Loading...
HomeMy WebLinkAbout2002-10-08 Business and Economic Development Committee Minutes � BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE TUESDAY, October 8, 2002 Meeting Minutes Councilors Attending: Frank Farrington, 7oe Baldacci, David Nealley, Gerry Palmer, John Rohman Staff Attending: Ed Barrett, Jonathan Daniels, Mike Dyer, Stan Moses, Chief Cammack, Rebecca Hupp Others Attending: Ken Buckley Meeting convened at 5:05 p.m. i. Consent Agenda a. Residential Rehabilitation Loan — 93 Seventh Street. A $12,919 loan primarily for the replacement of windows, exterior painting and bathroom � repair. b. Lease with Downeast Harness Horseman's Association — Five-month lease at $100.00/month in consideration of leasing Barn F located at the Bass Park Complex. The committee approved the consent agenda. 2. Bangor International Airport Report. a. Comair Maintenance Contract. The airport provides routine maintenance for Comair Airlines under a contract agreement. Hupp presented a proposed one-year contract for committee ratification. This contract is beneficial to the airport, because it provides an additional revenue stream, $29,000 in 2001. Nealley asked if this contract could be affected by the airline's potential negative financial situation. Hupp replied that it should not be affected, due to the flat fee charge, and staff is only called in to cover services if needed. Barrett said that this makes it easier for certain carriers to operate, since they do not have their own maintenance personnel. It makes it easier for us to meet the needs of the airport. � � The committee approved the contract. 3. Amendment of lease with Dorks R Us to permit construction of a freezer unit. The Ground Round restaurant has requested that the City execute a lease amendment to permit the construction of a freezer and incorporate at 10-foot strip of land into the currently leased area. The committee approved the amendment, and to send it to full council. Councilor Tremble arrived to the meeting. 4. Discussion on City of Bangor departments providing services to outside entities. Daniels said that this resulted from a newspaper article regarding an issue in Houlton, Maine, where the Airport was involved in a bid for services for the runway. The State contacted the Airport in 1998 when they learned that the Airport had the equipment to do runway painting, and requested that they get involved in assisting other airports with this service. Since then, the Airport has � been contacted on at least five occasions to provide a quote for runway painting. This has given the Airport another source of revenue, and has provided more expertise for the crew. In regards to Houlton, the administration of Houlton contacted the Bangor International Airport at the behest of the State of Maine Department of Transportation about going into Houlton and engaging in this service again. Airport staff sent in a quote, and they lost the bid. Then they were requested to submit another quote. They were awarded a contract based on a bid that was $4-5,000 lower than the next bid. It was then that the Bangor City Councilors were contacted by one of the other contractors, who felt that it was unfair that the Airport was competing against private contractors. Daniels noted that this issue reaches beyond the Airport, to other areas of the City that may contract out their services in competition with private services. The Houlton bid is on hold at the moment, pending council action. Rohman asked about the other five occasions that have occurred since 1998, were they competitive bid processes? Hupp noted that they were for services to Augusta, Old Town, Princeton, Lewiston-Auburn and Frenchville. Tremble said that his understanding was that this was the fifth or sixth time this has happened this year. Daniels said that this was the first time this year. Tremble asked if the town of Houlton would be willing to release us from the bid. Hupp said that Houlton would like the Airport to do the work for them, because of our expertise and the lower cost. Hupp said that the Airport is an enterprise department and is not funded or � subsidized by tax dollars, therefore we do not have an unfair advantage. Nealley � said to some extent, the Airport is subsidized, because of the land that was � gifted back for a $1 by the FAA, which is land that the Airport has an income , stream. Hupp said the reason the Airport was deeded that land, with that restriction from the FAA, is that the Airport also inherited a significant operating burden in maintaining the airfield. No airport the size of Bangor can be self- sufficient economically, solely on airport revenue. Daniels said that aeronautical revenues account for only 52% of the revenues. Nealley asked at what point would we draw the line at contracting out our City employees for services in the private sector. He said that helping out another community is different than competing in a bid process. Tremble said that expenses that a business would pay such as excise taxes for vehicles, are not the same type of expenses that the Airport would be required to pay, therefore the Airport does have an advantage. Baldacci said that we should go forward with the Houlton bid, because we entered into a contractual agreement. Baldacci said that he doesn't have a problem with this issue because the Airport is an enterprise fund, and the service requires a specialized knowledge for which we are assisting another community. If we have to revise our policies about dealing with the private sector, then we should do so, but not hold up this particular bid process. Rohman agrees with Baldacci, due to the enterprise fund situation. Farrington said that Baldacci's point is very good, but it is Houlton's decision whether to use a public or private entity. He said if we expect the Airport to run as a business, then it is to our � peril to take away the revenue generating opportunities that could put us in competition with the private sector. Rohman asked what our ultimate goal is. Barrett suggested that we go ahead with this bid, and in the future give a price if we are the only bidder for a project. Rohman asked if we should establish a policy for the future bid processes. Barrett said he would need time to think through the situation. Palmer said that this type of revenue was never discussed on any Airport committee that he was involved in, and agrees that we need to have a policy. Barrett noted that MDOT was interested in this because they eventually foot the bill for this service, and they may buy equipment for Presque Isle to use to service the county. Barrett said if this is something we have done 5 times in 5 years, that he didn't want to spend any more time on it and let's just make a policy that if we're asked we put in a price with the caveat that it's only if there is no private sector parry that is willing or able to do it. Barrett is considering having the Airport do some street painting, because we can't get our streets painted in a timely manner. Barrett said that this type of situation has happened with the Airport, the Fire Dept., and Bass Park. Heitmann noted that we are not covered by insurance for this project and would need to obtain it before proceeding with the project. • The committee approved this item to full council. � Hupp apologized for the Council being caught by surprise concerning this issue, and that since this was a routine issue for the Airport, she was not aware that Council did not know about it. The vote was doubted by Palmer, and then passed by a vote of 4-1. 5. Discussion of policy on sale of leased land. Barrett presented a proposed revision of the policy on sale of leased land. The new policy has a couple of new requirements, the first is for the City to consider selling leased land, the value of the property must be in excess of $350,000, and is consistent with the overall City development plans for the area in which it is located. In cases where this value is lower than $350,000, the city will consider the sale if the lessee agrees to improve or intensify the development on the property to this level. The second suggestion concerns how we figure out what the charge for the property. The options are fair market value, an amount which would allow us to recover what we anticipate receiving in leases over a 20 year period, for which the amounts would be invested, or to allow us to recover what we anticipate receiving in leases over a 40 year period, with the amounts being invested to permit annual on-going revenues beyond 40 equal to the estimated • annual lease payment anticipated in year forty. At the end of the 20 or 40-year period, we would remove the same amount received in the lease, and we would still have the principal in the account to continue the payment every year thereafter. Nealley asked about an imaginary line around the airport that the City needed to maintain property. Barrett replied that because of FAA requirements, property between the Airport and Maine Avenue could not be sold. Baldacci asked if the $350,000 per acre is an arbitrary number, and five years from now it should be adjusted. Barrett said that it is adjusted annually, and we have the option to review and adjust periodically. Baldacci said that the appraisal for option A, is almost twice the assessed property value, to which Barrett replied that he would need to speak with the City Assessor concerning this. Baldacci said that option B is the best due to the City getting a stream of income for at least 20 years, and a premium over and above the appraised value. Tremble said that as far as the issue of fairness, that the City is being more than fair, in even considering selling these properties, and that the key is to maintain the revenue flow for the Airport. Farrington clarified that the enterprise fund revenue goes to the Airport, and wanted to know where the taxes go. Barrett replied that the taxes go to the City. Farrington said that if we sell the land, receive taxes, then the Airport loses income generation and needs to make up the revenue. He is concerned with the Airport losing too much revenue over the years. Barrett clarified that the City � has from time to time subsidized the Airport, but has not had to do so for � approximately 15 years. We have continued to operate the Airport from reserves of interest on Airport funds, therefore, the City has not used tax money to subsidize the Airport. Due to the volatility of the airline industry, we can not rely solely on this revenue for the Airport. Daniels noted that revenue from leases account for 7% of the budget. The 40- year mark is the level at which the leases would be and the revenue that we would be generating from the leases will match the amount coming out on an interest basis. Rohman clarified that this was option C. Nealley moved to accept option B, and Baldacci seconded the motion. Baldacci asked if we adopted this policy that it applies to property that has already been built. Barrett said that we could clarify this in the graph with an as of date. Barrett said from the point of view of the City, at the end of 20 years, the City owns the land and the building if the company does not extend their lease. Farrington doubted the motion, stating that it was at our peril and the Airport's peril if we did not go with option C. He agreed that option B was a better deal � for the buyer, however, as the '�seller" he had to go with option C. Tremble stated that he wanted everyone on the list to receive a copy of the policy so that they are aware of the option to purchase their properly. He strongly supported Farrington's doubt of the motion, even though he does not get a vote. The committee voted 3-2 to send option B to the full council. 6. Executive Session — Negotiations for Tentative Developer Status for Development of Lots 15 & 16, Maine Business Enterprise Park— Chad Walton. 7. Discussion on Negotiations for Tentative Developer Status for Development of Lots 15 & 16, Maine Business Enterprise Park—Chad Walton. Decision to authorize tentative developer status to Chad Walton. Nealley asked to reconsider the vote for the policy on leasing. The committee voted 4-1 to send option C to the full council. � The meeting adjourned at 6:35 p.m.