moves much quicker. Those who do have not pre-check status are being reminded to arrive at ILM two hours in advance. During the Phase 1B project, there will be a total of three lanes in the form of two standard NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 34 SPECIAL MEETING, JUNE 14, 2018 PAGE 147 and one pre-check with built-in space for users. While she would like to say the Transportation Security Administration (TSA) will have technology to deal with the challenges, the reality is that as TSA is doing this the terrorists are developing ways to get around it. It’s an ever changing risk threat environment. She truly believes TSA is working hard to stop all threats. There are upwards of 50% of the travelers Monday – Friday going through pre- check lanes. The weekends and holidays see more non-business travelers. Chairman White stated as ILM starts developing the new terminals and expansions, on a personal level, he would like the personality of ILM to be retained such as the southern columns, rocking chairs, and basically the things that people esthetically come to expect. While he knows its minor, over the years it has been seen where architecture in the government area ascribing to the latest trends, such as the old jail, hasn’t blended well with the area. This is a small southern airport, that’s a good thing and it’s recognized. Director Wilsey said she hears that all the time and it is what ILM is known for. Chairman Lambeth stated when he started on the board, Parks Griffin was the chairman. A lot of the amenities enjoyed by everyone are due to the vision and suggestions of Mr. Griffin. ADJOURNMENT Hearing no further discussion, Chairman White thanked the Airport Authority members and staff for the report. Chairman White and Chairman Lambeth adjourned the meeting at 8:46 a.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the Special Meeting of the New Hanover County Board of Commissioners.