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2013-10-30 Work Session Minutes Final New Hanover County Airport Authority October 30, 2013 Page 1 NEW HANOVER COUNTY AIRPORT AUTHORITY SPECIAL MEETING/WORK SESSION October 30, 2013 CALL TO ORDER The New Hanover County Airport Authority met on Wednesday, October 30, 2013, at Wilmington International Airport, 1740 Airport Boulevard, Wilmington, North Carolina for a work session to determine the terms and conditions of a FBO lease. Chairman Barber called the meeting to order at 6:00 p.m. Airport Authority members present were Tom Barber, Chairman; Jonathan Crane, Secretary; Carter Lambeth; and Al Roseman. Also present were Jon Rosborough, Airport Director; Julie Wilsey, Deputy Airport Director; Gary Broughton, Operations Director; and Rose Davis, Executive Assistant. Guests present included Chris Sikes, Ann Tremblay and Gerry Tremblay of Aero Services; Karen Smith and Herb Hilliard of Fly Wilmington, NC; and Bill Cherry and Sandra Spaller of Air Wilmington. John Perritt, Vice-Chairman, arrived at 6:04 pm. Mr. Barber addressed the Board indicating that the notice of this meeting was for the purpose of discussing what the options are with regard to Fixed Base Operators (FBO) at the airport. Mr. Barber reminded the Board of his 4 priorities as Chairman: 1) build air service; 2) work on the business park; 3)improve general aviation (GA); and 4)find replacement for Director. Mr. Barber stated his primary objective with regard to general aviation is to grow GA operations. ILM has a current FBO operator with a bit of cloudiness in terms of management and leaseholder standing and that FBO is requesting a lease. Mr. Barber stated now may be the time to figure out options and indicates that the Board has three choices: 1) continue to do what we are doing which puts the airport at risk if something happens and the FBO goes out of business; 2) grant a lease to the existing tenant that would result in the curing of various defaults that we see under that leasehold; and 3)find out what is out there by issuing a RFP. Find out what demand is and then make a decision as to the best way to do things for the community and the airport, with the primary goal being to improve general aviation at the airport. Mr. Barber stated that going through the RFP gives the Board the best choices from which to make a decision. The RFP has been drafted and several Board members have made comments on it. Mr. Barber further stated that a request was made for an open meeting to discuss the RFP and that is the purpose of this meeting and no other topics will be discussed during this meeting. Mr. Barber reminded guests present that the regular Authority board meeting is scheduled for next week and that if anyone wants to make a presentation to the Board that they should send a written request to Mr. Rosborough to get on the agenda for that meeting. Mr. Barber opened the floor for comment and discussion so that next week at the regular board New Hanover County Airport Authority October 30, 2013 Page 2 meeting the Board will be able to vote on this matter. Dr. Crane addressed the Board stating that general aviation is crucial to all of the Board and the Board does want to grow general aviation and the question becomes what is the best way to grow general aviation. Dr. Crane stated his opinion is that the RFP is the most transparent way to do this where everyone could see what is being done and that he is in favor of the RFP. Dr. Crane stated he thinks if the Board does a deal on the side, we could get accused of doing side deals, which comments have been made about the Board and people here and who knows what truth there is to it, but I just feel an RFP is the most transparent way. Dr. Roseman questioned Dr. Crane's comment about a side deal and Dr. Crane responded he has heard people say that, if we went to a current leasee and arranged something, some people would say that isn't the most transparent way to do it. Mr. Barber stated that since the Board has a fiduciary responsibility to the community, the more above-board this can be done, the better and that the Board should get the best facts it possibly can and then make a decision. Mr. Barber stated he would find it difficult to do it any other way but that he was open to listening to reasons why the board should do it differently. Mr. Lambeth addressed the Board by saying that he was on the Board when the first RFP was done and that Mr. Cherry was the only one to bid. Mr. Lambeth further stated that to his knowledge, he hasn't heard of anyone coming to the airport in the last 8 years asking to put in an FB O. Mr. Lambeth stated that Mr. Cherry spent an extremely large amount of money to meet the requirements of the RFP. Mr. Lambeth reminded the Board that at the time of the RFP Aero Services was operated by Ken Vojta and there were problems about whether he paid his lease on time and at the recommendation of staff, he was put on a month-to-month tenancy. Mr. Lambeth indicated the feeling of the Board when this was done, was that we needed competition and that if you look at requirements of the DOT, you are required to give everybody an opportunity to operate here that wants to operate. Mr. Lambeth went into detail about the types of services that both Air Wilmington and Aero Services provide and the different needs they cater to. Mr. Lambeth indicated that when he was on the Authority before, the Authority built 30 hangars, and that the Board ought to look into that as a side issue to promote general aviation by building hangars for little guys again or for private parties wanting to build hangars. Mr. Lambeth stated that he was told that Kyle McIntyre had approached Gerry Tremblay recently about private hangars and was told that Jon Rosborough did not know if Aero Service had a future on this field. Mr. Lambeth opined that the Board doesn't have to have an RFP to enter into a lease and that some of the requirements of the minimum standards are absurd and some of the requirements that are in this RFP are basically unnecessary in his opinion. Mr. Lambeth stated he didn't want to hurt Mr. Cherry and that he has the highest regard for him and his business but at the same time, thinks the Board has a duty and obligation to the other people on this field to offer them a lease on terms and conditions that can be negotiated that are fair,just and in the best New Hanover County Airport Authority October 30, 2013 Page 3 interest of all and general aviation. Mr. Lambeth doesn't think an RFP does that and that it puts unnecessary requirements and costs up. Mr. Lambeth stated that there is nothing illegal whatsoever with doing a lease. Mr. Lambeth said he feels the Board needs to negotiate with Aero Services and come up with a lease and in the meantime, Aero Services will continue on a month-to-month until such time as the Board can arrange to do that, if this Board sees fit to go that route. Dr. Crane commented that if Mr. Cherry had to do an RFP, why shouldn't it be fair for everyone else in the future and by doing the RFP, it made Mr. Cherry sit down and think about what he put into the area and he stepped up to the plate. By putting out an RFP, we may have gotten something of dramatically better quality than if we didn't put out an RFP. Dr. Crane stated he didn't think it was fair to have one person do a RFP and another person not have to do a RFP. You can't do things one way for one person and another way for another person. Dr. Crane stated that even though legally the Board probably can, there is an ethical factor which in his opinion, he'd rather see a RFP. Dr. Crane stated he believes a RFP is the only ethical way to do it. Dr. Crane said that at least he and Mr. Lambeth have the same goal in mind where they want to see GA grow and both care about GA so their hearts are in same place but with just a different vision on how to get there. Mr. Barber indicated his heart is in the same place too despite what others may think. Mr. Barber asked Mr. Lambeth to indicate if there is something in the RFP that is too onerous so that it could be fixed during this meeting. Mr. Lambeth indicated that he was opposed to the RFP. Mr. Lambeth stated there was nothing unethical about not doing an RFP and that he respected Dr. Crane's opinion on it but legally speaking and ethically speaking, there is nothing unethical about negotiating a contract. Dr. Roseman agreed that we do it all the time. Mr. Cherry asked if he could make a few comments and addressed the Board. Mr. Cherry gave a timeline of Air Wilmington and its capital investments from when it started in 1975 as a limited service FBO and the minimum standards he has had to meet to become a full service FBO. Mr. Cherry stated that Air Wilmington does service jets and Harriers but that they also service light general aviation and that they also teach people how to fly and have been doing that continuously. Mr. Cherry continued to address the Board about the position it is in right now with an operation. Mr. Cherry said he heard Carter, Tom and Jonathan say that Aero Services does not have a lease at the present time. That lease expired as Mr. Cherry understands it in 2010. Mr. Cherry requested from the Airport Authority that they force Aero Services to cease and desist all operations effective immediately because Aero Services does not meet the minimum standards that the Board is holding Air Wilmington accountable to. Mr. Cherry went through the minimum standards and pointed out issues that create unfair competition between the two FBOs. Mr. Cherry stated he could bring the FAA in to discuss this but he'd rather not do that and he thinks it can be handled amicably with this Board. Mr. Cherry, referring to the Minimum Standards from November 19, 2003, says that it states ILM will handle all general aviation service providers in a fair and equitable manner. Mr. Cherry New Hanover County Airport Authority October 30, 2013 Page 4 went on to say that the Operating Standards outlined in this section are the minimum requirements for general aviation services as a condition of their right to lease premises and provide stated general aviation activities on international airport. Mr. Cherry stated that Aero Services doesn't have a lease and can't meet the standards, and asked how can the board allow Aero Services to continue to operate? Mr. Lambeth stated Aero Services is operating on a month-to-month lease that was granted by the Board and that Aero Services lease was terminated back in 2003 or 2004 by this Board. Mr. Lambeth said the Board voted to stop the lease and let Aero Services operate month-to-month under the terms and provisions that were in the original lease. Mr. Cherry said lets assume Aero Services still has the yearly lease or the lease that he has and asked if Aero Services is still required to abide by the minimum standards on the airport? Mr. Lambeth said Aero Services is required to abide by whatever standards were put in that lease which were presumably the minimum standards at the time the lease was given to him. Mr. Cherry points out the minimum standards were updated in 2003 and Aero Services lease extension happened in 2005 but Mr. Lambeth said there hasn't been a lease extension. Mr. Cherry stated that the Board allowed Aero Services to operate on a 30 day month-to-month lease. Mr. Cherry said he would assume on a month-to-month lease Aero Services would have to abide by the minimum standards. Mr. Barber said the issue is whether or not those minimum standards are incorporated into the lease Aero Services has now. If the lease has a different set of minimum standards or different standards and doesn't reference that, it is a whole different animal. Mr. Cherry said Aero Services lease would have expired in 2010 and asked how Aero Services is on a month-to-month. Mr. Lambeth said it expired in 2004 or whenever this Board took action. Mr. Cherry stated that what Aero Services is operating on now is a grant by the Airport Authority which would have to enforce their own minimum standards or why have them in the first place. Mr. Cherry stated that Aero Services has never met the minimum standards on the airport; Aero Services does not meet them today and they cannot meet them within a year or so. Mr. Cherry referred to Minimum Standards Sec. 8-274(1)(a) and the minimum service standards for a Fixed Base Operator and went through the list of Aero Services deficiencies. Mr. Cherry also refers to Sec. 8-274(1)(a) 7, Hangar Rental and Aircraft Storage. Mr. Barber stated that staff has the minimum standards and knows where Aero Services is failing to meet the standards and that Mr. Cherry has proved his point that they are not meeting some of the standards. Mr. Lambeth said they might also be grandfathered under their lease. Mr. Cherry stated we are getting into an inequitable situation and the Board is allowing two different standards and asked if that is what the Board wants. Mr. Cherry also asked if the FAA would enjoy seeing this and stated it is unfair for Air Wilmington. Mr. Cherry explained that you can't operate a $6-8M investment business at the same cost you can operate a$0 investment business and Aero Services have made virtually no capital improvements. Mr. Cherry stated that should the Board elect to go with an RFP or should it elect to do a lease under your minimum standards Sec. 8-274(1)(a)9(d)3, page 9, it states that"all Fixed Base Operators shall make a minimum capital investment prior to commencing operations, in buildings and equipment, exclusive of aircraft of two million dollars" and asked how that was New Hanover County Airport Authority October 30, 2013 Page 5 going to happen. Mr. Cherry indicated Air Wilmington had to do it and that he is in a position to hold everybody's feet to the fire. Mr. Cherry stated that he has put more than $2M in Air Wilmington. Mr. Lambeth referred to subsection C where New Hanover County Airport Authority reserves the right to temporarily waive any requirement and then you figure out a way that Aero Services can do it. Mr. Cherry asked Mr. Lambeth if that was being prejudicial and asked why he wants Air Wilmington to compete with Aero Services or vice versa and them not be on the same sheet of music. Mr. Lambeth said you also have FAA requirements as far as exclusive rights at airports. Mr. Cherry said he doesn't want exclusive rights, he just wants everyone to play on same sheet of music. Mr. Cherry stated he was not opposed to competition but that it needs to be equal competition and not prejudicial. Mr. Barber indicated he understands Mr. Cherry's frustration. Mr. Barber referred to the Master Plan calling for all FBO activity to be on the North side of the airfield and that the Board couldn't put another FBO there because of the rental car facilities being built, and needing to demo some land and create the space. Mr. Barber said what we have is a"weak sister" on the South side of the airfield meeting a need. Mr. Barber said that the Board is trying to figure out how to create a situation where we can eventually move the FBO on the South side of the field to the North side of the field to meet the Master Plan. Dr. Roseman stated that the Master Plan is a living document and can be changed like a strategic plan and that the Board has to do what is best for the airport and that is the Board's responsibility. Dr. Roseman indicated if it is best to have someone on one side of the field and someone on the other, the Board may have to change the Master Plan and that that is not an issue. Dr. Roseman asked if the Board does a RFP would Air Wilmington bid on it and Mr. Cherry responded that he would look at it and see. Mr. Cherry said it may not be worth doing. Mr. Cherry stated that both FBOs are supposed to be on the same playing field and are supposed to all live by the Minimum Standards. Mr. Cherry stated that is why he made the demand earlier that Aero Services needs to cease and desist until they meet the minimum standards. Mr. Cherry stated this is clearly an unfair situation that is being supported by the Airport Authority and he believes that it puts ILM in violation of a whole bunch of stuff which he is bringing to the Board's attention and asking that the Board straighten out the inequities on the airport. Mr. Cherry indicated he is an avid supporter of growing GA and will do anything he can to make that happen but he is under a contract with ILM to make a monthly financial contribution and Air Wilmington has done that continuously, consecutively, without fail, on time or early and the only way Air Wilmington can do that is to charge for our services, our facilities, our fuels and anything else we have to generate those funds. Mr. Cherry stated if the Board is going to run a successful airport which is good for everybody, it has to be fair and equitable. Mr. Cherry stated Air Wilmington's interest as an operator on this airport is to serve the entire aviation community with the best and Air Wilmington has done that and will continue to do that but we are going to New Hanover County Airport Authority October 30, 2013 Page 6 have to insist that it is fair and equitable. Mr. Lambeth asked Mr. Cherry how, when he controls 90% of all the business on this field with his FBO, has he been hurt or is he being hurt? Mr. Carter indicated that the FAA encourages competition and doesn't encourage someone to come in and have 100%. Mr. Cherry stated the FAA encourages fair competition and they don't want it one-sided. Mr. Lambeth asked what has been unfair so far. Mr. Cherry responded that Aero Services doesn't meet minimum standards but Air Wilmington gets checked every month. Mr. Cherry asked where Aero Services 10,000 sq. ft. hangar was or their $2M capital investment and Mr. Lambeth said Mr. Cherry would have to take that up with Aero Service and Mr. Cherry said that was part of what needed to be fixed and part of the decision process going forward. Mr. Lambeth asked Mr. Cherry what he wanted the Board to do, kick Aero Services off the field? Mr. Cherry said he wants Aero Services to meet the same minimum standards he has to meet. Mr. Cherry stated that the Board put the burden on his back in 2006 and told him he would have to bid and make a minimum $2M investment and he has lived up to that and expects any competitor to do exactly the same. Mr. Lambeth asked if Mr. Cherry wanted Aero Services to have an identical lease to his and Mr. Cherry agreed. Dr. Crane acknowledged a request from Chris Sikes, an investor in Aero Services, to speak. Mr. Barber asked Mr. Sikes who owns Aero Services and Mr. Sikes replied that Aero Services is owned by Gerry and Ann Tremblay with Ann Tremblay owning 51% and Gerry owning 49%. Mr. Barber stated that is just one more bag of worms that just got opened because that is another violation of the lease as he understands it. Mr. Barber said the Airport Authority has to approve that and Dr. Roseman clarified that it is "subject" to the airport approval and he knows that for a fact. Mr. Barber gave a heads up that he would like for someone to approach the Director of the airport and tell him what happened to the current leaseholder, which is Ken Vojta. Mr. Tremblay said that Ken is the current leaseholder and that Mr. Tremblay is running the business for ISO Aero Services. Mr. Barber clarified that Ken Vojta has the lease but Gerry Tremblay is the owner and they agreed. Mr. Tremblay said that he owns the equipment and Mr. Vojta leases it from him. Mr. Barber said that was a whole other legal matter that we have to figure out. Mr. Sikes stated the general aviation situation in this area is poor and that we are losing it to areas like Wallace and Southport. Mr. Sikes indicated when Mr. Cherry was talking about building a 10,000 sq. ft. hangar and having that facility, that Aero Services would love to do that but no bank is going to provide the rest of the financing for a hangar until there is a solid lease. Mr. Sikes asked what bank is going to give $30,000 to $60,000 to go out and build a hangar and you turn around and are gone the next day. Mr. Sikes asked Mr. Cherry if he had a lease when he built his hangars and Mr. Cherry stated that was true. Mr. Sikes said Aero Services has to have certain things. Mr. Barber asks Mr. Sikes if we ask you to fill out an RFP saying who owns company, what is your business plan, what is your marketing plan, what are you going to do, and if you are awarded that RFP, which means you could then have your 5 year lease and go to the banks, if New Hanover County Airport Authority October 30, 2013 Page 7 that was acceptable to Aero Services. Mr. Sikes said that is acceptable but then again look at the costs of putting together a RFP and Mr. Sikes asked Mr. Cherry if it cost him $100,000 for an RFP and Mr. Cherry said yes. Mr. Barber asked for clarification between a FBO and a SASO. Mr. Lambeth stated that a SASO can't sell fuel. Mr. Rosborough responded there are 9 requirements an FBO needs to do in accordance with the standards and a SASO cannot do any one of those 9 things and that Mr. Lambeth is right that the primary one is selling fuel. Mr. Rosborough stated they can sell fuel only if the FBO enjoins with them to provide that service and a SASO has about 6 things that it can do. Mr. Lambeth asked if the minimum standards were suggested by our consultant to be passed and Mr. Rosborough indicated that was part of it, yes. Mr. Lambeth asked why the minimum standards can't be changed. Mr. Rosborough said ILM had minimum standards before he got here under the County Code and then staff tried to bring those up to date and looked at the whole general aviation component. Staff got the consultant in to assist in that update and staff also researched other airports. Mrs. Wilsey stated staff used about 3 or 4 different airports for the minimum standard revisions back then and also the RFP. Mr. Barber questioned whether those standards are now part of the County Code and staff replied that was correct. Mr. Sikes continued to address the Board that it is their dream and ambition that they have a repair station that is waiting to come in but you can't put a repair station in those facilities over there now because the doors don't even shut and Mr. Barber responded that is part of the whole problem. Mr. Sikes said that is part of the whole future. Mr. Sikes stated they are in talks with a repair station and avionics shop about opening up once they have the facilities to support them. Mr. Barber asked if Mr. Sikes was saying if Aero Services had a lease they would have the money to do all that. Mr. Sikes responded that if Aero Services had a lease they could go to a bank and get the funding they need to secure or replace the building and add more hangars out there. Dr. Roseman, addressing Mr. Cherry and Mr. Tremblay, said he is concerned about and hates to see the leakage of aircraft and that maybe that is their fault as a Board. Dr. Roseman said that things are going on that make people go different places and we've lost a lot of business in this community and he'd like to see this business come back to this community. Dr. Roseman said this community benefits from general aviation and a lot of that has been lost and he's not concerned about whether the Board does an RFP or whether they make an addendum to Aero Services lease, what he's concerned about and what is his responsibility is to make this a better place for the citizens in New Hanover County. Dr. Roseman said he wants to see this community come out better than it was. Dr. Roseman said he is more interested in Mr. Cherry and Mr. Tremblay telling the Board how they can make this a better community for aviation. Dr. Crane commented that when you put out a request for proposal you hear different ideas on how to reach this goal and that is why to him a RFP is the way to reach those goals that Dr. Roseman just mentioned. Dr. Crane said in his mind, having proposals come in, looking at the proposals and saying this is the best one to fix this problem, the best one to snag all those planes going everywhere else and bring them here, that is the proposal. Dr. Roseman, said he agreed and if Aero Services wants an addendum to their lease, tell the New Hanover County Airport Authority October 30, 2013 Page 8 board what Aero Services is offering to get an addendum to the lease. Mr. Barber said Dr. Roseman makes a good point, if you think about the RFP, and if you go back to the prime directive, and you really want to grow GA, maybe that RFP has to have a little something in it that's not there, something to the effect that the successful bidder, if we did the RFP, is going to be the person that is a)financially solvent and b) can demonstrate in a business plan specific things they will do to increase general aviation at this airport and it doesn't matter if it's Mr. Cherry or Mr. Tremblay or someone else, if we really believe that the name of the game is to increase general aviation, who can do it and who is willing to do it and who has the wherewithal to do it and the plan to do it. Mr. Barber said that is what we are trying to find and agrees with Dr. Roseman that we all want to grow GA. Mr. Cherry responded that the community is certainly important because it subsidizes this whole operation. Mr. Cherry states he believes this aviation community here is on a growth because his hangars are full and he's talking about building another hangar because Air Wilmington is out of room. There was more discussion between Mr. Cherry and Mr. Lambeth about existing leases and hangars, etc. when Mr. Cherry had to put in the RFP. Dr. Roseman said the Board had to fight the administration to build 25 hangars on the other side in 1998 and that has not cost the airport any money and those hangars are full and if we could build 25 more hangars they'd probably be full too. There was further discussion about the building of hangars and the cost to constrict and leasing them out for a profit and whether or not the airport would be in competition with the FBO if they built their own hangars. Dr. Roseman said his point is that he'd like to see the aircraft protected and he'd like to see more people come into the community and to see growth and asked Mr. Cherry and Mr. Tremblay to tell the Board how they are going to do it. Mrs. Tremblay addressed the Board stating their main vision is predominately to bring youth into aviation. Aero Services would like to move into the community and possibly work with schools and bring these youth in and start getting them interested in the aviation area. To teach youth about aviation and the careers that are available. Mr. Tremblay referred the Board to Aero Services' newsletters showing them reaching out to the community to increase aviation education. Mr. Barber stated that all the comments have been very interesting and he feels like we are coming full circle. Mr. Barber stated the Board needs to come back again and look at the RFP. If there is something in the RFP that looks like it cost$100,000 to do, then let's fix that. The purpose of the meeting in the first place was to go through this RFP and try to resolve those kinds of things in it. Dr. Roseman asked if ILM hired a consultant to do the RFP and Mr. Barber responded no. New Hanover County Airport Authority October 30, 2013 Page 9 Carter said ILM did originally. Mr. Rosborough asked if he meant back in 2003 and Mr. Lambeth said the format came from what staff hired the guy to do. Mrs. Wilsey said no and Mr. Lambeth said it was exactly the same kind. Mr. Barber proposed that Mr. Cherry and Mr. Tremblay and the Board set a time and get a presentation together, either at a different work session or board meeting, regarding their thoughts on what they could do and how they would go about doing it and Dr. Crane responded that basically if we ask for thoughts, we're asking for proposals. Dr. Crane made a motion to do a RFP but motions were not allowed during the work session. There was discussion about what was expected of both Air Wilmington, to attract the whole spectrum of aviation and grow it and Aero Services, to bring some assurance from the bank that they could meet the minimum obligations and produce the business they are talking about. Mr. Barber asked if there were any other comments. Mr. Lambeth said no and asked to adjourn the meeting. Chairman Barber closed the meeting at 7:10 pm. Prepared by: Respectfully Submitted: Rose M. Davis Dr. Jonathan S. Crane, Secretary Date of Approval: November 6, 2013