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HomeMy WebLinkAbout04/14/1997COUNCIL WORK SESSION April 14, 1997 5:45 p.m. Second Floor Conference Room Members present: Mayor Rooff, Jordan, Krizek, Murphy, Mollenhoff, Anders, Collier, Airport Commissioners Petersen, Heaton, Den Hartog. Members absent: Getty, Airport Commissioners Hoffman, Meyer. Moved by Murphy, seconded by Jordan to approve the agenda as proposed. Ayes: Six. Absent: Getty. Motion carried. Airport Commission Chairperson Bob Petersen reported on the bids received for the construction of a new hangar at the Airport. The low bid received from Prairie Construction was $713,000.00 which is higher than previous estimates. Financing the project will need to be changed to reflect this higher cost. Several items have been looked at for removal from the project to lower costs. Taking out the alternate for aluminum siding will save approximately $63,000.00 and the Commission has consensus to remove it. Other items which could be deleted have a lower cost benefit ratio. The removal of the parapet design will save $20,900 but was included to improve the cosmetic appearance of the Airport Elimination of the design issues such as radiant heat in the floors, elimination of bathrooms or windows would have an impacton the attractiveness of the leased area to prospective customers. Petersen reported that there is an anticipated revenue of $5,000 per month from tenants that have signed letters of intent with the Airport Commission. The rent would allow the project to pay for itself if amortized over a twenty year period. Petersen acknowledged that this doesn't comply with the city's normal repayment schedule of fifteen years for bonded indebtedness. The anticipated revenues are projected at normal or higher rent for comparable hangar space, so increasing revenue does not seem to be an option. The Commission must accept the bid by the middle of the week or risk an increase in prices in several areas. The Commission is asking the City Council to give some indication of their preference in the amortization period or financing methods. Councilperson Murphy asked if the project will cash flow if any tenants are lost. Petersen reported that it would not cash flow without being at full capacity but lack of prospective tenants doesn't seem to be a problem. There are the letters of intent from three entities which will store seven to eight aircraft total in the hangar. Airport Commissioner Den Hartog reviewed the possible financing mechanisms that could be used for the hangar project. If the Airport Commission were to obtain a lower interest loan from the Revolving Loan fund in addition to conventional financing then the cash flow projections could be changed. Den Hartog asked if the city would insist on the fifteen year amortization or allow a twenty year schedule. Krizek asked what source of financing is being considered. Petersen reported that an AMT blended rate with funds from the Revolving Loan are suggested. Mayor Rooff asked if any of the amenities could be phased in. Petersen explained that everything which has been reviewed seems to be basic amenities with no :frills except the parapet. Murphy asked what the term of the contracts with the tenants were? Petersen indicated that the contracts would be for three years. It is anticipated that the contracts would be negotiable after that term. Bob Heaton pointed out that the useful life of the hangars exceeds thirty years. There hasn't been any hangars built or improvements in over sixteen years and the revenue from leasing is contributed to operations. Den Hartog indicated that he would like a fifteen year term for financing to save the interest costs of approximately $50,000. Den Hartog suggested using revenue from other sources to supplement the income stream to firm up the ability to use a fifteen year financing term. 41 Anders supported the fifteen year term if funds could be accessed through the Revolving Loan fund. Petersen acknowledged that the project has a twenty year cash flow but will look to get a fifteen year program approved for financing. Mayor Rooff stated that he prefers looking at making the project self-supporting because there are additional needed improvements to the airport that haven't been addressed yet. Mollenhoff supported approving the project with all the basic amenities included to eliminate the need for additional improvements at a later date. The council formed a consensus to agree to seeking a fifteen to twenty year term for financing the project. With no further discussion, it was moved by Jordan, seconded by Collier to adjourn the meeting at 6:30 p.m. Ayes: Six. Absent: Getty. Motion carried. Susan Fangman City Clerk COUNCIL WORK SESSION April 14, 1997 5:00 p.m. Second Floor Conference Room Members present: Mayor Rooff, Jordan, Krizek, Murphy, Mollenhoff, Anders, Collier. Members absent: Getty. Moved by Jordan, seconded by Murphy to approve the agenda as proposed. Ayes: Six. Absent: Getty. Motion carried. City Attorney James Walsh expressed the opinion that it is appropriate for the council to adjourn to executive session under the provisions of Iowa Code Section 21.5 {c} to review matters relating to the litigation with IBP. Moved by Mollenhoff, seconded by Krizek to adjourn to Executive Session per section 21.5{c} of the 1996 Code of Iowa. Roll Call. Ayes: Jordan, Mollenhoff, Krizek, Murphy, Anders, Collier. Absent: Getty. Motion carried. Meeting went into closed session at 5:10 p.m. EXECUTIVE SESSION At the conclusion of the discussion, it was moved by Jordan, seconded by Mollenhoff to adjourn the Executive Session at 5:55 p.m. Roll Call. Ayes: Jordan, Mollenhoff, Krizek, Murphy, Anders, Collier. Absent: Getty. Motion carried. Moved by Mollenhoff, seconded by Jordan to adjourn the meeting at 5:56 p.m. Ayes: Six. Absent: Getty. Motion carried. Susan Fangman City Clerk