Fernandina Beach approves Eight Flags FBO and leasehold 5-0

Submitted by Suanne Z. Thamm
Reporter – News Analyst
October 21, 2015 1:44 p.m.

The Fernandina Beach City Commission (FBCC) at its October 20, 2015 Regular Meeting unanimously approved Resolution 2015-139, which awarded a lease to Eight Flags Aviation for land at the Fernandina Beach Municipal Airport and Fixed Base Operator (FBO) services. The basic terms are as follows: 1) 20-year lease with two five-year renewal options; 2) payment to be remitted to the city for twenty cents per square foot of unimproved land; 3) FBO to contribute to cost of design and construction of new welcome center in exchange for rent credits to be determined in separate financing and construction documents; and 4) a fuel flowage fee of eight cents per gallon delivered by fuel supplier. Additional revenue to the airport to be determined by actual feet leased is estimated to be a minimum of $35,000 annually.

The details of design, construction and financing the Welcome Center and related improvements will be memorialized in formal written agreements approved by Eight Flags Aviation, LLC and the FBCC within the next 1-2 years.

Action on this resolution had been delayed in order to allow McGill Aviation to present arguments regarding their request for reconsideration of the award of RFP 15-101.2 during a Special Meeting held on October 13, 2015. As a result of that meeting, the FBCC expressed an interest in seeing survey areas and sketches of current and proposed lease areas for McGill Aviation and Eight Flags Aviation in order to clarify where the new Welcome Center would be located in addition to other facilities on the North Area of the Airport. Additionally, City Attorney Tammi Bach verified legal points with the FAA.

McGill Aviation is the current airport FBO and was the only other bidder on the RFP, which the city awarded to Eight Flags Aviation in August of this year.

During Commissioner Comments at the close of the meeting, Commissioner Tim Poynter asked City Attorney Bach to reach out to McGill Aviation on a new lease, now that the city knows where the Eight Flags leasehold is situated.   He asked Bach to invite the McGills to negotiate a new lease, which would take effect at the end of McGill’s current lease in 2018. Bach suggested that such an approach might be preferable to the RFP process to reassure the McGills that they were not being excluded from airport operations, and she agreed to do so without objection from the FBCC.

Presentations

Andrew Holesko, Program Manager for Passero Associates (city airport consultant), presented commissioners with two sets of slides. The first set of 15 had been shown to all parties interested in bidding on the RFP during a mandatory pre-proposal meeting on June 4, 2015. Holesko explained that a mandatory pre-proposal required that anyone interested in being considered for the award of bid was required to attend the meeting. Such a requirement guaranteed that all bidders would hear the same information at the same time and not be able to claim ignorance of the city’s intentions and requirements. A conceptual design for the welcome center was provided to the potential bidders.

The second presentation had been prepared subsequent to the October 13 meeting to answer FBCC questions regarding the existing McGill leasehold and the proposed leasehold for Eight Flags and included aerial photographs and surveys.

Commissioner Pat Gass confirmed that the building called the Welcome Center would also house city administrative offices and that it would be constructed to withstand Category 5 winds, since the building will also serve as the island’s emergency operations center. She asked Holesko, “So all the information that you have just provided to us was provided to every single person who was interested in applying or filling out a form for this proposal. Is that correct?” Holesko responded that only the first presentation of 15 slides had been presented to all potential bidders in City Commission Chambers during the pre-proposal mandatory meeting.

Gass then asked if the two leaseholds contained the same acreage. Holesko said that he believed that the Eight Flags leasehold might be 10-15 percent smaller than the McGill, but could not be certain.

City Attorney Bach reported that because the city had taken some of the questions that John McGill had raised regarding FAA rules at the October 13^th meeting very seriously, she had called the FAA in Atlanta to make sure that the city was proceeding properly to award the lease to Eight Flags. She recapped a telephone conference call that included Bach, City Manager Pro Tem Marshall McCrary and the city’s aviation attorney Ed Booth. She reported that while the FAA does not weigh in on the city’s procurement process, they saw no violations in the proposed lease with Eight Flags. She confirmed that at the end of the McGills’ current lease, their structures become the property of the city to repurpose or demolish. Bach said, “I feel confident that we are moving forward with very good professionals and experts behind us, and that we’ve done this right.”

Public Comment

John McGill took issue with some of the graphics, indicating that as a result of the lawsuit, some of the areas indicated are no longer in his leasehold and that he receives a 35 percent rent reduction. He renewed his request for reconsideration of the Eight Flags proposal. He took issue with point assessments in the award. He claimed that the new leasehold essentially blocks him from being a second FBO.

Lou Goldman said he favored two airport FBOs in their own buildings. He also criticized the city’s posting of information about this matter on their website. He said that based upon his years as an aviator, every FBO has its own welcome center, not the municipality. He suggested that the city repurpose the money for the welcome center and leave that function to each FBO.

Gass asked if the money could be repurposed, and Holesko said it could.

Sean McGill spoke next. “I think Andrew [Holesko] crystallized what has become a very confusing situation.” He added that the number of unknowns made bidding very difficult. He suggested that the area in question be split, arguing that he didn’t think it made sense to tear down the current McGill buildings when they revert to the city. He acknowledged that the building currently “needs a lot of TLC,” but that it could be of use to hang gliders and other airport users.

Holesko clarified that he was making no recommendation on the future of the McGill building.

Joan Bean questioned the need for two FBOs, saying that she doubted that two could make enough money to stay in business.

FBCC deliberations and action

Following the audience input, Commissioner Robin Lentz moved to approve the resolution granting the lease to Eight Flags Aviation; Tim Poynter seconded the motion.

During commission discussion, Gass said that following the October 13 meeting she wondered whether the city should not just forget the airport welcome center, even allowing that it would be built with grant money and airport or private funds, not ad valorem taxes. She considered requiring both Eight Flags and McGill to provide the same level of service out of roughly the same amount of space, placing both FBOs on a level playing field. She said that she understood the need for a welcome center, but seemed swayed by both Goldman’s and Sean McGill’s arguments. “What’s wrong with that?” she asked the other commissioners.

Poynter replied, “I don’t think there is anything wrong with that, but that’s not what we put out for an RFP. What we put out, what our previous City Manager put out, what everyone worked on for a long time when the previous commission moved to start this project and put a welcome center out there. It seems like we have a history of one commission says we are going to do something, and then the next commission tries to undo what the first commission did. That’s exactly what we would be doing here if we tried to stop everything.

“I truly believe that the last commission said, ‘This is what we want to do.’ What satisfied me tonight is that from everything I have read and seen since the previous meeting, everyone was aware. There was no question that the new leasehold covered this land,” he said as he pointed to the slide. “Everyone was there; everyone walked it. Even Sean McGill just said he was out there, asking questions, looking at the site. It’s not a secret; it was all there. Bidders put out their best proposals. Now $1.2M [8 Flags offer] versus $500k [McGills offer]—that’s a pretty big difference.

“What I was concerned about last week, why I didn’t move to approve the new lease last week, was simply because I wanted to make sure that everyone was on the same page and that everyone had the same information. [The RFP process] stopped and started three times. When the third time it started, both parties were engaged. Both parties did not complain anymore. Both parties made their best offer before a selection committee that then went through the research to pick the winner, which they forwarded to us. And we approved it. And here we are with a request to reconsider. I’m not interested in reconsidering because I am convinced the city went through the proper process. Everyone was aware who bid on it. There were other [potential bidders] who attended the [mandatory pre-proposal] meeting and decided they weren’t interested. It came down to the last two bidders. This is where we’re at, and this is why I am going to support this resolution.”

Gass asked how long Eight Flags Aviation would need to own the lease before they could sell it, adding that McGill Aviation had bought their leasehold from a previous owner. Bach replied that that she believed Gass was questioning the leaseholder’s ability to assign a lease to another party. While Bach said that there is no minimum time that the original leaseholder must retain possession, any reassignment would need to be approved by the FBCC.

After approximately 40 minutes of presentation the FBCC unanimously approved the lease with Eight Flags Aviation to operate a second FBO at the city airport.

Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.