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HomeMy WebLinkAbout1996-01-11 Airport Commission SummaryKENAI AIRPORT COMMISSION AGENDA January 11, 1996 City Hall Council Chambers Chairman Tom Thibodeau 1. Roll Call 2. Approval of Agenda 3. Approval of Minutes December 14, 1995 4. Persons Present Scheduled to be Heard 5. Old Business 6. New Business a. New Airport Regulations Discussion 7. Airport Manager's Report 8. Commission Comments and Questions 9. Information Items a. Town Hall Meeting Memo b. Memo Regarding Roster Corrections ¢. Reappointment Letters d. Airport Commission Roster 10. Adjournment KENAI AIRPORT COMMISSION January 11, 1996 Minutes Roll Call. Members present' Bonnie Koerber, Tom Thibodeau, Ron Holloway, Henry Knackstedt, Barbara Edwards Others present' Airport Manager Randy Ernst, Councilman Measles, Administrative Assistant Marilyn Kebschull Approval of Agenda Chairman Thibodeau stated there would be an amendment to the agenda. Under New Business, add The National Car Rental Agency's request to terminate their lease. Add as 6a. Under Information, add the letter from Mr. VanZee. HENRY KNACKSTEDT MOVED TO APPROVE THE AGENDA AS AMENDED. MOTION SECONDED BY RON HOLLOWAY. APPROVED. Approval of Minutes December 14, 1 995 RON HOLLOWAY MOVED FOR APPROVAL OF MINUTES OF DECEMBER 14, 1995. MOTION SECONDED BY HENRY KNACKSTEDT. APPROVED. Persons Present Scheduled to be Heard Old Business New Business National Car Rental Lease Termination Letter Chairman Thibodeau related that National Car Rental Agency stated in their letter it was their intention to vacate their lease as of January 1 8t~. Mr. Ernst stated that the contracts for the car rental agencies allows for a rescission agreement for their lease space by mutual consent. Ernst stated what is needed is the Airport Commission's recommendation to the council that you accept their letter and to rescind their lease. If that is how the Commission feels; if not, then it would be necessary to determine how much they would owe for the remainder of the lease. Ernst stated he did not feel it was necessary to do that. Knackstedt asked if they were paid up to date. Ernst stated they were paid up to date. Holloway asked Airport Commission January 12, 1996 Page 1 Minutes how much time was left on their lease. years as they had just redid the lease. Ernst stated he thought it was about four KNACKSTED MOVED THAT THE COMMISSION RECOMMEND TO COUNCIL TO ACCEPT THE TERMINATION OF NATIONAL RENTAL CAR LEASE PER THEIR JANUARY 4, 1996 LETTER. MOTION SECONDED BY KOERBER. Dan VanZee stated that on the surface there will be a vacancy at the airport and it would probably appear to be in the city's best interest to try to fill that space and generate the revenues from the space. VanZee stated he wanted to make the point that he did not feel it was in the city's best interest. There is nothing for the city to gain by actively seeking another rental car agency to come and fill the space. The rental car market in Kenai will remain the same whether National Car Rental is here or not. The bulk of the revenue from the car rental agencies come from the time and mileage charges that are paid to the city monthly. In addition to that, there is a lease space charge of approximately $1.65 a square foot, $2400 a year. That is the only number being talked about that could be a potential loss of revenue to the city, the space rent. The market will continue and the city will continue to get ten percent of that market. They will just get that from four people rather than five. The rental car industry is in a bind because of excess competition. Every year the price of new cars goes up. VanZee asked when the last time anyone had heard of an insurance company lowering their rates. Rental rates have not substantially increased in four or five years. VanZee stated the agencies are in a pinch. The more competition, the more it is held down. That doesn't do anybody any good. It doesn't do the city any good and it doesn't do any of the businesses any good. To continually struggle amongst themselves trying to capture a bigger and bigger share of the market doesn't do anyone any good. VanZee stated that for a 10 percent degrees in rates requires generating 25 percent more business to have the same capital or the same income. That is not possible. VanZee said they are all caught in the pinch. VanZee stated that now with a vacancy of space there is a potential for loss of income of $2400 per year to the city. VanZee stated he is here to ask the city not to seek another car agency in Kenai. VanZee stated he believes four rental car companies are plenty of competition. There is no price fixing, noting they are competitors and will continue to be competitors. VanZee stated his feeling it is a benefit for the city to look for someone and the only possible negative is the loss of rent space. VanZee said he is here to guarantee that the city doesn't have to lose that space rent. VanZee stated he will personally rent the space and continue to pay the rent until he can find a business that will be approved by the Commission, the city council, etc. to take over that space that would not be in competition with the car rental business. Mr. Holloway asked if all four businesses shared and opened up the current spaces, would that help? VanZee stated that is what he would prefer to see, that the space be remodeled. VanZee stated they don't have adequate space now to run a Airport Commission January 12, 1996 Page 2 Minutes business. There are discussions about adding electrical service. Doing that with an existing structure is more difficult. VanZee said he would like to see that done in the future but he is talking about now. VanZee stated he knows that any remodeling projects may be a year from now or two years from now. VanZee said he would prefer to see the space remodeled, expand the space, and everyone would pay more because they would have more space. And, there would be no loss of revenue. VanZee said he would prefer to see all the agencies take the space and split the cost; however, he is not convinced that that will happen. There is at least one agency that feels no one else wants the space so why should they pay more. VanZee reiterated that he will personally lease the space because he doesn't want the loss of revenue to' be a factor in the decision not to seek another rental agency. VanZee stated he doesn't feel there is anything for the city to gain and he wants to make sure there is nothing for the city to lose. Mr. Holloway asked how many rental agencies in Fairbanks airport. VanZee stated four, a $5 million dollar market. Juneau has three with a $2.4 million dollar market. Anchorage has six with a $20 million dollar market. Holloway stated it appears to be plenty for Kenai. VanZee stated he feels four is too many but four is better than five. VanZee reiterated he doesn't see anything for the city to gain and he is willing to personally guarantee that there is nothing for the city to lose by not seeking another 'rental car agency to fill the space. Mr. Thibodeau asked how big the spaces are now. Mr. Ernst stated they are leased as 10 by 10 or 100 square feet. Mr. VanZee noted that their working space is much smaller because of the counters. Thibodeau asked how they felt, if that was enough space. Ms. Koerber stated that all the agencies had looked over the information and discussed it. Koerber stated that basically the agencies are really fighting in the winter and they do every year. This is probably the first chance that has come up that they could come to the city and ask for some help. Koerber stated that she understands VanZee's offer to pay the difference but she is sure they will all go in on that fee. Although, there is one agency who may not. Basically, Koerber stated she sees no reason why the space couldn't be rented. Koerber stated that Mr. VanZee is saying that one way or another it could be worked out wherein the city doesn't lose any money. Mr. Knackstedt stated he was wondering if the public would notice a difference in availability of rental vehicles. VanZee noted that each agency would buy more cars to make up the difference. Knackstedt noted that there are times in the summer with five agencies where there are no cars available. Now, with four agencies, will that happen sooner, or later? VanZee stated that if they run their businesses right they don't have any cars left over. All the cars are rented at the end of the day. Only in July is that possible. VanZee stated that if they have a firm understanding Airport Commission January 12, 1996 Page 3 Minutes of what is going to happen at this time of year they have an opportunity to order more cars so that an increased demand in the summer. If they don't have a firm understanding of what may happen, one agency can truck vehicles in. But, for the local owners, the decisions needs to be made now and order the cars. VanZee said if they will be one car agency short that means they will be 50 to 60 cars short of what was available last summer. National probably ran between 50 and 60 cars last July. Between the four agencies, there will be an increased demand of maybe ten cars each. VanZee the biggest negative that could happen to the remaining agencies is that they order the cars to meet the demand and then in June another rental car company shows up and they would have an excess of 50 cars. VanZee stated the demand will be met and they will invest more if they have a bigger piece of the pie. Ms. Koerber stated that if they now ahead they will order accordingly. Basically, they know every summer approximately what is coming in. Koerber stated that if they know there will just be the four agencies, they will order accordingly to take up the slack. So, there would not be a problem with commuters. Mr. Thibodeau commented that there are other rental agencies in the area such as Chrysler, Hutchings, etc. Thibodeau stated that if there was a time the airport ran out of cars, the other agencies would try to pick up the slack. Thibodeau stated he didn't feel there was ever not enough cars in the area. VanZee stated the period between July 1 5t~ and the 21~t. Koerber added that Ford was going strongly into the rental business. Mr. Ernst commented that if someone comes off airport and comes to the airport to pickup customers, they are obligated to pay the same gross percentage as everyone else. Ernst stated they would insist on it. Ernst stated he would be watching that very closely. The only instances that has happened in the past is that Peninsula Ford has vans that they lease to the school district. Ernst stated that is minimal. If they came in and tried to bring in a whole fleet and started picking people up at the airport and it was an airport generated revenue, then the city would require the 10 percent gross. · Mr. Ernst asked to respond to Mr. VanZee. Ernst stated the Commission has three choices; yes, no, or you make no recommendation. Ernst stated that Ms. Koerber would need to abstain from the vote. As far as the revenue, the revenue lost at this time would be the square footage revenue. And, Ernst stated he probably would agree that if there would four agencies that market would spread over four. Maybe the gross revenue would not change a whole lot. As far as not leasing space to a car rental agency, it could be leased to someone else. Ernst stated he did not feel the Commission could recommend at this point. Ernst stated that for VanZee to pick up the rent lease space is against the grain of competition. Every space in the airport is bid. Ernst stated the space would probably have to be bid. Airport Commission January 12, 1996 Page 4 Minutes Mr. Holloway asked if anyone had shown any interest in wanting to move into the space other than a car rental agency? Ernst stated there have been several different kinds of interest but nothing that ever came back. Ernst stated Ms. Kangas will be at the far end but she is paying a reduced rate, $50 a month for the entire year. If she was allowed to move into the space that wouldn't be fair to the car rental agencies. Holloway asked if the glass partition area was still available and Ernst responded yes. Ernst stated that people inquire and some have been told they could not operate at the airport. Ernst stated the most requests he gets are for an espresso stand and it is in direct conflict with the restaurant. Holloway asked if the area was due for an upgrading? Ernst responded that right now people have plug ins that are overused and causing a big problem. They are blowing breakers all the time so the airport needs to have them correct the problem or get in there and redo the electrical circuits. Ernst stated he couldn't speak to whether it was adequate room for them. Ernst stated a renovation of the area has not been discussed. Ernst stated that by eliminating the space you would be locking yourself out. Ernst stated that as VanZee had stated that by the architecture it made itself conducive to five car rental agencies. Thibodeau stated that in comparison to other airports, the space is small. Thibodeau added that it seems like we are continually improving the terminal that perhaps an upgrade on the counters would be nice. He stated it was his opinion that it would be nicer if they were larger spaces. Councilman Measles indicated that Mr. VanZee had indicated he would like additional space. Measles asked if all four agencies would like additional space? VanZee responded they would all be willing to pay for additional space. VanZee stated his comment earlier was that there was one agency that said they didn't think anyone would want the space so why should they pay more for what they have now. Measles stated he didn't think it would work for the agencies to pick up the lease cost for the vacant space. Measles said the space would have to be advertised for bid and that would open it to anyone who wanted to bid on the space. Measles said he thought he was hearing them say they didn't want that to happen. VanZee said he didn't care who was in the space as long as it is not a rental car agency. Measles said the architect comment is right but at the time the space was designed there were five agencies who wanted a spot in the airport. The design didn't dictate five agencies, five agencies dictated the design. Measles stated that he felt if the Commission wanted to make a recommendation in line with what Mr. VanZee was saying so that you recommend to the council that you accept the termination of the National Lease and you further recommend that that space not be advertised for re-lease at this time and leave it at that. Ernst stated that would give the Commission the opportunity to come back and say we would like to renovate the area. Ernst stated that if someone leases the space, you will not get them out. Holloway noted that it seemed to him it would be the ideal time to do it if we are considering rewiring. Ernst stated if that was the Commission's recommendation to the council and if council agreed. Ernst commented that this would be a way to make the areas bigger and not get into waiting for someone else Airport Commission January 12, 1996 Page 5 Minutes to check out again. Measles stated that if that is the direction the Commission wants to go that it could also be part of the recommendation, that the city look at expanding the existing spaces to four spaces instead of five. Chairman Thibodeau asked if there was further discussion. BARBARA EDWARDS MOVED TO RECOMMEND TO THE COUNCIL THAT NATIONAL CAR RENTAL'S LEASE TERMINATION BE ACCEPTED AND THAT THE SPACE NOT BE ADVERTISED FOR LEASE AT THIS TIME. ~,IN ADDITION, RECOMMEND THAT COUNCIL LOOK INTO THE OPTION OF POSSIBLE RENOVATION. MOTION SECONDED BY RON HOLLOWAY. Thibodeau commented that he was wondering what kind of an operation could be run from the airport. You can have a restaurant that gets luncheon business. People don't spend a lot of time in the airport. This airport is not a hub. There are not that many businesses that can take advantage of it except car rental agencies. The restaurant is not a booming, thriving business so the city has done what it could do to protect it. Other than the car agencies and the restaurant, Thibodeau stated he didn't think there were that many other businesses that could take advantage of it. Mr. VanZee stated he felt there were other businesses that could utilize that space and gave examples. (Discussion about businesses who may be successful in the airport.) Clarification of motions on the floor. Mr. Knackstedt withdrew his motion on National Car Rental lease termination and withdrawal agreed to by Ms. Koerber. VOTE: KOERBER ABSTAIN HOLLOWAY YES EDWARDS YES THIBODEAU YES KNACKSTEDT YES MOTION PASSES. New Airport Regulations Discussion Decision to postpone this discussion until the end of the meeting and go into a work session. Airport Manacjer's Report Mr. Ernst explained his handouts and noted that he is not sure if he will ever get a solid figure for Mark Air Express enplanement figures for November. Ernst explained how he came up with the estimated figures. ERA figures are estimated Airport Commission January 12, 1996 Page 6 Minutes as their manager is out of town. Ernst stated he has been told this figure is fairly accurate but it cannot be verified. Total enplanements for the year are right at 130,000 which is 1 3,000 higher than last year. Ernst advised Aires Consultants who are doing the Master Plan will furnish to Ernst by the Friday before the February 8t~ meeting an informational packet on the plan progress. The meeting of February 8t~ will be an informational meeting on the Master Plan. Ernst stated he plans to advertise it as such to the users and the general public. It will be an overview of how far they have gotten as far as photographing the airport properties and digitizing those photos. It will be a preliminary informational meeting. The FAA will be at the meeting. Patty Sullivan and Debbie Roth (finance portion of the FAA) want to be here also. Ernst stated that will probably take a lot of time and he suggests that a quick business meeting be held and then adjourn and go into a hearing. Ernst advised he will be leaving Monday night to go with the Director of Maintenance to go to Oshkosh to make a final inspection on the sander plow truck. It has to be checked to make sure it meets specifications. Then, they will go over to another town to look at the Oshkosh sweepers to get an idea of price. Ernst stated he will be gone about four days. Ernst advised that yesterday and today the annual certification of the airport was held and for the second year in a row they have not had any discrepancies. In the letter of correction there will be no corrections to be made. Ernst stated he appreciates the Public Works Department, Police Department, and Fire Department in being able to pull off an inspection like this. This year is the airport's tri-annual disaster drill. Ernst stated they are hoping to have it hopefully near July 1. That is a full blown drill involving everybody, the hospital, ambulance service, etc. Mr. Holloway asked if the ski plane basin was open? Ernst stated it has been open by invitation only. Mr. Thibodeau asked if there were any moose on the airport? Ernst stated they have had a few; however, he hasn't seen them. Commission Comments and Questions Mr. Knackstedt asked if any applications had been received for the vacant seats. Ernst stated no and that he has been remiss about getting applications out. The seats have been advertised. Mr. Ernst advised that this was the meeting that elections for chair and vice-chair were to be held. TOM THIBoDEAU WAS NOMINATED FOR THE CHAIR POSITION BY MS. KOERBER AND SECONDED BY MS. EDWARDS. UNANIMOUS. Airport Commission Minutes January 12, 1996 Page 7 RON HOLLOWAY WAS NOMINATED FOR THE VICE-CHAIR POSITION BY MS. KOERBER AND SECONDED BY MS. EDWARDS. UNANIMOUS. Mr. Knackst'edt asked if Mr. Freas had decided on a date for the parliamentary procedure work session. Ms. Kebschull advised that Ms. Freas believed it would be on the 29t~ and that she would notify everyone when the date was selected. Information Items Town Hall Meeting Memo Chairman Thibodeau reminded the Commission of the meeting scheduled for January 25th. Memo Regarding Roster Corrections Reappointment Letters Airport Commission Roster Changes on the Commission roster noted: Councilman Measles noted his correct work number is 776-8191. Ms. Koerber would like her number listed as 283-4506 as that number rings into her home. At approximately 8 p.m. Commission went into work session on Airport Rules. Commission began reading the document noting questions and concerns. Mr. Ernst took notes on items to be clarified. Adjournment Meeting adjourned at approximately 9'30 p.m. Respectfully Submitted' / Administrative Assistant Airport Commission Minutes January 12, 1996 Page 8