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HomeMy WebLinkAbout02/02/1999 Study Session Minutes· · FEBRUARY 2, 1999 II. PLACE AND DATE Marana Town Hall, February 2, 1999 CALL TO ORDER By Mayor Ora Ham at 5:33 P.M. PLEDGE OF ALLEGIANCE Led by Mayor Ora Ham IlL ROLL CALL IV. COUNCIL Ora Ham Bobby Sutton, Jr~ Ed Honea Herb Kal Sherry Millner Michael Reuwsaat Roxanne Ziegler Mayor Present Vice Mayor Present Council Member Present Council Member Present Council Member Present Council Member Excused Council Member Present STAFF Michael Hein Dan Hochuli Sandy Groseclose Jane Johnson Roy Cuaron Brad DeSpain Jerry Flannery Dick Gear Dave Atler Town Manager Town Attorney Town Clerk Human Resources Director Finance Director Utilities Director Development Services Administrator Community & Econ. DevL Administrator Public Works Director APPROVAL OF AGENDA A motion was made by Bobby Sutton, seconded by Sherry Millner, to approve the agenda, as written. The motion carried 5/0. GENERAL ORDER OF BUSINESS Discussion of Proposed Airport Lease and Transfer of Sponsorship Michael Hein congratulated Dan Hochuli, Town Attorney, and Dick Gear, Community & Economic Development Administrator, on their diligent efforts in bringing this important consideration before the Council. Dan Hochuli gave a brief overview of the legal description of the airport property divisions and parcels. Mr. Hochuli explained that portions of the property were public and shall remain public as they have been developed and I"1':11111'.'~1{¥ 2. I()~)~) maintained with grant funding. These portions cannot be leased. The remaining portions of the airport property is owned by Pima County and various parcels are subject to lease. Mr. Hochuli reviewed the existing leases and occupants of the airport property and explained that all leases were granted by and subject to Pima County, the land owner. He detailed several actions that must take place prior to completion of airport sponsorship transfer including executing a warranty deed with Pima County, FAA transfer of sponsorship to the Town of Marana and assignment of existing leases to the Town of Marana. Mr. Hochuli noted that as part of the agreement of the transfer the pending lawsuit between Pima County and Pima Aviation would end and be dismissed at the same time this sponsorship transfer occurred. Dick Gear presented the Council with an information packet and generally explained the projection figures contained in the packet. Mr. Gear said that having ownership of the Avra Valley airport will be like acquiring an $8 million facility with the front end costs at $206,000 to the Town of Marana at the time of closing with Pima County. Of these Town costs, 90% ($187,400) will be compensated by ADOT in a routine type grant funding. Mr. Gear stated that the static budget presented in the Council packet shows the best numbers for the operating budget at the airport based on the figures derived from Pima County's last four years' presentation of data. Roy Cuaron, Finance Director, had taken those numbers and arrived at the best average over those four years. Mayor Ham interrupted to add to the record that Councilperson Roxanne Ziegler had arrived at the Study Session. Time: 5:50 P.M. Dick Gear concluded that none of the revenue projection figures presented in the pro forma report to the Council included any new commercial and/or economic development outside of the airport property or along Avra Valley Road. Mayor Ham opened the discussion for questions from the Council regarding Mr. Gear's report. Vice Mayor Bobby Sutton questioned why the pro forma figures were not carried forward and Dick Gear replied that his revenue projections were conservative. Mr. Gear added that these business relationships in development have not been confirmed and would add unnecessary financial impact. Councilman Herb Kal questioned the small amount ($18,250) of revenue generated for assets on an $8 million property. Dick Gear noted that this figure was not being generated but was a cost to Marana for the ability to sublease the airport property and receive returns from the investors and developers building on the airport property. Michael Hein, Town Manager, pointed out that the current lease with Pima County was being amended and that Parcel 73 was new. A Request For Proposal (RFP) had gone out and the Abrams Family was the successful bidder. Mr. Hein stated that the Town was basically doubling the amount the Abrams were paying on the additional acreage. He added that the $8 million was an investment in the airport by the Abrams, not Pima County, and that the Abrams Family was paying the $18,205 for the right to lease the 73 acres and develop more assets onto the airport property. Councilman Kai asked if general, administrative, FICA and health costs had been included in the airpod budget. Dick Gear replied that an airport manager had been included in the budget at a salary of $40,000 with an additional $20,000 going for benefits and GNA. Mayor Ham urged the Council to present questions for the panel. Dan Hochuli pointed out the advantages of the Town master leasing the airport property versus leasing small plots to numerous businesses and acting as landlord. He stated that at the conclusion of the term of the lease every building on the 73 acre parcel would belong to the Town. Councilman Kal asked about the costly removal of old buildings after leases have expired. Dan Hochuli answered that there would be some costs accrued but the Town would also have other profit from the airport property that would offset those costs. Councilman Honea inquired about the various leases' terms and renewal options plus the Town's option to lease as Marana grows over the years. Dan Hochuli explained that the leases have differing expiration dates with some expiring as soon as 2006 and that not all of the leases have renewal option clauses. Dan Hochuli explained some of the possible long term strategy plans for the airport property and what the master plan for Avra Valley Airport may be in terms of police and fire substations. Dan Hochuli explained various provisions, compensation schedules, business privilege taxes and rent schedules of the lease document with Pima County. Councilman Kal inquired about the process of property valuation and taxation. Dan Hochuli responded that the airport property would belong to a municipality and was not taxable but that the structures and buildings were subject to personal property taxes. Mr. Hochuli added that the valuation of the airport would be arrived at by comparing it to similar airport properties. Councilman Honea questioned the percentage of responsibility in the event of an accident and how it would be determined whom to hold responsible or harmless. Dan Hochuli explained the leases mutual indemnification clause. Mayor Ham added that this was the reason an on-site Airport Manager had been included in the Town's budget and that there would be a maintenance schedule adhered to in order to keep abreast of any repairs such as runway lights, paving, etc., required. Dan Hochuli continued his presentation by briefly discussing the 5% revenue from the Avra Valley Airport property which includes a $.03 per gallon fuel fee and sales tax on top of that fee. Mr. Hochuli outlined some of the use of premise lease restrictions such as structure height restrictions, compliance with FAA regulations, and sub-lessee restrictions. Councilman Kal asked about public funding for improvements of the airport property and the Town's liability for expansions or improvements. Dan Hochuli explained that Marana would be responsible for the expansion of the public portion of the airport. He stated that most of the ADOT and FAA grant fundings cover 90% to 96% of the costs and the Town would be responsible for the remaining costs. He also added that if funding was not available then the Town was not obligated to make the improvements. Vice Mayor Sutton agreed with Councilman Kai's point and asked if the Town received the full value of the whole project after making the required contribution percentage. Dan Hochuli answered that was correct and there would be no shared equity. He sited an example of the Town making a $100,000 expenditure toward improvements to raise the value of the airport by $1 million. Dick Gear briefly discussed the fact that Pima County had applied for grants to handle fire suppression up to the boundary of the airport and that Cella Barr Associates, Inc. was conducting a study for the county to be completed in June 1999. Mr. Gear pointed out that within the boundary of the airport to service the hangars and infrastructure would be the responsibility of the lessee of the ground. Councilman Ed Honea requested information regarding a suitable water delivery system and if this system would be part of the municipal water system or operate on its own. Brad DeSpain, Marana Municipal Water Director, stated that when the water delivery system was annexed into the Town of Marana and within our Town limits it would become par~ of our certificated area. Mr. DeSpain added that Cella Bart was looking into all of the alternative water sources and that the water system would possibly interconnect at the appropriate time. Dan Hochuli continued the Study Session with comments stressing the importance of the business relationship between the Town of Marana and the master lessee. Mr. Hochuli stated that it will be mutually beneficial to work hard to settle any disagreements that arise. Councilman Herb Kal asked about the provisions for utilities to the airport property and if this was included in the budget. Dick Gear stated that it was not and that the budget presented was operational only. Dan Hochuli stated that this expense may be covered by grant funding but that some are the capital expenditures necessary for this project in the next few years. Mr. Hochuli stressed that the Town was not adopting the lease but merely telling Pima · FEBRUARY 2 , 1999 County that the lease was satisfactory to Marana with the revisions which he read into the record. He concluded by stating that he was pleased with the lease and recommended the Council adopt the lease. Mayor Ham asked the Abrams Family if they would like to address the Council at this time. Gary Abrams, Vice President of Pima Aviation and President of Tucson Aero Service Center, addressed the Mayor and Council and thanked them for the opportunity to work with Marana as a partner on this project. Mr. Abrams also commended the Marana Police Department and Town staff for a positive outlook and attitude toward the community. Vice Mayor Bobby Sutton asked about the pace the Abrams family was planning to take now that Marana was involved as a partner. Mr. Abrams stated that they were prepared to be very aggressive and at the same time allow the Town to decide if a project was within the Town's means, etc. Mayor Ham asked if there were additional questions of Mr. Abrams. There were none. VI. ADJOURNMENT A motion was made by Bobby Sutton, seconded by Ed Honea, to adjourn. The motion passed 6~0. Time: 6:58 P.M. CERTIFICATION I hereby certify that the foregoing minutes are the true and correct minutes of the Marana Town Council held on February 2,1999. I further certify that a quorum was present. - SANDRA L-.-~ROSECLOSE, TOWN CLERK