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HomeMy WebLinkAbout01/15/1986 Meeting e e e M I NUT E S Joint Eugene City Council/Airport Commission Luncheon/Work Session Valley River Inn, South McKenzie Room January 15, 1986 11 : 30 a.m. COUNCILORS PRESENT: Cynthia Wooten, Richard Hansen, Emily Schue, Freeman Holmer, Ruth Bascom, Debra Ehrman, Jeff Miller. COMMISSIONERS PRESENT: Robert Bolton, Bruce Chase, Bob Kime, Barbara McCay'ty, Robert Tal bott. The adjourned meeting from January 13, 1986, of the City Council of the Cit~ of Eugene, Oregon, was called to order by His Honor Mayor Brian Obie. He welcomed the councilors, airport commissioners, and guests. I. INTRODUCTIONS Responding to Mayor Obie's suggestion, the City Councilors and Airport Commis- sioners present introduced themselves. Orlando Hollis, a guest, represented the Airport Task Force and the Eugene Area Chamber of Commerce Aviation Conmittee. Mayor Obie said Bruce Chase did an excellent job as chairperson of the Airport Commission last year. Mayor Obie congratulated Bob Kime on his election as; the chairperson for 1986. II. APPOINTMENT OF METROPOLITAN PARTNERSHIP REPRESENTATIVES Mayor Obie presented his nominations for reappointment to the Eugene/ Springfield Metropolitan Partnership Board. He said the Partnership will be making appointments to the at-large positions in the future. On Tuesday, January 21,1986, the executive conmittee and officers will be elected. He said the council will have to appoint its representatives today if they are to be considered for the executive conmittee and as officers. If the councilors wished to submit names to be considered for the at-large positions, Mayor Obie said he would forward those names to the Partnership. Answering a question from Ms. Bascom, Mayor Obie said he planned to submit Ed Whitelaw's name for consideration for the at-large positions. Ms. Bascom urged consideration of Mr. Whitelaw. MINUTES--Eugene City Council January 15, 1986 Page 1 e Mr. Hansen said the Partnership is only about a year old. He said the Mayor's nominees have been active in the Partnership, and he did not think changes in the membership should be made now. However, if the other councilors wished to consider other people for the appointments, Mr. Hansen suggested the matter' be postponed. Ms. Wooten said she preferred to delay a decision so that other people can be considered. Ms. Schue said she supported Mr. White1aw's appointment last year and thought he should be appointed to an at-large position this year. However, she thought the council appointees should be considered when officers of the Part- nership are elected, and, therefore, she favored making the appointments today. Mr. Hansen moved, seconded by Ms. Ehrman, to approve the following Mayor's nominations for reappointment to the Eugene/Springfield Metropolitan Partnership Board: Bob Fenstermacher, 3505 Spring Bou1evard.....Term to expire: 1/87 Thomas Hoyt, 460 Pa10mino....................Term to expire: 1/87 Jeanne Wagenknecht, 492 East 53rd............Term to expire: 1/87 The motion carried unanimously, 7:0. Mayor Obie said he will submit Mr. White1aw's name for consideration for an at-large position on the Partnership Board. e III. PRESENTATION OF AWARD TO JAN AMUNDSON Mr. Chase said Jan Amundson has just completed twelve years of service on the Airport Commission. He said she is a pilot and has represented the "genera1 aviation" users of the airport well. He said she has been aware of the tech- nical aspects of long-range planning. He said it was a joy to serve with her and her expertise will be missed very much. He thanked her for her service. Mayor Obie presented a plaque to Ms. Amundson in appreciation of her contribu- tion to the community. IV. AIRPORT COMMISSION RECOMMENDATION CONCERNING AIRPORT TERMINAL PROJECT Mr. Chase reviewed the development of the airport terminal expansion project. He said the council approved an expenditure of $530,000 in July, 1985, to complete the design of the expansion. It will be completed this week. thE! site work will be completed in 60 days. He said the concerns of all the councilors and users have been incorporated into the design. e MINUTES--Eugene City Council January 15, 1986 Page 2 e e e Mr. Chase said the airport is exceeding the projections in the long-range plan. The expansion is designed to serve five airlines and two 727 stretch aircraft simultaneously, which is occurring now. Discussing financing of the airport, Mr. Chase said 66 percent of the people using the airport are from outside the Eugene/Springfield area. Thirty-six percent of the people in the airport use the restaurant and lounge, 25 percent use car rentals, and 23 percent use the gift shop. Forty-three percent of the airport users who do not live in the Eugene/Springfield area use local mote~s and hotels. Mr. Chase said an increase in the room tax is very reasonable and is the key to putting a financing package for the expansion together. It will help lease negotiations with the airport and service providers. They are asking what the community will do to help finance the expansion. An increase in the room tax will respond. Mr. Chase said alternate ways of financing the expansion are being explored. The Federal Aviation Administration (FAA) trust funds are generated by an eight percent ticket tax, and additional FAA trust fund moneys are being requested. State lottery funds are being sought. FAA ticket user fees could finance 24.3 percent, the on-site use of the facility could finance 53.4 percent, the room tax could finance 18.3 percent, and the lottery funds could finance four percent of the expansion. Mr. Chase said the Airport Commission recommends that no changes in the design of the expansion be considered until the negotiations for user fees and discussions with the bonding underwriters are completed. He said some of the cuts being proposed in the design will decrease revenue producing space. He said the design is not ostentatious. It is a good design, but if reductions must be made, the Airport Commission has assigned priorities to suggested changes. He said changing the project will increase the design costs. Answering a question from Ms. Wooten, Mr. Chase said structural changes in the expansion seem to be counter-productive. Non-revenue producing areas of the terminal are the baggage claim area and the observation area, and Mr. Chase did not think the public would want those areas reduced. Mr. Shelby distri- buted two pages indicating potential cost reductions to the councilors. Answering a question from Ms. Ehrman, Mr. Chase said some improvements in the expansion might be deferred until later. Responding to a question from Mayor Obie, Aviation Director Bob Shelby said the Airport Commission may recommend deferring some of the expansion after the negotiations with the airlines. He discussed how the expansion can be funded. He said increased fees are being requested from the airport's service providers. He recommended no changes in the design be made until the negotia- tions are complete. Only about $3 million of construction needs to be funded by the community now. He said more space for American and PSA airlines has been added to the design. A snack bar in the lobby was added at the council's request. Council also requested more landscaping along Greenhill Road. MINUTES--Eugene City Council January 15, 1986 Page 3 e e e Referring to the potential cost reductions, Mr. Miller said apparently things costing $3 million could be changed without jeopardizing the basic design of the expansion, but $1.5 million of those cuts would affect the income producing areas. Ms. Ehrman pointed out passenger user fees are not legal and are not included in any of the revenue projections for the expansion. Answering her questions, Mr. Shelby said it makes sense to have the same business operate the restau- rant and the snack bar. He said County Road Funds might be used for improve- ments to the County road that leads to the airport, but those were not included in the expansion design. The road improvements included in the expansion are only those on City property. He said airport costs are only about 2 percent of the airlines' budgets; consequently, the increased fees being requested from the airlines will not increase ticket prices very much. He said airline ridership from the airport was lower in 1985 than in 1984 because of the United Airline strike and a fare war in Portland. Ms. Bascom reconfirmed that the Airport Commission recommends no cuts in the expansion design now. Mr. Shelby also noted that the Eugene Area Chamber of Commerce Aviation Committee has agreed to seek private funds for the public meeting spaces in the design for the expansion. Answering questions from Mr. Holmer, Mr. Shelby said increased operating costs that will be caused by the expansion are included in the projections of increased revenues. He said the negotiations with the airlines will be completed in late March or early April. He said airline representatives were consulted when the expansion was designed. The airport fees are now below average and, therefore, it is reasonable to expect the increase being requested. Mr. Gleason said the airlines will not "pick up" the $3 million than is needed from the community. Ms. Wooten said the $3 million in potential cost reductions is about the same as the amount needed from the community. She wondered if some of the cost reductions could be implemented to reduce the amount needed from the com- munity. Mr. Shelby responded that the potential cost reductions will reduc:e the quality of the airport. Mayor Obie responded that the airport service providers have indicated that they want the community to support the expansion financially. Answering a question from Ms. Wooten about seeking funds for the airport from outside the city of Eugene, Mr. Chase said the airport is a regional one now and serves many areas outside Eugene. The Airport Commission did not have enough data to make a decision about the legal issues involved if funds are sought from other jurisdictions. The Commission was told the project would be delayed if funds are sought from other jurisdictions. Mr. Shelby said the staff is studying regional financing options for the airport and that staff report will be available this week. Ms. Schue received confirmation that the Airport Commissioners do not want to make cuts in the proposal because the things that would be cut are attractive to the users who are being asked to increase the fees they pay. MINUTES--Eugene City Council January 15, 1986 Page 4 e Answering questions from Ms. Wooten, Mr. Shelby reviewed the revenue received by the airport from private aircraft. He said the private aircraft industry is decreasing here and nationally. He said financing of $2.3 million of construction is needed to complete the financing of the airport package. Mr. Gleason added that $450,000 will be needed annually to service that debt. Answering questions from Mr. Hansen, Mr. Shelby and Mr. Gleason discussed the request for lottery funds and said it will probably be approved. Sewer user fees and revenues from airport parking will pay the loan from the lottery funds. The airlines pay annual fees which are divided among them. It is not based on the number of passengers. Parking and car rental leases are for five years, the airline leases are for one year, the restaurant lease will probably be for 10 years plus, and the display advertising leases will be for three years. When an airline leaves the area, the fee is divided among the remaining airlines. Answering other questions from Mr. Hansen and Mayor Obie, Mr. Shelby discussed when income streams will be available. He said the requested fees from the airport service providers is a 20-year average and will service $9.4 million of capital for the expansion. The airport will try to keep its fees to about the same as paid at new airports in other communities about the size of Eugene. Answering questions from Ms. Ehrman, Mr. Shelby said the user's fees will probably decrease as the bonds for the expansion are paid. The expansion will be enough for about 10 years and then more space will be needed. e Mr. Gleason discussed the computer simulations used to plan the expansion. He said the second level concourse is extremely important to the airlines. Good facilities are needed to create routes which create ridership. v. DISCUSSION OF INCREASE IN EUGENE ROOM TAX Introducing the discussion of an increase in the Eugene room tax, Mr. Gleason said six months and about $500,000 "up-front cash" are needed to prepare the bid documents for the expansion. If design changes are made, the bids will be delayed and the expansion will cost more. The room tax increase would provide the needed "up-front" cash. A general obligation revenue bond would probably be the least expensive way to finance the expansion. He said the airport would be regionally financed if the recommendations and the increased room tax are approved because Federal and State grants are regional, and a room tax is not paid by local residents and, therefore, is regional. He said it would take about two years to receive funds from other jurisdictions. Mayor Obie asked each councilor to comment on the proposal to increase the Eugene room tax. Ms. Ehrman said a room tax in Eugene only would not really be a regional room tax. She wondered about a restaurant tax. e MINUTES--Eugene City Council January 15, 1986 Page 5 e e e Ms. Bascom said a restaurant tax is no longer a luxury tax because many people eat in restaurants quite often. She said many other cities have room taxes as high as 10 percent. She would like to discuss an increase in room taxes for the airport expansion with the Lane County Commissioners. Mr. Obie responded that some Lane County Commissioners and the Mayor of Springfield are interested in discussing increases in room taxes for the airport. Mr. Holmer said he is very concerned about building community consensus for' the expansion of the airport. He suggested a council committee be appointe!d to negotiate with other jurisdictions to ensure the support of the whole community for the expansion. He wondered if a vote on a port district would be advisable. He asked the Airport Commission how community consensus can be achieved. Mr. Chase replied that an educational program on the economic impact of airports is needed. He noted that the airport is the only City facility that makes money. Answering a question from Mr. Holmer, Mr. Gleason said a general obligation bond would require a vote. Mr. Talbott said a marketing strategy for a general obligation bond should be developed if the expansion is financed that way. Answering questions from Ms. Schue and Mr. Miller, Finance Director Warren Wong said the room tax in Eugene is 6 percent. Two percent of it goes to l.ane County and four percent is retained by the City. In the unincorporated areas, Lane County receives a five percent room tax. Eugene administers the tax for Lane County. He discussed the revenues that could be expected from an increase in the room tax. Mr. Miller wondered if some way (such as free advertising space) could be found to directly benefit hotels and motels if the room tax is increased. Responding to questions from Ms. Wooten, Mr. Chase said the Airport Commission did not hold formal hearings on the proposed expansion, and cited the number of public meetings on the subject. Mr. Talbott discussed public input during the development of the expansion plans. Mayor Obie said reaction from hotel and motel owners about the impact of an increased room tax has been mixed. Ms. Wooten said it would be helpful to the council if the Lane County Commis- sioners would postpone a decision about an increase in the Lane County roonl tax until representatives of the City can meet with representatives of the County, the tourism industry, and the Convention and Visitors Bureau to formulate a proposal to serve the needs of all the participants. Ms. Wooten moved, seconded by Mr. Hansen, to ask the Lane County Commissioners to indefinitely postpone deliberations on increasing the room tax; to schedule a public hearing of the council on an increased room tax; to create a committee composed of representatives of the council, the Convention and Visitors Bureau, the Lane County Commissioners, the Springfield City Council, and the tourism industry to discuss a mutually beneficial package; to develop a proposal to raise $450,000 for the airport expansion; and to schedule additional public hearings before acting on the proposal. The motion carried unanimously, 7:0. MINUTES--Eugene City Council January 15, 1986 Page 6 e e e Mr. Miller said Ms. Wooten's proposal can proceed even if the Lane County Commissioners decided not to postpone their discussions. He said he favors a general obligation bond to finance the expansion because it will involve the pub 1 i c. Mr. Holmer said the council identified the expansion of the airport as its primary goal for 1986. He appreciated the Mayor's leadership when he proposed an increase in the room tax because it created a public demand for the council's discussion and action. Ms. Wooten said she is still concerned about the cost of the expansion. She thought some cost reductions might be appropriate. Mr. Hansen said the council should not act too fast on proposals to finance the airport expansion. He said more information will be available in April. He emphasized that the council has only "one shot." Ms. Schue agreed with Mr. Hansen. She said the voters usually approve genE!ral obligation bonds more readily than they approve increased taxes. Mayor Obie and Ms. Wooten thanked the Airport Commission for its work and recommendation. Mayor Obie adjourned the meeting at 1 :20 p.m. R~~ Michea1 Gleason Ci ty Manager (Recorded by Betty Lou Rarick) ~- 1953C MINUTES--Eugene City Council January 15, 1986 Page j'