HomeMy WebLinkAbout2001-08-21 Business and Economic Development Committee Minutes � Business and Economic Development Committee
August 21, 2001
Minutes
Attendees. Councilors Baldacci, Crowley, Palmer, Vardamis, Tremble; Barrett, McKay,
Hupp, Bolduc, Dyer, Moses
2. Request to Purcf�ase Lot 9 in the BIA CommercialJlndustrial Park
Lot 9 is being subleased fram .lerry Conn by Hagan Road Ma�ors which currently
operates it as the Jeep Dealership. Quirk indicated they are in the process ofi
purchasing the building and would like to purchase the land upon whieh the building is
located. Quirk was familiar with the guidelines established by the City for purchase of
Cit}r-owned property in the BIA park areas. Qne stipulation is �hat the praject must
create a significant new �ax base. Quirk �ook over a business at the location which was
not economically weil off and which had faur to five employees. Since purchasing that
business, Quirk now has twenty fulltime employees, three par�-time, 95% of Quirk's
240 employees are fulltirne with benefits. Quirk has plans to expand the facility in order
to progress as with their other buildings and feels more business and jobs can be added
ta that area by upgrading the facility, equipment and property. There would not be a
� building expansion. Quirk has been successful in the auto business for 27 years with a
proven track record and has added to the tax base of the City as well as in the area of
emplayment opporkuniti�s. Quirk has the franchise and �here are na competi�ive issues
with other dealerships.
McKay referred to the palicy established by the Cauncil regarding property at the
BIA Park. The City's policy is to lease only except in those cases where it would have to
consider selling the lot to achieve deveiopment objectives. The recommendation of staff
has been to continue to lease lan�! and not sell. Under the City's lease policy, unless
something significant is ta be deve(oped, the Council would nat favarably consider sale
of land, McKay agrees that Quirk has done a lot for the business community but the
City's interest is in (ong-term economic revenue to the Airport to support its operations.
The Airport staff recommends lease not sale of land. Baldacci referred to the criteria on
page three of the Committee's agenda, and mentioned the Quirk's economic bene�t to
Bangor indicating this had not been factored into the guidelines. Barrett said that for
technical accounting reasons it is beneficial for Quirk to own the praperty and the City
would be willing to work out the terms of a lease. The lease option is through 2026. If
this properly is sold, Barrett felt there would be no basis in the future to deny future
requests in the Airpart area. Quirk felt this was a potential far the City to graw on
another side of town and felt his dealership could add to that greatly. Crowley asked ifi
there is any legal reasan to not entertain the sale. Barrett said the sale could iegally be
� done. Crowley agreed that it is an area that the City is trying to develop in terms af
� economic growth. He feels the City has the responsibility to be flexible in applying its
policy. Crowley indicated he didn't understand the benefit of the City's very restrictive
development policy for that area of the City. Barrett said that lease property brings in
about $600,000 annually in Airport revenue. Without that annual revenue stream, the
Airport would be operating at a deficit. He again indicated the City would be willing to
work with Quirk to structure a lease or lease extension to meet their objectives. Quirk
indicated the dealership would be paying for the land so the money would be used to
offset interest payments. Baldacci suggested deferring action for two weeks allowing
time for the staff and Quirk to meet for further discussions. Councilor Palmer made a
motion to postpone the item to the Committee's next regularly scheduled meeting on
September 4th. Motion was seconded. Crowley felt the weakness of the airport at the
current time should not weigh heavily against development strategy. Barrett stressed
that wasn't the basis for the entire argument. Palmer mentioned long-range plans and
the possibility of the new auditorium being placed on Airport property. Quirk asked for
a copy of the newly adopted policy.
3. Request to Purchase Lot 10 in the BIA Commercial/Industrial Park
Union Street Athletics which subleases from Darlings has requested to purchase
Lot 10. Sherry Haller, owner of the athletic facility, is purchasing the building from the
Darlings and is interested in purchasing the land from the City. Haller also requested a
copy of the new policy guidelines. Haller said there is 10,000 sq. ft. of building, 25-30
� employees, 5-7 are fulltime. Union Street Athletics is a very positive business but
financially can't expand until the facility can be purchased. When one purchases a
building, one wants to own the land as well. McKay indicated Haller could not meet the
criteria set forth by the Council unless she could purchase the land.
Vardamis would like to see the Committee discuss this issue further, and
indicated she is bothered by the fact the City is penalizing businesses. The policy was
not created to tie the hands of those already in business. Vardamis suggested that Ms.
Haller meet with the staff, as was suggested with Mr. Quirk, to work around the issue.
Baldacci suggested discussions might center around a longer-term lease that might
make a difFerence as one alternative. Bangor Savings Bank's operations center has a
40 year lease. McKay indicated that generally speaking the City is not as concerned
about the terms as long as provisions are included to adjust the lease rate to reflect the
market value of real estate. Barrett said that highest and best uses need to be taken
into account. The City's objective is not to push out existing businesses. With an
extended lease, Haller said she will still have a payment and it prevents her from
expanding. Crowley agreed that further discussion was needed by the Committee. He
urged the City to be cautious and not to be so concerned with its own interests that it is
at the expense of existing businesses contributing to the tax base.
McKay indicated that when the policy was discussed the issue was sell or lease.
� Small business owners in particular prefer to own to build equity, larger business does
� not care as much whether they lease or purchase. In terms of the policy, the City could
attract more development if the policy was to sell; however, that was perceived as a
detriment to the Airport and its operating revenues.
Palmer made a motion to postpone this issue to the September 4t" meeting of
the Business and Economic Development Committee. The motion was seconded.
4. Lease Extension — Bangor Metal Works
Bangor Metal Works has been leasing from the City for one year and approval of
this item will extend the lease for one more year with a lease rental increase. Palmer
asked the status of the business in terms of its relationship with General Electric. McKay
indicated the business is doing well. A motion was made and seconded to approve the
lease extension.
5. Lease Agreement with the United States of America, Department of the
Arm�, Hangar No. 457
Staff recommended approval of this five-year extension of the lease at
approximately $3,686/month. A motion was made and seconded to approve the lease
extension. McKay said that the City is responsible for the structure and maintenance of
� the building and the tenant is responsible for the interior. There is 360 ft of office
space and the remainder is hangar space. Hangar 457 is the old general aviation repair
station located just beyond the domestic terminal building on the Airport access road
and has been used for sometime for storage of an aircraft used by the National Guard.
6. Lease Extension — Maine Army National Guard
Acting Airport Director Hupp discussed the request for execution of an
amendment to a lease with the State of Maine, Military Bureau. In 1997, the Council
approved a lease between the City and the State of Maine, Military Bureau for the
properly currently being used by the Maine Army Guard for helicopter operations. This
lease was for 25 years with a possible extension of another 25 years. At this time, the
Army Guard is proceeding with plans for significant additional improvements and
expenditures on this site, and has�requested a commitment from the City to lease this
parcel for at least another 52 years. It is our understanding that it is Army Guard policy
to not expend significant amounts on a project unless the lease term is at least 50
years. At the end of the 50-year term, the lease agreement stipulates that all of the
assets will revert to the Airport. Hupp is arranging a Council tour of the facility. The
Guard is looking for a significant expansion; Brian Ames reviewed the project in its
entirety. An $8M budget has been approved for the project with construction
commencing in early 2002.
�
A motion was made and seconded to recommend the lease extension for full
� Council approval.
7. Penobscot Theatre Request to Use 77 Railroad Street for Storaae
The Penobscot Theatre Company has requested permission to use the Kobritz
Building at 77 Railroad Street to store props and materials associated with the Maine
Shakespeare Festival. Last year, the materials were stored in a barn at Bass Park.
McKay indicated concern with the condition of the Kobritz building; i.e., the sprinkler
system, septic problems, mold problems. Staff recommends the continued of the
livestock barn at Bass Park. Dyer indicated there is no guarantee of safety of the stored
materials, which will need to be removed two weeks prior to next year's Fair. A
question was raised as to the possibility of using Airport space, and Hupp replied that
there are certain FAA rules and regulations for use of Airport properry at no charge by
agencies and organizations. Crowley asked why Bass Park was not leasing the storage
area to the Theatre. Theoretically, Barrett felt there should be a lease arrangement.
Mike Dyer indicated it is an in-kind contribution to the Festival, and the City has no
liability as it stands.
A motion was made and seconded to approve staff's recommendation to
continue use of storage space at Bass Park.
� 1. Re�ort on Airport Rental Income .
This item was delayed until the arrival of the Acting Airport Director. Hupp felt
this item had been discussed at great length during today's meeting. For an Airport the
size of Bangor, it is important to diversify its revenues but not to penalize business. The
existing businesses entered agreements realizing it is Airport property and the Airport's
policy not to sell. Baldacci asked about selling properry and placing into a trust fund.
The Airport Manager and City Manager have discussed the possibility. If property is
sold outright, it is limited as to what investment pools can be used because the Airport
is a government entity. Approximately 5-6% could be earned compared to the current
lease arrangements at approximately 10%. New lease arrangements will be at 8%.
Also to be considered is that some buildings revert to the Airport and the base
appreciation of the land. Baldacci questioned if, for example, Quirk could realize its full
potential without sale. He felt the Committee needs to recognize the $609,000 issue.
Hupp said if the Airport keeps the property it will be able keep control. Hupp indicated
she understands Quirk's perspective but doesn't feel it is the highest and best use of
that property. Crowley felt the City is forgetting that it exists for the citizens of Bangor.
He understands the argument of the assets to the Airport. Crowley would like the City
to put as much enthusiasm into replacing the deficit rather than to lease land to cover
it. It is putting a band-aid on a situation. Barrett disagreed and said there has been a
very conscious policy on the part of the City to try to diversify Airport revenue so that it
� is not dependent upon one single area. Historically, BIA has been very dependent upon
Airport business as its profit margin. At the same time, there are a lot ofi pressures to
� keep cast ta the airlines as low as possible to remain competitive. Staff still needs ta
find ways to keep the Airport as self-supportive as possible. In earlier years, the Airport
didn't make money and was subsidized by the General Fund, and Barrett daesn`t want
that to happen again. There are market fiorces tha� the Airport cannot cantrol. Barrett
felt that some decisions made ta lease haven't beer� in the highest and best use. The
Council makes many decisions weighing multiple interests, with Bass Park being a
perfeet example, Barre�t indicated that if Bass Park were operated on a private
enterprise basis, the City would not be in the Bass Park business. Crowley said the City
would not be losing money, but indicated that it a separate discussion for another
meeting. In response to Vardamis, Barrett indicated there is not a sufficient revenue
stream coming in over and abave the rental income. Trernble expressed appreciation
to the City Manager and Acting Airpart Director for �heir explanation. He agrees that
the City should nat sell property. When the palicy went into effect, he saw it as
instrumental in the Maine Business Enterprise Park and other non-aeronautical sections
of the City. Barrett said he wauld like to be able to workout something uvith the Quirks
and the Union Street Athletic Cent�r that will meet their business abjectives without
creating long-term problems. Tremble questioned haw it is determined when these
issues are discussed in executive session. McKay said that items are in executive
session if it concerns negotiations that could be a detriment to the City; i.e., amounts
invalved. A palicy issue would not be in executive session. Other lessees have asked
for the option to purchase in the past and have been denied. Barrett indicated that if
� there are new, undeveloped parcels to be sold that the money could be placed in a
trust fund to protect the Airport's future revenue flow for long-term protection.
Vardamis asked far a fu!! listing of City owned property. Staff wil! prepare and provide
to the full Councii. Vardamis asked staff to indicate to bath parties up front that the
City will not sell. Palmer indica�ed that the Committee needed to say that, not staff.
Quirk had indicated ta Barrett that his accountant was warking to s�ructure the lease so
as ta avoid capital gain tax issues. McKay said that staff needed a policy to treat all
fairly and equitably.
8. Bass Park Report
a. Report an Fal( Business Outloak. Dyer reviewed an in-house event
caler�dar which the Committee had received in their agenda packets. Boakings fram
September through December af this year are 66 compared to a total of 54 last year.
Included in last year`s, were six ever�t days for the MMA Canvention, v,rhich will not be
in Bangor until 2002. Amang notable changes from last year are the Bangor Daily News
not sponsaring their marketing symposium after eight ar nine years. There is a drop off
in antique and craft events in response ta market farces. The Lipizzaner Stalfion is a
firm date. Sesame Street will be back an December 11�" and 12tn. November IQth is
being held for the WWF, which Dyer feels is a solid commitment. November 14 or 15 is
being held for a yet to be named cancert. Dyer has daubts about the Kenny Rogers
� Christmas Show but it is a promoter call. The Chamber Business Trade show has
expanded into both the auditorium and civic center. The Senior Show, scheduled for
� the spring, is expected to bring 25-30 vendors and is being coordinated and sponsored
by Bass Park.
b. Discussion of Booking Program Software. Bass Park,has looked at
10-12 software packages for a long period of time and found that most are suited for
hotel/function room businesses. They did find three appropriate for Bass Park: Event
Business Management System ($18,000), Event Management System Professional
($6,000), and Scheduler Plus and Optimum Settings ($10,200 plus training). StafF
recommended the Scheduler Plus software. It will keep daily schedules, break out
events by specific rooms, an activity screen showing every portion of a specific event
such as MMA Convention, an ongoing confirmation report on various services and
rooms as well as keeping an active billing summary, track information on events by
groups, by time of year. It will automate all of the pertinent information. Bass Park
has $4,000 in the current budget year for computer equipment, and Dyer proposed to
take half of that for the software and the remainder out of the marketing budget. The
item will need to be approved by the Finance Committee. Crowley asked what would
not be done under marketing with the now proposed use of $2,000 for the new
software. Tremble asked the expected lifetime of the software. Dyer will find out the
information and will also find out the cost of the training services. Tremble asked if the
same software could be utilized with a new auditorium facility. Pending technical
evaluation of the software by Information Services, Dyer asked for this Committee's
� recommendation for consideration by the Finance Committee. A motion to accept
Dyer's recommendation was made and seconded. Tremble stressed the need to have a
better understanding of the training costs. Baldacci also asked that Councilor Crowley's
marketing question be researched. Barrett indicated that all of this information will be
in place prior to Finance Committee review and discussion.
, Dyer mentioned the retirement parry for ]ack McClay. All Councilors will
be receiving an invitation.
c. Other Business/Correspondence
During the summer's hot weather season, Barrett indicated that there
were extreme working conditions in the administrative office area of Bass Park with the
temperature reaching 98 on three difFerent days. Estimates have been received from
Public Works at about $10,000 to allow for open windows to allow airflow in the
building as well as three window air conditioning units. Purchasing may go out for bid
on the item. Staff will come back to the Committee to request use of unused bond
money. Staff is also recommending drapes for the mezzanine level.
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