Chairman McCabe asked if 20% commission was standard in airports. Mr. Kitchel stated this commission rate is better than other contracts. There are very few companies that do this nationally. Airports typically will put their advertising concession out to bid and it ranges from 50% commission to 75% going to the airport with the bidder maintaining the equipment.
On motion by Trustee Monoukian, second by Trustee Martin, which motion duly carried by unanimous vote, the Board approved the Concession Agreement for advertising services with The Elizabeth Younger Agency, and authorized the Executive Director or his designee to sign.
#96-06 LEASE AND DEVELOPMENT AGREEMENT PROVIDING FOR THE LEASE OF FACILITIES AND LAND FOR DEVELOPMENT, CONSTRUCTION, SUBLET AND MANAGEMENT OF AIR CARGO AND RELATED FACILITIES AND OPERATIONS AT RENO/TAHOE INTERNATIONAL AIRPORT - INTERNATIONAL AVIATION TERMINALS CORPORATION/AERGO
A revised memo had been distributed. Mr. Kitchel explained this was discussed at the workshop on the Master Plan. The revisions reflect a change in term from 25 to 30 years and to have the developer act as manager of the facility during the transition period until the development of the first phase. The management fee will be paid at 15% or approximately $15,000, which will be reflected in a rental reduction. Staff is proposing a 30 year development lease that would turn over the existing facility as well as raw land to the developer who will market air cargo (belly cargo, all cargo aircraft, freight forwards) for this airport. It is expected the developers will invest $6.5 million in capital development for the building and infrastructure including public parking and the public roadway system. The operator will be responsible for all costs of the building and the Airport Authority will be relieved of expenses of maintaining and operating and providing these facilities. Mechanisms for timely development by the developer have been included in the agreement. Rent will start in December and the first tenant needs to be in my November 1996. The benefits are that the Airport Authority will not have to use its own capital to develop a much needed air cargo facility for this airport and there is a net revenue development that can be used to enhance the bonding capacities. The developer selected for this has a network of contacts in the air cargo business and has developed air cargo businesses in Canada and the U.S. This project also furthers the goal of developing the Master Plan and promotes third party development. He then introduced the principals of IAT/Aergo: Don Sorensen of Aergo and Rick Turner, CEO/President of IAT.
Mr. Don Sorensen, President of Aergo Development, stated he has been in the third party development of facilities for about 12 years, has done development work on behalf of Braniff Airlines, and has 25+ years experience in developing support facilities for the airlines and airports nationwide. Currently, he is involved in 12 different airports across the U.S. where his company has designed, financed, built and operated the facilities. Typically, they lease to freight forwarders, airlines, integrating carriers. They build specialized facilities that meet the needs of airlines at airports and provide marketing of those facilities.
Chairman McCabe noted that a workshop was held discussing this project as it relates to the Master Plan. He felt this project is on target as far as airport’s goals and objectives, but his concern was that we proceed with due haste to secure commitments on the land necessary to develop Concourse A immediately. He felt that was critical for the protection of the growth in facilities for commercial air carriers.
Trustee Miller stated in that regard he would like to make a motion to approved the agreement and direct the Airport Authority to enter into negotiations with NANG to contract to swap sufficient property to provide for the future development of a full passenger Terminal A; the target date for the completed contract would be August 1, 1996; and further direct the Airport
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authority to provide the Board a monthly progress report on the status of said negotiations. Trustee Carano seconded the motion.
On motion by Trustee Miller, second by Trustee Carano, which motion duly carried by unanimous vote, the Board approved the Lease and Development Agreement with IAT/Aergo authorizing the Executive Director or his designee to sign; and directed staff to enter into negotiations with NANG to contract to swap sufficient property to provide for the future development of a full passenger Terminal A; the target date for the completed contract being August 1, 1996; and to provide the Board with a monthly progress report on the status of said negotiations.
Chairman McCabe complimented staff for working diligently on this agreement and welcomed IAT/Aergo.
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