1 2 3 4 KERRVILLE-KERR COUNTY JOINT AIRPORT BOARD 5 Regular Meeting 6 Monday, January 19, 2015 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 Ed Livermore Corey Walters, 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 Jonathan Letz, Commissioner Pct. 3 20 Jeannie Hargis, Auditor James Robles, Assistant Auditor 21 22 CITY STAFF PRESENT: Jack Pratt, Mayor 23 Sandra Yarbrough, Finance Director 24 VISITORS: 25 Tom Bowen, Mooney International 2 1 I N D E X January 19, 2015 2 PAGE 3 CALLED TO ORDER 4 1. VISITORS FORUM - 5 2. KERRVILLE-KERR COUNTY JOINT AIRPORT BOARD 6 MEMBER FORUM 3 7 3. CONSENT AGENDA 3A Approval of Nov. 25, 2014 board meeting minutes 4 8 4. DISCUSSION AND POSSIBLE ACTION 9 4A Monthly Financials - October, November & December 5 10 4B Recognition of Dugosh Aviation -- 11 4D Future use of Buildings 17, 18, and 19 11 12 4C Airport Audit presentation 22 13 5. INFORMATION AND DISCUSSION: 5A General Update 33 14 6. EXECUTIVE SESSION -- 15 7. ADJOURNMENT 42 16 17 18 19 20 21 22 23 24 25 3 1 On Monday, January 19th, 2015, 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: 6 P R O C E E D I N G S 7 MR. KING: All right, I'll call the meeting to 8 order of the Kerr County -- Kerrville/Kerr County Joint 9 Airport Board, January 19th, 2015, regular meeting. 10 Visitors' forum. At this time, any person with business not 11 scheduled on the agenda may speak to the Airport Board. No 12 deliberation or action may be taken on these items because 13 the Open Meetings Act requires an item be posted 72 hours 14 before the meeting. Visitors are asked to limit their 15 presentations to three minutes. Anybody? No. Kerrville 16 Joint Airport Board Member Forum. At this time, any member 17 of the Airport Board may speak to the board or the public 18 present on any matter not scheduled on the agenda. No action 19 may be taken because the Open Meetings Act requires it to be 20 posted for 72 hours. Anybody? I guess I'd like to say one 21 thing about Jeannie. This is probably Jeannie's last meeting 22 with us, and she's going to be moving on in -- May? In 23 March? Or -- 24 MS. HARGIS: March. 25 MR. KING: I just want to say how much we 4 1 appreciate all the help you've given the Airport Board over 2 these many years, as long as I've been a part of it. 3 (Applause.) 4 MR. KING: Thank you for helping us understand -- 5 MS. HARGIS: I've enjoyed it. 6 MR. KING: -- understand the finances of our own 7 Airport Board, and we appreciate everything you've done. 8 MS. HARGIS: Thank you. 9 MR. KING: Look forward to seeing you around town, 10 and -- 11 MS. HARGIS: You've got to come to New Mexico. 12 MR. KING: That's right, you're moving, aren't you? 13 Well, thank you very, very much for everything, Jeannie. 14 You've done a great job. Consent agenda. All items on this 15 -- all items listed below within the consent agenda are 16 considered routine by the board and will be enacted in one 17 motion. There will not be separate discussion of the items 18 unless a board member or citizen requests, in which event 19 each item will be removed from the general order of business 20 and considered in its normal sequence. Approval of the 21 November 25th special board meeting minutes, Item 3A. 22 MR. GRIFFIN: I make a motion we approve as 23 written. 24 MR. KING: Motion to approve, Kirk. Second? 25 MR. WALTERS: I second. 5 1 MR. KING: Second by Mr. Walters. Any discussion? 2 All in favor? 3 (The motion carried by unanimous vote, 4-0.) 4 MR. KING: That's 4-0. Ed Livermore is not with us 5 today. Item 4A -- Discussion and Possible Action. 4A -- 6 Item 4A, monthly financials, November and December. James? 7 MR. ROBLES: I thought we had October. 8 MR. GRIFFIN: October too. 9 MR. KING: October, November, and December. 10 MR. WOOD: We should just have him do December. 11 MR. GRIFFIN: Is there any reason to go back, 12 James? 13 MR. ROBLES: Not unless y'all want to. 14 MR. KING: Yeah, let's do December. 15 MR. ROBLES: Did all that work. 16 (Laughter.) 17 MR. KING: Be aware, we did read them all, though. 18 MR. WOOD: Yes. Yes, we did read them. 19 COMMISSIONER MOSER: They were so good, no 20 questions. 21 MR. ROBLES: All right, December. 47, balance 22 sheet, Page 1. Cash and receivables, 329,483.78. Payables 23 at 99,695.09. Page 2, total equity and revenue over 24 expenditures, 229,788.69. Page 3 is the revenue, monthly 25 revenue, 43,069.90. Year-to-date, $122,843.80. Page 4, 6 1 salary and benefits, 20,891.06 for the month; 46,285.10 for 2 the year. Page 5 is personnel, supplies, maintenance, and 3 professional services. You'll see here on 47-800-010, we 4 still have a credit in that expense. That is from the 30,000 5 that we still owe them for the consultant. Once we pay that, 6 that should -- 7 MR. GRIFFIN: That's for the consultants, right? 8 MR. McKENZIE: Mooney roof. 9 MR. ROBLES: The only other thing of interest is we 10 are over in the vehicle maintenance. That's from mower 11 repair. Page 6, utilities, 6,060.54. Total monthly 12 expenditures, 42,745.30 -- .35, excuse me. 13 MR. WOOD: Question. Under utilities, I think I 14 had the same question before. I was just looking at how big 15 the number was year-to-date versus prior year-to-date, and 16 there's $12,000 in there for reserve for capital. I still 17 wonder why that's under utilities. 18 MR. ROBLES: Isn't that the one that we discussed? 19 (Low-voice discussion off the record.) 20 MS. DUNGAN: There really isn't a good reason. 21 That was the tractor and a crew for another truck, so 22 where -- 23 MR. WOOD: I mean, it's no big deal. I'm -- just 24 in case anybody wanted to put it in a different section, I 25 thought I'd point it out. 7 1 MS. HARGIS: We can move it. Where do you want us 2 to move it? 3 MR. WOOD: Well, I just didn't -- 4 MS. HARGIS: We don't really have a capital 5 section. 6 MR. WOOD: Okay. So it's got to go somewhere. 7 MS. HARGIS: Mm-hmm. We can move it under -- 8 MR. ROBLES: Under maintenance. 9 MS. HARGIS: -- under maintenance, if that's where 10 you want it. 11 MR. WOOD: That would make more sense. 12 MR. GRIFFIN: 47-800-250. 13 MS. HARGIS: We'll just move the whole account, and 14 save -- and just transfer the information. We can do that. 15 MR. WOOD: If somebody was trying to track how they 16 were -- how you utilities were working, this would kind of 17 distort it. 18 MS. HARGIS: Okay. That's a good suggestion. 19 MR. ROBLES: And Carole and I are working on 20 clearing out some of the these accounts that have not had 21 activity for the last several years, so next month we may see 22 this shrink a little bit to be more simple. 23 MR. GRIFFIN: Good. 24 MR. WOOD: Thanks. 25 COMMISSIONER MOSER: Hey, James, on Page 6, on 8 1 total airport, percent of budget remaining, a hundred -- I 2 guess, a hundred -- oh my gosh, 123 percent? 3 MS. HARGIS: Which page? Six? 4 COMMISSIONER LETZ: I've got 92 percent. 5 COMMISSIONER MOSER: Oh, I'll be darned. 6 MS. HARGIS: You've probably got the wrong month. 7 MR. KING: What month are you on? 8 COMMISSIONER LETZ: You're on October, though. 9 COMMISSIONER MOSER: Oh, okay. All right. The 10 number -- okay, nevermind. Cancel that. 11 MR. ROBLES: Page 7, terminal. Utilities for the 12 month, 1,362.46. Page 8 is the capital account, balance of 13 68,269.23. Page 9, revenue. Year-to-date revenue, 14 25,006.31. The County still owes the RAMP grant match; we're 15 working on that. We'll have it in by the end of the month. 16 Page 10, expenditures. Year-to-date, 22,978.75. And Page 17 11, again, year-to-date, 20,978.75. 18 MR. KING: What was that on RAMP grant, Bruce? 19 What did you spend on RAMP grant, the 9,000? 20 MR. McKENZIE: We have spent -- 21 MR. ROBLES: 22,978. 22 MR. KING: Year-to-date. Monthly expenditures, 23 9,000? 24 MR. McKENZIE: You want to know what it was for? 25 MR. ROBLES: I got you. Let's see. 9 1 MS. DUNGAN: Earnest Roofing. 2 MR. McKENZIE: We fixed the Brinkman hangar. 3 MR. KING: How much was that? 4 MR. McKENZIE: $7,200 to fix that. 5 MR. KING: Really? 6 MS. DUNGAN: Part of it is the asphalt repair at 7 the gate. 8 MR. McKENZIE: A little bit of asphalt work out 9 here that has not been fully completed yet. 10 MR. KING: Okay. 11 MR. WALTERS: Did we bid that hangar project? 12 MR. McKENZIE: No, it was less than $50,000, and it 13 was an emergency, so I got the one I knew I could depend on 14 to get it done the quickest. 15 MR. KING: How'd that work out? Is it fixed? 16 MR. McKENZIE: Yes, sir, it's fixed. We've had one 17 small rain since then, but we haven't had a real significant 18 rain event since then. 19 MR. KING: How long did it take them to do that? A 20 couple days? 21 MR. McKENZIE: Two days. 22 MR. GRIFFIN: Did most of it over a weekend. 23 MR. McKENZIE: Saturday and Sunday. 24 MR. KING: 19,400, T-hangars, what's that? Is that 25 our payment? 10 1 MR. McKENZIE: That is -- that was the last payment 2 to Robert. 3 MR. KING: That's finished? 4 MR. McKENZIE: We're finished paying Mr. Lansford, 5 yeah. 6 MR. ROBLES: Yeah, Draw 5. 7 MR. McKENZIE: That was the last draw. 8 MR. KING: He came and fixed all those -- we've 9 resolved the problem with the water running underneath the 10 T-hangars? 11 MR. McKENZIE: Yes, they're supposed to be here 12 this week or next. The material is here to put the little 13 rubber gaskets on, so that's coming, yes, sir. 14 MR. KING: Okay. 15 MR. McKENZIE: And that's still warrantied. He's 16 going to stay with us to fix it, anyway. 17 MR. KING: Okay, good. Okay. Anything else, 18 James? Is that it? Any questions on the budget -- on the 19 financials? All right. Need a motion to approve. 20 MR. WOOD: Make a motion -- 21 MR. KING: All three months, I guess. All three 22 months. 23 MR. WOOD: Yeah. I so move. 24 MR. KING: October, November, and December 25 financials. Second? 11 1 MAYOR PRATT: Steve, I've been pretty quiet on this 2 for a while, but you really need to accept the financials. 3 They can't be approved until an audit is done. 4 MR. KING: Until what? 5 MAYOR PRATT: An audit is done. You just accept 6 them. 7 MR. KING: Accept them, okay. 8 MR. WOOD: Change my motion to accept them. 9 MR. KING: Okay, accept them. We'll accept them, 10 then. Seconded by who? 11 MR. GRIFFIN: I'll second. 12 MR. KING: By Kirk. And any discussion? No 13 discussion. All in favor? 14 (The motion carried by unanimous vote, 4-0.) 15 MR. KING: 4-0. Okay, Item 4B. We're going to 16 postpone that till next month. Item 4C, airport audit 17 presentation. Is he here? 18 MS. HARGIS: He's supposed to be here at 9:00. 19 MR. KING: Okay, we'll move that until he gets 20 here. Item 4D, future use of Buildings 17, 18, and 19. 21 MR. GRIFFIN: I just wanted to bring up that we've 22 had those buildings now for a year, and start talking about 23 what we need to do over there. And we've received an e-mail 24 from Mooney last week that says that they have some things 25 they want to talk to us about, but next month. And I'll 12 1 defer that, and it will be next month. There wasn't anything 2 at present, so -- 3 MR. BOWEN: Yeah. 4 MR. GRIFFIN: -- it was just -- we've got those 5 assets, and we need to start trying to figure out what we're 6 doing with that stuff. 7 MR. BOWEN: And I can give you a brief update. 8 MR. KING: Could do you that, Tom? 9 MR. BOWEN: Sure, absolutely. 10 MR. KING: State your name. 11 MR. BOWEN: Tom Bowen, Chief Operating Officer, 12 Mooney Airplane -- Mooney International. So, in October, we 13 got the formal approval from the I.R.S. to form a 501(c)(3), 14 so we are now an official 501(c)(3). It's called the Mooney 15 Educational Foundation. Mayor Pratt was our first donor to 16 the foundation, so thank you, Mayor. And we -- you know, you 17 have formal bylaws, and we're going to review and approve our 18 bylaws and move on to appointing a board of directors. So, 19 the other big news is we've formed a partnership with the -- 20 the Galveston Lone Star Aviation. 21 MR. McKENZIE: That's good. 22 MR. BOWEN: And part of that partnership is, right 23 now, they have an aviation learning center, and they use a 24 Cirrus. I mean, I just can't imagine a bigger insult in the 25 state of Texas. (Laughter.) So, they use a Cirrus as the 13 1 centerpiece of their aviation learning center. What happens 2 in the learning center is they have an education program, 3 part of their STEM initiatives; science, technology, 4 engineering, math. And the students come in; they learn 5 about meteorology, aircraft design, aerodynamics, and it's a 6 whole-day program where they come in and they go from station 7 to station, and they learn -- you know, have these little 8 courses. Then they actually preflight the airplane, which is 9 located in the big hangar, and then they get in a Redbird 10 simulator -- I don't know if any of you have been there -- 11 and actually do a flight plan, and they fly from Point A to 12 Point B. So, our partnership is going to replace that Cirrus 13 with a Mooney Ovation, and it will be redone completely, and 14 it will be the centerpiece. They're actually moving their 15 museum. 16 COMMISSIONER MOSER: To? 17 MR. GRIFFIN: They're moving it up to Ellington, 18 getting off of the shoals, 'cause of the damage they 19 experienced in the last hurricane. 20 MR. WOOD: What's the name of the Galveston -- 21 what? 22 MR. GRIFFIN: Lone Star Flight. 23 MR. KING: It's a great museum. 24 MR. BOWEN: Yeah. 25 MR. McKENZIE: Till it washed away. 14 1 MR. KING: Six foot under water. 2 MR. BOWEN: And it also has the Texas Aviation Hall 3 of Fame also co-located with it. So, we're in a partnership 4 with the Lone Star Museum. Part of that partnership is 5 they're actually going to have a -- they're going to help us 6 establish a STEM program here in Kerrville at what we 7 anticipate to be the Mooney History Museum. So, we'll be 8 establishing an A.L.C. here on a smaller scale. I think they 9 have 10 simulators. We're working with Peter Lewis in town, 10 the architect, Peter Lewis, and laying out a facility that'll 11 have two to three simulators, and of course have a Mooney as 12 its centerpiece. 13 MR. WOOD: If y'all don't know about Redbird, 14 they've got a big -- I guess their main base is in San 15 Marcos. 16 MR. BOWEN: Yeah. 17 MR. WOOD: And those simulators are unbelievable. 18 It's like a little building you walk into and the stuff 19 moves, and you got a big screen, and it's like really flying. 20 MR. BOWEN: We've purchased three of their 21 simulators already. We sent one to China. There's one in 22 California. And if you want to see it any time, we have one 23 in the hangar over here. 24 MR. KING: Oh, really? 25 MR. BOWEN: At Kerrville, yeah. 15 1 COMMISSIONER MOSER: So, how many degrees of 2 freedom is it? 3 MR. BOWEN: It's three-axis. 4 COMMISSIONER MOSER: Three-axis, 3 degrees. 5 MR. WOOD: Did our flight instructors talk to you 6 about using those at all? 7 MR. BOWEN: You know, we really haven't -- we 8 really haven't put our personnel together to the point where 9 we can accept outside flight training. But all the employees 10 are welcome to get free flight training. 11 MR. WOOD: For an instrument rating, this is 12 something that's really valuable, 'cause you don't spend time 13 in the airplane, and you get credit for it. 14 MR. BOWEN: And it is Mooney-specific to the 15 performance. The characteristics of the aircraft -- of the 16 simulator are characterized to the aircraft, so it's pretty 17 neat. And we can do all of our instrument proficiency 18 through it, 'cause it's a -- whatever, a Level 2. So, we're 19 working with Peter Lewis, and our main focus today has been 20 on Building 18. And I don't know if a lot of you know the 21 history of Building 18, but at one point, both Art and Al 22 Mooney occupied Building 18. It's always been the R & D 23 facility for all new models -- most of the new models; there 24 were a couple that they drew up on the floor. But it has a 25 lot of history. It has a lot of attachment to -- to Mooney. 16 1 And, in fact, we're still using the static test annex. We 2 just repaired the roof, and put the doors back together. 3 MR. McKENZIE: I noticed that. 4 MR. BOWEN: We're going to start. We have -- we 5 have two new models of M20 that are going to debut this year, 6 and we're going to be doing static testing here in a month or 7 so. In addition, we've asked Chino -- our sister company in 8 China just announced a smaller plane, an M10. We are on the 9 bidders list, if you will, to do all of their static testing 10 and all their fatigue testing, so that is still a very active 11 part of our business plan and our model development. So, 12 like I said, we've been focusing on Building 18 as the 13 cornerstone of what we would envision as a future aviation 14 museum focused on Mooney history, and our aviation learning 15 center. So -- 16 COMMISSIONER MOSER: Two questions. How many -- 17 what's your goal on your -- on the money to raise for your 18 501(c)(3), or do you have a goal like that? 19 MR. BOWEN: We have seed money from the parent 20 company. 21 COMMISSIONER MOSER: Okay. 22 MR. BOWEN: In the amount of around $800,000. 23 COMMISSIONER MOSER: Okay. But do you want to 24 get -- do you have a goal to get to? 25 MR. BOWEN: Not yet, because we haven't really -- 17 1 COMMISSIONER MOSER: Good enough. And how many 2 students go through the one in Houston? Do you know? 3 MR. BOWEN: I don't, but it's in the thousands. 4 COMMISSIONER MOSER: Is it? Okay. 5 MR. BOWEN: It's in the thousands they can accept. 6 COMMISSIONER MOSER: Okay. 7 MR. BOWEN: Yeah. They can accept, I think, 200 a 8 day. 9 COMMISSIONER MOSER: Wow. 10 MR. BOWEN: Two programs, 200 students a day. 11 COMMISSIONER MOSER: Wow. Okay, thank you. 12 MR. KING: So, Tom? 13 MR. BOWEN: Yeah? 14 MR. KING: Are you talking about -- 18 is the 15 horseshoe, right? 18 is the horseshoe. Are you talking 16 about using that as the museum completely, or what about -- 17 what the other building? 18 MR. McKENZIE: 17. 19 MR. GRIFFIN: 17 is the office. 20 MR. KING: Offices and stuff. Do y'all have any 21 use for Building 17? 22 MR. BOWEN: No. They're in such bad shape -- 17, I 23 don't even think you could occupy. I think they have mold 24 issues. 25 MR. McKENZIE: You cannot -- there's significant 18 1 issues besides mold. 2 MR. BOWEN: So, the layout we did with Peter 3 Lewis was taking 17 out, building a new annex that would feed 4 -- that would be, let's say, perpendicular to 18. 5 MR. KING: Yeah, 18. 6 MR. BOWEN: And it would be a -- it would be a 7 reception hall. 8 MR. KING: Right. 9 MR. BOWEN: And a display area and a theater, -- 10 MR. KING: Sure. 11 MR. BOWEN: -- et cetera, et cetera, that would 12 feed into Building 18, which would be put together -- it's 13 like a series of dioramas. This is the concept so far. 14 MR. KING: Okay. 15 MR. BOWEN: Reflecting the decades of advancement 16 of Mooney aircraft. 17 MR. KING: Okay. Okay. 18 MR. BOWEN: And keeping the static test annex as a 19 working lab. 20 MR. KING: As a working lab, I got you. 21 MR. GRIFFIN: And then 19 is the -- 22 MR. KING: And 19 -- no use for 19? 23 MR. BOWEN: We don't, unless somebody could come up 24 with a magic wand and make that an acceptable paint facility. 25 I'm afraid it's out of our scope right now. 19 1 MR. KING: Yeah. Where are y'all painting 2 airplanes now? 3 MR. BOWEN: We're using Tejas over in San Marcos. 4 We're heading down to Hondo to talk to the Corrigans. I 5 think next month -- no, March, we jump to two airplanes a 6 month. 7 MR. KING: Right. 8 MR. BOWEN: And we're really going to be impacted 9 hard through outside painting. We still could really use a 10 top-notch paint shop, but I don't know how to make that hoop 11 yet. That's what we've been doing. And all of the money 12 we've been spending so far is just coming out of our general 13 budget. The company itself is -- is funding that. The -- 14 the money -- the seed money from the sale of the airplane is 15 just in reserve. 16 MR. KING: It's in reserve, okay. What's the 17 timeline on this? Do y'all have a timeline? 18 MR. BOWEN: Once we get the board -- once we got 19 the board formed, I think we're probably looking at, you 20 know, four, five months to get really organized to start our 21 -- our other fundraising initiatives. 22 MR. KING: Mm-hmm. 23 MR. BOWEN: So we'll be back. 24 MR. KING: Okay. 25 MR. WOOD: How have sales gone? 20 1 MR. BOWEN: Sales are -- sales are good. 2 MR. WOOD: First couple are going to China? 3 MR. BOWEN: Yeah. We've run into a little bit of a 4 hitch with the F.A.A. Even though we've maintained our type 5 certificate and our production certificate, the F.A.A. has 6 not turned us loose to license our airplanes. So, you know, 7 it's kind of the perpetual story with the F.A.A. 8 MR. WOOD: "We're not happy till you're not happy." 9 MR. BOWEN: They trust you, but they don't trust 10 you. So, we're working through those issues. The first 11 licensable airplane is ready today for the F.A.A. to come up 12 and give its blessing, so they've made the statement they 13 want to do three airplanes. They want to personally license 14 three airplanes. The first one's an Ovation, and then two 15 Acclaims follow right after that. So, our sum total of 16 deliveries in 2014 was zero, because we couldn't license an 17 airplane. All seven of those airplanes from the last year's 18 production will be delivered here in the next month to month 19 and a half. We're -- our production goal for this year is 24 20 aircraft, and half of those are sold, so we feel pretty 21 fortunate with that. 22 MR. WOOD: That's great. 23 MR. KING: What percentage of those will stay in 24 the states? Do you know? Most of them? 25 MR. BOWEN: I think we'll probably see -- our plan 21 1 right now is for 10 airplanes to go to China. 2 MR. KING: Ten to go to China? 3 MR. BOWEN: Yeah. 4 COMMISSIONER MOSER: Any that have opened up over 5 there at all, as far as clearances? 6 MR. BOWEN: Air space is making small 7 incremental -- 8 COMMISSIONER MOSER: Okay. 9 MR. BOWEN: -- progress. The biggest thing right 10 now is qualified operators. To be able to own and operate an 11 airplane in China, you have to be a qualified operator. The 12 Chinese C.A.C. doesn't even have a definition of an approved 13 operator, so that's where they're struggling right at the 14 moment, is maintenance, flight instruction, and then 15 qualified operators. So it would be like everyone in the 16 U.S. that wants to operate an airplane has to have a Part 17 135, basically is what it ends up being. 18 MR. KING: Okay, Tom. Well, thanks for -- 19 MR. McKENZIE: Appreciate it. 20 MR. BOWEN: I'll try and make it by more often, 21 give you better updates. 22 MR. KING: Let us know if you need anything, or you 23 want to make another update. We don't have an update on the 24 roof? 25 MR. McKENZIE: I do. We're going to hit that in 22 1 the general update. 2 MR. KING: Okay. All right. Anything else on 4D? 3 MR. GRIFFIN: No, sir. 4 MR. KING: Information and Discussion. Item 5, 5 general update. 6 MR. McKENZIE: You want that now? 7 MR. KING: Wait, I'm sorry. He's here; I saw him. 8 MR. McKENZIE: Keith has arrived. 9 MR. KING: Morning. 10 MR. McKENZIE: Have a seat. 11 MR. NEFFENDORF: Everybody doing all right today? 12 MR. WOOD: Good to see you again. 13 MR. NEFFENDORF: Good seeing y'all. I apologize in 14 advance if I get a hacking spell. It's cedar fever; it's 15 not -- I don't have the Ebola or flu. It's just cedar fever. 16 MR. KING: Good to know. 17 MR. NEFFENDORF: Eat cedar berries. 18 MR. McKENZIE: Right. 19 MR. NEFFENDORF: Or even go to the coast with the 20 salt air. It's amazing what that does, too. But -- and, of 21 course, now they've taken to drops; everybody wants to do the 22 drops. So -- okay. Well, the audit for the airport, again, 23 the audit report has to comply with all the GASB -- 24 Governmental Accounting Standards Board -- A.I.C.P.A. 25 standards. The format is basically the same it has been in 23 1 previous years. As you recall, with the wonderful advent of 2 GASB 34, we have to do two sets of financial statements. The 3 one set is what I call the GASB 34 model, where we include 4 all your assets and do the related depreciation, and come up 5 with a profit and loss just like a business would. And the 6 other set is the governmental basis, where we just show you 7 the assets and liabilities by funds, and that's the basis 8 that the County keeps the records on, and that's what y'all 9 see in your monthly financial reports with your comparison to 10 your budget. So, we'll go through here and hit the high 11 points. If you have any questions, just stop and ask me. 12 After this index on Page 1 is the independent 13 auditor's report. This is where we state we've made an audit 14 of the financial statements of the Airport Board as of 15 September 30th, 2014, the year then ended. And on the top of 16 the second page of that report, In our opinion, the financial 17 statements referred to above present fairly the financial 18 position of the Airport Board as of September 30th, 2014, and 19 changes in financial position for the year then ended. 20 That's the clean -- auditor's clean opinion letter, 21 unqualified opinion. The next section is a requirement of 22 GASB 34; it's called Management's Discussion and Analysis, 23 Pages 3 through 6. It is a condensed summary, and gives 24 condensed financial information and financial highlights. 25 It's labeled unaudited. We're not required to audit it, but 24 1 I'll just go through and do my own highlights. But it's good 2 for your readers. On Page 3 of that report, I like the one 3 -- the bullet that says the airport has no outstanding debt, 4 and that's always good, especially in the governmental realm. 5 Anyway, the first statement that we give an opinion 6 on is Page 7, called Statement of Net Position. This is the 7 equivalent of a balance sheet, including all the assets of 8 the airport as of September 30th, 2014. If you can see the 9 balances there, the cash or cash equivalents, receivables, 10 and then of course all your capital assets, and this is net 11 of related depreciation balance. So, you have total assets 12 of 17,393,771. Your liabilities for your accounts payable 13 and unearned revenues and other, so you have total 14 liabilities of 514,354. That leaves you with a net position 15 of 16,879,417. That would be the equivalent of a 16 stockholder's equity or retained earnings, and you can see 17 that's excellent. Any company would love to have 17 million 18 in assets and no new debt. 19 Pages 8 and 9 is the statement of activities. This 20 would be the equivalent of a net income statement. It's in a 21 format required by GASB, so therefore you can see it shows 22 the expenses first. And this -- remember, this includes the 23 depreciation, so your total expenses last year were 775,134. 24 Your program revenues, of course, your charges for services, 25 that's all the rents you receive out here. The operating 25 1 grants, these are the moneys contributed by the City and the 2 County. Then you have your capital grants and contributions. 3 These are the moneys that are received from the State, and 4 then the City and County's contribution toward the hangar 5 project. So, you can see you come up with a net change of 6 $477,163 positive. You add your $37 you earned in interest, 7 so you come up with a net change or a net income of $477,200. 8 That increased your position from 16,400,000 to 16,879,000. 9 Page 10, the governmental balance sheet, split out 10 by the two funds the airport has, the general fund, the 11 capital projects, and then total. You can see the general 12 fund last year had assets of 341,549, liabilities of 85,500, 13 net fund balance of 256,041. Capital projects had the same, 14 with the assets minus the liabilities, fund balance of 15 56,056. So overall, in the governmental basis, the airport 16 had 742,191 in assets, 430,094 in liabilities, so a net fund 17 balance of 312,097. 18 Take that fund balance to the top of the next page. 19 This is how we reconcile governmental to GASB. Of course, 20 your big item, you add back the net book value of the capital 21 assets. That's the cost minus the accumulated depreciation. 22 That's the 16,079,372 figure. You add back your current year 23 capital outlays, 999,191; this was the hangar project, and 24 then also you got some RAMP grant money. And you subtract 25 off depreciation expense for the year, the 426,983, and 26 1 recognize the liability for the severance pay to Bruce of 2 84,260; you come up with a net position of 16,879,417. So 3 you can see the big item, of course, is adding the capital 4 assets and subtract the depreciation amount to change from 5 governmental to GASB. 6 Page 12 is a statement of revenues and expenditures 7 on the governmental basis. Again, it's broken out by the two 8 funds and total. The general fund last year had revenues of 9 428,372, expenses of 448,151, a deficit of 19,779. 10 Transferred out to the capital project funds to meet the 11 matching requirements for the hangar project, 80,667, so you 12 had a loss of 100,446, or a deficit for the year, which 13 reduced your general fund from 356 to 256. Capital project 14 funds had the, of course, grants from the State, and then the 15 City's and the County's contribution, 823,954. Capital 16 outlays of 899,191. Deficit for the year, 75,000. After 17 your transfer from the general fund, you had a positive 18 change of 5,438. So, overall, you can see last year the 19 airport operated at a deficit of 95,008, and we'll see later 20 it was as planned. Page 13, this is where you take the 21 change in the deficit from the governmental funds, the 22 95,008; the capital outlay expenditures last year were 23 999,191. You add those back, subtract your depreciation 24 expense, 426,983, so you come up with a net change positive 25 under GASB 34 of 477,200. 27 1 The notes starting on Page 14 are additional 2 disclosures required by generally accepted accounting 3 principles. The first part just gives an explanation of GASB 4 34, the fund accounting. Over on Page 17, the deposits and 5 investments. The board's deposit, of course, accrues with 6 the County, and they meet the requirements of the Public 7 Funds Investment Act. Page 18, the capital asset activity. 8 That just shows the changes for the year, with the hangar 9 project and improvements from the RAMP grant, increased your 10 total assets to 20 million. And then you can -- of course, 11 your related accumulated depreciation there showing 12 depreciation expense, as we said, last year of 426,983. The 13 other notes, of course, on Page 19, the county -- the airport 14 employees were a part of the Texas County & District 15 Retirement System, and that pension cost was 17,846. And the 16 other notes are as shown there on Page 20; it shows the 17 contract to construct T-hangars, the total project cost, the 18 State share, the local share. 19 Page 21 is the supplemental schedule required for 20 the general fund. The budget-to-actual, you can see last 21 year, your revenues exceeded your budget -- your balance by 22 47,858, while your expenditures were below budget by 32,363. 23 So, you actually planned a deficit of 116,667; it was 24 100,000, so you had a positive variance to the budget. The 25 last section is called -- labeled the State Single Audit 28 1 Report. The -- TexDOT, with your agreement to construct the 2 hangars, one of the requirements in that contract is you have 3 to comply with the State Single Audit Act. This raft of 4 reports does that. Basically, I can condense it in a few 5 items, that in addition to our audit of the regular financial 6 statements, we had a test for internal control of your 7 financial reporting, and we found no material weaknesses. 8 And the same way under the compliance with laws, contracts, 9 and grants; we noted no incidences of noncompliance. And the 10 same way with the requirements of the State Single Audit Act. 11 The airport's complied with that act, and there was no 12 instances of noncompliance, or no problems with internal 13 control used for financial reporting. 14 Finally, over on Page 6 of that report, you can see 15 the summary of the auditor's results. And, of course, then 16 on Page 7 is a breakdown by the state awards for the year, 17 including the airport project, which was the hangar project, 18 the 726,000, and the RAMP grant project, which was the 19 47,954. The last letter in your packet is the letter that is 20 drafted to the board of directors. As part of GASB, the 21 Single Audit Act, we have to provide these items as listed to 22 you in this letter. Single audit findings; there were none. 23 There were no difficulties encountered in performing the 24 audit, no corrected or uncorrected misstatements, no 25 disagreements with management. And, basically, this was a 29 1 good, clean audit. And we always appreciate the cooperation 2 of Bruce and Carole; they get the documents for us. And, of 3 course, James and Jeannie from the County's end. And, 4 basically, you spent some money, but you increased your 5 assets substantially. And it's -- 6 MR. GRIFFIN: That's easy to do. 7 MR. NEFFENDORF: Right. But in my opinion, it's a 8 very good thing. I mean, you got a good -- it really 9 increased the assets and the quality of the airport by over 10 16 million, and you have no debts. 11 MR. WOOD: Well, and by building the T-hangars, we 12 increased our revenues. 13 MR. NEFFENDORF: Revenues, oh yeah. 14 COMMISSIONER MOSER: Let me commend and 15 congratulate, number one, the board for what you've done. 16 This is -- this is excellent, and it starts at the top. And 17 then Bruce and Carole, and Jeannie and James. So, I think 18 with that -- you know, when you can come up with a clean 19 report like that, with all the stuff that's been going on 20 outside, the cooperation with the State, and so 21 congratulations to everybody. 22 MR. McKENZIE: Thank you. 23 MR. KING: Thanks, Keith. As usual, you did a 24 great job presenting that. 25 MR. NEFFENDORF: Did you understand it, though? 30 1 COMMISSIONER MOSER: An even better job of 2 presenting it. 3 MR. KING: I didn't say that. 4 MR. NEFFENDORF: Okay. (Laughter.) 5 COMMISSIONER MOSER: Hint, hint. 6 MR. NEFFENDORF: Hint, hint. 7 MR. WOOD: I think you made it about as 8 understandable as government work can be. 9 MR. NEFFENDORF: Okay. Well, I appreciate that. 10 MR. KING: No, you did a very good job. 11 MR. NEFFENDORF: Okay. 12 MR. KING: And we appreciate y'all's help and 13 y'all's work y'all do on this every year. 14 MR. NEFFENDORF: Well, it's always good to work 15 with good people. And like I say, it -- you know, you can 16 say what you want, but the bottom line is, it's been a good 17 joint effort. 18 MR. KING: Mm-hmm. 19 MR. NEFFENDORF: And the cooperation with the State 20 the last -- what's it been, Bruce? 21 MR. McKENZIE: Seven years for sure. 22 MR. NEFFENDORF: Whatever. But we've more than 23 doubled the assets with those projects. 24 MR. KING: Yeah. 25 MR. NEFFENDORF: You know, and sometimes -- and 31 1 Bruce knows, and y'all know this as well, too. Sometimes we 2 have to jump through some hoops with the State -- 3 MR. KING: Yeah. 4 MR. NEFFENDORF: -- in getting their money and 5 their reports, but in the end, when you have no outstanding 6 debts, that's hard to argue with. We'll just jump through 7 some hoops, won't we? 8 MR. McKENZIE: Yes, sir. 9 MR. WOOD: We're trying to cut down the money we 10 get from the City and the County. 11 MR. NEFFENDORF: Right. 12 MAYOR PRATT: That's my question. Is there any 13 projection on what the City and County's contribution will be 14 this next year? 15 MR. WOOD: We're going to look at the budget first. 16 MAYOR PRATT: I know, but is the budget in line? 17 MR. WALTERS: The answer is no, there's no budget 18 yet. 19 MR. KING: I don't know -- 20 MR. WALTERS: No projection yet. 21 COMMISSIONER MOSER: Way to go, Corey. 22 MR. WOOD: We have a goal. 23 MR. KING: We have a goal. 24 MR. McKENZIE: We've cut it down significantly in 25 the last five years. 32 1 MAYOR PRATT: I know it's been cut down 2 significantly. 3 MR. NEFFENDORF: The last three years, it's 4 probably gone down over 100,000. 5 COMMISSIONER MOSER: Started at 400,000, down to 6 100,000. 7 MR. McKENZIE: We're down to 96,000. 8 MR. NEFFENDORF: Right. 9 COMMISSIONER MOSER: Zero next year. 10 COMMISSIONER LETZ: The budget's pretty much in 11 line with the first quarter? 12 MR. McKENZIE: Yeah, it's tracking right now. 13 MR. KING: Well, thank you very much, Keith. 14 MR. NEFFENDORF: All right. Okay. 15 MR. KING: We have to approve this? 16 MR. NEFFENDORF: As usual, if, later on, you got 17 some questions, if you don't understand, just give me a 18 holler. 19 MR. WALTERS: Move to accept it. 20 MR. KING: Accept it. 21 MR. WALTERS: It is an audit, so maybe -- 22 MR. KING: I guess -- do we accept it? 23 MR. WALTERS: I guess we approve this, since it's 24 an audit. 25 MR. KING: Okay. All right. Motion to approve? 33 1 MR. WALTERS: I motion we approve the audit report 2 as presented by the auditors. 3 MR. KING: Second? 4 MR. WOOD: I'll second. 5 MR. KING: Any discussion? All in favor? 6 (The motion carried by unanimous vote, 4-0.) 7 MR. KING: 4-0. 8 MR. NEFFENDORF: All right, thank y'all. 9 Appreciate it. 10 MR. KING: Thank you, Keith. See you next year. 11 MR. McKENZIE: Thanks for coming over. 12 MR. NEFFENDORF: No problem. 13 MR. KING: General update, Item 5A. 14 MR. McKENZIE: Okay, general updates. The first 15 one is the Mooney roof project. And I visited with Barry at 16 3 o'clock Friday afternoon. 17 MR. KING: Yeah. 18 MR. McKENZIE: And, Tom, jump in if you want to say 19 anything on this. They have narrowed this down to the -- to 20 two contractors, the two lowest bidders. One was 1,493,000. 21 The second bidder was 1,724,000. Dr. Chen is scheduled to be 22 in Kerrville this week, according to Barry, and they will 23 hopefully make a decision when Dr. Chen arrives. And 24 hopefully by the end of the week or the first part of next, a 25 decision will be made, but that's what they're down to, is 34 1 these two lowest bids. One -- one of the contractors, the 2 lowest bid, had 210 days. The second lowest bid, at 3 1,724,000, had 180 days, so that's -- there's -- it appears 4 that that's being considered as well as the time it's going 5 to take to repair the roof. Anything else, Tom, that you 6 know about? 7 MR. BOWEN: No. I think it's -- the bids, of 8 course, are to do all the buildings proposed. I think it's 9 important to note that we may counter-propose to only do a 10 selection of buildings, and either defer the maintenance on 11 those buildings or, you know, find further funding to do it. 12 But Mooney's piece of it will be substantial, but it will be 13 limited as well. 14 MR. WOOD: Is there a selection of buildings that 15 you reroof based on your need for the space to be good? 16 Or -- and how much does all the other work that has to be 17 done in order to make the buildings accept a new roof factor 18 into it? 19 MR. BOWEN: The primary consideration for selection 20 of the buildings is the ones that are the most deteriorated 21 and need the most work are the priorities. 22 MR. WOOD: Okay. 23 MR. BOWEN: The second-tier selection would be how 24 many of those buildings are being used for the production 25 process. 35 1 MAYOR PRATT: Is there any -- any evaluation of the 2 two bidders that are mentioned? 3 MR. McKENZIE: Tom Kita with Primero is working 4 hand-in-hand with Mooney, and they're analyzing it; have been 5 for the last two and a half weeks. Yes, sir, they have. I 6 wasn't in on those, folks. That's up to Mooney and Primero. 7 MAYOR PRATT: I understand. 8 MR. KING: I think -- Mayor, I think, to answer 9 your question, both bidders are very, very reputable, on the 10 same level. 11 MR. McKENZIE: All six of these are Tier 1 12 contractors. 13 MR. KING: In fact, the -- I know the second 14 bidder, the low bidder, comes from a very, very good 15 recommendation from one of your councilmen. 16 MAYOR PRATT: Yeah. 17 MR. KING: So, I mean, I think you're dealing 18 with -- we're dealing with two very, very capable companies 19 to do the job, okay? 20 MR. McKENZIE: Next thing -- anything else on the 21 roof? Good. The next thing, I always give the board the 22 personnel evaluations at the February board meeting, but this 23 year, rather than do that, I thought I would just go ahead 24 and complete those, and you can take your time. Unless you 25 want to do it a different way. I'll just e-mail it to you, 36 1 you can review it, and then you can do whatever you need to 2 do with the February meeting, rather than take up time going 3 over it at the meeting, unless you would rather do it a 4 different way. 5 MR. GRIFFIN: I'm good. 6 MR. KING: That's fine; I don't have a problem with 7 it. 8 MR. WOOD: Fine with me. 9 MR. WALTERS: Instead of going into executive 10 session, we'll have a preview, so -- 11 MR. KING: Okay. 12 MR. WALTERS: I'd like to go back to the Mooney 13 roof one second. Tom, if y'all come back with a deferred 14 roof plan, I'd like to ask that you come to discuss that with 15 Bruce, and maybe come to our board meeting and discuss it 16 with the board members so that we have an idea what roofs 17 you're planning to put on deferred maintenance, and what plan 18 you have in the future to -- to take care of that deferred 19 maintenance. You know, just so that we have an idea that 20 it's just not on deferred maintenance, and it's, you know, 21 out there with, you know, no repairs in sight. 22 MR. BOWEN: That's reasonable. I think we can 23 accomplish that. 24 MR. WALTERS: Okay, thank you. 25 MR. McKENZIE: The next thing is, we all know that 37 1 Ilse will be leaving us sooner than later. And at a board 2 meeting, I think it was August -- I went back in and referred 3 to the minutes. The August board meeting of 2010, as we were 4 choosing her the first time, as we were choosing our own 5 attorney, the board gave me the authority to hire the 6 attorney that we're going to use. Is that still what you 7 gentlemen want to do? Or do you want me to start down the 8 list again and bring you attorneys, and you choose the 9 attorney? But last time there was 35 on that, so I was 10 supposed to choose the legal counsel. But I'll do whatever 11 your wish is. It's up to you. 12 MR. KING: Depends on who you're going to choose. 13 (Laughter.) 14 MR. McKENZIE: That's why I'm bringing it up. 15 MR. WOOD: Can you -- can you consult with us 16 before you -- 17 MR. McKENZIE: Oh, sure. 18 MR. WOOD: -- pull the trigger on it? 19 MR. McKENZIE: We can do it any way you want. 20 MR. KING: I don't have a problem. 21 MR. McKENZIE: I'm just reminding you, it's in the 22 minutes that it said do it. So -- 23 MR. WOOD: I think we ought to let you do it, but 24 it would be nice for us to have a final agreement with you. 25 MR. KING: How about prior to you choosing, give us 38 1 the -- 2 MR. McKENZIE: Sure. 3 MR. KING: -- name and the cost. I'd like -- I'm 4 more interested in the cost. I mean, I know you're quite -- 5 MR. McKENZIE: Absolutely. 6 MR. KING: -- quite aware of the fact that we 7 are -- you know, we look at that line item quite often, the 8 legal expense. 9 MR. McKENZIE: I understand. 10 MR. KING: You know what Ilse's charging us. 11 MR. McKENZIE: Yes, sir. 12 MR. KING: And so we hope that it would be somewhat 13 in line with that, or less. 14 COMMISSIONER MOSER: Not my business, but a 15 recommendation by Bruce and a concurrence by the board seems 16 a good procedure. 17 MR. KING: That's a good one. I think that I just 18 -- I don't have any problem; we kind of knew what we were 19 getting when we -- the last time this happened. You know, we 20 kind of knew it was going to be Ilse, probably. 21 MR. McKENZIE: Well, and we -- I talked to three 22 different ones, and it just -- it ended up being not a good 23 -- you know, just they didn't understand governmental 24 business. They just didn't understand city and county 25 business. We were very fortunate, she knew both. 39 1 MR. KING: Right. 2 MR. McKENZIE: We got lucky. I'll do that. 3 MR. WALTERS: Does Ilse have a recommendation? 4 MR. McKENZIE: Yes. She does, yes, and I'll visit 5 with you about that. 6 MR. KING: Okay, good. 7 MR. McKENZIE: Yes, she came back to me -- she -- 8 as a matter of fact, she came out here and visited with me 9 about it the other day. 10 MR. WALTERS: Okay. 11 MR. KING: Any more updates? 12 MR. McKENZIE: The last thing is -- let's see, the 13 Texas Aviation Conference. If any one of you gentlemen want 14 to -- Kirk said he was going. It's going to be in San -- 15 it's in San Marcos this year. Just let me know by the end of 16 the month. It's over in San Marcos, a day trip, if you want 17 to go. 18 MR. KING: Dates? 19 MR. McKENZIE: May the -- what is it, Carole? 20 MR. KING: It's April. 21 MR. McKENZIE: April, okay. 22 MR. GRIFFIN: Right. 15, 16, 17, something like 23 that. 24 MR. McKENZIE: And it -- 25 MS. DUNGAN: 15, 16, and 17. 40 1 MR. McKENZIE: So, the 16th is really the date of 2 the meeting. If you want to go, let me know and I'll 3 register. It's a little cheaper to register through -- 4 MR. KING: Where they are having it? 5 MR. McKENZIE: It's going to be at the San Marcos 6 Conference Center they've built over there. 7 MR. WOOD: And this is the conference where they 8 talk about running airports -- 9 MR. McKENZIE: Texas Aviation Conference. 10 MR. WOOD: -- and the problems that people have, so 11 it would be good for the board? 12 MR. McKENZIE: Sure, if you'd like to go, mm-hmm. 13 MR. GRIFFIN: I went two years ago. 14 COMMISSIONER MOSER: Those things have been very -- 15 very informative. You always learn more than you anticipate. 16 MR. McKENZIE: Everybody from all across the state 17 will there be that day. It's good. 18 MR. KING: Okay. 19 MR. WOOD: I got it. 20 MR. McKENZIE: That's all I've got, Steve. 21 MR. KING: Anybody else have anything? 22 MR. WALTERS: I do. 23 MR. KING: Okay. 24 MR. WALTERS: Bruce, have you prepared a 25 cost-to-budget analysis on the T-hangars so we know exactly 41 1 where we came in on the -- on the T-hangar project? Actual 2 cost-to-budget? 3 MR. McKENZIE: I haven't formally worked it up, no. 4 MR. WALTERS: Okay. Would you do that, please? 5 MR. McKENZIE: Sure. Sure. 6 MR. KING: And I saw you gave us a fuel report? 7 MR. McKENZIE: Yes. 8 MR. KING: Anybody have any comments on that? Can 9 anybody understand it? (Laughter.) 10 MR. WALTERS: Who's -- who prepares the report? 11 MR. McKENZIE: We do. 12 MR. WALTERS: I'd like to ask, at the end of each 13 calendar year, we add a column that just says "total." 14 MR. KING: Yeah. 15 MS. DUNGAN: Okay. 16 MR. WALTERS: So we can -- it's a quick way to see 17 exactly where we are for the year. 18 MR. GRIFFIN: Yeah. 19 MR. KING: That would be helpful. Okay. All 20 right, anybody else have anything else? That's it. Are you 21 done? Just need a motion to adjourn. 22 MR. GRIFFIN: Motion that we adjourn. 23 COMMISSIONER MOSER: Nobody wants to adjourn. 24 MR. WOOD: Second. 25 MR. KING: All in favor? 42 1 (The motion carried by unanimous vote, 4-0.) 2 MR. KING: Thank you very much. 3 (Airport Board meeting adjourned at 9:28 a.m.) 4 - - - - - - - - - - 5 6 7 STATE OF TEXAS | 8 COUNTY OF KERR | 9 I, Kathy Banik, official reporter for Kerr County, 10 Texas, do hereby certify that the above and foregoing is a 11 true and complete transcription of my stenotype notes taken 12 at the time and place heretofore set forth. 13 DATED at Kerrville, Texas, this 21st day of January, 14 2015. 15 _______________________________ 16 Kathy Banik, Texas CSR # 6483 Expiration Date: 12/31/16 17 Official Court Reporter Kerr County, Texas 18 700 Main Street Kerrville, Texas 78028 19 Phone: 830-792-2295 20 21 22 23 24 25