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HomeMy WebLinkAbout2002-04-16 Business and Economic Development Committee Minutes Business and Economic Development Committee � April 16, 2002 Minutes Councilor Attendance: Palmer, Nealley, Farrington, Allen, Tremble Staff Attendance: Barrett, Daniels, Hupp, McKay, Dyer, Little, D'Errico, Olson, Wellington Others: Buckley, Ziegelaar, T. Allen 1. Consent Agenda A motion was made and seconded to accept the Consent Agenda. a. Exchange Street - Amendment to Downtown Parking Management District to change spaces 2236 and 2207A from one-hour parking to handicap parking, and to change space 2201 from handicap parking to one-hour parking. Reference Council item 02-167. b. Park Street - Amendment to Downtown Parking Management District to change pace 1722 from one-hour to handicap parking. Reference Council • item 02-168. c. Authorization to submit and accept a proposal under the Small Community Air Service Development Pilot Program. 2. Bangor International Airport Report. -Telford Aviation Bob Ziegelaar of Telford Aviation was present to discuss their plans and programs with the Council. Hupp indicated in July of 2001 the City and the Airport set aside funding to rehabilitate Hangar 1. Administratively, the Council did not formally enter into an agreement with Telford, which needs to be taken care of. Ziegelaar provided an overview of the company using an overhead projector. Telford went through corporate restructuring a few years back calling itself Telford Group, and Ziegelaar described each component of the group and its responsibilities. Telford is the fourth largest operator of its kind in the country. Telford has grown from a $20M to a $50M company in one year. Nealley commended Telford for its great success stories in terms of the business growth and revenue generation and asked about the strong margin areas. Allen indicated it would be in parts. Tremble asked about Hangar 1. Ziegelaar said the � project has proceeded fairly well. He mentioned setting up a Council visit of the • site. The Code and Fire Departments have determined code issues at the site which are being handled in the area of sprinkler systems and a firewall. $200,000 had been earmarked for the project and is funded through Telford's lease payment for the facility. The rent is allowed to be applied to the building renovations. Ziegelaar felt it would be closer to $280,000. Hupp added that the $200,000 is on a 80% ratio. Tremble asked about the planned usage of the expansion. Ziegelaar said the first addition was a warehouse and this addition will be a mirror image but used to hold more aircraft. Palmer asked about the 300 planes being held on the ground for parts, and Ziegelaar said that when Telford acquired the operation at Mojave there were 75 airplanes for parts. After September 11, that area of business accelerated. Many of the planes are being parked there on a temporary basis, and Telford provides the maintenance. Palmer asked if the City of Bangor's name could be showcased in any of Telford's marketing. Ziegelaar felt that given Telford's business in a lot of sectors of the aviation business couldn't but help but to promote Bangor. Ziegelaar indicated there were joint marketing efforts that could be undertaken by BIA and Telford particularly on the military side but also on the commercial side. Palmer asked if there were ways for Telford to market itself to the average person on the street. Barrett discussed the agreement that covers the work at hangar 1. Council has set aside the funding in an earlier action but the actual agreement needs • approval. Hupp had previously issued a memo to the Council outlining the details of the agreement. Barrett indicated there had been some confusion as the funds had been set aside, the terms of the agreement approved, but had not formally acted to execute the formal agreement, which was drawn up by the City Solicitor. Tremble asked if the $200,000 referenced in Section 8 of the agreement needed to be amended to reflect the additional funds needed. Hupp suggested that the agreement be approved and then she will bring an amended agreement to the Council when a formal estimate is provided on the cost of the additional renovations. A motion was made and seconded to approve the agreement. The item will be referred to the full Council and will be included on their April 22"d agenda. Barrett asked the number of local employees, and Ziegelaar indicated 250 in the Telford Group and 140 at the Bangor location. Telford originally started with 30- 40 employees at its initial inception. Daniels asked if the current crews would be used with the expansion and addition of aircraft. Allen thought they would bring in subcontractors and roll them into permanent employees with a conservative average of 10. Barrett said that despite cash flow issues with the Department of Defense that Telford's presence in Bangor has been positive. Ziegelaar estimated that $20M of business is generated by Telford annually and mainly in • Bangor. � -Air service development proposals (Northwest/American Eagle) Hupp and Russell have met with Northeast Airlines regarding Bangor's proposal for Detroit service. Because of the September iith events, Northeast does not have Bangor on its immediate list for expansion. American Eagle will be flying from another New England city to Chicago. Staff has asked the Congressional Delegation to formally request American Eagle to initiate service to Chicago from BIA. In response to Tremble, Hupp indicated that the marketing proposals are produced by Global Aviation Associates and BIA is charged for each proposal at approximately $10,000-$15,000. Tremble asked if analysis is performed prior to asking for GAA to perform a marketing proposal. Hupp said that the Airport staff has identified certain key cities that could reasonably be expected for service initiation from BIA. Two proposals are budgeted annually and sometimes updates are provided. Farrington noted that Envisionet was part of the marketing proposal. Farrington asked why the MSA (metropolitan statistical area) numbers differ in the Airport marketing proposal and the MDOT information, and Barrett indicated that the MSA is the 13 immediate communities that are part of Bangor's federally designated census area and a population of 85,000. The MDOT figures may not be correct. Nealley asked how much information changes from proposal to proposal from year to year. Hupp indicated it is significant � because of change in airline schedules and pricing structure. -Runway funding update Hupp said that BIA is scheduled to received $5M in DOD funding and $2.3M in entitlement funding through the Airport Improvement Program through the FAA. At this point, the discretionary funding that has been allocated for $2.3M by the FAA. Post September 11t", the funding and priorities have changed and the FAA is holding discretionary funding to pay for security projects. BIA will be receiving the funding but the date is not certain. Lane Construction is the low bidder for the project and it will be brought to the Finance Committee for award of bid and then to full Council for approval. Hupp indicated that some international traffic would be lost during the construction time. The first phase will be during daytime hours and the runway will be open. One end will be closed and reopened and then the other end will be closed and then the final phase will be closing the middle and it will be closed during nighttime hours. The runway will be able to be reopened with a fifteen-minute prior notice. The existing runway is over 40 years old and, with the renovations, it will have a life expectancy of 20 years. -Passenger statistics for March • Hupp reviewed the statistics for March a 6.3% increase over March of 2001. The statistical information was included in the Committee's agenda packet. Tremble � asked about a previously distributed report which included cargo numbers, enplanements and deplanements. Hupp indicated the information could be obtained and reported. Palmer asked if BIA tracked its record with nation wide statistics and Portland's, and Daniels said it would be provided. -Discussion on Airport Receivables Hupp addressed Council concerns about charging interest on over year receivables City wide. BIA staff has been taking a more pro-active approach with two of its tenants. Agreements are in place and the tenants are adhering to their agreements. Tremble indicated that charging interest is the best way to go for the City to eliminate no interest loans. Barrett said there is a new computer program which can compute interest and interest is being charged on taxes. The Finance Director and staff will establish a policy for handling the interest on receivables. One of the issues at BIA is the balance of collecting money and charging interest as opposed to getting people coming to BIA. The customer mix needs to be looked at because BIA is not an end point destination so as not to lose business. Tremble stressed the need to be fair and equitable to all involved. Barrett agreed but, due to competition, the policy should recognize the realities of the specifics of the location. Palmer agreed that taxpayers should be looked at in a different way. Farrington agreed there is a difference between taxpayers � and tenants. He asked if it made sense to give a discount to those who pay early and Barrett agreed depending on the operation. The policy has to be established so as not to impair the revenue flow. Discounts on the general fund would have to be budgeted for annually. City Treasurer said that if interest is to be charged that he felt it should on enterprise funds receivables because these funds are a business. Hupp said that BIA does recognize that the airlines very rarely pay within 30 days and perhaps even 90 days and the airport services are priced accordingly. Frequently, when interest is charged, the airlines will not pay it so it ends up being written off by the Airport. Hupp suggested that airport staff come back to Council with a recommended time to start charging interest. Nealley said that unless there are other airports of Bangor's size that are able to charge interest he felt it unlikely that BIA would be able to institute a policy and would end up writing off the late payment fees. He agreed that building time cost into the original fees makes sense. Daniels said that BIA is in the mix of dealing with small businesses and in upcoming research should indicate what the mix is, the level at which some airports do not feel comfortable in charging interest, and he will come back to the committee within the next couple of weeks with the industry standard. Hupp indicated it would be difficult to find airports with which to compare BIA to. Tremble asked for information to include the top five tenants and receivables. Palmer asked who follows up on the collection process. In collections, Hupp indicated that BIA is in a much better position that it was three months ago and she feels comfortable with the tenants who are � behind in the rental payment or landing fees. A payment program has been � established and the two companies who have the largest receivable balance have payment programs and are sticking to them. One airport employee is responsible to deal with receivables. Hupp said she would answer Council question on specific tenants out of the committee meeting setting. Nealley talked about anticipation discounts. Barrett said the issue is do we want the airline and do we want to take the risk. Hupp said there are certain airlines to which BIA does not extend credit and are on a cash basis only. Tremble asked if airline and tenant financial records were a public record, and Hupp indicated yes. Barrett stressed that discretion needs to be used in this area as it could be damaging. -Otherissues Hupp indicated there is a legal issue with National Car Rental but it can be moved to an upcoming agenda. 3. Discussion and review of marketing/advertising program Palmer asked for an update from Bass Park. Dyer said that American Free Rocks concert attracted 150 attendees so would be an issue in terms of receivables. The Garden Show did very well and the Patriot's event was more than what � anyone expected. Total attendance at the Garden Show was down a bit but ticket price was up so should have a good financial report. Upcoming events are The Home Show and The Shrine Circus. Palmer thanked staff involved with the Patriot event. Daniels talked about developing a marketing/advertising program. He indicated some ads would be forthcoming in a few weeks. One will appear in the Bangor Daily News Perspectus and one in Interface Business Journal. One of the issues is how to integrate the marketing and advertising. BFT has done a fantastic job in advertising BIA and has done away with some of the misconceptions on pricing issues. Daniels would like to be able to build upon the momentum of the Airport's advertising down through Bass Park and Economic Development. A lot of costs associated with 2002-03 fiscal years costs will be covered by utilizing the approximately $40,000 and is critical to getting the identify created and the first few ads done. Discussion turned to the interactive television component of marketing and advertising. Daniels referenced the system that EMDC has in place and works well. Nealley stressed the need of consistency without redundancy. Allen asked about marketing the existing Bass Park. Barrett suggested maintaining what is necessary for the on-going marketing more on an individual basis. The BCVB does some marketing for the area that • includes Bass Park. The community and the area need to be sold on the need to replace the facility. Hupp indicated that the City of Bangor is well promoted • through the airport market'ing and airport business contacts. RFP will be going out within the next week and should be back to the committee by the middle of May. $95,000 has been included in the FY03 budget for marketing. $20,000 will be encumbered through Community and Economic Development. Farrington discussed the di�cult budget year ahead. Allen asked if there was a game plan in mind for upcoming three years. Daniels said that the initial dollars need to be spent and in future years the allocation could be a smaller amount. Nealley felt it is time to fund marketing for the City to continue to insure a strong airport, strong economic development, and raise the awareness of the importance of Bass Park as an amenity. Barrett stressed the importance of integrating the City's efforts with the Greater Bangor Area Development Alliance, which has $125,000 to market for economic development. Palmer asked that future marketing agenda items be placed first on the agenda. � �