04/11/1988 Meeting (2) - Laserfiche WebLink

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e e - run over, Ms. Andersen said there is a contingency in the project budget to address unforeseen costs, She said staff does not anticipate getting into a situation where abnormal cost overruns will occur, She said staff does expect to reduce project costs by reviewing types of materials and installation processes, Ms, Wooten said the $910,000 increase in airline revenues appears unrealistic, Mr, Holmer pointed out staff is projecting an 18 percent increase in less than two years, Mr, Gleason said that is a negotiated rate between the City and the airlines. He said the real issue at stake is the airlines' competitive position among each other, If the airlines do not eventually sign the contracts, he said they stand to be charged more, Ms, Andersen said the increase is part of the whole lease negotiation process. Once the negotiated figure is fixed, she said staff goes through a separate process for the sale of the bonds that involves the feasibility analysis that demonstrates the City has the capacity to repay the bonds from the airport revenues on the basis of traffic projections and financial stability of the airport. In response to questions from Ms, Wooten, Ms, Andersen said repayments to the Fleet Fund would come out of the operating budget and not strictly from airport revenues, In addition to airline revenues, she said the operating budget is comprised of several sources including rental car and restaurant revenues, If the City awards the project to the lowest bidder, Ms, Ehrman asked if the bidder can hold the City to the bid price. Ms. Andersen replied that is correct. She said staff feels all of the bidders are good contractors and are committed to the project. Mr. Rutan said it is important to consider two factors: good faith and total cost. He said the council has a good faith commitment to the community to construct the project as it was originally approved. He said staff's recommendation is sound and added it should be noted that staff's plan will not impose increased costs on the community, With regard to total cost, Mr, Rutan said the revenue bonds will be driven primarily by the market despite what staff and the council can do. He pointed out that several of the matching funds, such as Oregon Lottery proceeds, have time limits on them. He said he is as disappointed as others about the cost projections, but said staff's proposal passes both the good faith and financial viability test, Mayor Obie said he feels his personal credibility is on the line relative to the project, He said the council cannot compromise the good faith that the community has entrusted in it, He said the apparent low bidder contacted him and offered that company's cooperation in the project, although he said the bid should not be awarded on that basis. He suggested the council approve the request and require two conditions: 1) monthly staff reports; and 2) the first project savings should be used to reduce the total cost, He said staff should use the increased revenues to reduce or mitigate the project only as a last resort. MINUTES--City Council April 11, 1988 Page 11