AUSTIN | ABIA Updates

[LoneStarMike]

A bit more info from the closed caption log of the City Council Meeting on 08/23/2007, a couple of months after the initial presentation:

Leffingwell: On Item Number 4, I believe Mr. Smith is here, Airport Director. This is an item to approve a ground lease for a low-cost terminal at...midfield and the item now reads to negotiate. Hopefully, we will establish some guidelines for these negotiations and talk about those guidelines in future executive sessions as we progress in the negotiations. My main concern -- it is going to be a complex agreement, I think, and there will be a lot of variables involved and it's complex enough to where I think we ought to be -- the Council ought to be briefed on it as we go forward. And my main concern is to make sure that we -- the contract is structured so that there's fairness between those who operate -- fairness and equity between those who operate out of the low-cost terminal and those who are currently operating out of the main terminal. So Mr. Smith, if you would like to make a couple of comments on that, you are more than welcome, but I'm going to leave it on consent. I just wanted to make that explanation.

Jim Smith: Well, as it relates to the rate structure, the F.A.A. requires that we do not discriminate among the players at the airport. And what they mean by that is that there's two fees involved at the airport. One is an airfield-related [fee] for the use of the runways, taxiways. Everybody who flies at the airport pays the same fees so that cannot be modified. Then you pay a fee for the facilities that you rent from the airport -- your office space, your gates, your loading bridges, et cetera like that, and there's a fee associated with that. The only way you can differentiate among the players is if one doesn't have the same type of facilities as the other. And under the lease arrangement we're contemplating, the new ultra low-cost terminal is going to have loading gates. It's not going to have the same level of electronics and telecommunications, and as a result it's going to have a cheaper rent.

So it is perfectly okay under the F.A.A. guidelines to have a rent structure in the main terminal. All the players who share that facility, and have that be different than the rent structure for the ultra low-cost terminal. What you can't change is anything on the landing fee. The only variation that occurs in that is occasionally the airport offers incentives to a carrier who is introducing new, non-stop service, and for a limited period of time, the airport will sometimes offer incentives to underwrite sombody's landing fee or rental rate in the terminal for a specific period of time while they introduce the new non-stop service. But that has a limited time period where the rent's obviously good on for as long as that entity is there. So that's pretty much how it works. And as a result, any deal we strike with GE has to be sent to the F.A.A. for review to make sure we are not[...] discriminating against any of the carriers.

Leffingwell: And I also assume as you've been going along, you've been getting input from the other airlines, the ones who currently operate out of the main terminal and like to make sure they are fully informed as to what's going on, too. But little...it is a complex agreement. The term has not been totally nailed down yet. The price per square foot, we have a minimum number of per square foot, but that has not been nailed down. It's complicated enough to where we have another agenda item today that we are going to approve on the consent agenda to hire outside counsel to negotiate that agreement. So my concern is just to make sure that we're briefed on an ongoing basis and hopefully we can start that executive session to talk about those details next week. So Thank you.

Jim Smith: If any of you at the council offices have any questions or concerns we would appreciate hearing about them before we bring this item back in a couple of weeks in executive session for you to vote on the final lease deal. Thanks.

Here's additional information from the closed caption logs of the City Council Meeting on 09/27/2007 when the council approved the negotiation and execution of the lease with GECAS. (Some misspellings and/or acronyms that I don't know what they stand for, but I re-typed it as is.)

Mayor Wynn: Council, that concludes our general Communication. Let's see. We had discussion -- let's see if any of our Aviation Department folks are here. Mr. Smith is here. Let's see. We have four folks on the dais. So Council, earlier in closed session we took up Item number 78, the real estate matter regarding a potential land lease at Bergstrom. We had a good presentation from our Aviation Department in closed session pursuant to state law. We have posted Item number 8 for potential action related to that discussion. That being authorizing the negotiation and execution of a land lease and perhaps a quick staff presentation about that item and the four of us could deliberate. Welcome Mr. Smith.

Jim Smith: Mayor and Councilmembers, this is the third time we've been here before you with this issue. The first two times to give you an update on our negotiations with General Electric Commercial Aviation Services to build a low-cost terminal on the south side of our airport. We've completed those negotiations and coming to you today for an action item to actually execute that particular lease. The terms of the lease, a 30 year land lease, which is the same as all the other leases we have out at the airport. It's -- transfer model which means at the end of the lease term the facility reverts back to the City of Austin.

The first step in the process will be the renovation of an existing building at the airport to make an interim facility that would have three gates. And we need an interim facility before a whole lot of money is invested to see if this business model will work successfully. Assuming it does work successfully, GE is committed as soon as there's a demonstration of a business need, they will start building a 100,000 square foot new facility on the site of the airport.

In terms of a rent structure, again, it's the same as the other leases we have at the airport. There's a ground rent plus a performance rent based on how well the facility does. We will share in those profits. We have arranged with GE to dord [sic] nature their operating budget, capital program, market ago program and concessions program to make sure it's in sync with what we're trying to accomplish at the airport. Also sthef [sic] committed to a strong DBE program and they are working not only in anticipation of the construction of a new terminal but also on the interim facility to make sure they are doing sufficient outreach and identifying scopes of various projects and working with SMBR to get that into the community so the contractors know what kind of work is available.

The bottom line, this is really a unique opportunity for Austin to develop a niche in the aviation market which would hopefully bring more air service to Austin that the pop lakes [sic] (Population?) actually deserves and that's because we would essentially be becoming a mini hub for some of those ultra low-cost carriers. So this is a rare opportunity and we're hoping in partnership with [GE] and their strength of having relationships with over 270 airlines in 70 countries that we can make a dent and improve the air service here in Austin

Mayor Wynn: Great, thank you, Mr. Smith. It is exciting. Questions, comments? We have posted Item 8 which is this authorization to negotiate a execute [sic] I'll entertain a motion.

Leffingwell: I move approval

Mayor Wynn: Motion made by Councilmember Leffingwell, seconded by Councilmember Cole to approve Item 8 as presented by staff. Further Comments? Hearing none, all those in favor please say aye. Opposed? Motion passes on a vote of 4-0 with the mayor pro tem and Councilmembers Martinez and McCracken off the dais. Thank you, gentlemen.

So does anyone know exactly which existing building is being renovated for the interim facility and if renovations have begun?