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HomeMy WebLinkAbout2002-10-22 Business and Economic Development Committee Minutes • BUSINESS AND ECONOMIC DEVELOPMENT COMMI7TEE TUESDAY, OCTOBER 22, 2002 Minutes Councilors Attending: John Rohman, David Nealley, Gerry Palmer, and Frank Farrington Staff Attending: Jonathan Daniels, Rodney McKay, Jim Ring, Jeff Russell, Kate Weber, and Norman.Heitmann Others Attending: Adrian Fox, Sidney Epstein, Carol Epstein, A. Fiori, and J. Quirk Meeting convened at 5:00 p.m. i. Bangor International Airport Report. a. Presentation of BIA Fall Advertising Campaign by BFT International. Adrian Fox showed those present the various decreases and increases in traffic since 1999 through the use of charts. More recently, there has been a signifi-cant turnaround � in air traffic and he demonstrated the upward trend during the busiest times of the year. Mr. Fox read a lot of statistics comparing the various years in question and said he thought that 2002 is going to be the best year for the Airport since 1999, consisting of 400,000 passengers. In 1999, the figure was 416,000. This can be attributed to the strong campaign, more carriers and improved equipment. Bangor is now the third fast growing airport in America, the other two being Pepsicola and Long Beach, California. Councilor Palmer stated that the trend nationally is that things are down. Mr. Fox responded that out of the 128 airports, only 15 showed any positive increase and Bangor was number three. Councilor Palmer asked how long Bangor could see this trend, and Mr. Fox responded probably another year. The Airport is always trying to be proactive in thinking of new ways to make things better. He then explained the television advertising, and said that it would be a high-impact campaign using all aspects of local and regional media. Mr. Fox then played and read three versions of the tv commercial for the Committee members. He explained that including prices and times in some of the ads would be more beneficial. b. Authorization to Enter into Agreement with Telford Aviation for the Construction of a Hangar. Jonathan Daniels informed the Committee that the authorization for funding on this was approved last September, and they are now planning to move forward with the project. Telford will construct the hangar, the City would purchase it at cost and then lease it back to Telford. A motion was made and seconded to recommend the item for full • Council approval. • c. Authorization to Amend Lease with Maine Air Guard to include .189 Acres. Jonathan explained that the Air Force has a two-year lease with the City on .189 acres of land located on the northeast side of the international aircraft parking ramp. This land is used by the Air National Guard as the location for a temporary trailer and they would like to do is construct a more permanent structure. They would also like to add this piece of land to the existing lease which includes 157.97 acres for Air National Guard purposes. A motion was made and seconded to recommend the item for full Council approval. d. Passenger Statistics. A detailed statement on statistics was included in the agenda packet. However, Jonathan emphasized the 27.1% increase when comparing the September 2001 to September 2002 number of monthly passengers. This places year-to-date passengers up 12.5%, making BIA the third fastest growing airport percentage- wise in the nation. Both American and Delta were up dramatically; Pan Am saw a 24% increase; US Airways has seen a small decrease; and Continental saw 813 passengers as last year they did not have any and therefore saw a 100% increase. It is also interesting to note the 43% drop from unsold during September of last year to 26%. The passenger load figures are fairly significant, and the market load average was 75% jet capacity and 25%turbo capacity. Overall, even with September 11�', Bangor recovered well. � There were no questions from the Committee. However, a comment was made by a member of the public from 395 Griffin Road about the negative advertising on Channel 5 promoting flying from Manchester and Portland. Someone responded that BIA has been working with local travel agents and some of the carriers, but probably some of the ads are coming from the airlines. Adrian Fox also added that it's not necessarily cheaper to go from southern airports when you consider time, a hotel room, fuel and food. Councilor Palmer suggested that someone on staff talk with Mike Young at Channel 5 as a way to help Bangor. Jonathan reminded the Committee of the travel agent reception where they invite travel agents statewide to introduce them to BIA. In addition, some BIA staff members go out and meet with travel agents on an individual basis. As a final comment, Councilor Palmer felt it important to not lose track of cargo. Jeff Russell responded that work in this area was being improved upon. 2. Discussion on Sale of Leased Properly. Councilor Rohman didn't think a lot of background was necessary on this issue. Jonathan explained he would like to review what has been proposed by the Council and by staff and to explain some of the confusion that has arisen. He said it is difFicult on an individual basis to see what the impacts are and what it will mean in true dollars. Recognizing that this issue has been going on since before his arrival, he is in hopes that this can be resolved in an expeditious manner that makes financial sense for everyone involved. � At this point in the meeting, Frank Farrington joined the meeting. 2 Councilor Nealley stated that when he came on board the Council policy was that the � land wasn't for sale, that it was only to be leased. We thought that there were certain properties on the other side of Godfrey Boulevard that could potentially be allowed to purchase. We also thought staff had two hats on, one hat to keep the Airport whole and to keep the revenue stream from the lease commitments, and the other hat was to allow for build-out of properties for a greater economic development so that we may have additional jobs with that build-out but would obviously get property tax values up. So, one hat was the City side trying to protect the property tax revenue and trying to create jobs and the other side was the airport, although part of the City, trying to make sure we keep the lease income there. What resulted is some kind of a compromise. A determination was made that we would allow the property to be purchased, but it would have to be purchased with a certain dollar build-out in mind and as well, they would have to buy the lease out. Instead of an appraised value or some premium to appraised value, it would be appraised value in consideration with the buyout of the lease. Councilor Rohman said this was one of the questions raised because staff struggled with trying to find some merger between the protection for the property but the ability to buy. Councilor Palmer agreed that what has resulted from the large amount of time spent on this represents the best thinking of the Council but it wasn't easy. Councilor Farrington apologized for being late. In summarizing his rationale on this, he said he was one of the ones that felt that the City should not sell land because the land • is a part of the airport enterprise fund which has a value of some $15M, and this fund throws ofF$1M or 1.5M a year of income to help run the airport. We charge the airport to run as a business so that it doesn't take money out of the taxpayers. They have approximately a $10M operational budget and they generate from operations $9 M to $9.5M so that they have to make up the difference in the money that's thrown off in the enterprise fund. The government has also had a history of helping the airport by providing substantial amounts of money for the runway. The military has also been a part of Bangor for a long time, and the National Guard is a valuable tenant. We get very little from the region. As a service center, we provide a lot of services and some money comes back but it basically falls on what Bangor provides. Councilor Rohman asked if there were any questions on the Council Order itself that was included in the agenda packet. Sidney Epstein informed the Committee members that back in the 1970s there was a different approach and a lot of promises were made to them that were never kept. And now, he feels, they're being held up for bad investments at the Airport. To ask him to finance 10% of the City's endowment out there is ridiculous. Property has been sold out there, very valuable properry, recently and now they're being told they have the most valuable property on the air base. Mr. Epstein said he would abide by the Council's decision but if he had to do it over again he wouldn't. He said in the beginning, they were going to go to Brewer but they were enticed by Ed McKeon to go to Bangor. • Carol Epstein indicated she had been out of town and had not received this until late Friday afternoon. She thought that clauses 4 and 5 were very confusing and said she 3 � had talked to Jonathan and without a model, this could be interpreted many ways. She requested that more time be given to review the Order as she would like to see the model and then come back to make comments. Councilor Rohman asked ]onathan if we were under any timeframe, and Jonathan responded that it's gone on a long time but we want to move this process along as quickly as possible, but if it's going to take two weeks, we're able to provide that hypothetical model and sit back down again. Councilor Palmer asked Carol Epstein if two weeks was enough time and she responded yes as it was an absolute priority for them. Carol Epstein briefly summarized where they are at. When the leases were signed on the airport land, she said they had reasonable expectations that when the City gained control they might have the opportunity to purchase at fair market value. Their expectations about fair market value were based upon 1) verbal discussions with the City at the time the leases were signed, and 2) actual clauses in the leases that address a pricing process using appraisals effectively using fair market values to determine sales prices. She said their expectations were further based on the contracts that they signed with the City. More recently, they had been hopeful that the City would sell to them if they gained control from the Federal Government and if they subsequently sold parcels to other new developers coming in at market rates. She said they could appreciate wanting to protect the airport, but they were encouraged last September, 2001, when the Council authorized the staff to negotiate potential terms and conditions. • She said they would remain open to pursuing that process or any other reasonable one to purchase these properties. Councilor Nealley stated that initially there was still some contention among the Council and some City staff members as to whether we really wanted to do this so a limited window was put in place to see who might fight this option. He said he realizes we're asking for a premium because we're asking for a buyout of the lease as well as an appraisal for the properly. A lot of the other properties sold by the Airport weren't part of the lease revenues at the time so it wasn't a part of the evaluation. If the leases stipulate something different, they certainly should be reviewed. However, it seems customary when making sales of this nature that the lease has some value. There has to be some value as a leaseholder. Carol stated she was fascinated by the concept of establishing value by adding processes instead of comparing them. A typical appraisal looks at three approaches: cost, market and income. The Council is looking at market and income. A typical evaluation would then compare them. She said she never heard of adding to come to a value, and this is a totally new concept to her. So, to talk about fair market value being an addition to the market value and the income value is a concept she has never heard of it. If the Council is going to determine that this is a fair method of determining market value, she would relish the opportunity to bring in experts to address it. Councilor Rohman said he thinks the difference is if you look at items 4 and 5 don't address fairness issues as far as sales. They address protection issues as far as income- • producing for the airport, and that's where different concerns were raised by some Councilors. 4 • Councilor Nealley thought in order to preserve the stream of lease income, the Council needs to review the current leases and do further research. Sid Epstein said that the Airport Committee has lost sight what is good for the City. When these buildings were built, the City was interested in establishing taxable property which he feels is more important today. Ed Bearor, representing the Epstein Company, spoke to the Committee. He referred to meetings held last August and September where a process was in place that has never been followed and this is why it has now come to a point. That process, according to the Order, was that the staff was authorized to negotiate with current lessees subject to the recognition of the continuing income needs of the airport. He said the process was never followed because no one ever negotiated with the lessees. Instead they got a number. If there was any negotiating, it was between City staff and City Council. He stated that the lessees were never apprised of the process or brought into it until now where they're presented with a proposal. For better or for worse, the Council has been talking with staff and staff was opposed to the disposition of property. This process was encouraging because they thought they'd have an opportunity to meet with staff and then a proposal would be presented to the Council. That is not what is happening. Instead, the Committee has been given information and have reached a conclusion and despite all of the discussions, the Committee can be open to their concerns. Councilor Rohman responded that he thought there had been a softening in the process from the City side of it and without disclosing what was said in previous executive sessions, • Councilor Rohman thought the positions are closer now than they were before. Carol Epstein asked the Committee to have the opportunity to reasonably address the issues. Councilor Rohman responded that the Committee was now in a position to go ahead and approve this as is or with recommendations and move it to the full Council. Or, the Committee can recommend that there be some sort of workshop session to review the lease agreements and how items (4) and (5) impact individual sales. )onathan Daniels added that the November meeting would have different Councilors because it would be after the election. Councilor Nealley moved to have a workshop to look at the original lease documents, and Councilor Palmer seconded his motion. Councilor Farrington agreed that the Committee needed to look at the leases and he does feel that there is a value to a lease. He also feels it is a major departure from the policy of the City, we need to have a system that works for everyone. The Committee voted to set up a workshop. 5. Pinal Review and Approval of Development Plan Submitted by 7. Dawson for New York Street(Material to be provided at meeting). Because of time constraints, this item was taken out of order. Norman Heitmann • indicated that one change has been made. An area he pointed to which was originally labeled as"Open Space"was not required. The only thing in the agreement about the 5 • Dawson property was how much they couid build out, which was the two places. The only change in the final subdivision plan is that it is not labeled open space because that was not required the first time around. The final plan has not changed in any other respect that he is aware of. Councilor Farrington asked if there would be questions raised about the open space being wetlands. Norman responded no because we do have this as part of the agreement so when the Council acted on that there was no representation that that would remain open space; and second, at the time they presented their preliminary subdivision plan to the Planning Board, they advised the Planning Board that they would be making that one change, taking those words off. The Planning Board didn't have any problem with that and Norman stated he was not aware of any public comment in opposition to it. Any fans of wetland had an opportunity to be there as it was an advertised public hearing. Councilor Palmer moved for approval of the development plan, and his motion was seconded. 3. Authorization of Amendment to Contract for Professional Services to Carol R. )ohnson and Associates. Rod McKay said that Carol R. Johnson and Associates had been engaged to do design work on the waterfront, and have completed work in Area 1 (the Front Street project) and they're now working on Area 2 which is the Railroad Street quarter doing 100% design development. The two proposals that were submitted by Johnson and Associates • to continue completing final design in Area 3, the water's edge which goes along the new bulkhead and the area on Front and Broad Streets from May Street up to Washington Street. This Order, if approved by the Council, would authorize an amendment to their existing contract on an hourly basis with a not to exceed figure and continue to design 100% development of those two areas. Councilor Farrington asked why this wasn't in the contract originally and Rodney responded because we didn't want to do 100% design development. They do it in phases, the preliminary phase of 30%, preparation of the final design at 30% complete, and 100% complete is bid documents. We've done the schematic and concept designs for the whole waterfront connected to downtown, now we're going back and doing the engineering so that the bid documents can be reviewed by the City's Engineering Department. It's done in piece-meal because it involves $15M worth of improvements and as they become available we seek state and federal funds. As funding is secured for other areas, the contract will have to be amended again. A motion was made and seconded to approve stafF recommendation. Councilor Palmer asked for figures and Rodney answered the initial planning phase is coming out of Community Development and then when outside funds are located the design work is billed to the outside funding source. The not to exceed on the Front Street Phase II is $163,000 and for the water's edge is $170,000 to Johnson and to their subcontractor to do the civil and electrical engineering not to exceed $32,000, and for the marine engineer not to exceed $83,000. And how much they spend will depend on • how much the City asks them to do. They've been spending about 40% of the not to exceed figure. 6 _ _ _ __ � Jonathan Daniels asked Rod if there was any indication where we may be able to find some money for the shortFalls that are in there, the $634,540. Rodney repiied that there probably will not be a shortFall on Railroad Street because the plan was changed by not building a parking lot which would be a $200,000 to $300,000 savings. And as we go through the design phases, changes are made in the design to bring the project into line with the available budgets. 4. Discussion and Authorization to Enter Into an Agreement with the Challenger Learning Center for Lease of Property at the Maine Business Enterprise Park (Material to be provided at meeting). The City has appropriated $250,000 for the Challenger Museum. On Monday night's Council agenda will be three documents: The first is an agreement similar to that of the Children's Museum and University Museum where there are certain deadlines to raise funds. The second document is the Bill of Sale which will convey Portland Hall to them and to allow them to use the land the Hall sits on. There is a provision in the Bill of Sale that if they do not use it for the Challenger Center at any time, the Hall comes back to the City at no cost. The third document is the conventional lease for the use of the land and again, that lease will terminate if they stop using it as the Challenger Learning Center. The lease contains a small parcel and the option to add additional space for future expansion. A motion was made and seconded to accept staff recommendation. � 6. Discussion and Authorization to Enter Into a Purchase and Sale Agreement, and Acceptance of the Deed for Property Located on Dutton Street. Jonathan Daniels indicated that a Purchase and Sale Agreement had already been drawn up and the Council was authorized to designate $350,000 out of undesignated funds. Now the Council is in a position to authorize the execution of the Agreement contingent upon receiving proper environmental reports, the acceptance of the Deed. A motion was made and seconded to proceed with staff recommendation. 7. Executive Session - Land Disposition on Telcom Drive -- Grotto Bay Realty Trust. A motion was made by Councilor Palmer and seconded for the Committee to go into executive session for a land disposition matter on Telcom Drive. 8. Discussion and Action Associated with Land Disposition on Telcom Drive -- Grotto Bay Realty Trust. The Committee came out of executive session. A Motion was made by Councilor Palmer and seconded to approve Telcom Drive/Grotto Bay Realty Trust. The meeting adjourned. � , 7