Airport Authority Study Group Meeting Minutes, Thursday July 30, 2019

August 3, 2019

 

 

The Airport Governance Advisory Committee Meeting (AGACM) mostly centered around a slideshow that highlighted the pros and cons of keeping the airport as a commission, vs. changing it to an independent authority. This slide show, and all the information, was put together by Steven Baldwin Associates Airport Management Consultants, and was presented by Penny Perkins.

 

Before the meat of the presentation, Perkins talked about a survey that was given to the commissioners. In the survey, the commissioners were asked what was important to prioritize when considering the future of the airport. Most of the answers revolved around keeping excellent customer service for patrons of the airport, and having the airport remain an economic asset for the surrounding counties.

   

Decision Making Process-

 

Under the current structure, the airport acts as an agent of the counties. If there is an issue with the Federal Aviation Administration (FAA), the commission inquires within the County Boards of Commissioners (Grand Traverse and Leelanau) on how to become compliant, whereas with an independent authority they would resolve the issues with the FAA themselves. Commissioner LaPointe asked were there many times in Airport Director Kevin Klein’s 17 years at TVC that the airport had been liable for any issues with the FAA, to which Klein said “no, not on a large scale”. Klein did mention the recently clear-cut trees as problematic, as they were in violation of FAA clearance, which is why they had to be removed. (Public perception is that it was done for the sake of commercial development.)  Klein said that both Leelanau and Grand Traverse County were consulted on the cutting, and had both okayed it, but if one or both of the counties hadn’t given the go ahead, it could have potentially been problematic, which is a snapshot of what could be a negative about operating under a commission.

   

Spending-

 

One pro to operating under an authority is the ability to enter in installment purchasing agreements (IPA’s). This was described as a way to allow the airport to be “nimbler” in their spending, according to Perkins. Independent authorities are not able to impose new taxes or millage.

   

Regulatory Issues-

 

Different governance models affect compliance issues. Under commissions, members need to have significant knowledge about regulations and compliance. One con to that is that elected county board members can change frequently. Under an independent authority, members are still chosen but there are more stringent specific knowledge requirements. Minimum standards and qualifications can be stipulated for member qualification under authorities, and members can set terms, rather than being subject to elections. Also, only 45% of members can be elected officials under an authority. Perkins and her team suggested that elected officials can have agendas, and that should be a consideration as well. The consultant team clarified to the audience that airfare prices were set by the airlines, not the airport, and that under an authority, annual audits would be mandatory, although the commission chooses to do them as it exists now.

   

County Perspective- Keeping as a Commission

 

Pros-

  1.  the county has direct oversight

  2.  political connection and support

  3.  some control over long-term lease agreements

 Cons-

  1. airport can be asked to provide financial support (hasn’t happened recently)

  2. less efficient legislation

  3. agreements are not as clear

  4. no direct control of airport zoning

   

County Perspective-Independent Authority

 

Pros-  

  1. counties protected from liability

  2. airport would have expanded business focus

  3. clear legislation

  4. criteria of expertise for board members

  5. more transparency required (the current commission already practices)

 Cons-

  1. Question of eminent domain – very important

  2. more representation from outside counties

  3. reduce county control over agreements

  4. limit to 45% of elected officials

 

It seems there are a lot of wrinkles to be ironed out, whether they switch to an independent authority model or keep the board as a commission. If they do keep operations under a commission, changes will be required to be in compliance with FAA regulations:

 

  1. FAA does not recognize the reverter clause that would allow the city to take back control of airport property

  2. FAA does not recognize easement control by the city to Oakwood Cemetery

  3. City has a myriad number of cables supplying power, water, etc. to the airport that the FAA says they would need to purchase easements from the airport at fair market value which could run into more than $1M liability to the city.

These compliance issues were referred to as having to correct the “sins” of previous administrations.

 

Paraphrasing of Klein’s Closing Remarks -

 

Going to an independent authority creates a mechanism for clearing up compliance issues and allows flexibility with the FAA. The next step is the process of switching to an independent authority and what that entails. This board is trying to decide if they want to explore being an authority or modifying the existing agreement and stay a commission.

 

Paraphrasing of the Consultant Teams Closing Remarks

 

An independent authority would create a stronger platform for development. It enhances decision making, lowers operations costs, control is still maintained by the board, and all employment and pension benefits would be preserved.

   

 

Public Comment by Ted Iorio -

 

The clear cutting of the trees triggered public interest in the airport. The issues discussed here today are complex.  Ted stressed that we want the business to succeed, but we don’t think rushing this is a good idea for anyone. (GT BOC Commissioner LaPointe had expressed a wish to have this wrapped up quickly before the next election as the composition of the board could change which might complicate the outcome.)  We appreciate that this process is open to the public. A lot of issues are on the table, for example the issue of eminent domain, and public representation on the board if it becomes an independent authority, etc. If we go too quickly, we might not be able to get the public informed in time. Take your time, it’s in the community’s and your best interest.

 

The target date for this decision to be presented to the counties for their consideration is the end of this year, and it usually takes 12 months after the decision is made to make the final call. The next meeting will consist of going over the process of changing and the public’s involvement. There will also be a poll created to see what individual commissioners would want to do. The next AGACM is scheduled for 12:30 on Tuesday, August 20th.  It is critical that the public show up at these meetings to impress on all involved that they are concerned and want a voice in the process.

 

 

 

 

 

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