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HomeMy WebLinkAboutIR 7709 INFORMAL REPORT TO CITY COUNCIL MEMBERS No.— 7709 To the Mayor and Members of the City Council Subject: MANAGEMENT OF AIJDANCE AIRPORT Acting on a recommendation from the Privatization Committee, the City Council requested staff to pursue the possibility of contracting out the management of Alliance Airport. On December 14, 1992, the City issued a Request for Bids (RFB) for the maintenance, operation and management of Fort Worth Alliance Airport. The RFB included the following: ♦ Bidders were invited to submit a bid on the performance of all management, operation and maintenance services, employment of personnel and acquisition of equipment necessary to fulfill the responsibilities detailed in the Management Agreement. • The selected bidder will be given an option to lease a parcel or parcels of land at the Airport for the provision of Fixed Base Operations and other aeronautical activities at the Airport. A All bids submitted shall conform to the "City-wide Disadvantaged Business Enterprise Policy". • Bidders were required to state the percentage of the total Airport revenue to be retained by the City. A A qualified/responsible bidder is defined as a firm, firms, or firm's top management team that has a minimum of five years of positive, successful experience in airport management covering all functions, duties, and obligations set forth in the Management Agreement of Airports with levels of activity and operations equivalent to or larger than that of Alliance Airport. A The City of Fort Worth shall determine the lowest bid by applying the proposed percentage of gross revenue in each bid to the Alliance Airport Revenue Projections for the years from 1993 through 2009. The bid that will generate the greatest amount of total revenue to the City for the years 1993 through 2009 will be considered the lowest bid. OFFICIAL RECORD CITY SECRETARY FL WORTH, TEX. ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7709 T To the Mayor and Members of the City Council 1873 Subject: MANAGEMENT OF ALLIANCE AIRPORT Page 2 of 4 The City received one bid in response to the RFB which was submitted by Pinnacle Air Services, Inc. The City's staff has reviewed Pinnacle's bid and has determined that it is a responsive bid. Pinnacle's bid proposes that the City retain fifty percent (50%) of the Airport's annual gross revenue in excess of $1.5 million. Attachment "A" of this report outlines the revenue sharing tabulation of the bid. Attachment "B" is the Expense Budget proposed by Pinnacle in this bid. Attached to the RFB was the Management Agreement which would be entered into between the City and the selected bidder. An Executive Summary and the full Management Agreement is provided as Attachment "C" of this report. The Management Agreement provided the operator a non-assignable ground lease option for designated parcels at the Airport. The proposed Master Lease Agreement and Executive Summary is provided as Attachment "D" of this report. The operator may negotiate with the City the terms of the Master Lease Agreement. The Aviation Advisory Board in reviewing the bid from Pinnacle Air Services, requested the staff to present a ten-year revenue and expenditure estimate assuming the Aviation Department retained management of the Airport. These estimates are provided in Attachment "E" of this report. In making these estimates, several assumptions were made which are foot noted in the attachment. After considering staffs revenue and expenditure estimates and after much discussion, the Advisory Board voted unanimously (6-0) to recommend to the City Council that Pinnacle's bid to manage Alliance Airport be rejected. The Advisory Board has prepared a report on their recommendation. The City of Fort Worth's Aviation System, with its three different airports, can address the diverse needs of the aviation community. It is of utmost importance that Alliance Airport always be operated as part of the City's Aviation System. The proposed Management Agreement does not prohibit Alliance Airport to be operated as part of the System. Under the 0"111 proposed Management Agreement,the City Council retains the authority to set -dAEdK-ffnd fees, approve leases and access permits, and establish mini i L regulations. Imehr CITY SECRETARY — ISSUED BY THE CITY MANAGER F RA AS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7709 &xRTIEN"'o Ag,A To the Mayor and Members of the City Council Subject: MANAGEMENT OF ALLIANCE AIRPORT Page 3 of 4 Alliance Airport like the City's two other airports serves a particular role. Because of its design, (approximately 16.5 acres of land to be developed) Alliance will only have limited facilities on the Airport. The concept of Alliance Airport was to be a catalyst for much needed industrial and commercial development in the Alliance corridor. Taxiway "H", the proposed runway extension and taxiways which will be built in the future are all intended to promote high quality development around the Airport. To be able to attract quality development, the City cannot afford to simply maintain Alliance at a minimum standard. Alliance Airport must be maintained at a high enough standard that it will be attractive to businesses which will increase our industrial and commercial tax base and create jobs. In the past, tight budgets have caused the City to cut back on personnel and expenditures. The Aviation Department has contributed to the City's reductions. As a result, the City's airports have experienced deferred maintenance and delayed improvements on the airports. These actions have had a negative impact on the operation of the airports. In order to ensure the full development of the Alliance area, maintenance of the Alliance Airport should not be sacrificed even during tight budgets. The proposed Management Agreement with Pinnacle Air Services will immediately eliminate the City's subsidy to the operation of Alliance Airport. Additionally,the agreement places an operator managing Alliance that has the financial interest to make sure that Alliance Airport is maintained at a high enough standard which will be an attraction for development. The proposed operator and its various affiliates have the financial capability and commitment to operate and maintain Alliance Airport. The biggest value of Alliance Airport to the City is not in the amount of profit which can be generated from the operation of the airport. The real value of Alliance is in the industrial development and the increase in the non- resident tax base that will occur as a result of Alliance being operated as a world class airport. American Airlines Maintenance Facility, Drug Enforcement Administration, Ishida Aerospace Research,Nestle Company, and the Santa Fe Railway facilities are examples of the success of the Alliance project. Now is not the time to just look at profit from airport operations, but instead how best can the City ensure a quick and complet o irk rent of Alliance Center, Alliance Gateway and the lEllwood/Park GI effFMAIt"IRORD CITY SECRETARY ISSUED BY THE CITY MANAGER ALTO%,IQAP INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7709 GNpRTEHFO >� To the Mayor and Members of the City Council xps Subject: TST3 MANAGEMENT OF ALLIANCE AIRPORT Page 4 of 4 Staff is of the opinion that the Alliance area will reach full development quickest if the airport has the financial commitment to be operated at a high standard. Therefore, staff recommends that the City Council accept the bid submitted by Pinnacle Air Services, Inc. to operate, maintain, and manage Alliance Airport. Unless otherwise directed, an M&C will be placed on the April 13, 1993 City Council agenda with the above mentioned recommendation. Bob Terrell City Manager OFFICIAL RECORD CITY SECRETARY FT. WORTH, TEX. ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS