Thursday, January 26, 2023
5:30 PM
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
Remote Participation
Council Airport Committee
Agenda
January 26, 2023Council Airport Committee Agenda
COVID-19 Notice: Consistent with Assembly Bill 361/Gov Code 54953(e), the Council Airport Committee (CAC) meeting includes teleconference participation by all CAC members and the public.
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Send an email to [email protected] by noon the day of the meeting. Please identify the Agenda Item Number in the subject line of your email. Emails will be compiled into one file, distributed to the Committee Members and City staff, and published on the City's Meeting & Agenda Center under Documents Received After Published Agenda. Written comments received after noon that address an item on the agenda will still be included as part of the record.
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Click this link below to join the webinar:
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OR
Telephone: +1 669 900 6833 or +1 646 931 3860
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How to watch this meeting from home:
A Guide to attend virtual meetings is provided at this link: https://bit.ly/3jmaUxa CALL TO ORDER Pledge of Allegiance: Council Member Zermeño
ROLL CALL
PUBLIC COMMENTS:
(The Public Comment section provides an opportunity to
address the City Council Committee on items not listed on the agenda as well as items on the agenda. The Committee
welcomes your comments and requests that speakers present their remarks in a respectful manner, within established time limits, and focus on issues which directly affect the City or are within the jurisdiction of the City. As the Committee is prohibited by State law from discussing items not listed on the agenda, any comments on items not on the agenda will be taken under consideration without Committee discussion and may be referred to staff.)
January 26, 2023Council Airport Committee Agenda
APPROVAL OF MINUTES
Approval of Minutes of the Council Airport Committee Meeting held on October 27, 2022
MIN 23-010
Attachments: Attachment I CAC Minutes for 10-27-2022
REPORTS/ACTION ITEMS
Oral Presentation: Hangar Repair Project Update - Phase IIIRPT 23-004 FY23 and FY24 Hangar Rent Increase and FY24 Master Fee
Changes at Hayward Executive Airport
ACT 23-003
Attachments: Attachment I Staff Report
Attachment II FY23 and FY24 Budget Forecast
Oral Presentation: Update on Reuse of Skywest PropertyRPT 23-005
FUTURE AGENDA ITEMS
Updated 2023 Agenda Planning CalendarRPT 23-006
Attachments: Attachment I Staff Report
COMMITTEE MEMBER/STAFF ANNOUNCEMENTS AND REFERRALS
ADJOURNMENT
NEXT REGULAR MEETING - 5:30 P.M., THURSDAY, APRIL 27, 2023
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: MIN 23-010
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT
Approval of Minutes of the Council Airport Committee Meeting held on October 27, 2022
RECOMMENDATION
That the Council Airport Committee (CAC) reviews and approves the October 27, 2022 Committee Minutes.
SUMMARY
The October 27, 2022 CAC meeting minutes are presented for the Committee’s review and approval.
ATTACHMENTS
Attachment I October 27, 2022 Council Airport Committee Meeting Minutes CITY OF HAYWARD Printed on 1/20/2023Page 1 of 1
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ATTACHMENT I
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT Approval of Minutes of the Council Airport Committee (CAC) Meeting held on October 27, 2022
CALL MEETING TO ORDER
Council Member (CM) Zermeño called the meeting to order at 5:29 p.m. with Mayor Halliday present. CM Salinas was absent.
City staff: Doug McNeeley, Airport Manager
Pamela Svrdlin, Airport Operations Supervisor
Todd Strojny, Airport Business Supervisor
Amy Toste, Senior Secretary
Members of the public present:
Six members of the public were present on the Zoom webinar.
PUBLIC COMMENTS
None.
REPORTS/ACTION ITEMS
1. Approval of Minutes for June 24, 2022
A motion was made by Mayor Halliday and seconded by Council Member Zermeño. The motion passed unanimously; minutes approved as submitted.
2. Montecito Development, LLC. – Ground Lease for California Air National Guard Site
Airport Manager McNeeley presented the report.
ATTACHMENT I
Public Comments
None.
Committee Comments
Mayor Halliday asked about the $1 million in sales tax revenue that this 50-year lease may generate. Karl Higgins, CEO of Montecito Development, responded that part of the plan included a manufacturing facility and the City will benefit from sale of the product.
Mayor Halliday asked if there was any reaction from the nearby aviation tenants. Mr.
McNeeley responded that Meridian Hayward is supportive of this development.
CM Zermeño asked who will maintain the community buildings. Mr. McNeeley answered that Airport staff currently maintains the building at the CANG site and would be able to maintain the new building as well.
CM Zermeño asked if it was possible to save part of the historic CANG hangar and to place it on display. Mr. Higgins responded that they would incorporate the CANG sign into the new development.
Both Mayor Halliday and CM Zermeño expressed support for the community building and open space.
A motion was made by Mayor Halliday and seconded by CM Zermeño to recommend presentation of this item to City Council for their approval. The motion passed.
3. Raja Indian Cuisine – New Ground Lease for Property at 1275 West Winton Avenue
Mr. McNeeley presented the report.
Public Comments
Mr. Makan Bains requested a lease term longer than 35-years due to the capital investment required for the planned improvements.
Mimi Dean asked how the Surplus Lands Act relates to this project. Mayor Halliday suggested perhaps the law may not apply to airport property due to safety and aircraft noise concerns.
Committee Comments
CM Zermeño asked why Raja Indian Cuisine would want to extend the lease nine months. Mr.
McNeeley explained they estimate it will take nine months to finish improvements.
ATTACHMENT I
Mayor Halliday acknowledged the tenant’s request for a 50-year lease term, but given the scope of the proposed leasehold improvements and the anticipated capital investment, she thought a 35-year term was more reasonable. She suggested this subject could be revisited in the future, and that perhaps the lease term could be renegotiated at that time. CM Zermeño agreed that a 35-year lease term seems sufficient.
Mayor Halliday and CM Zermeño recommended that this item be reviewed by CAC again in January 2023 for further review related to term length.
4. Update on Reuse of Skywest Property (Oral Report)
Airport Manager McNeeley presented the informational report.
Public Comments
Mimi Dean was pleased that staff would be attending the Eden Area MAC meeting on December 13, 2022. She asked questions regarding the runway safety zone. CM Zermeño suggested that Airport staff address such questions at the upcoming Eden Area MAC meeting.
Committee Comments
Mayor Halliday noted the significant number of comments already received from the community regarding the redevelopment plans.
5. Updated 2023 Agenda Planning Calendar
Airport Manager McNeeley presented the informational report of the upcoming items.
Public Comments
None.
Committee Comments
No comments or requests for additional agenda items by the Committee.
Committee Member/Staff Announcements and Referrals
Mayor Halliday thanked Airport staff for their work on the 2022 Airport Open House.
Mayor Halliday said she was recently approached by a member of the Ninety-Nines International Organization of Women about their interest in refreshing the surface-painted markings on the Airport’s compass rose. She felt this project would help provide recognition for women in aviation. Airport Manager Doug McNeeley stated that Federal Aviation Administration (FAA) regulations have changed and there is no longer a suitable location for a
ATTACHMENT I
compass rose on the airport. He suggested that photographs and memorabilia honoring women in aviation could be proudly displayed in the Airport Administration Building.
CM Zermeño announced the creation of an aviation club at Chabot College.
ADJOURNMENT
The meeting adjourned at 6:28 p.m.
Meeting Attendance
Present Present Excused Absent
10/27/22 to Date This to Date This to Date This
Meeting Calendar Year Calendar Year Calendar Year
Mark Salinas x 2 0 1
Barbara Halliday 3 0 0
Francisco Zermeño 2 0 1
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: RPT 23-004
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT
Oral Presentation: Hangar Repair Project Update - Phase III
RECOMMENDATION
That the Council Airport Committee receives an oral presentation on the Hangar Repair Project Phase III.
SUMMARY
Staff will present an oral update on the Hangar Repair Project Phase III.
ATTACHMENTS
None
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CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 23-003
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT
FY23 and FY24 Hangar Rent Increase and FY24 Master Fee Changes at Hayward Executive Airport
RECOMMENDATION
That the Council Airport Committee (CAC) reviews this report and provides comments and a recommendation to Council to approve hangar rent increases for FY23 and FY24 as well as certain changes to the Master Fee Schedule for FY24.
SUMMARY
The Airport operates as an enterprise fund and relies solely upon the revenue it generates to fund its operating and capital improvement budgets. Accordingly, the Airport does not receive any financial support from the City’s General Fund.
Airport staff regularly monitors the operating budget to reduce cost and increase revenue whenever possible. Staff has also been successful in applying for and receiving monetary grants from the FAA and Caltrans to fund capital projects, totaling approximately $3 million over the past 10 years. The objective, in conformance with Council directives and Federal Aviation Administration (FAA) standards, is to become and remain financially self-sufficient.
On January 15, 2019, Council approved annual rental increases for hangar tenants. Standard-sized hangars were increased by 5% annually, and other types of hangars were increased by 2.5%. These increases were to be implemented over four fiscal years (from FY19 through FY22). Going forward, staff used objective criteria to establish new rental rates for FY23:
· Current rental rates at nearby general aviation airports for comparable hangars · The cost of future capital projects to improve infrastructure and enhance safety · Current and historical Consumer Price Index (CPI) rates for the San Francisco Bay Area According to the latest data from October, the annual CPI increase was 6.0% and would be applied to FY23 rates. In order to lessen the financial impact to tenants, the proposed FY23 increase would be effective on April 1, 2023, while the FY24 increase would coincide with the start of that fiscal year, which is July 1, 2023. The FY24 adjustment will measure the percentage increase between the CPI data from April 2022 and April 2023.
CITY OF HAYWARD Printed on 1/20/2023Page 1 of 2
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File #:ACT 23-003
In addition to hangar rent increases, airport staff is also recommending adjustments to the FY24 Master Fee Schedule by the same increase of 6% for hangar storage rooms, office spaces, and tie down spaces.
ATTACHMENTS
Attachment I Staff Report
Attachment II FY23 and FY24 Budget Forecast
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DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT: FY23 and FY24 Hangar Rent Increase and FY24 Master Fee Changes at Hayward Executive Airport
RECOMMENDATION
That the Council Airport Committee (CAC) reviews this report and provides comments and a recommendation to Council to approve hangar rent increases for FY23 and FY24 as well as certain changes to the Master Fee Schedule for FY24.
SUMMARY
The Airport operates as an enterprise fund and relies solely upon the revenue it generates to fund its operating and capital improvement budgets. Accordingly, the Airport does not receive any financial support from the City’s General Fund.
Airport staff regularly monitors the operating budget to reduce cost and increase revenue whenever possible. Staff has also been successful in applying for and receiving monetary grants from the FAA and Caltrans to fund capital projects, totaling approximately $3 million over the past 10 years. The objective, in conformance with Council directives and Federal Aviation Administration (FAA) standards, is to become and remain financially self- sufficient.
On January 15, 2019, Council approved annual rental increases for hangar tenants. Standard- sized hangars were increased by 5% annually, and other types of hangars were increased by
2.5%. These increases were to be implemented over four fiscal years (from FY19 through FY22). Going forward, staff used objective criteria to establish new rental rates for FY23:
Current rental rates at nearby general aviation airports for comparable hangars The cost of future capital projects to improve infrastructure and enhance safety Current and historical Consumer Price Index (CPI) rates for the San Francisco Bay Area
According to the latest data from October, the annual CPI increase was 6.0% and would be applied to FY23 rates. In order to lessen the financial impact to tenants, the proposed FY23 increase would be effective on April 1, 2023, while the FY24 increase would coincide with the
start of that fiscal year, which is July 1, 2023. The FY24 adjustment will measure the percentage increase between the CPI data from April 2022 and April 2023.
In addition to hangar rent increases, airport staff is also recommending adjustments to the FY24 Master Fee Schedule by the same increase of 6% for hangar storage rooms, office spaces, and tie down spaces.
BACKGROUND
Hangar Rent Increases
The Airport operates as an enterprise fund and relies solely upon the revenue it generates to fund its operating and capital improvement budgets. It does not receive financial support from the City’s General Fund. Both the Council and the Council Airport Committee (CAC) have expressed a desire to make the Airport as financially self-sufficient as possible.
The FAA has a similar policy objective for airports. A key element of self-sufficiency is to reduce costs and increase revenue whenever possible. On the cost side, for example, staff recently replaced a software package with a new one that provides more capabilities at a lower monthly cost, saving approximately $25,000 over the life of the contract. Staff also works to increase revenue by leasing vacant parcels of land for commercial development, renegotiating existing commercial leases, as well as instituting rental increases for individual and commercial tenants. For instance, over the past ten years, new commercial leases totaling over $41 million have been executed.
A standing City policy for adjusting hangar rates was recommended by the CAC and later adopted by Council. At its meeting on May 25, 1999, a methodology was recommended to and approved by Council to increase rates every other year, on odd numbered years, by 75% of the CPI during the same period. In addition, staff was to conduct a market analysis every four years to ensure that hangar rents are consistent with prevailing market rates.
Because of adverse economic conditions, there were occasional deviations from this policy.
For example, the last market rate study prior to 2017 was conducted in 2007. This contributed to widening of the gap between the hangar rents charged at Hayward in comparison with those at other airports. As a result, rental rates at Hayward did not keep pace, and that in turn created some budget challenges.
In March 2017, a market rate study was completed by an outside firm to determine whether the rents charged for hangar space at Hayward Executive Airport were comparable with those at other similar airports. The firm identified comparable local airports and airports in other cities across the country. The results of the study indicated that Hayward’s rental rates for standard sized hangars were 51% below the market rate, while most of the other hangar sizes were below the market rate by up to 26%.
To arrive at rental rates that would meet the Airport’s financial needs and be acceptable to the hangar tenant community, City staff met four separate times with tenants to develop an amenable rent structure. The net result of this dialogue was realized on January 15, 2019,
when the Hayward City Council approved annual standard sized hangar rent increases of 5% (and all other hangars by 2.5%) from fiscal year 2019 through fiscal year 2022.
Master Fee Schedule Updates
In addition to hangars, the Airport rents office space, storage rooms, and outdoor aircraft tie down space. Storage room rental rates were increased in FY19; the rates for offices and tiedown spaces now require adjustment to remain competitive.
DISCUSSION
Hangar Rent Increases
As noted earlier, Council approved a four-year series of hangar rent increases in 2019. That series of increases concluded on June 30, 2022. A decision was made to delay future rent increases for the first portion of FY23 until airport staff could review the actual revenues and expenditures for FY22. It was determined that to keep pace with inflation and meet the need for future capital improvements, such as paving and hangar repairs, rental increases are indicated for both FY23 and FY24. It should be noted that hangar occupancy rates have remained steady after implementing the prior rent increases and through the COVID19 pandemic.
Justification
It is important to clarify the reasons for the proposed rental increases and the methodology used for the adjustment. Hayward Executive Airport operates as a financially independent enterprise fund. Through the administration of fees and charges, the Airport finances all its operations including transfers to fund a Capital Improvement Program (CIP). The Airport does not receive revenue from the City’s General Fund. The costs incurred to operate the airfield are noted under “expenditures” in the Airport’s FY23 budget forecast (please refer to Attachment II).
Recent history shows that revenues are not keeping pace with the costs to maintain and manage the Airport. Personnel costs continue to increase due to a rise in retirement and medical costs. In addition, the Airport’s yearly contribution to fund its capital improvements continues to increase as construction contracts and associated material (such as asphalt) become more expensive. For Fiscal Year 2023, the Airport is expected to experience a shortfall of approximately $1.5 million. A budget surplus is forecast in FY24, but this result is based on revenues from land leases that are currently under negotiation or capital projects that are under review by Council.
In response, Airport staff has taken steps to generate revenue from all sources:
A commercial ground lease was signed with a second Fixed Base Operator (FBO), Meridian Hayward. The company began operations at the Airport in October 2016, and the lease generates annual revenue of over $135,000.
Council approved commercial ground leases for the construction of two new hotels on Airport property. One hotel is currently operational, and once the second hotel is completed in 2024, together they will generate $420,000 in annual revenue.
Council approved the negotiation and execution of several commercial ground leases for both aeronautical and non-aeronautical use at the Airport, which total over $41 million in additional revenue.
Other future agreements for large parcels of vacant land at the former California Air National Guard (CANG) and Skywest golf course sites will significantly improve the Airport’s financial position.
Future capital development will not be assured until the deals are finalized, bank financing is secured by the commercial tenants, building permits are issued, and the projects are constructed.
Methodology
Staff reviewed strategies employed in the past to make a recommendation for rental increases. Since a third-party rental study was completed less than five years ago, consideration was focused on employing an increase tied to the Consumer Price Index (CPI).
To keep pace with inflation, staff recommends that hangar rents be increased by CPI for both FY23 and FY24. In early FY24, staff will review the airport’s financial standing to determine if future CPI-related increases are needed, or some other form of rent adjustment would be preferable. The concept of annual rent increases tied to CPI is used by many of the general aviation airports in the Bay Area, including Reid-Hillview, San Martin, Livermore, Palo Alto, and Buchanan Field.
The additional revenue generated will enable the completion of capital improvements that enhance safety and efficiency for all tenants.
For FY23, staff is recommending that the new rates be implemented by April 2023. This time frame includes Council consideration of the item in February and, if approved, would allow airport staff time to notify tenants at least thirty days in advance of the rate change, which is a requirement.
The CPI for the Bay Area (all urban consumers/all goods) rose by 6% between October 2021 and October 2022, which will be applied to all monthly hangar rental rates at the airport for FY23. This amount is comparable with the annual 5% increases from the prior four fiscal years.
It should be noted that, in order to moderate this increase to hangar rental rates for FY23 and to lessen the financial impact to tenants, the adjustment will be implemented in April 2023 and not applied retroactively to July 1, 2022. The FY24 increase will be an evaluation of the rate of change in CPI between April 2022 and April 2023.
A summary of the rate changes per hangar type is highlighted below and are rounded to the nearest dollar:
Hangar Type Current
Rent/Month
FY23 Rent
(Effective 4/1/23)
FY24 Rent
(Effective 7/1/23)
Small $294 $312 FY23 rent + CPI
adjustment
Standard $455 $482 FY23 rent + CPI
adjustment
Large $566 $600 FY23 rent + CPI
adjustment
Small Executive $982 $1,041 FY23 rent + CPI
adjustment
Standard Executive $1,359 $1,441 FY23 rent + CPI
adjustment
Large Executive $1,483 $1,572 FY23 rent + CPI
adjustment
Updates to Master Fee Schedule
Each year, airport staff evaluates the various fees associated with the Master Fee Schedule to ensure they are fair and reasonable in light of existing economic conditions and financial needs of the airport. The last update occurred in FY21 and focused on increases to staff costs to perform certain functions, such as ramp sweeping services and hangar cleaning performed by Maintenance staff after tenants vacate.
For FY24, staff is recommending changes to several rates by the same CPI increase of 6.0% (rounded to the nearest dollar) that is proposed for the hangars:
Hangar storage rooms
Storage Room Type Current
Rent/Month
FY24 Rent
(Effective 7/1/23)
Small $73 $77
Medium $101 $107
Large $196 $208
Extra Large $250 $265
Office spaces
Current Rent/Month FY24 Rent (Effective
7/1/23)
$650 $689
Tie down spaces
Current Rent/Month FY24 Rent (Effective
7/1/23)
$60 $64
ECONOMIC IMPACT
For the full fiscal year, a standard hangar tenant would pay an additional $27 per month, or $324 annually with the proposed 6% adjustment. With the implementation date deferred to April 1, 2023, tenants will instead pay an additional amount of $81 per hangar for the balance of FY23.
FISCAL IMPACT
The rent increase is expected to generate an additional $19,000 in revenue for FY 2023.
STRATEGIC ROAPMAP
The additional rent generated from the increase will support the Strategic Roadmap to Invest in Infrastructure. Specifically, this item will support the following project:
Invest in City Facilities & Property
N12: Upgrade and maintain Airport infrastructure and facilities N12a: Rehabilitate the Pavement in Phases
N12b: Design and Construct Capital Improvements to Airport Hangars
SUSTAINABILITY FEATURES
This report does not pertain to any sustainability features.
PUBLIC CONTACT
The agenda and staff report for this item have been posted on the City’s website and distributed to interested parties.
NEXT STEPS
If approved, Airport staff will implement the FY23 increase on April 1, 2023, to allow notification to tenants at least thirty days in advance.
Prepared by: Doug McNeeley, Airport Manager
Recommended by: Alex Ameri, Director of Public Works
Approved by:
Kelly McAdoo, City Manager
Attachment II
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: RPT 23-005
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT
Oral Presentation: Update on Reuse of Skywest Property
RECOMMENDATION
That the Council Airport Committee receives an oral presentation on the reuse of the Skywest Property.
SUMMARY
Staff will present an oral update on the reuse of Skywest Property.
ATTACHMENTS
None
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CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: RPT 23-006
DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT
Updated 2023 Agenda Planning Calendar
RECOMMENDATION
That the Council Airport Committee reviews and comments on this report.
SUMMARY
The updated 2023 Agenda Planning Calendar is presented for the Committee’s review and comment.
ATTACHMENTS
Attachment I Staff Report
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DATE: January 26, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT: Updated 2023 Agenda Planning Calendar
RECOMMENDATION
That the Council Airport Committee reviews and comments on this report.
DISCUSSION
For the Council Airport Committee’s (CAC) consideration, staff has prepared this updated 2023 Agenda Planning Calendar with topics and anticipated discussion dates listed below.
APRIL 27, 2023
1. Skywest Property Update
2. Update on Sulphur Creek Project
3. Hangar Repair Project Update – Phase III
JULY 27, 2023
1. Skywest Property Update
2. Airport Layout Plan with Narrative – Project Update
3. Pavement Management Plan – Project Update
OCTOBER 26, 2023
1. Skywest Property Update
2. Internship Opportunities at Airport
3. Report on Summer Activities for Teens at Other General Aviation Airports
UNSCHEDULED
1. Attracting Small Commercial Flight Operators
2. Partnership Opportunities with Other Airports for U.S. Customs
3. Taxiways Zulu & Foxtrot – Project Update
NEXT STEPS
Upon consideration and approval from the Committee, staff will schedule items accordingly for future CAC meetings.
Prepared by: Douglas McNeeley, Airport Manager
Recommended by: Alex Ameri, Director of Public Works
Approved by:
Kelly McAdoo, City Manager