City Council Airport Committee Tuesday, April 13,2018 Approved Meeting Minutes  After determining that à quorum is present, the Council Airport Committee oft the Denton City Council convened in a special meeting on Tuesday, April 13,2018, at 1:07 p.m. int the City Hall, City Hall Basement Meeting Room at  2151 E. McKinney St., Denton, Texas to consider the specific agenda items listed below:  PRESENT: Mayor Chris Watts, and Councilman John Ryan.  ABSENT: Councilmen Don Duff  STAFF PRESENT: Mark Nelson, Transportation Director; Trey) Lansford, Deputy City Attorney; and Scott Gray, OTHERS: PRESENT: Win. Perkins, Airport &. Aviation Appraisals, Inc., Robin Paulsgrove, Fire Chiefand The Airport Committee ofthel Denton City Council convened into a. Closed Meeting to consider specifici items as these items is listed below under the Closed Meeting section of this agenda. When items, for consideration. àre not listéd under the Closed Meeting section oft the agenda, the Airport Committee of the Denton City Council will not conduct aClosed Meeting and will convene at the time listed above for its regular or special called meeting. The Airport Committee oft the Denton City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 ofthe' TEXASCOVERMMENT: CODE, as amended, as set forth below,  Airport Manager, Julie Mullins, Administrative Assistant and Recording Secretary.  Kenneth' Hedges, Assistant Fire Chief.  At 1:07 p.m. the Airport Committee of the Denton City Council convened into a Closed Meeting.  1. CLOSED METING  A. CAC18-012 Deliberate regarding Real Property - Under Texas Government Code 551.072;  Consultation with Attorneys- - Under Texas Government Code Section 551.071 Discuss, deliberate, and receive information from staff and provide staff with direction pertaining to an Airport lease reimbursement request where the deliberation of same in an open meeting would have a detrimental effect on thej position oft the governmental bodyi in negotiations with a third person or potential litigation. Consultation with the City's attorneys regarding legal issues associated- with an Airport lease reimbursement request where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton, the Denton City Council, and the Council Airport Committee under the Texas Rules of Disciplinary Conduct of the State Bar of Texas, or would jeopardize the City's legal position in negotiations or potential litigation. At1:20 p.m. the Council Airport Committee re-convened in the Regular Meeting. No official action was considered on Closed Meeting item(s) under 551.071 of the Texas  Government Code, as amended.    City Council Airport Committee Minutes  April 13,2018 Page 2  1. REGULAR: MEETING A. CAC18-003  Consider approval oft the minutes from the meetings held on October 5, Mayor Watts made a motion to approve the minutes as presented. Councilman Ryan seconded the motion. The motion was approved unanimously with a vote Receive an update on the CPI Review and Recommended Action Plan Gray informed all 50 Airport lease agreements were reviewed for CPI calculation and periodic fee increases. Staffi met or discussed with each ofthe affected tenants thes status oftheir billing statements over the subsequent months. Staffcoordinated with the Customer Serviçe Department to ensure a billing process could be instituted moving forward clearly indicating the billing changès. Each tenant was mailed al letter on February 16, 2018, explaining the process and results, including acopyofallealeulations: fort their leasehold.AllAirport. lease billings were updated and included in the February billing cycle (March invoices). Several tenants contacted Staffi following receipt oft thel February billings with questions and were provided clarifications as necessary.. All Airport tenants have accepted the newly Mayor Watts inquired about the total amount. Gray stated total billings were Receive aj report, hold a discussion and make ai recommendation to the Denton City Council on aj proposed. Airport Fire Station location.  2017 and November 28, 2017.  of(2-0).  B. CAC18-002  calculated lease rates and all CPI calculations are up-to-date. $74,000 forl FY17-18 and $72,000 for FY16-17.  CAC18-004  Gray stated the 2015. Airport Master, Plan identified al location for an Airport Fire Station at the west end of Schweizer Street on the AirportLayout Plan (Exhibit 2) genèrally located at the south end oft the. Airport. This. location was intended tol be an airport only fire station and was not for emergency response to the adjacent industrial area. Airport. Staff was approached by Fire. Administration regarding a different location in the vicinity of the Airport Terminal Building. This new location was determined by Fire Administration to be more advantageous in meeting response time requirements to both airport emergencies and to the adjacent industrial area, Airport staff has been çoordinating with Fire Administration on consolidating the facility footprint, resulting in the Proposed Airport Fire Station Conceptual Plan. The conceptual plan includes a two-story structure and incorporates vehicle parking needs by expanding the éxisting Terminal Building parking area. These design elements assist in ensuring valuable aviation related land remains available in the terminal area for future aviation- Gray continued' by stating to ensure thej proposed location isa available: for the future development oft the Airport Fire Station, Fire. Administration is recommending a formal resolution be approved by City Council. Additionally, Airport staff is recommending the Airport Layout Plan bé updated to reflect the newly proposed Chief Paulsgrove stated thej proposed location would give prime response location  related development.  site as depicted on the conceptual plan.  and access to all areas.    City Couricil Airport Committee Minutes  April 13, 2018 Page3  Mayor Watts made a motion recommending a formal resolution be approved by City Council for proposed location of Airport Fire Station. Councilman Ryan seconded the motion. The motion wàs approved unanimously with a vote of Receive a report, hold a discussion and make a; recommendation to City  (2-0).  C. CAC18-007  Council on the GAhangar, LLC, lease agreement.  Gray stated on August 15, 2017, the City Council approved an Airport lease. agreement with GAhangars, LLC: for 3.214 acres ofvacant property at $0.27/sflyr for the development of approximately 20 hangars. The proposed development included hangars capable of accommodating midsized corporate jet aircraft, as The lease agreement contains two sèctions with several requirements with specific deadlines. The: first section is in relates to the construction period, which identifies a deadline of May 12, 2018. This section does not have any provisions to modify or adjust the deadline. The second deadline is associated with several additional conditions, generally related to financing, which should be met by February 11, 2018. This section does include provisions to modify deadlines. Both of these deadlines have been included int the agreement to ensure the proposed development ist timely as the monthly lease fees do not begin until after the receipt ofal building permit and to avoid developers "holding" properties without developing. During the past six months, Airport Staffhas met numerous times with GAhangars, LLC representative, Tony Montgomery, to discuss the project. Inl November 2017, Mr. Montgomeryinformed Staffthat he was modifying the proposed hangar layout toi include approximately 40 small box hangars to address the needs based on their market analysis. He was informed that while it wasn't what was originally proposed, it was within the scope of use as provided in the lease agreement. Mr. Montgomery was encouraged to schedule a Preliminary Development Review Committee meeting to ensure there were no issues with his proposed project and. toe ensure he was able to meet the performance deadlines contained in the lease Mr. Montgomery informed Staff on December 12, 2017, that he was. unable to secure the financing he had been working, on for several months. In coordination with Economic Development, Staff hosted a meeting with the North Texas Small Business Development Center on December 15, 2017, to assist. with acquiring financing for the project. NTSBDC had been working with Mr. Montgomery in On February 20, 2018, Staff met with Mr. Montgomery and representatives of Green Bank to answer questions about the Airport and tour the area. The bank representatives. felt comfortablewitht the information and indicated that they would be taking the project to their Financing Committee on March 1, 2018. Staff received several additional questions from the bank on March 1st regarding airport operational and based aircraft data, which the information was provided. They indicated they were expecting to take the project financing to their Board for  well as smaller hangars for single and twin engine aircraft.  agreement.  finding a financial institution.  approval on March 2,2018.    City Council Airport Committee Minutes  April 13,2018 Page 4  Staff met with Mr. Montgomery on. February 23, 2018, and discussed the project, financing, and lease requirements. Mr. Montgomery was informed that Staffwould wait to see if the bank would approve his financing. If he was unable to secure financing, he was advised that the City would consider exercising the rights to terminate the lease agreement in accordance with the Conditions Precedent On March 2nd, the bank informed Staff they were requiring Mr. Montgomery to conduct additional market analysis. In addition, the bank indicated that they had several proposed lease language changes to assist in their decision to finance the project. They were informed that it was not likely the changes would be made to the lease, however, they should forward any proposed changes sO that the City's On March 12, 2018, Staff provided a letter requesting details from both Mr. Montgomery and the Green Bank regarding the proposed solution to meeting the deadlines. or requesting a change to the lease agreement. On March 16, 2018, both Mr. Montgomery and Green Bank provided responses to the March 12+h letter. Green Bank indicated that they anticipated funding in approximately 45 days. The If an extension is approved, this would also delay Airport revenues as lease fees do not begin until the issuance of a building permit. The extension should also include a lease amendment adjusting the lease rate ($0.27/sflyr) based on the recently completed appraisal which indicated that the Fair Market Valuè (FMV) for Site #7 is $0.31/sflyr. This would increase lease revenue by $5,600/yr. or Termination of the lease agreement provides the City with an opportunity to address FMV, enter into an updated lease agreement to ensure FAA compliance. Additionally, this allows Staff to continue to market this parcel for the highest and best use as identified in the recently completed appraisal report. If the existing tenant has continued interest, this would provide ample time to further investigate the market and address financing issues and submit under the new development Mayor Watts inquired if larger hangars are more desired than smaller hangars. Gray responded there is a strong desire for the smaller T-hangars, however, for Airport operations there are advantages to attract larger aircraft. Mayor Watts made a motion to recommend City Council terminating lease agreement in accordance with the Conditions Precedent language. Councilman Ryan seconded the motion. Thei motion was approved unanimously with a vote of Receive a report, hold a discussion and provide staff direction on the Draft Gray reported based on Airport staff review of current fees, along with several questions raised during budget preparation and lease negotiations, Airport Staff engaged the aviation appraisal firm of Airport & Aviation Appraisals, Inc. from  language.  Legal Department could review them.  tenant requested a 120 day extension tol both deadlines.  $224,000 in unadjusted revenue over the 40-year lease term.  review process.  (2-0).  D. CAC18-011  Airport Appraisal Report.    City Council Airport Committee Minutes  April 13, 2018 Page: 5  Austin, Texas, tos assisti in assessing various fees at] Denton! Enterprise Airport. The process included ai markêt rate comparison to other airports ini the Metroplex and recommendations for establishing! Fair Market Values (FMV) lease rates for vacant Airport land parcels, T-hangar, apron, fuel flowage, and FBO hangar/tiedown Mr. Win Perkins, Airport & Aviation Appraisals, Inc., presented an overview of Gray stated Airport staff is recommending to follow the recommendations and Mayor Watts made a motion for staff toi follow the recommendations included in the Draft. Airport, Appraisal Report. Councilman Ryan seconded the motion. The Receivear report; hold a discussion and provide staff direction on the establishment Gray stated the Denton Enterprise Airport operates under thè guidance of the Federal Aviation Administration (FAA). Thel FAAI has many policies that regulate the operation of an airport, including grant assurances, policies, orders, and advisory circulars. To assist in compliance with these various FAA documents, many airports establish their own guiding documents. These. documents generally are developed to work in conjunction with one another, but each has a specific Gray continued with Airport staff recommendation of a three-phase approach as. Phase 1- Staff1 has included another agenda item for possible action toi recommend to Denton City Council the: approval ofthe Airport Rates and Fees Schedule. Phase 2-1 Development of the Airport Leasing/Development Policy which would be brought forward to the CAC and City Council in approximately 30-60 days. Phase 3-1 Development oft the remaining guiding documents through a formal six to nine month public process. of tenant meetings and Airport Advisory Board Mayor Watts made a motion to proceed with staff recommendations to proceed with at three-phase approach. Councilman Ryan seconded the motion. The motion Receive a report, hold a discussion and provide staff direction on Rates and Fees Thel Denton Enterprise. Airport operates under the guidance ofthel Federal Aviation Administration (FAA). Thel FAA recommends that airports establish: rates and fees associated with the use of airport land and facilities to assist in reaching financial  commissions.  the appraisal process and recommendations.  analysis as presented.  motion was approved unanimously with a vote of(2-0).  E. CAC18-009  ofA Airport Guiding Documents.  purpose. follows:  meetings.  was approved unanimously with a vote of(2-0).  F. CAC18-010  Schedule.    City Council Airport Committee Minutes  April 13, 2018 Page 6  self-sufficiency. In accordance with City Code, any fee for the use of City property must be adopted by the City Council. The establishment and adoption of an Airport Rates and Fees Schedule provides staff, users, and tenants with a clear Based on the recently completed Airport Appraisal Report, previous direction by the Council Airport Committee, and other City Department practices, an Airport Mayor Watts made a motion to adopt the Airport Rates and Fees Schedule as presented. Councilman Ryan seconded the motion. The motion was approved  understanding ofany approved airport-related fee.  Rates and Fees Schedule was developed. unanimously with a vote of(2-0).  With no further business, the meeting was adjourned at 2:20 p.m.  CHAIRMAN  ITY OFDENTON, TEXAS  PK  Sa AIRPORT MANAGER