actual presentation. It was at this point, that Carter said Oakes could save time and not change the proposal. She said the city was expanding the airport, planning to open up a new entrance and planning to construct a new terminal building.
“In light of all of that, we feel like it’s in the best interest, and we were going to notify you, and I will ask for a vote for this tonight, for early termination of the contract,” she said. “That’s where we’re headed. I don’t know how these folks are going to vote, but I will entertain some discussion.”
When Oakes asked if early termination was on the agenda, the mayor responded it was under the FBO proposal item, but if that wasn’t clear enough, an agenda item would be added.
“I’m glad we’re here, I didn’t know this was going to come up,” Oakes said as he went to take his seat.
During the actual council meeting, Oakes said he felt ambushed and said it was the first he had heard of early termination. When the added item came up at the end of the meeting, City and Airport Manager Steve Horton jumped in.
“I guess I’m the middle of the road kind of here … We haven’t heard everything Bob and Craig have to say. My curiosity always gets the best of me. I’d like to hear what Bob has to say. He may have something not in that letter (proposal) that you need to know about,” Horton said.
The FBO’s operational proposal contained nine bullet points. Many of the points dealt with revised fuel prices and operation. However, one key point asked the city to drop its ability to terminate the contract early.
“The city would abandon any efforts to buy-out the existing FBO by removing the provision for early termination buyout and allow Dixie Jet to keep its existing equity position in its existing hangar and office building. This would encourage Dixie Jet and its shareholder(s) to further invest in the airport facilities at Covington Municipal Airport,” the proposal said.
The proposal also asked for a 30-year lease, which it said would help mitigate the devastating loss of $1.5 million in revenue during the past nine months due to closure and anticipated closure of the airport. It said that despite the loss in revenue, Dixie Jet continued to pay rent.
Carter said she would be OK with tabling the matter and allowing Oakes, Riddell, Horton and City Attorney Ed Crudup to meet to discuss the proposal and additional information. However, she said early termination has been discussed for the past two years and it would continue to be discussed.
“The spending actions we’ve taken so far are to move the FBO operations to another location and change the management thereof,” she said.
Oakes asked why there couldn’t be two airport managers, but Carter said she wasn’t going to debate those issues at the council meeting.
In an e-mail on Tuesday, Carter said the decision to pursue early termination is strategic. She said the city feels the current operating agreement with Dixie Jet would not be the best way to maximize customers and increase the tax base.
“Beyond the strategic aspects, we have had many complaints about the day-to-day operations at the airport. Provided the council agrees, the city will take over the operations and will use Mr. Horton's facility maintenance staff to run the airport. We feel we will have a greater financial capacity to keep an abundant fuel supply and other necessary navigational aids,” she said.
If early termination is approved, there would be a 90-day notice period.
“If we had given notice today, the termination would have been July 5 and the buyout would have been $353,109.77. There also would be a 10 percent early termination fee. This fee is 10 percent of the payoff amount or $35,310.98. Each month that passes makes the buyout amount increase,” she said.
The operation of the airport has been a contentious issue over the past couple of years between Riddell and the council and Carter. Riddell and Dixie Jet Manager Rusty Anglin are upset that construction has been delayed so long, while city officials have complained about late rent and stormwater payments, and insurance coverage that lapsed.
Lighting at the airport finally was fixed late last week, and the airport is now open for night landing and taking off as of Friday.
The fuel farm should be up and running in about two weeks. A couple of inspections still need to be completed, but the state fire marshal said it was fit to use. Anglin emphasized that Dixie Jet does have fuel in its fuel trucks in the interim, but the fuel farm will allow it to store much larger supplies.
Finally, Dixie Jet’s stormwater payment is still outstanding, but Anglin said his company had planned to pay it as part of the proposal, but the early termination talk has delayed that payment until the lawyers and officials can meet.