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HomeMy WebLinkAbout1993-03-17 Airport Committee MinutesAIRPORT COMMITTEE MEETING Wednesday, March 17, 1993 - 12 PM AIRPORT CONFERENCE ROOM Present: William Shubert, Chair Bob Ziegelaar, Airport Director David Pellegrino, Purchasing Agent Absent. William Cohen Richard Stone 1. Car Rental Leases. Mr. Ziegelaar briefed Chairman Shubert on the responses received in the solicitation for proposals to provide car' rental services. The following companies, Avis, Hertz, National and Budget, all agreed to the n w terms and conditions as set forth in the solicitation. Dollar Rent- A-Car declined to renew due to the increased expenses they are incurring in their vehicle financing arrangements. Instead, they have agreed to operate "off -premise", at half the override rate. This is a standard arrangement in the industry. Mr. Ziegelaar further explained that the concession rates had been increased, which should produce an increase in airport revenues derived from car rentals. Depending on the overall inflation rate as well as tourism traffic levels, the Airport Director expects an increase of a% to 15$ in yearly car rental concession revenues. Chairman Shubert agreed to have final contracts prepared for City Council approval. 2. Airport Signage. The Airport Director next reviewed the proposals received for Airport signage designs. Both he and the Purchasing Agent concurred that the proposal offered by Sane Davis Doggett was the most responsive and, z all likelihood, the leastexpensive, at $98,000. Mr. Ziegelaar requested permission to negotiate a contract with Mrs. David Doggett, and indicated he would attempt to reduce the total cost. Chairman Shubert requested some further detail about the Minutes continued project and agreed that M. Ziegelaar should present a final contract for approval by the City Council. 3. BAC Corporation (Coffee Shop) Pursuant to the Comnittee's instructions of January ], 1993, Mr. Ziegelaar presented Chairman Shubert with an outline of contractual agreement with the BAC Corporation for a three year lease extension to the current lease with the concession. The purpose of the extension is to allow the concessionaire additional time to recover outlays for a modernization effort in conjunction with the terminal construction project. Chairman Shubert accepted the recommended format and suggested that the City Attorney prepare the necessary contract documents. 4. Airport Construction Project Review. Mr. Ziegelaar provided Chairman Shubert with a synopsis of the current status of the project. He indicated that the good news is that the project is close to schedule (time) and that the delivered product is of good quality. Upon final completion the City will have a much improved facility with which it can attract substantial new business activity. The quality of the terminal facilities will compare very favorably with competitive airports. The disturbing side of the project is that it is coming in v substantially over budget. Mr. Ziegelaar indicated that despite drastic efforts to cut costs by deleting segments of work and by reducing interior finishes, the project will end up at near 108 over budget. Current expenditures still show a $6B7a000 balance for the project, but given the number of outstanding change orders, the project will end up at least $800,000 over budget, with a figure of $1.2M as the likely final figure. The reasons for the over -run can be classified as follows: A) Owner -driven B) Contractor practices/pricing C) Architect errors and omissions D) Latent conditions A. While owner -driven cost increases are a factor, they are not substantial and would have been mostly off -set by owner -driven cost reductions. These changes were primarily necessitated due to operational considerations sideratio or economics of scale. (E.G.: building lay -out considerations, replacing a full ceiling rather than a partial ceiling). B. As a result of the multitude of change -orders, the contractor has added very substantially to the contract amount. Many Minutes continued of these changes are still under dispute. Also, because the City insisted on "time and material" pricing, for a number of change orders underway in an effort to contain costs, no final pricing has as of yet been established for some of these projects. The contractor's insistence upon detailed design instructions has been a significant factor in the cost escalation throughout this project. C. The level of deficiencies in the initial design has been the most critical factor in the overall cost escalation. Mr. Pellegrino explained that the number of change orders caused by design deficiencies has been extremely high. Such deficiencies have ranged from matters such as beams that were of insufficient length to a mechanical heating design that was wholly inappropriate for this project. Mr. Pellegrino indicated that the nature of the various issues is such that legal action is warranted and that the City's claims could encompass the major part of the total budget overage. As has been discussed before, the City is consulting legal counsel in this matter. D. latent conditions have been a problem from the outset. These range from unexpected conditions discovered i the process of "opening up" existing building areas, to structural characteristics that were different from those expected. The structural weakness of the International Terminal was severely underestimated by the architect and engineers and has been a troublesome factor throughout the project (uncertainty, delays, schedule changes). Mr. Ziegelaar added that the airport has gone out of its way to accommodate the schedule changes and to keep the project on schedule. This has created severe hardships for the airport and many of its tenants. It should, however, eliminate most or all of the delay charges the contractor threatened to make at one stage (even though the project would have been finished within the City stipulated period at any rate). 5. General Update. Mr. Ziegelaar briefed Chairman Shubert about the fuel tax issue in Augusta, indicating that he believes that the tax will not be reinstated, at least as things stand now. Chairman Shubert inquired about the status of Aeroflot's interest in Bangor and Mr. Ziegelaar responded that he expects to see the first flights in April. Minutes continued Attachments: signage project Memo re Coffee Shop Financial Summary AIRPORT COMMITTEE MEETING Wednesday, March 17, 1993 - 12 PM AIRPORT CONFERENCE ROOM Present: William Shubert, Chair Bob Ziegelaar, Airport Director David Pellegrino, Purchasing Agent Absent: William Cohen Richard Stone 1. Car Rental Leases. Mr. Ziegelaar briefed Chairman Shubert on the responses received in the solicitation for proposals to provide car rental services. The following companies, Avis, Herts, National and Budget, all agreed to the new terms and conditions as set forth in the solicitation. Dollar Rent- A-Car declined to renew due to the increased expenses they are rring in their vehicle financing arrangements. Instead, they have agreed to operate "off -premise", at half the override rate. This is a standard arrangement in the industry. Mr. Ziegelaar further explained that the concession rates had been increased, which should produce an increase in airport revenues derived from car rentals.Depending on the overall inflation rate as well as tourism traffic levels, the Airport Director expects an increase of at to 158 in yearly car rental concession revenues. Chairman Shubert agreed to have final contracts prepared for City Council approval. 2. Airport signage. The Airport Director next reviewed the proposals received for Airport signage designs. Both he and the Purchasing Agent concurred red that the proposal offered by Jane Davis Doggett was the most responsive and, in all likelihood, the least expensive, at $98,000. Mr. Ziegelaar requested permission to negotiate a contract with Mrs. Davis Doggett, and indicated he would attempt to reduce the total cost. Chairman Shubert requested some further detail about the Minutes continued project and agreed that Mr. Ziegelaar should present a final contract for approval by the City Council. 3. BAC Corporation (Coffee Shop) Pursuant to the COmmittee0s instructions of January 7, 1993, Mr. Ziegelaar presented Chairman Shubert with an outline of a contractual agreement with the BAC Corporation for a three year lease extension to the current lease with the concession. The purpose of the extension is to allow the concessionaire additional time to recover outlays for a modernization effort in conjunction with the terminal construction project. Chairman Shubert accepted the recommended format and suggested that the city Attorney prepare the necessary contract documents. 4. Airport Construction Project Review. Mr. Ziegelaar provided Chairman Shubert with a synopsis of the current status of the project. He indicated that the good news s that the project is close to schedule (time) and that the delivered product is of good quality. Upon final completion the City will have a much improved facility with which it can attract substantial new business activity. The quality of the terminal facilities will compare very favorably with competitive airports. The disturbing side of the project is that it is coming in substantially over budget. Mr. Ziegelaar indicated that despite drastic efforts to cut costs by deleting segments of work and by reducing interior finishes, the project will end up at near 10% over budget. Current expenditures still show a $687,000 balance for the project, but given the number of outstanding change orders, the project will end up at least $800,000 over budget, with a figure of $1.2M as the likely final figure. The reasons for the over -run can be classified as follows: A) Owner -driven B) Contractor practices/pricing C) Architect errors and omissions D) Latent conditions A. while owner -driven cost increases are a factor, they are not substantial and would have been mostly off -set by owner -driven cost reductions. These changes were primarily necessitated due to operational considerations sideratio or economics of scale. (E.G.: building lay -out considerations, replacing a full ceiling rather than a partial ceiling). B. As a result of the multitude of change -orders, the contractor has added very substantially to the contract amount. Many Minutes continued of these changes are still under dispute. Also, because the City insisted o "time and material" pricing, for a number of change orders underway in an effort to contain costs, no final pricing has as of yet been established for some of these projects. The contractor's insistence upon detailed design instructions has been a significant factor in the cost escalation throughout this project. C. The level of deficiencies in the initial design has been the most critical factor in the overall cost escalation. Mr. Pellegrino explained that the number of change orders caused by design deficiencies has been extremely high. Such deficiencies have ranged from matters such as beams that were of insufficient length to a mechanical heating design that was wholly inappropriate for this project. Mr. Pellegrino indicated that the nature of the various issues is such that legal action is warranted and that the City's claims could encompass the major part of the total budget overage. As has been discussed before, the city is consulting legal counsel in this matter. D. Latent conditions have been a problem from the outset. These range from unexpected conditions discovered i the process of "opening up" existing a isting building areas, to structural characteristics that were different from those expected. The structural weakness of the International Terminal was severely underestimated by the architect and engineers and has been a troublesome factor throughout the project (uncertainty, delays, schedule changes). Mr. Ziegelaar added that the airport has gone out of its way to accommodate the schedule changes and to keep the project on schedule. This has created severe hardships for the airport and many of its tenants. It should, however, eliminate most or all of the delay charges the contractor threatened to make at one stage (even though the project would have been finished within the City stipulated period at any rate). 5. General Update. Mr. Ziegelaar briefed Chairman Shubert about the fuel tax issue n Augusta, indicating that he believes that the .tax will not be reinstated, at least as things stand now. Chairman Shubert inquired about the status of Aeroflot's interest in Bangor and Mr. Ziegelaar responded that he expects to see the first flights in April. Minutes continued Attachments: Signage project Memo re Coffee Shop Financial Summary