1 2 3 4 KERRVILLE-KERR COUNTY JOINT AIRPORT BOARD 5 Regular Meeting 6 Wednesday, October 22, 2014 7 8:30 a.m. 8 Airport Terminal Conference Room 9 1877 Airport Loop Road 10 Kerrville, Texas 11 12 MEMBERS PRESENT: MEMBERS ABSENT: 13 Stephen King, President Corey Walters, Ed Livermore Vice President 14 Bill Wood Kirk Griffin 15 16 AIRPORT BOARD STAFF PRESENT: Bruce McKenzie, Airport Manager 17 Carole Dungan, Executive Assistant 18 COUNTY STAFF PRESENT: 19 Tom Moser, Commissioner Pct. 2 Jeannie Hargis, Auditor 20 James Robles, Assistant Auditor 21 CITY STAFF PRESENT: 22 Jack Pratt, Mayor 23 VISITORS: 24 Ilse Bailey, Airport attorney Ronnie Kramer, Dugosh Aviation 25 Steve Drane 2 1 I N D E X October 22, 2014 2 PAGE 3 CALLED TO ORDER 4 1. VISITORS FORUM - 5 2. KERRVILLE-KERR COUNTY JOINT AIRPORT BOARD MEMBER FORUM 3 6 3. CONSENT AGENDA 7 3A Approval of Sept. 15, 2014 Board Meeting Minutes 4 8 4. DISCUSSION AND POSSIBLE ACTION 4A Monthly Financials (September) 4 9 4B Airport Leases related to CPI - Executive Session 10 as needed 17 11 4C Proposed storing of courthouse Christmas decorations in Building 18 48 12 4D Proposed building sites for new corporate hangars 50 13 5. INFORMATION AND DISCUSSION: 14 5A General Update 57 15 6. EXECUTIVE SESSION -- 16 7. ADJOURNMENT 59 17 18 19 20 21 22 23 24 25 3 1 On Wednesday, October 22, 2014, at 8:30 a.m., a regular 2 meeting of the Kerrville-Kerr County Joint Airport Board was 3 held in the Airport Terminal Conference Room, Louis Schreiner 4 Field, Kerrville, Texas, and the following proceedings were 5 had in open session: 6 P R O C E E D I N G S 7 MR. KING: All right. I'd like to call this 8 meeting to order of the Kerrville/Kerr County Joint Airport 9 Board, October 22nd, 2014. Item 1, Visitors' forum. At this 10 time, any person with business not scheduled on the agenda 11 may speak to the Airport Board. No deliberation or action 12 may be taken on these items because the Open Meetings Act 13 requires 72 hours before the meeting to be posted. Visitors 14 are asked to limit their presentations to three minutes. 15 Anybody? None being heard, we'll go to Item 2, 16 Kerrville/Kerr County Joint Airport Board forum. At this 17 time, any member of the Kerrville board -- Airport Board may 18 speak to the board and/or the public present on any matter 19 not scheduled on the agenda. No action can be taken because 20 the Open Meetings Act requires that formal action be posted 21 on the agenda 72 hours before the meeting. If formal action 22 is required, it will be placed on the agenda for a later -- 23 future meeting. Anybody on the board? 24 MR. GRIFFIN: Not other than -- I'm sure it'll come 25 up in the general update. Thanks to Bruce for spearheading 4 1 the T-hangar effort to get it completed, behind us, and 2 carrying on to the next thing. 3 MR. LIVERMORE: Yeah. 4 MR. KING: Item 3, Consent Agenda. All items on 5 the item listed below within the consent agenda are 6 considered routine by the board and will be enacted in one 7 motion. There will not be a discussion unless a board member 8 or citizen so requests, in the event each item -- in which 9 event the item will be removed from the general order of 10 business and placed in normal sequence. Approval of the 11 September 15th board meeting minutes. 12 MR. LIVERMORE: So moved. 13 MR. KING: Motion by Ed -- Mr. Livermore. Second? 14 MR. WOOD: Second. 15 MR. KING: Mr. Wood. Any discussion? None? All 16 in favor of approval? 17 (The motion carried by unanimous vote, 3-0.) 18 MR. KING: 3-0. I'm going to abstain; I don't 19 think I was there. Item 4, Discussion and Possible Action. 20 The monthly financials, 4A. Go ahead. 21 MR. ROBLES: Morning, everyone. 22 MR. GRIFFIN: Hello. 23 MR. McKENZIE: Good morning, James. 24 MR. ROBLES: These are for September. Everyone got 25 a copy? All right. Page 1, balance sheet. Total cash and 5 1 receivables, 340,931.42. Payables out, 101,480.62. Page 2, 2 total equity and revenue over expenditures, 239,450.80. Page 3 3 is the revenue. Monthly revenue, 36,510.63. You can see 4 on the second-to-right column, we collected 50,255.57 over 5 what we were budgeting. Page 4 -- 6 MR. LIVERMORE: What is our flue -- fuel foliage -- 7 I can't even say it. 8 MR. McKENZIE: Fuel flowage fee. 9 MR. LIVERMORE: Getting my L's in the wrong place. 10 What -- what do we collect? 11 MR. McKENZIE: Nine cents a gallon. 12 MR. LIVERMORE: I notice this is down 13 substantially. 14 MR. McKENZIE: Nine cents a gallon. It reflects 15 that in the graph that I sent everyone. If you'll notice, 16 year to year it tracks pretty much the same. In the summer, 17 it peaks. In the hunting season, it peaks. 18 MR. LIVERMORE: Well, but the dollars are down. 19 MR. KING: Is this the last month? 20 MR. LIVERMORE: This is it. 21 MR. KING: This is the end of the year, right? 22 This is basically year-end -- a year-end deal. 23 MR. McKENZIE: Actually, next month it will really 24 show the actual final month. 25 MR. LIVERMORE: We're down a sixth, about 16 6 1 percent over the previous year. 2 MR. WOOD: You got hunting season coming next 3 month. 4 MR. LIVERMORE: No. 5 MR. KING: It was in last year also. In other 6 words, this is 12 months. 7 MR. LIVERMORE: This is 12 months. 8 MR. KING: Twelve months. You send out that 9 report; is that correct, Bruce? 10 MR. McKENZIE: Yes, sir. 11 MR. LIVERMORE: I saw the report; it's a good 12 report. 13 MR. McKENZIE: Yes, sir, thank you. 14 MR. ROBLES: Page 4 is the salary and benefits, 15 19,232.91. Page 5, personnel, supplies, maintenance, 16 professional services. 17 MR. KING: This -- by looking at this, we should 18 see any -- any budget remaining or unencumbered. That's what 19 was left in the budget, basically? 20 MR. ROBLES: That's correct. 21 MR. KING: So, on the mowing contract, Bruce, we 22 had one more cycle left? 23 MS. DUNGAN: Yes. Yes, sir. 24 MR. KING: That we did not use? 25 MS. DUNGAN: Yes, sir. 7 1 MR. KING: Okay. 2 MR. ROBLES: Page 6, total expenditures, 72,515.97. 3 MR. LIVERMORE: Where is this, now? Oh, okay, I've 4 got it. My eyes were on the wrong column. 5 MR. ROBLES: Page 7 is the utilities, 1,608.39. 6 MR. KING: Can I go back to Page 6? 7 MR. ROBLES: Sure. 8 MR. KING: So we -- basically, on light and power, 9 we were overdrawn; is that what you're saying? Is that what 10 that's saying, basically? 11 MR. ROBLES: Yeah, 1,120 over. 12 MR. KING: Okay. 13 MR. WOOD: I still have the same question I think I 14 had last time about contingencies, under utilities, why we've 15 got $17,000 of -- 16 MR. ROBLES: I believe that was kind of a catch-all 17 after -- what was it, the expenses for the -- 18 MS. DUNGAN: Do you remember when we moved the 19 money, Mr. Wood? 20 MR. WOOD: I remember doing that, yes. 21 MS. DUNGAN: That was the account we put it in that 22 we could draw from for the areas where we were over. We used 23 one account. 24 MR. WOOD: I guess my confusion is just why, under 25 the topic of utilities, you have a big contingency item. 8 1 MS. DUNGAN: Well, actually, it would fall under 2 Page 5, 47-800-310, if we wanted to move it there. 3 MR. WOOD: If we had a breakdown of what that 4 $17,000 was spent for, I would suspect it wasn't on 5 utilities. 6 MS. DUNGAN: No, sir. 7 MR. ROBLES: No. 8 MS. DUNGAN: No. 9 MR. KING: So, Bruce, it would be a good idea to go 10 back and look at our current -- new budget, new budget for 11 next year, and let's compare it to what we had left over 12 here, 'cause I see some items here, like on -- like vehicle 13 maintenance. You know, we've proposed 5,000; we used 3,800. 14 Less than that, I think. And on insurance, property 15 insurance, did we get a good deal? 16 MR. LIVERMORE: What page are you on? 17 MR. KING: Five. Why did we propose 7,500, and we 18 ended up using less than that, 3,800? We get a good deal? 19 Forget to pay somebody? 20 MS. HARGIS: No, the property comes through us, and 21 we don't get our bill until September, so it may not be 22 reflected here yet. 23 MR. KING: Okay. I think it's a good idea to go 24 through here and look and see how it's reflected -- how these 25 numbers are reflected in next year's budget, because it looks 9 1 like we had some items, like the light and power; I hope we 2 increased that. I can't remember, but, you know, we were a 3 little short there. But then there was some items that we 4 were -- like computer upgrade. We didn't do any computer 5 upgrades? 6 MR. McKENZIE: No, sir. 7 MR. KING: I think it would be a good idea to take 8 a look at this and see where -- where we're a little over and 9 a little under. 10 MR. LIVERMORE: When it says "unencumbered 11 balance," that means how much is -- 12 MR. KING: Left in the budget. 13 MR. LIVERMORE: -- left or not left in the budget. 14 MR. KING: Or not left. Like phone service under 15 utilities, we budgeted $2,191, and we ended up with $1,966 16 left. I don't know what happened there. 17 MS. DUNGAN: That is for our cell phones. John 18 Trolinger goes through and he charges them off, so we don't 19 ever see it on ours, even though he's going through and 20 charging it. 21 MR. KING: Who pays for it? 22 MS. DUNGAN: We do. 23 MR. KING: Where -- 24 MR. LIVERMORE: Where is it reflected? 25 MR. KING: Where is it reflected? 10 1 MS. DUNGAN: It's not. 2 MR. LIVERMORE: Then how do we pay for it? 3 MR. KING: How do we pay for it? 4 MR. LIVERMORE: You and I are in parallel here. 5 MS. DUNGAN: This is the way he explained it to me, 6 was he was charging off Bruce's and Roy's cell phones through 7 his department. 8 MS. HARGIS: It should be billed back. So -- 9 MR. KING: Can I get on that plan also? 10 MR. LIVERMORE: We'd like to get in on that. 11 MS. DUNGAN: But like Jeannie says, it's going to 12 be billed back to us. 13 MS. HARGIS: They should bill it back. But we have 14 an agreement with them; our cell phones are like $9.50 a 15 month, and unless somebody goes over on minutes, that's 16 pretty much it. And then if you're on a data line, then you 17 have to pay for your data line. And that, again, is -- is 18 shared proportionately amongst whoever uses the data, so it 19 changes. We try to be fair to everybody. 20 MR. KING: Right. 21 MS. HARGIS: Because the contract comes in as one 22 huge amount of data. 23 MR. KING: Right. 24 MS. HARGIS: And we can see which phone is using 25 it, and then he just uses the ratio each month. So, one 11 1 month he may use somebody else's account; he may use more, so 2 that's the way it goes. 3 COMMISSIONER MOSER: Is it reflected back in the 4 department -- 5 MS. HARGIS: It should be charged back to the 6 department. 7 MR. KING: Doesn't look like it's getting charged 8 back to us. 9 MS. HARGIS: Well, the 588 -- which line are you 10 looking at? 11 MR. KING: I'm looking at Line 801-300, phone 12 service. 13 MS. HARGIS: Oh, you're on Page 7. I thought you 14 were on 6. 15 MR. KING: We only used -- 16 MS. HARGIS: The 225, that was probably your land 17 line, and you don't have it any more. 18 COMMISSIONER MOSER: That's the terminal. 19 MR. KING: That's in the terminal. Looks like 20 we've over budget for that, because last year it was 300, and 21 this year it was 225. 22 MS. HARGIS: Right. 23 MR. KING: We budgeted $2,191. 24 MS. HARGIS: Yeah. I think originally -- remember, 25 we had a land line, and now you have -- once we got Hill 12 1 Country -- 2 MR. KING: That's what I'm saying. Not a problem. 3 I just wanted to be sure. 4 MR. LIVERMORE: What land line is it that we're 5 talking about? 6 MR. McKENZIE: There's two out there by the 7 pilot's -- in the pilot's lounge, and for the pilot planning 8 room. There's a phone there to call flight services. 9 MR. LIVERMORE: But will we still have those 10 phones? 11 MS. HARGIS: Yes. 12 MR. LIVERMORE: But the -- we're not spending money 13 for them. That's what -- 14 MR. KING: I think we're spending -- 15 MR. LIVERMORE: That's your point, isn't it? 16 MR. KING: Well, my point was, we budgeted $2,191, 17 and year before last we spent 300; this year we spent 225. 18 You probably could reduce that budget amount, if that's 19 really an expense that we -- it's probably an expense that we 20 were incurring under a different -- under a different 21 procedure earlier, and now it's being taken care of in a 22 different way, and we just never did change the budget. 23 MS. HARGIS: When the County changed to Hill 24 Country Telephone, then it took a while for us to get the 25 line out here for y'all, and then we did. And we have a 13 1 special contract with them. 2 MR. KING: So we can change that. I'm just trying 3 to figure out places that we -- I don't want to overbudget by 4 89 -- we had 89 percent left, and if we can cut a few of 5 these places, we can put it somewhere else. 6 COMMISSIONER MOSER: I think while you're on Page 7 7, I think the important thing, Steve, is to look at revenue 8 over/under. Bottom line, 147,000. 9 MR. KING: Right. 10 COMMISSIONER MOSER: Whatever it is. 11 MS. HARGIS: Well, part of that, Steve, is -- a big 12 chunk of that is for the consultant on the engineer you're 13 paying. You haven't paid him all of the money. 14 MR. KING: Right. 15 MS. HARGIS: The 60-something thousand dollars. 16 MR. KING: Right. 17 MS. HARGIS: So that's a payable. 18 MR. KING: Sure. 19 MS. HARGIS: And so that -- that's not reflected in 20 here, so you've got to deduct that from the unencumbered, 21 because you owe it. 22 MR. KING: Sure. 23 MS. HARGIS: We don't have a bill from him yet, 24 unless somebody here has one. 25 COMMISSIONER MOSER: So -- but the bottom line 14 1 is -- and this is good, but the airport operations went out 2 of the year a plus, $80,000 or something. 3 MR. KING: Sure. 4 COMMISSIONER MOSER: Yeah, so -- 5 MR. KING: Yeah, I understand that. 6 COMMISSIONER MOSER: And that's great. 7 MR. KING: That's good. I just -- if we -- if we 8 have places where we can reduce the budget next year, you 9 know, like this item here, we can drop it a couple thousand, 10 $1,500; we can reduce it even more. But I'm just taking a 11 look at those, Bruce. 12 MR. McKENZIE: Yes, sir. 13 MR. KING: All right, we can go ahead. 14 MR. ROBLES: All right. Page 8, Capital Account 15 balance, 95,093.09. Page 9, monthly revenue, 32,686.57. 16 MR. LIVERMORE: Page 9, you said? 17 MR. ROBLES: Yes, sir. We're still waiting on 18 TexDOT -- 19 MR. KING: That's where you were looking at that 20 number, Commissioner, that 80,000 below on the budget 21 remaining? Basically, that's 80,000 -- Jeannie? 22 MS. HARGIS: No. 23 MR. KING: What's that number? 24 MS. HARGIS: The 147 -- if you take the 147 and 25 subtract off the 60-something thousand that we owe to the 15 1 engineer, then you only have about 80 left -- 2 MR. KING: Right. 3 MS. HARGIS: -- in general, but this one is 4 capital. 5 MR. KING: Oh, this is capital, okay. 6 MS. DUNGAN: You got 80,000 in -- 7 MS. HARGIS: That's just for the T-hangars. 8 MS. DUNGAN: 10 percent. 9 MS. HARGIS: You're actually -- you're actually, on 10 the revenue side, not doing -- but in the capital, you know, 11 it's what we actually have. 12 MR. KING: Right. 13 MS. HARGIS: So we haven't gotten all the money 14 there from Tex -- our money. We put our money -- that's the 15 80,000 we put in. 16 MR. KING: Sure. 17 MS. HARGIS: For using for our hangars; that was 18 our percentage. 19 MR. KING: Okay. 20 MS. HARGIS: We started out at 50,000; that's what 21 I estimated. 22 MR. KING: Right. 23 MS. HARGIS: And then I had to change it to 80 when 24 we finally got the bids in, our 10 percent. 25 MR. KING: I see. Go ahead. 16 1 MR. ROBLES: Page 10 is your expenditures for the 2 month. Page 11, total expenditures for the year, 564,790.88. 3 MS. HARGIS: Keep in mind there, we have a $361,000 4 payable bill out to TexDOT we'll have to book in this current 5 year. 6 MR. KING: Okay. 7 MS. HARGIS: And I'm waiting -- right now I'm 8 waiting to get all this data from -- from her, the 9 receivables and all that, so I can book them -- 10 MR. KING: Okay. 11 MS. HARGIS: -- and make sure that we have them all 12 in there. So, once I get all the receivables, I'll bring it 13 back so you can see what the -- the actual. I just don't 14 have a bill from that consultant; I don't know what his final 15 bill's going to be. 16 MR. KING: Right, okay. 17 MS. HARGIS: I don't have any idea. 18 MR. McKENZIE: $100,000. We paid him 35. That's 19 where we're at right now; still waiting on $65,000. 20 COMMISSIONER MOSER: So it's not going to be any 21 more than that? 22 MR. McKENZIE: No, sir. 23 MR. GRIFFIN: No, that was our agreement with him. 24 MR. McKENZIE: Kirk and Corey worked that out with 25 them, sternly. 17 1 MR. GRIFFIN: But that was our agreement. That's 2 what we signed. 3 MR. McKENZIE: Okay. 4 COMMISSIONER MOSER: That's what I remember. 5 MR. McKENZIE: Right. 6 MR. KING: Okay. Any questions on the budget -- I 7 mean on the financials? Motion to approve? 8 MR. LIVERMORE: I so move. 9 MR. KING: How about a second? 10 MR. LIVERMORE: You guys always look at each other. 11 MR. WOOD: It's his turn. 12 MR. GRIFFIN: I'll second. 13 MR. LIVERMORE: Thank you. 14 MR. KING: No discussion? All in favor? 15 (The motion carried by unanimous vote, 4-0.) 16 MR. KING: 4-0. 17 MR. McKENZIE: Thank you, James. 18 MR. KING: Thank you very much. 19 MR. LIVERMORE: The two musketeers over here. 20 MR. KING: All right, Item 4B, airport leases 21 related to C.P.I. This is an item that was brought up -- do 22 you want to -- 23 MR. LIVERMORE: Go ahead; you can talk about it. 24 You've got a pretty good feel for it. 25 MR. KING: This is an item brought up to us by 18 1 Mr. Drane, one of our -- 2 MR. LIVERMORE: Tenants. 3 MR. KING: -- tenants at the airport. And 4 Mr. Kramer, who is also another tenant at the airport. All 5 of our leases have a C.P.I. clause in them, and the clause is 6 not really -- it's a little bit -- I wouldn't say vague. I 7 wouldn't say it's vague; it's just not -- 8 MS. BAILEY: Obtuse. 9 MR. KING: Obtuse. It's not as well written as -- 10 as what you would think it would be in a lease. And I think 11 all of our -- most of our leases have this clause. 12 MR. McKENZIE: Yes, sir. 13 MR. KING: I think Mr. Kennedy has one lease that 14 does not have a clause like that; is that correct? And that 15 would be for this hangar over here. 16 MS. DUNGAN: Correct. 17 MR. KING: For some reason. And -- but I think 18 this affects Mr. Kramer, Mr. Drane, Mr. Stieren, -- 19 MR. McKENZIE: George. 20 MR. KING: -- Mr. -- 21 MR. McKENZIE: Gulf States. 22 MR. KING: Gulf States Toyota, and Mr. -- and 23 Kerrville Aviation on the leases on this side of the building 24 over here. 25 MR. McKENZIE: And Mooney. 19 1 MR. KING: And Mooney too. It was brought to our 2 attention that the method of -- of computing this C.P.I. 3 increase is a little bit -- what would you say? 4 MR. LIVERMORE: Just doesn't meet the reasonable 5 man theory. 6 MR. KING: This is a policy issue. 7 MR. WOOD: It's inconsistent. 8 MR. KING: It's inconsistent. 9 MR. WOOD: The leases are different. 10 MR. KING: The leases are different, and the 11 increase in the C.P.I. is figured -- it's been -- you know, 12 this is not something that's happened -- this is something 13 that the City, when the City was managing the airport, it was 14 -- it was -- 15 MR. McKENZIE: That's correct. 16 MR. KING: -- figured that way, and then when the 17 County took over doing the books, then it was figured that -- 18 the same way as what was done in the City. And we've looked 19 at it, and -- and there's been some discussion as to whether 20 it's actually being computed in the manner in which it is 21 intended. And the C.P.I., which is a Consumer Price Index 22 increase, it's a way to balance out your lease payment to 23 reflect an increase in -- for inflation. For inflation on a 24 yearly basis. And some of these leases are yearly; some of 25 these leases are every five years. There's a little bit of 20 1 inconsistency as to when some of them -- 2 MR. LIVERMORE: Trigger. 3 MR. KING: -- trigger this thing, but they all are 4 based off of the same -- the same language; similarly, they 5 use the same index. Is that correct? Are they all using the 6 same index? 7 MAYOR PRATT: Which index are they using? Dallas? 8 MS. BAILEY: I'm not sure. Most of them are -- 9 MR. KING: Most of them are -- 10 MS. DUNGAN: Dallas/Fort Worth. 11 MR. KING: -- Dallas/Fort Worth. 12 MAYOR PRATT: That's the one that should be used. 13 MR. KING: Right. And so we -- when it was brought 14 up to our attention by Mr. Drane and Mr. Kramer that possibly 15 their increase in the rent on an yearly basis was not 16 reflective of what the spirit of the C.P.I. increase was, we 17 decided to take a look at it. And -- 18 MR. LIVERMORE: Well, if I could just interject, 19 basically, the -- the monthly -- or the recomputation each 20 time is supposed to adjust the current lease for the rate of 21 inflation. What has been occurring is that, as we all know, 22 the rate of inflation for the last several years has been 1, 23 1 and a half, maybe 2 percent, and I think one year it 24 actually was -- went down. This has been going up an average 25 of 10 percent per year for several years, and it's just way 21 1 out of kilter with -- with reality. 2 COMMISSIONER MOSER: How's that? 3 MR. KING: It's because in that -- the language is 4 written in the leases -- 5 MR. WOOD: Look on Page 2, and you'll see two 6 formulas. 7 MR. KING: The formula, and -- 8 MR. WOOD: They're using the current formula -- 9 COMMISSIONER MOSER: We don't have that. 10 MR. WOOD: Oh, sorry. 11 MR. KING: What's happening is when your -- when 12 your lease is -- is executed, there is -- in the C.P.I., 13 there's a base -- base price index. A base index is used, 14 and basically, that is what the -- whatever the -- the 15 Consumer Price Index for the particular index is for the date 16 that you -- that you start it. And so it's -- it started at 17 zero, and then maybe when you signed your lease, it's now 18 200. And let's say it's 220 or something, and that's how 19 they use it, off of this number. And then the way the -- the 20 way the clause is written -- written a little bit loosely. 21 The intent is -- what I feel the intent is, is to reflect 22 back to the rate -- back to the rate -- base rate every year, 23 to go back to the base rate every year and compute it off of 24 that original base index. But what has been happening is, 25 it's been based off -- it's been basically compounded. It's 22 1 compounded by -- instead of going back to the base rate, it's 2 going back to the -- 3 MR. LIVERMORE: Previous year. 4 MR. WOOD: Current year. 5 MR. KING: -- previous year, current rate. And 6 then it takes the multiple of what the index was and 7 increases it. 8 MR. WOOD: And the current rate has already been 9 adjusted several years. 10 MR. LIVERMORE: Exactly. There's several 11 adjustments built in. 12 MR. KING: Been used every year. 13 MR. WOOD: And it's the way the lease was written. 14 They've been doing it according to the way the lease was 15 written, but it -- the lease should never have been accepted 16 that way. And -- and it amounts to, you get a compounding of 17 the -- of the index. 18 MR. LIVERMORE: Again, it's supposed to reflect 19 each year's -- the amount of increase of inflation over the 20 base rate. But, you know, the way this thing is being 21 calculated is that it's going up an average of 10 percent a 22 year at a time when there's like 1.1, 1.2 -- 23 MR. KING: Right. 24 MR. LIVERMORE: -- of inflation, and I just think 25 it's way out of kilter, and it's, frankly, not fair, what's 23 1 happening. 2 MR. KING: Is that -- am I explaining that right, 3 Steve? Because you're the one that brought this up 4 originally five years ago -- or several years ago. 5 MR. DRANE: Basically, what it's doing is 6 compounding -- it's linked to an index that's being done now 7 instead of going back to the first year of the lease, the 8 base rate. And the -- the contract says notwithstanding 9 during the term of this lease, the base rate will be..., and 10 it gives it. And the base index as published by the index in 11 Dallas will be... And those remain the same throughout the 12 life of the contract. 13 MR. KING: Right. Right. 14 MR. DRANE: And they're using last year's instead 15 of the base. 16 MR. KING: Exactly. 17 MR. LIVERMORE: And it compounds it. 18 MR. DRANE: And it compounds it. 19 MR. KING: And it's easily confused. 20 MR. LIVERMORE: Very confusing. 21 MR. KING: They give an example in the lease of 22 what it would look like, but it doesn't say that this example 23 is to be used. It doesn't say specifically -- 24 MR. WOOD: Well, also, it uses the first year, and 25 the first year, the base rent is the current rent. 24 1 MR. KING: Right. 2 MR. WOOD: That's why -- that's why, as Carole 3 found out, they say to use two examples, so you can get a 4 further year. And that way, the current rent and the base 5 rent are not the same. 6 MR. KING: So -- so anyway -- so -- 7 MR. LIVERMORE: To the audience, this is probably 8 about as clear as mud. But, I mean, it's hard to explain 9 this, but we have gone through this for quite a bit of time. 10 MR. WOOD: I think what the board wants to do is to 11 -- to get a policy in our leases where this escalation is 12 very, very clear, so everybody understands it. 13 MR. LIVERMORE: With examples. 14 MR. WOOD: With examples. And Carole has worked 15 hard to kind of come up with some of that. 16 MR. KING: And then add an addendum to all these 17 leases? Would that be -- 18 MS. BAILEY: That would be my suggestion, that we 19 do a modification. 20 MR. KING: On the back end of these leases, to 21 clarify this is how it's going to be adjusted. 22 MS. BAILEY: So they're all the same. 23 MR. McKENZIE: From this point forward. 24 MR. KING: From this point forward, that is how 25 your lease is going to be adjusted. 25 1 MS. BAILEY: And does it go up in January? Because 2 this is a good time to change it if that's the case, get this 3 all done by January 1. 4 MR. LIVERMORE: They're all different. 5 MR. WOOD: All these leases have different starting 6 dates. 7 MS. BAILEY: So the C.P.I. is -- is based on 8 starting date? 9 MR. WOOD: No, January is the C.P.I. 10 MS. BAILEY: That's why I say it's important to -- 11 yeah, it's the -- when the C.P.I. adjustment is made, if it's 12 mostly all in January, this would be a good time to make that 13 change. 14 MR. WOOD: That's the way. 15 MR. DRANE: Steve, in my lease, I only have every 16 five years. In 20 years, I've got three of them. 17 MR. KING: Right. 18 MR. DRANE: In my lease, it's on December 1st, 19 2004; December 1st, 2009; and this December, it will be -- 20 and the base is -- and each one of those three is outlined. 21 MR. KING: Mm-hmm. 22 MR. DRANE: It clears up this. These guys have an 23 annual, so they'd have to go through however many -- 25 of 24 them to -- to do what they did on mine. And I think the 25 wording in mine is exactly the same -- 26 1 MR. KING: Right. 2 MR. DRANE: -- as his. And I haven't looked at 3 Joey's, but it's -- the example that is given in his, it's 4 confusing the issue. 5 MR. KING: Yes. I mean, if you looked at -- you've 6 looked at -- and who -- first of all, who's had -- who's 7 experienced this problem? What leases have been -- 8 MR. LIVERMORE: Mr. Kramer, probably. 9 MR. KING: Obviously, Mr. Kramer has. 10 MR. McKENZIE: That's the only one. 11 MR. KING: How about Mr. Stieren? 12 MS. DUNGAN: Mr. Stieren has a cap on his, so -- 13 MR. McKENZIE: Has a cap. 14 MS. DUNGAN: -- he never went up more than 15 5 percent. 16 MR. KING: Is it "Let's make a deal" on these 17 leases? What's the deal? I don't understand. 18 MR. WOOD: I think that's what we're trying to 19 stop. 20 MR. KING: I don't understand why -- this is 21 something I've talked to -- I've talked to Steve about a 22 while ago, was that I think as a board, we need to be a 23 little more -- as a board and as -- and with Bruce, we need 24 to be a little bit more vigilant, or -- "vigilant" might not 25 be a good word. 27 1 MAYOR PRATT: Diligent. 2 MR. KING: Diligent about maybe realizing that we 3 are the landlord here, and then when someone -- when we 4 propose a lease to someone, that the changes that are -- that 5 are offered by the tenant are not to be taken as -- 6 MAYOR PRATT: Gospel. 7 MR. KING: -- gospel, something we have to do. 8 I mean, it's kind of like me going to my apartment -- if I 9 wanted to rent an apartment down here, and they said it's 10 going to be 750 bucks, and you need $1,000 deposit, I go, 11 "Tell you what, I can give you $550, and I'm only going to 12 give you $250, and I don't want any rate increases for the 13 next 10 years." And the guy goes, "Well, that sounds good, 14 if that's what you say." You know, but I think we need to be 15 a little more -- maybe -- 16 COMMISSIONER MOSER: Consistent. 17 MR. KING: -- hold our ground a little bit harder 18 on some of these leases. Because I've read a bunch of these 19 leases, and they're, you know, -- 20 MR. WOOD: All over the place. 21 MR. KING: -- all over the place. 22 MR. McKENZIE: They're everywhere. 23 MR. KING: So -- go ahead, Mr. Drane. 24 MR. DRANE: Okay. In the favor of the problem 25 you're having, these -- my lease is 15 years old. 28 1 MR. KING: Sure. 2 MR. DRANE: And they're spread out over all that 3 period of time. 4 MR. KING: Right. 5 MR. DRANE: I suspect the same person, firm -- and 6 I don't know who wrote my lease -- is the same one that wrote 7 Ronnie's, but over this period of time, people change. You 8 guys change. 9 MR. KING: Sure. 10 MR. DRANE: The attorneys change. 11 MR. KING: Right. 12 MR. DRANE: So it's never written in stone 13 anywhere. And you're getting to part of the problem. The 14 verbiage is a little different, and whoever makes the 15 explanation. So, I think there's wherein comes the problem. 16 MR. LIVERMORE: What we need to do is just have a 17 new start from this point. 18 MR. DRANE: Yeah. 19 MR. KING: Yeah. I just think we need to -- we've 20 written some leases here in the last couple years, and even 21 in the last couple years, Mr. Stieren's lease is not that 22 old, and his has got a different clause in it than other -- 23 and I'm sure Friedken's is -- the Friedkin lease is 24 different, too. So, I think we just need to -- maybe when 25 people -- when we do offer a lease to someone, just 'cause 29 1 they start crossing things out and changing things, you know, 2 I think we should maybe be a little more diligent about not 3 accepting some of those things, so we don't -- and realizing 4 that we are changing up our leases. 5 MR. WOOD: Part of the problem, Steve, is I think 6 that the verbiage has been so hard to understand, people felt 7 like they had to protect themselves. I don't blame them. 8 MR. KING: And I think you're right. I think 9 you're right on that. 10 MS. BAILEY: I think -- I don't remember who it 11 was, but the very last lease that I did, I changed up the 12 paragraph, because I figured if I couldn't understand what it 13 was, then I'm sure the tenants couldn't. And we made it -- I 14 don't know if it's any better, but it's simpler. I don't 15 even remember what that was. 16 MR. LIVERMORE: One of the -- I'm sorry. 17 MS. BAILEY: Go ahead. 18 MR. LIVERMORE: No, you're not finished. I thought 19 you were. 20 MS. BAILEY: No, go ahead. 21 MR. LIVERMORE: You know, one of the things -- a 22 lease is basically a negotiation in the market, under the 23 market conditions that are in existence at the time you 24 negotiate a lease. And some of this is long-term leases that 25 have gone on for 25 years or 15, whatever it is. I mean, 30 1 times were different then. Maybe we needed people on the 2 airport, and maybe we were bending over to get them on the 3 airport, 'cause some money was better than no money. And 4 other times, the market's tight; people want on the airport. 5 And, you know, that's -- there's an ebb and flow -- 6 MR. KING: Sure. 7 MR. LIVERMORE: -- in that. But I do think the 8 formula -- 9 MR. KING: Right. 10 MR. LIVERMORE: -- for the -- the C.P.I. formula 11 should not be a subject of negotiation. 12 MR. KING: I agree. 13 MR. LIVERMORE: It ought to be set in numbers that 14 people can understand. 15 MR. KING: So that our plan is to go back to these 16 leases, to make some -- make a standard clause and offer it 17 as an addendum to each one of the leases; is that correct, 18 Bruce? And -- 19 MR. McKENZIE: Mm-hmm. 20 MS. BAILEY: That's -- yes. 21 MR. KING: Is that what we plan on doing, going 22 back and changing that? 23 MS. BAILEY: I can't imagine that any of the 24 tenants would object to something that is going to redo the 25 amount of their increase, as opposed to -- 31 1 MR. LIVERMORE: Well, it's in their favor. It's 2 doing what was intended -- 3 MS. BAILEY: What we intended. 4 MR. LIVERMORE: -- in the beginning. It just 5 didn't happen. 6 MR. KING: So, can we go through this just real 7 quickly? So, Mr. -- Gulf States Toyota has not increased? 8 They've not had an increase yet? Or they have? 9 MS. DUNGAN: Oh, yes. Every year. 10 MR. KING: Every year. So they're on the -- they 11 get an increase every year. 12 MR. McKENZIE: Everybody is, except -- except 13 Steve. Except Steve. 14 MR. KING: How many years has their lease been in 15 effect? 16 MR. McKENZIE: Their hangar is six years old. 17 MR. KING: Six years old, okay. What about 18 Mr. Stieren? Now, Mr. Stieren's on a different deal, so he 19 has not had an increase yet? 20 MS. DUNGAN: Yes, sir. 21 MR. McKENZIE: He has. 22 MS. DUNGAN: Five percent. 23 MR. McKENZIE: Everybody had one. 24 MR. LIVERMORE: Just no more than 5 percent. Not 25 10 percent. 32 1 MR. KING: So theirs was limited to 5 percent on 2 Stieren. 3 MS. DUNGAN: Mm-hmm. 4 MR. KING: How about Friedkin? 5 MS. DUNGAN: No, no limitation. 6 MR. KING: No limit on him? So he's in the same 7 boat as Mr. Kramer. 8 MS. DUNGAN: Yes, sir. 9 MR. LIVERMORE: Friedkin is Gulf States -- 10 MR. KING: Gulf States Toyota. 11 MR. LIVERMORE: Same one. 12 MR. KING: What about Mr. Kennedy? What is he -- 13 what boat is he in? 14 MS. DUNGAN: Same. 15 MR. KING: He's gone up every year? 16 MS. DUNGAN: Yes, sir, same as the others. 17 MS. BAILEY: Unless we have language in one of 18 these that you want to adopt, I'd suggest that we -- Carole, 19 Bruce, and I get together and pull the leases, pull all the 20 paragraphs, figure out what we want to do, make a new 21 proposed paragraph, and then bring all of that back at the 22 next meeting to say, "Please approve this." 23 MR. WOOD: That sounds reasonable. 24 MR. LIVERMORE: But we need more than one example. 25 We need an example carrying forward. 33 1 MS. DUNGAN: Absolutely. 2 MR. LIVERMORE: First year, second year, third 3 year. 4 MS. BAILEY: At least that way, you can go, "Here 5 are the leases, here's the language in each one," so you know 6 how it's going to affect each one. 7 MR. WOOD: If I remember right, the T-hangar leases 8 don't have any -- 9 MR. McKENZIE: They do not. 10 MR. WOOD: -- inflation. 11 MS. DUNGAN: But the new Brinkman do. 12 MR. KING: Hangar does. Those leases do. Those 13 individual leases, like Mr. MacDonald. 14 MS. DUNGAN: Mm-hmm. 15 MR. WOOD: So, do we want to do this for all 16 leases? 17 MS. BAILEY: I think if we're to do it for one, we 18 should do it for all. Except T-hangars may be different. 19 You may decide you don't want to do it for those, but you 20 may. I mean, if they have leases that don't have an increase 21 in them now, they're probably not going to agree to it. But 22 those renew annually, so we can do it in the next renewal. 23 MR. WOOD: The purpose of the increase is just to 24 have protection against inflation. And, you know, once you 25 have a lease value, the intention is just to keep the airport 34 1 from losing money in case prices go up. 2 MS. BAILEY: Right. But if I'm a tenant that pays 3 $100 a month and you tell me you want to raise it so it's 4 going to be $100 this year, $105 next year, $106 the next 5 year, I'd say no, I'd rather keep the $100 a month. 6 MAYOR PRATT: I've got a question, Steve. 7 MR. KING: Yes, sir? 8 MAYOR PRATT: If you don't include the T-hangars, 9 are you going to have the same conversation several years 10 down the road? 'Cause none of you are going to be on the 11 board. Another board may say, "Well, we didn't -- we're not 12 treating everybody the same." 13 COMMISSIONER MOSER: Back to his point, yeah. 14 That's a good point. 15 MS. BAILEY: Except for the T-hangars are annual 16 leases, not a multi-year lease, so you set the lease -- the 17 rental rate every year. So, I don't think -- I don't 18 think -- it's apples and oranges. 19 MR. WOOD: All I'm saying is the same logic should 20 apply if you're trying to protect yourself from losing 21 money -- 22 MS. BAILEY: No, I agree. 23 MR. WOOD: -- on agreements you made last year. 24 MR. McKENZIE: And to -- and to your point, we went 25 up on the older T-hangars last year. Kirk brought that up. 35 1 MS. BAILEY: Yeah. 2 MR. McKENZIE: That's a different -- it's apples 3 and oranges. 4 (Low-voice discussion off the record.) 5 MR. LIVERMORE: Well, I think we should discuss 6 that. 7 MR. KING: Why don't you discuss it? 8 MR. LIVERMORE: You want me to discuss it? Well -- 9 MR. KING: Wait, Mr. Drane had a question. Maybe 10 he'll bring it up. 11 MR. DRANE: What policy will you do for the 12 overpayments that have accrued? 13 MR. LIVERMORE: That's what we were sitting here 14 talking about -- conferring about. 15 MR. DRANE: I'm not involved, because I haven't 16 been caught in the web yet. 17 MR. LIVERMORE: Well, here's what -- here's my 18 point of view on that. We -- I don't believe -- I think 19 what's paid is paid. We were not aware of it. It was not 20 brought to our attention until you and I -- I didn't know 21 about it till you and I had our meeting, Steve. That was my 22 first inkling of this. And I think we've moved pretty 23 quickly since then. But those who over -- who allegedly 24 overpaid -- I use that word advisedly -- they had a duty also 25 to -- to inform us they were overpaying over those years, and 36 1 I don't believe that, really, we -- I've not ever heard that. 2 And so I think what's paid is paid, and we go forward from 3 here. 4 MS. BAILEY: I -- 5 MR. LIVERMORE: With the proper format. 6 MS. BAILEY: It's important not to be calling it 7 "overpayment," because it's a policy matter of how you 8 calculated it. You calculated it one way in the past, and 9 from this point going forward, the Board is going to -- 10 MR. LIVERMORE: I agree with what she said. I said 11 "advisedly" when I used that word. It wasn't a good word. 12 MR. KING: I guess there's also another point. 13 There's a second part of that, though, is -- and I would just 14 use Gulf States Toyota's lease, for example. Their lease has 15 gone up from "X" number of dollars to "X" number of dollars. 16 Should we adjust their lease back to what it should be? Now, 17 that's not giving them anything back, but should we adjust 18 their lease to be what it should be? In other words, if 19 their lease has gone from $1,000 a month to $1,300 a month, 20 and it should only be $1,150, should we adjust their lease to 21 the $1,150 and start over, basically? And start the process 22 from where it is? 23 MR. GRIFFIN: Or do you accept the current rate, 24 and January 1, you take that rate and do the C.P.I. against 25 that rate? What's going to happen, Steve, if you do the 37 1 first one that you've -- the one you were discussing, I'm 2 afraid, is that our overall budget is going to lose -- our 3 income for 2015 is going to be substantially less than what 4 we have in our current budget. 5 MR. McKENZIE: $6,800 worth. 6 MR. KING: How much is the total? 7 MR. McKENZIE: $6,800 worth. 8 MR. KING: A year? 9 MR. LIVERMORE: That's the impact of the whole 10 thing. 11 MR. KING: Do what, Mr. Drane? 12 MR. DRANE: Have you figured in Joey's leases? His 13 may be significant, 'cause he's got four leases that have 14 been going for -- we may be talking considerably more money 15 than that. 16 MR. McKENZIE: No, we're talking about just this -- 17 just this fiscal year. 18 MR. GRIFFIN: Just a fiscal year. 19 MS. DUNGAN: Joey's doesn't -- it's done a totally 20 different way. 21 MR. McKENZIE: Like yours. 22 MR. DRANE: We'll take a look at it. 23 MR. McKENZIE: What's your question? I don't 24 understand what your question is. 25 MR. DRANE: How much has Joey -- have you looked at 38 1 Joey's leases to see if he's overpaid? 2 MAYOR PRATT: Nobody's overpaid. 3 MR. McKENZIE: We're figuring it correctly. It's 4 just we've decided that we want to take a different tack as 5 to how we figure this. 6 MR. GRIFFIN: From this point forward. 7 MR. DRANE: Okay. 8 MR. McKENZIE: You can argue the point -- 9 MR. GRIFFIN: We're drawing a line in the sand. 10 MR. McKENZIE: Thank you. 11 MR. GRIFFIN: For no better term, to say, okay, 12 every -- let me ask -- I'm going to make a statement. I'm 13 going to ask you a question. 14 MR. DRANE: Okay. 15 MR. GRIFFIN: We're drawing a line in the sand 16 today. I think what we're trying to do is to try to draw a 17 line in the sand and say this is how we want to figure our 18 C.P.A. -- our C.P.I. from this point forward. 19 MR. DRANE: Okay. 20 MR. GRIFFIN: Okay. That being said, as -- as a 21 leaseholder on this airport, do you feel that in the last 22 five years, you've been overpaying? 23 MR. DRANE: Not me in particular, but I think -- 24 MR. GRIFFIN: That's -- 25 MR. DRANE: Mine hasn't been adjusted in five 39 1 years. 2 MR. GRIFFIN: But what I'm saying is, is that -- 3 and that's where I think -- where I'm trying to go, is as of 4 this point today, on the 22nd of October, I'm not sure any 5 one of our lessees has an issue with the amount that they're 6 paying us. 7 MR. DRANE: Contractually, they have paid you too 8 much. 9 MR. GRIFFIN: I'm not even going there, because 10 what we're talking about is from this day forward, how we're 11 going to figure our C.P.I. 12 COMMISSIONER MOSER: That's it. 13 MR. GRIFFIN: We're not talking about how somebody 14 was treated 5, 10, 12, 15 years ago when they signed their 15 lease. What we're trying to establish here is how this 16 board's going to write their leases from this point forward. 17 Now, if you want to get into a negotiation factor about a 18 past lease or something else, that's a different subject, I 19 think. What -- what we're really trying to resolve here 20 is -- 21 MR. LIVERMORE: If I understand what you're saying, 22 I'm in agreement with you. I think we go from the numbers 23 that we have right now, and we adopt a more -- a different 24 calculation method for inflation. 25 MR. GRIFFIN: Yeah. Now, if somebody has a problem 40 1 with what they've paid us in the past, then that's a totally 2 separate issue than what is being brought up here. 'Cause 3 what we're trying to do here is -- is establish how we figure 4 our C.P.I., not what's been done by previous administrations 5 and that kind of stuff. And what we're really -- we're using 6 -- the problem is that we're using real live examples to say 7 how we got to where we are. 8 MR. KING: Yes? 9 MS. DUNGAN: If we're going to redo them as of 10 January with an addendum, are we then going to use the base 11 rent at the time of their signing of the lease? 12 MR. LIVERMORE: That's what we're talking about. 13 MS. DUNGAN: So, we're going back to that, but 14 that's only once we have the amendment to their lease in 15 place? 16 MR. LIVERMORE: I think what he's saying is -- is 17 that we go -- effectively, the current lease is the new base. 18 Is that what you're saying? 19 MR. GRIFFIN: That's where I would start. 20 MR. KING: So that's what I'm trying -- 21 MR. LIVERMORE: Right where we're at. And 22 calculate it and say -- 23 MR. GRIFFIN: Okay, everybody's in line with what 24 they're paying today. You're writing a new lease. 25 MR. WOOD: Okay. So, all the bases are going to be 41 1 reestablished to January 1st? 2 MR. LIVERMORE: Whatever it is right now. 3 MR. WOOD: Right now, okay. 4 MS. BAILEY: The calculation will be specified so 5 that it's clear. 6 MR. GRIFFIN: Which happens -- 7 MR. WOOD: No more compounding; it will be just 8 whatever the C.P.I. increase is this year. 9 MS. BAILEY: Right. 10 MR. KING: I see Mr. Kramer has a perplexed look on 11 his face. I'm sure he has a comment on this situation. 12 MR. KRAMER: You know, I got a base of '09. 13 MR. KING: Right. 14 MR. KRAMER: And I think that's where we need to 15 start on my lease, in '09. 16 MR. KING: Adjusted for each year since '09? 17 MR. KRAMER: C.P.I. to '09, my base in '09 every 18 year. 19 MR. KING: And see what -- where your base should 20 be. 21 MR. WOOD: The C.P.I. base will also move to this 22 year's, so you won't -- 23 MR. KRAMER: C.P.I. moves every year. 24 MS. BAILEY: The base doesn't really matter. It's 25 the C.P.I. change that -- whatever base you figure, you 42 1 figure on that base. And the problem is, the -- we don't 2 want to compound it. 3 MR. WOOD: There's a base rent, and there's a base 4 C.P.I. And that was the problem. 5 MS. BAILEY: Right. 6 MR. WOOD: We were using the base C.P.I. against 7 current rent instead of base rent. 8 MS. BAILEY: Exactly. 9 MR. WOOD: So, as long as you are doing apples and 10 apples, there won't be a problem; you're only going to get 11 the 1 or 2 percent increase. 12 MS. BAILEY: Exactly. 13 MR. KING: I'm not familiar with any -- the only 14 lease I'm really familiar with is Ronnie's, 'cause he brought 15 it to us and we looked at it, but I haven't looked at Joey's. 16 I haven't looked at Mr. Friedkin's, and I haven't looked at 17 Mr. Stieren's. But what was your base rent in '09? What was 18 your rent -- starting rent in '09? 19 MR. KRAMER: 1,092. 20 MR. McKENZIE: $1,091. 21 MR. KING: $1,091? 22 MR. KRAMER: 1,092.63. 23 MR. KING: What is your proposed rent for your 24 current lease? 25 MR. KRAMER: I got a letter yesterday; it's 1,400 43 1 and something. 2 MR. DRANE: 1,455. 3 MR. KRAMER: Mine's going up to 1,600. 4 MR. KING: Your lease has gone up four years? 5 MR. KRAMER: Yeah, four years. 6 MR. KING: So what are you saying? What do you 7 think -- a while ago when you made that comment, what do you 8 think your rent should be? You think your -- what do you 9 think your rent should be? 10 MR. KRAMER: 1,034.31 -- 1,234. -- 11 MS. DUNGAN: Yes. 12 MR. KRAMER: -- .21. 13 MR. KING: How is that figured? 14 MR. KRAMER: That's figuring today's base, C.P.I. 15 on my base at 1,092. 16 MR. GRIFFIN: Taking his 2009 base and putting 17 today's C.P.I. on it. 18 MR. KING: Just refiguring it? 19 MR. GRIFFIN: The way we're saying we're going to 20 do it. It's just a matter of where you start. 21 MR. LIVERMORE: It's gone up how much? 22 MR. McKENZIE: $400. 23 MR. KING: It's gone up $400, and should have gone 24 up 180, basically. So, there's two different -- there's two 25 different -- two different things to look at here. A, 44 1 whether we are refiguring the base, and B, whether you refund 2 any money to people, to give them back any money. And we -- 3 we've kind of agreed we were not going to do that. I 4 think -- I mean, I'm going to -- I'm going to -- I think we 5 need to get some figures together, don't you think? As a 6 board? I mean, we can -- we can do -- go on with this policy 7 like you're saying, Kirk, but -- 8 MR. WOOD: Well, I agree. Keep it simple. Let's 9 just do what he said. 10 MR. KING: I can't believe we're not going to have 11 a line of people out our door come day after tomorrow, 12 wondering -- if we haven't -- the way we look at this clause, 13 if we're having trouble -- if we're having trouble 14 interpreting the clause, I don't understand why they're not 15 going to have any trouble -- 16 MR. GRIFFIN: I'm not -- 17 MR. KING: -- them and their attorneys are not 18 going to have trouble interpreting the clause also. 19 MR. GRIFFIN: I agree with the intent of what has 20 been brought up here in total. It's just the discussion that 21 -- that needs to happen, or the discussion we have to resolve 22 it -- 23 MR. KING: Right. 24 MR. GRIFFIN: -- is, what's the starting point? 25 MR. McKENZIE: Where do we start? 45 1 MR. GRIFFIN: Where do you draw the line in the 2 sand? And that's -- and as a board, with our dollars -- with 3 the dollars that we're talking about, what we have to decide 4 is whether or not we can -- whether our budget can accept 5 that hickey or not. 6 MR. LIVERMORE: Well -- 7 MR. GRIFFIN: And so that's how -- that's how 8 adamant, then, we have to be about, "Can we afford to do this 9 this way?" 10 MR. WOOD: Well, I suggest -- 11 MR. GRIFFIN: We have -- we're saying that we have 12 existing contracts written a certain way. 13 MR. KING: Go ahead, Mayor. 14 MAYOR PRATT: That are negotiable. 15 MR. LIVERMORE: I think there was a duty on the -- 16 on the other side to inform us of this problem a lot earlier 17 than we got it. 18 MR. WOOD: Let's keep this as simple as we can. 19 Let's do the escalation policy, and then you can look at 20 every lease individually, just like what you said. 21 MS. BAILEY: Yeah. I think we're trying to figure 22 what we don't have in front of us, and if we can bring it to 23 you, put it all in front of you, then you can look and say, 24 "Well, this lease, this many dollars, and this lease..." 25 MR. KING: Yeah. Did you have something, Mayor? 46 1 MAYOR PRATT: Yeah, I have a suggestion. Why don't 2 you take two board members and Bruce and Carole, put them 3 together, let them come up with something, and come back to 4 the board with a recommendation? 'Cause you're trying to 5 make a decision now. Just give them a direction and let them 6 come back to you with it. 7 MR. KING: That's fine, I think. 8 MR. LIVERMORE: Yeah. 9 MR. KING: Bruce, if we could do this; let's look 10 at all of the leases that are escalated, and let's -- let's 11 have a start number. Let's find out where they started, when 12 the escalation started, and let's find out what their rent is 13 today, as proposed, what their rent would have been if -- if 14 this would have been figured the other direction, and -- and 15 see what the difference is. And see what the difference is, 16 as it affects -- in other words, if you did roll the clock 17 back and you said Mr. Kramer's lease is now $1,200, what is 18 Mr. Kennedy's and what is Mr. Stieren's and what is 19 Mr. Friedkin's? 20 MR. McKENZIE: We want to compare it. 21 MR. KING: And see what that would do. I'm not 22 saying we go back and basically credit them back for other 23 rent, but let's see what -- how it affects our budget. How 24 it affects our budget. In other words, if we're only going 25 to -- our rent is going to be -- instead of 70,000, we're 47 1 only going to get -- whatever. Okay? And let's find out 2 what all that is. 3 MR. McKENZIE: Sure. 4 MR. KING: So that we can be a little more -- have 5 a better idea what we're talking about here. 6 MR. McKENZIE: Will do. 7 MR. KING: I think the policy is pretty clear. I 8 think the policy is clear. We're going to adjust based on 9 the C.P.I. number. 10 MR. GRIFFIN: That's fine. 11 MR. KING: As it should have been. The base -- 12 MR. McKENZIE: Base. 13 MR. KING: According to the base index as to what 14 it was. 15 MR. McKENZIE: When we started? 16 MR. KING: No, the base, we're going to do it from 17 this -- from some -- this day forward. We're going to adjust 18 whatever -- whatever we start with, we're going to adjust it 19 based on the formula that we have discussed, that increases 20 it by the C.P.I. 21 MR. McKENZIE: Okay, from this point forward. 22 MR. KING: Not by a compounding method. From this 23 point forward. We take the leases and move forward. Are we 24 in agreement with that pretty much, guys? 25 MR. McKENZIE: Where we are now, move forward. 48 1 MR. KING: We just need to find out what the 2 ramifications are of where the base starts. 3 MR. McKENZIE: I will do it, yes, sir, and have it 4 ready for the next board meeting. 5 MR. KING: Is that okay with you, Ronnie? 6 MR. KRAMER: Yes. 7 MR. KING: Is that okay with you, Mr. Drane? 8 MR. DRANE: That's fine. Till December, I'm an 9 innocent party. 10 MR. KING: All right. Let's go -- we'll go from 11 there. 12 MR. McKENZIE: Okay, that will work. 13 MR. KING: Any questions? 14 MR. McKENZIE: Put them side-by-side and look at 15 them. But we know what the policy is now. 16 MR. KING: We know what the policy's going to be. 17 We just need to find out where we're at. 18 MR. McKENZIE: Good. Very good. All right. 19 MR. KING: Okay. Item 4C, proposed -- is that it? 20 We done with that? 21 MR. WOOD: Yeah. 22 MR. KING: Item 4C, proposed storage of courthouse 23 Christmas decorations in Building 18. 24 MR. DRANE: We all have Christmas trees in our 25 hangars, so -- 49 1 MR. McKENZIE: Everybody does. 2 MR. GRIFFIN: I don't. 3 MR. LIVERMORE: We do. 4 MR. McKENZIE: We have -- all of the decorations 5 that are displayed at the courthouse are stored in our 6 building up here right now. 7 MS. HARGIS: Not all of them. We have a whole 8 bunch. 9 MR. McKENZIE: Our building's full; the back is 10 full. I know you've got some too, but we're being pushed 11 out. So, I just wanted the board to know I'm going to do 12 this. I just wanted you to know it. I'm going to put them 13 in Building 18 when they take them down in January, which is 14 over in the horseshoe at Mooney, and get them put away. 15 MR. LIVERMORE: That building is tiny, so they 16 won't get carried away or anything. 17 MR. McKENZIE: They have a security guard over 18 there, and we don't. 19 MAYOR PRATT: Are you going to make them understand 20 that if 18 is needed, that -- that they have to find another 21 place immediately? 22 MR. McKENZIE: And I was assured by the City 23 Manager last year that they would have a building built next 24 year to put those. 25 MAYOR PRATT: If we have somebody that wants that 50 1 building before then, -- 2 MR. McKENZIE: They've got to move out. 3 MAYOR PRATT: -- they've got to move out. I want 4 to make sure that's understood. 5 MR. McKENZIE: I know the guy -- the gentleman 6 that's taking care of that, and I'll make that clear. 7 COMMISSIONER MOSER: I don't think that's a policy. 8 That's your decision, Bruce. Whoever's -- I mean, that's 9 your decision. 10 MR. GRIFFIN: He just wanted to make sure the board 11 was good with it. 12 MR. KING: That's fine. We're not going to ruin 13 Christmas. 14 MR. McKENZIE: I didn't want you to hear it at the 15 coffee shop and then come back, "Why are you..." anyway, 16 okay. Thank you. 17 MR. LIVERMORE: The rumor will come back, "Steve 18 King rained on Christmas." (Laughter.) 19 MR. KING: I'm not voting against Christmas. Not 20 going to propose anything against Christmas. 21 MR. McKENZIE: Thank you. I'm done. 22 MR. KING: Item 4D, proposed site for corporate 23 hangars. I guess somebody else has got this, 'cause I don't 24 know anything about it. 25 MR. GRIFFIN: Yeah. What this is, it's happened 51 1 several times, is that Bruce has had somebody come in and 2 ask, you know, "I'm interested in doing a -- building on your 3 facility. Where can I build?" And so Bruce goes, "Oh, well, 4 we've got a whole bunch of open space. Where would you like 5 to build?" And in some conversations that Bruce and I had 6 while we were watching them build the T-hangars, we were kind 7 of looking around going, you know, "This would be a good 8 location. This would be a good location." The thought here 9 is that over the next couple months -- there's no time 10 frame -- that the board members think about this and we look 11 at options, so that if somebody walks in the door and says, 12 "I want to build a hangar that's 100 by 100," Bruce has got 13 places that the -- right now, he would have to -- if somebody 14 came in and said that and was ready to go tomorrow, Bruce 15 would have to say, "Well, I've got to get the board together 16 and agree to where we can put this building." 17 MR. LIVERMORE: We don't have that in the master 18 plan? 19 MR. GRIFFIN: We have -- 20 MR. McKENZIE: Yes. 21 MR. GRIFFIN: We have location desires in the 22 master plan, but we -- what we haven't done is give Bruce the 23 okay to say -- if somebody walks in and says, "I want to 24 build a hangar next to Mr. Kramer's" up there, he'd still 25 have to come to us and say -- you know, what I was thinking 52 1 was is if we could shorten that cycle to where we would say, 2 "This location, this location, and this location are our 3 prime locations that we" -- 4 MR. LIVERMORE: Priority 1, Priority 2. 5 MR. GRIFFIN: Yeah. And then if somebody walks in 6 the door and says, "I want to do this," Bruce can say, 7 "Here's where you can go." We're ready to take your money 8 and go. 9 COMMISSIONER MOSER: I have a suggestion. You have 10 a master plan, which we spent a lot of money and a lot of 11 time looking at multiple options, so that's kind of the 12 concept -- the framework for it. If somebody -- it's pretty 13 significant putting a new facility out here, new building. 14 If somebody comes and wants to do one, whether it's with the 15 master plan or not, what's wrong with convening a special 16 meeting of the Airport Board? 17 MAYOR PRATT: How about the planning committee 18 first? 19 COMMISSIONER MOSER: Well, that -- it's on -- 20 MR. GRIFFIN: We've already got the planning part 21 done. That's the master plan. 22 COMMISSIONER MOSER: Yeah, you got the master plan, 23 so just to consummate the deal, what's wrong with having -- 24 instead of waiting a month, if you had to, if it's going to 25 hold somebody up, have a special meeting. 53 1 MR. GRIFFIN: That's always the case. I was just 2 wondering if it wasn't easier to say, you know, our prime 3 spot for growth is here. 4 COMMISSIONER MOSER: Could be. I don't know. 5 MR. GRIFFIN: If -- and if there was any benefit to 6 it. That's why I put it on here, just to have the 7 discussion. Not to -- 8 MR. KING: I think one of the problems in that 9 scenario is there's no place to build on this airport. 10 There's only one place you can build on this airport without 11 spending a huge amount of money for infrastructure. There's 12 only one place, and that's over there next to Mr. Drane; 13 there's a spot over there. But any other place on this 14 airport, if you want to build, it's going to cost you a huge 15 amount of money to put a road in here. We've already -- 16 we've looked at this in-depth. I mean, if you want to build 17 next to Brinkman over here, yeah, the hangars are great. 18 That road is not right. It has -- Bruce and I have been out 19 there with a surveyor, so you have to take the grade down 20 to -- 21 MR. McKENZIE: Two percent. 22 MR. KING: -- two percent. We had a surveyor out 23 there; you got to cut almost five feet out of the hill to get 24 to the top of the hill. And it's -- I mean, it's a big 25 number. Over here next to Ronnie, you can build over there, 54 1 but you're going to have to make a deal with Ronnie to go 2 through his parking lot, because there's a drainage ditch 3 down there; you can't get out. 4 COMMISSIONER MOSER: And I think during the master 5 plan, we looked at all the options on how to do it, and we 6 understood there was a slope issue, and we talked about -- if 7 I recall, we talked about if somebody wants to do it, then we 8 would abate their rent or whatever if they helped, you know, 9 with the infrastructure change. We recognize it's an issue, 10 you know. 11 MR. KING: Yeah. 12 COMMISSIONER MOSER: The hills are the hills. 13 MR. KING: And so I think it kind of -- it almost 14 takes care of itself. And I agree with Kirk; it would be 15 nice if we had a -- a little direction we would give these 16 guys, because the first thing we have to explain to them is, 17 that, you know, we don't have any money to build -- 18 MR. GRIFFIN: Absolutely. 19 MR. KING: -- giant roads. You know, giant 20 taxiways up hills. 21 COMMISSIONER MOSER: Give them a special deal on 22 C.P.I. 23 MR. KING: Or give them a special deal now. 24 MR. GRIFFIN: You would bring that up. 25 MAYOR PRATT: But they're going to be talking to 55 1 Bruce about that anyway. Why micromanage Bruce? Let him do 2 his job. 3 MR. GRIFFIN: Well, yeah. 4 MR. KING: I agree. I mean -- 5 MR. LIVERMORE: I have a question. Is what I'm 6 hearing that our infrastructure here is -- is almost to the 7 point that it precludes any new expansion? 8 MR. McKENZIE: No. 9 MS. BAILEY: Nothing precludes expansion. 10 MR. McKENZIE: All behind this area back here to 11 our east, we have three-phase power, sewer, water, and 12 electric. All this property -- it's in our master plan; it 13 shows that, as well as down by the T-hangars. And like Steve 14 said, that's a prime spot down there, just beyond where the 15 self-service fuel pump is. 16 MR. KING: Right. 17 MR. McKENZIE: But you're going to have to build a 18 road there. But beyond this, there's still water, sewer, and 19 electric. 20 MR. KING: We have utilities to all these lessees. 21 MR. McKENZIE: It's just the road and taxiway. 22 MR. KING: The F.A.A. has a weird deal about 23 taxiing planes uphill. You can't taxi up a hill over a 24 certain grade. 25 MR. McKENZIE: Two percent. 56 1 MR. KING: And they're very -- 2 MR. DRANE: I think they're more worried about 3 downhill, Steve. Most of us don't have reversible 4 propellers, so it can get fun. 5 MR. KING: But that can be overcome. I've been a 6 huge proponent of this over the last 10 years, is that, you 7 know, when you have someone coming in, like a corporate 8 tenant come in that's going to build a $500,000, a $1,000,000 9 hangar, is that we have options with them to get them to 10 build some of this stuff. I was a huge proponent of having 11 Mr. Friedkin not build his hangar on the ramp out here, so he 12 could park nothing in it and sit there and pay us for a 13 ground lease, when it would have been a really cool idea to 14 get him to build his hangar back further and get him to fund 15 part of that road, maybe give an abatement on his rent, abate 16 his rent the next 10 years. You got to get creative with 17 some of these ideas to get some of this infrastructure paid 18 for by other people. And we just get it paid out over a -- 19 over a term. So, I mean, I think there is development to be 20 done, but it's just going to have to be -- we're going to 21 have to have some cooperation. Somebody's not going to build 22 a 40-by-40 hangar back there. There's not going to be enough 23 revenue to -- to make it work, but it can be done. 24 MR. WOOD: Right. 25 MR. GRIFFIN: Thanks. 57 1 MR. KING: Okay. General update, Item 5A. 2 MR. McKENZIE: T-hangars are all full. The erosion 3 matting is in place. Next Tuesday -- 4 MR. LIVERMORE: Looks good, too. 5 MR. McKENZIE: Thank you. 6 MR. LIVERMORE: 'Cause I was bitching about it, and 7 that's why -- griping about it, but it looks good. 8 MR. McKENZIE: Next Tuesday, we're scheduled to do 9 the sealing of all the asphalt down there, so you won't be 10 able to -- I sent everyone an email that has a hangar down 11 there. You won't be able to access your hangar until about 12 noon Wednesday. At a later date, probably two to three weeks 13 later, we'll come back in and stripe that area. Beyond that, 14 that's -- 15 MR. WOOD: Want to tell them about the lease 16 signing? 17 MR. McKENZIE: And we signed the lease with 18 Dr. Jerry Chen Monday morning, and the Mayor was here for 19 that lease signing for the Mooney lease. Thank you. 20 MR. LIVERMORE: When they do the stripe painting -- 21 I presume you're talking about on the asphalt. 22 MR. McKENZIE: The yellow there. 23 MR. LIVERMORE: Are they going to be careful to 24 line those lines up with the middle of the parking area 25 within the hangars? 58 1 MR. McKENZIE: Yes, it will be to the middle of the 2 hangar. 3 MR. LIVERMORE: The middle of the parking area? 4 MR. McKENZIE: Yes, where your aircraft sits. 5 MR. LIVERMORE: Some of these hangars have this 6 big -- 7 MR. McKENZIE: It will be to the center. 8 MR. GRIFFIN: Maybe the center of the opening's a 9 better way to say it. 10 MR. LIVERMORE: If you put it in the center of his 11 opening, it will be -- 12 MR. GRIFFIN: Right in the middle of his door. 13 MR. McKENZIE: Middle of the door. 14 MR. LIVERMORE: That's right, your door doesn't go 15 all the way. Okay, you're right. 16 MR. McKENZIE: Middle of the door, exactly. 17 MR. KING: Anybody else have anything else? 18 Anybody from the audience? No? Any questions on the C.P.I.? 19 (Laughter.) 20 MR. LIVERMORE: Or Christmas trees. 21 MR. KING: That's all. Motion to adjourn? 22 MR. LIVERMORE: So moved. 23 MR. WOOD: I second. 24 MR. KING: All in favor -- second by Mr. Wood. All 25 in favor? 59 1 (The motion carried by unanimous vote, 4-0.) 2 MR. KING: Adjourned. 3 (Airport Board meeting was adjourned at 9:36 a.m.) 4 - - - - - - - - - - 5 6 STATE OF TEXAS | 7 COUNTY OF KERR | 8 I, Kathy Banik, official reporter for Kerr County, 9 Texas, do hereby certify that the above and foregoing is a 10 true and complete transcription of my stenotype notes taken 11 at the time and place heretofore set forth. 12 DATED at Kerrville, Texas, this 24th day of October, 13 2014. 14 _______________________________ Kathy Banik, Texas CSR # 6483 15 Expiration Date: 12/31/16 Official Court Reporter 16 Kerr County, Texas 700 Main Street 17 Kerrville, Texas 78028 Phone: 830-792-2295 18 19 20 21 22 23 24 25