Preliminary Agenda set for December 12, 2012 Savannah Airport Commission Meeting

December 10th, 2012

SAVANNAH AIRPORT COMMISSION

December 12, 2012

1.                Call to Order by Chairman Formey

2.                Approve Minutes of Previous Meeting – November 7, 2012

3.                Recognition of Visitors

4.                Dale Carnegie Course - Highest Award for Achievement

5.                First in Service Award(s):                        Barbara Bowles, HMS Host

6.                Length of Service Award(s):                    Scotty Fuller - 5 years

David Switzer - 20 years

Jan Power - 5 years

CONTRACTS AND AGREEMENTS

1.                Approve 2013 Budget. The Savannah Airport Commissioners and Staff met on Tuesday, December 4, 2012 for the 2013 Budget Workshop. Total revenues Budgeted for 2013 are $24,624,791. Total expenses Budgeted for 2013 are $18,358,354. Budget 2013 net income is $6,266,437. The staff recommends approval of the 2013 Budget.

2.                Approve Proposed Foreign Trade Zone Designation with Hyosung USA, Inc. Hyosung USA, Inc., a Delaware corporation (“Hyosung” or the “Company”) is seeking designation of our distribution facilities as part of the general purpose Foreign-Trade Zone (“FTZ”) No. 104, under the Savannah Airport Commission’s (“Grantee”) Alternative Site Framework (“ASF”) structure. Herein, the Hyosung’s distribution facilities are referred to as “the proposed FTZ”.

The address of the buildings comprising the proposed FTZ is 200 Expansion Blvd. Port Wentworth, GA 31407.  As stated in FTZ Board Order No. 1736 (January 27, 2011), the ASF Service Area for the Savannah Airport Commission, the Grantee of Foreign- Trade Zone No. 104, is defined to include the following counties in Georgia:  Bulloch, Bryan, Chatham, Effingham, Evans, Liberty, Long and Screven Counties. The land area of the proposed FTZ is 6.5427 acres. This acreage includes the two buildings referenced above.  Both buildings are zoned M2- Industrial.

Hyosung’s products consist of steel tire cord and tire cord fabric. At the FTZ, Hyosung plans to receive, handle and distribute both foreign-sourced and domestic merchandise under FTZ procedures. Typical activities at the proposed FTZ include: general distribution operations such as receiving, inspection, quantity verification, sorting, warehousing, packing, packaging, re-ticketing, re-labeling and shipment of merchandise. Hyosung is not seeking FTZ manufacturing authority at this site.

3.                Execute Amendment No. Two to Land Lease Agreement with Associated Transport, Inc. In anticipation of the possible land lease under negotiations with NoPetro, which will be located in the corner of property currently leased to Associated Transport, Associated Transport was notified in June 2012 that their agreement would not be renewed under the same terms and conditions upon its termination date of September 30, 2012. As negotiations with NoPetro are still in process and the exact amount of land that will be deducted from Associated Transport’s land lease is still unconfirmed, an amendment has been drafted for Associated Transport to change the term of their land lease agreement to a month-to-month term. When NoPetro has finalized their plans and drawings, we will be able to adjust the size of the leased parcel to Associated Transport without waiting for their annual lease renewal date.

4.                Execute new Space Lease Agreement with Federal Express. Federal Express has leased two bays in the Air Cargo Building, exterior ramp space, storage space, and maintenance space since 1982. The final extension on this original lease agreement ended on September 30, 2012. A new lease agreement has been drafted which will increase their rates for ramp space incrementally over the next five years to a new total rate of $0.50 per sq. foot. These annual increases calculate to approximately 3.5% increase per year. The new lease will become effective as of October 1, 2012, and will terminate September 30, 2017, with automatic annual renewals thereafter.

5.                Execute Amendment No. Two to New Space Lease with DHL, INC. DHL has requested to renew their Space Lease Agreement for approximately 9,961 sq. ft. of bay space in the Air Cargo Building, plus 5,229 sq. ft. of loading dock area and 41,115 sq. ft. of ramp space. The rent for their bays will increase with this agreement from their current rate of $6.00 per sq. ft. up to $8.00 per sq. ft., matching the rates now charged to other tenants of the Air Cargo Building. The ramp space leased by DHL was previously charged at $0.18 per sq. ft., a rate that had not escalated in keeping with standard rental rate increases since prior to 1997. The amendment will increase the term for an additional three years with two annual options to renew thereafter.  The new monthly rental rate commencing December 1, 2012, will be $6,715.89.

6.                Terminate Land Lease Agreement with Avis Rent A Car. Avis and Budget Rental Car agencies merged into one corporate unit several years ago, at which time they consolidated their operations at this airport into one ticket counter. Avis and Budget each hold land leases for their individual service centers, which were constructed on Ida J. Gadsden Drive. The staff has approached Avis Rent A Car to determine if they would be willing to relinquish their land lease for the Avis service center, since they seldom use this facility. Avis has indicated that they would be receptive to an offer from the Commission to release the service facility early (termination date for the facility is May 2014, at which time the building reverts to Commission ownership).

To calculate a fair and reasonable offer to propose to Avis, Staff determined that Avis would save 18 months of rent charges (December 2012 through May 1, 2014) in the amount of $34,786.98. In addition, they would no longer be required to pay ad valorem taxes to the City and County for 2013 and half of 2014, saving them an additional amount of approximately $4,383.43. The total savings computes to approximately $39,170.40.

The Commission participated in the original construction of this facility by contributing 50% of the construction cost, which Staff has determined equals approximately $232,983.54 (Commission’s 50% share). Dividing that cost by the 20-year lease term means the cost per year is $11,649.18. With approximately two years left on the lease term, the estimated sales price of the building has been determined to be $23,298.

Total Savings:                        $39,170.40

Plus Building Sales Price:       $23,298.00

Total Benefit to Avis:             $62,468.40

 

Staff requests that the Commission approve and authorize the purchase of the Avis Service Facility Building for $23,298.

7.                Approve New Policy for Establishing Rental Rates on Reversion Properties Building/Facility Reversion Policy.

1)                  The Commission shall authorize appraisals of buildings/facilities approximately six months prior to the lease termination. Appraisals will then be performed every five (5) years thereafter with rental rates adjusted accordingly.

2)                  For the existing leaseholder who remains in the facility after reversion, the rent shall be calculated at 50% of the Fair Market Value (FMV), provided that the existing leaseholder shall have been the owner of the facility for a minimum of ten (10) years prior to lease termination, and provided that, after reversion or within five (5) years prior to reversion, existing leaseholder does not sublease more than 75% of the facility.

3)                  Existing leaseholder may continue to sublease the facility to sublessees who have been sub-tenants for at least five (5) years prior to lease termination/reversion under their existing sub-lease terms. The Executive Director reserves the right to amend or remove this provision at his discretion.

4)                  For a new leaseholder who rents the facility from the Commission after reversion where the original or existing tenant has relinquished the property to the Commission, the rent shall be calculated at full Fair Market Value.

5)                  The initial new term of the lease will be negotiated with the tenant.

6)                  Buildings and other facilities that revert to Commission ownership will be inspected five (5) years prior to termination date. Existing owner/tenants will be notified of maintenance or repairs in order to bring the structure up to current Airport standards prior to termination of the land lease.

7)                  Buildings, hangars and other facilities reverting to Commission ownership will be re-inspected approximately one (1) year prior to termination of land lease, and owners will receive notification of any repairs or maintenance items that remain incomplete in order to bring structure or facility up to current Airport standards.

8.                Approve Policy on Commission acceptance of Debit/Credit Card Payments. An increasing number of tenants and other airport customers have requested the ability to pay invoices or other charges to the Commission with credit or debit cards. Acceptance of credit cards for such payments results in an additional expense to the Commission which varies among the different credit card providers. Staff is requesting that a new policy be initiated, effective January 1, 2013, allowing the addition of a 3.5% Convenience Fee to be charged to all such payments, excluding those payments made at the Parking Deck or the Post Office.

9.                Approve Assignment and Assumption and Comfort Letter Dhari, Inc., dba Hawthorn Suites. Dhari, Inc. is requesting an Assignment and Assumption to transfer the land lease for the Hawthorn Suites hotel to a new corporate entity. They are in the process of changing the flag on the hotel from Hawthorn Suites to Hyatt Place, which will also require refinancing of their loan with a new bank. In addition, they will be adding major upgrades and renovations to the existing facility to bring it up to Hyatt standards and to enhance their competitive edge.

10.            Approve Pipemaker’s Canal Cable Relocation Funding in the amount of $50,000. The Pipemaker's Canal Relocation Project consists of widening the canal and realigning a section of it on Airport property which will help with drainage and satisfy Federal Aviation Administration (FAA) safety requirements regarding Taxiway Object Free Area distances, respectively. This Chatham County project also includes the removal of an old wooden Aircraft Rescue and Fire Fighting (ARFF) bridge which was replaced several years ago with a concrete bridge. There are FAA Medium Intensity Approach Lighting System (MALSR) cables affixed to the wooden bridge which need to be relocated to the new bridge prior to widening the canal. Work has already begun on the realignment phase of the project and the contractor anticipates moving forward with removal of the wooden bridge within the next few weeks. We are currently in negotiations with contractors for the cable relocation and would like to request approval of funding in an amount not to exceed $50,000 to complete the work. Funding for this project will be included in PFC application No. 10.

MISCELLANEOUS

1.                Calendar of Upcoming Events

Dec 12

5:00 – 8:00 pm

SAC Holiday Reception

Morris Center

Jan 9

9:00 am

SAC Meeting

Jan 31

 

Savannah Chatham Day

Atlanta

Feb 6

9:00 am

SAC Meeting

Mar 6

9:00 am

SAC Meeting

Mar 20-21

 

ACI-NA/AAAE Legislative Conference

Washington

2.                Executive Session – Personnel and Potential Litigation

3.                Adjourn