HomeMy WebLinkAboutStaff Report 6671
City of Palo Alto (ID # 6671)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 6/6/2016
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Council Priority: Land Use and Transportation Planning
Summary Title: Airport Planning and Consulting Services
Title: Approval of a Contract With Airport Management Consulting Group in
the Amount of $183,008 for Planning and Consulting Services at Palo Alto
Airport, including Evaluation of Options in Managing the Office Spaces and
Hangars, Development of Primary Management and Compliance Documents
Including the Airport Rules and Regulations, Minimum Business Standards
and Leasing/Rents and Fees Policies, and Related Matters; and Approval of
Budget Amendments in the General Fund and Airport Fund
From: City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council:
1. Approve and authorize the City Manager or his designee to execute the
attached contract with Aviation Management Consulting Group, Inc.
(Attachment A) in the amount of $183,008 for Airport Consulting Services,
including evaluation of uses, assistance in developing primary management
and compliance documents (Airport Rules and Regulations, Minimum
Business Standards and Leasing/Rents and Fees Policies) and related
matters; and
2. Amend the Fiscal Year 2016 Budget Appropriation for
a. the Airport Fund by:
i. increasing the transfer from the General Fund in the amount of
$208,008
ii. increasing the Airport Fund operations expense in the amount
of $208,008;
b. the General Fund by:
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i. increasing the transfer to the Airport Fund in the amount of
$208,008
ii. decreasing the Budget Stabilization Reserve in the amount of
$208,008.
Background
On August 11, 2014, City Council approved the transfer of the Palo Alto Airport
operations from the County of Santa Clara to the City of Palo Alto. The City
adopted several resolutions to authorize the transfer and creation of the Public
Works Department’s Airport Division to manage the Airport. (CMR: 4723).
City Council approved and adopted the county’s fees and charges, Airport Rules
and Regulations, and General Aviation Aircraft License Agreement (tie-down
application) until the City was able to develop its own. Although the Federal
Aviation Administration (FAA) recommends minimum requirements for airport
service providers, none existed and the transfer deadline did not allow for new
ones to be adopted.
On November 16, 2015, Council adopted a resolution amending the fee schedule
to reflect the single airport system as opposed to the county’s multiple airport
system. At the same meeting, interim minimum standards consistent with best
practices set forth by FAA Advisory Circular 150/5190-7 (CMR: 6278) were
adopted.
As part of the transfer of the airport, the City agreed to perform the executory
portions of all contracts assigned by the county, including the Lease Agreements
with Roy-Aero Enterprises, LLC and Airport Management Group, Inc. These two
leases expire in April 2017, at which time the City can enter into one or more new
leases with the current aviation businesses operating under these master leases.
The City also has the option of managing the leases or adopting a hybrid model of
self-management and outsourcing.
Bid Process
In December 2015, a request for proposals (RFP) for consultant assistance to
evaluate operational and leasing options; existing rules, regulations, policies and
minimum standards; to provide guidance addressing the areas needed and
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develop an Airport Business Plan (Attachment B) was posted for qualified
consultant firms.
Discussion
Proposals were received from two consultants on December 23, 2015. The
disparity in the two proposals was clearly identified by the evaluation panel as a
discrepancy in depth and detail of the deliverables; Airport Business Solutions
(ABS) submitted a proposal for $85,000 and Aviation Management Consulting
Group, Inc. (AMCG) submitted a proposal for $270,036. The AMCG proposal
included a team of experienced consultants to meet the project criteria set forth
in the RFP.
Staff recommends hiring AMCG to perform needed planning and evaluation tasks
(Exhibit A of the attached Agreement) prior to the April 2017 expiration of the
two lease agreements with Roy-Aero Enterprises, LLC and Airport Management
Group, Inc. and prior to the incumbent lessees returning tenant improvements
(e.g., buildings and hangars) and property management responsibilities to the
City.
A highest and best use analysis for the Airport will provide Council with options
for managing the office/retail spaces and land and hangars prior to the expiration
of the existing lease agreements. The consultant will consider the two previous
studies, Palo Alto Working Group Study and R.A. Weidemann & Associates
Report, in their evaluation and include recommendations on implementing best
industry standards; compliance with local, state and federal requirements; and
delineating actions necessary for meeting FAA “Sponsor Assurance” requirements
that are imposed on airports as a condition for receiving federal funding.
Staff expects to meet with Council in fall 2016 with the results of the study and
recommendations on management models and the primary management and
compliance documents. The airport primary management and compliance
documents include: Rules and Regulations, Minimum Standards, Leasing/Rents
and Fees Policy, and related documents (i.e., General Aviation Operator and
Lessee Application, General Aviation Operator Permit, and a General Aviation
Self-Fueling Permit). The goals are to establish effective property management
practices and update fees and rents that will ensure the airport is financially self-
sufficient and well-run. AMCG will study and make recommendations for the
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Rates & Fee Structure and develop comprehensive Rules and Regulations,
Minimum Standards and Leasing Policies to define the operational and leasing
options using the latest industry standards and technology. Outreach with the
pilots, businesses, and the community will be conducted to ensure stakeholder
input and program success.
To reduce proposed costs, staff determined that a building condition and
appraisal could be completed internally with help from the Real Property Division
and its consultant ($25,000). Additionally, staff negotiated with AMCG to expedite
the highest and best use analysis, for completion in the next 12 months
($183,008). Exhibit A of the attached Agreement also includes an optional scope
of work for an Airport Business Plan that would need to follow the outcome of
Council’s direction for management of the tenant improvements. At the end of
Fiscal Year 2017, Staff will return to Council for consideration to amend the
agreement to include the optional Airport Business Plan, which will be initiated in
Fiscal Year 2018.
Resource Impact
The General Fund has loaned about $2.0 million dollars to the Airport Enterprise
Fund to support operations and provide seed money for capital improvement
projects between Fiscal Years 2011 and 2016 (Table 1).
Table 1.
Fiscal Year Loan Amount
2011 $300,000
2013 $310,000
2014 $325,000
2015 $760,000
2016* $304,000
Total** $1,999,000
* When adjusted for the recommended $208,008 additional funding in this
report, the FY2016 contribution from the General Fund would be approximately
$511,637.
**This total does not reflect the anticipated loan necessary in FY 2017. Currently
it is anticipated that General Fund support of $700,000 will be needed. Should
this materialize, the total would be approximately $2.9 million from FY11 through
FY17 in General Fund support.
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Funding for the Airport planning work and management document assistance will
be appropriated from the General Fund in a budget amendment and will include
$25,000 for the Real Property Division’s consultant, Valbridge Property Advisors,
to complete appraisal consulting services; increasing the Fiscal Year 2016 Airport
Operations appropriation by $208,008 and decreasing the Budget Stabilization
Reserve by $208,008 (CR-2017-736). Funding for the optional Airport Business
Plan will be contingent upon funding and Council approval.
The Airport will need General Fund augmentation through FY 2017. The resulting
AMCG recommendations and creation of management documents will allow
Council to choose the most beneficial management option when the two leases
expire in April 2017, establishing effective property management practices and
updated fees and rents to ensure the airport is well-run and financially self-
sufficient. The airport is scheduled to initiate repayment of loans in Fiscal Year
2018.
Policy Implications
This recommendation does not represent any change to existing City policies.
Environmental Review
Approval of a consulting contract to evaluate options for providing FBO services,
review and update rules and regulations and minimum standards, and evaluate
fees, is not a project subject to review under the California Environmental Quality
Act (CEQA).
Attachments:
Attachment A_Contract Available 06-02-2016 (PDF)
Attachment B_Hyperlink to RFP 162180 (PDF)
Attachment A
Contract
Contract will be available in City Council's packet of June 2, 2016.
Attachment B
REQUEST FOR PROPOSAL (RFP) NUMBER 162180FOR PROFESSIONAL SERVICESTitle: Palo Alto Airport Business Plan and Guiding Documents(Hard copies for City Council Only)
http://www.cityofpaloalto.org/civicax/filebank/documents/52560