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04. Agreement - Airport Management ServicesCity of Kalispell Post Office Box 1997 -Kalispell, Montana 59903 Telephone: (406) 758-7701 Fax: (406) 758-7758 MONTANA MEMORANDUM To: Mayor Fisher and City Council From: Doug Russell, City Managei��� Re: Consideration of Airport Management Services Contracting Meeting Date: December 2, 2013 BACKGROUND.* During budget discussion, consideration was given to the concept of privatizing airport management services as a potential avenue for reducing expenditures within the airport fund. A Request for Proposals (RFP) was released in September of this year with an October 11, 2013, deadline for response. The scope of services that has been assimilated for management services is as follows: a) Notify the City of needed maintenance and repair of buildings, grounds and equipment b) Provide NOTAM issuances and airport advisories to FAA Flight Services c) Provide daily inspection of runway/apron/taxiway surfaces, lighting and navigational aid systems d) Comply with and enforce applicable regulations and adopted standards pertaining to the airport e) Communication with the City, and FAA if necessary, on field conditions affecting the safe use of the airport f) Report violations of ordinances, policies, or rules regulating the use of the airport to the City g) Provide available personnel to meet the needs of the airport and the flying public h) work with the City on the planning, budgeting, and development of airport facility modifications and improvements i) Provide customer service to airport users and the flying public j) Provide snow removal services for the runway/apron/taxiway k) Provide mowing/haying/weed services for the airport grounds The City received 2 proposals in response to the RFP. A committee of 5 people reviewed the proposals and is recommending the City Council approve an agreement with Red Eagle Aviation for the provision of airport management services. The agreement with Red Eagle will be for $36,000 a year, plus tie down fees (approximately $1750 in FY13). Additionally, Red Eagle will provide snow removal services at a rate of $400 per occurrence. The City of Kalispell will save in expenditures that we are currently experiencing in salary and benefits, and in costs of some of the service that will now be provided by Red Eagle Aviation, (for example, we will no longer have tractor rental expenses to aid in mowing). The proposed agreement is for 3.5 years, and would begin January 1, 2014. FISCAL IMPACT: It is estimated that approximately $13,000 will be saved within the airport fund by moving to contracted services. This amounts to a savings of approximately 16% of our budgeted operating expenditures within the airport fund. ALTERNATIVES: Reject the recommendation and continue to provide airport management services in-house. RECOMMENDATION: It is recommended the City Council approve the recommended agreement with Red Eagle Aviation for the provision of airport management services. for AIRPORT MANAGEMENT SERVICES THIS AGREEMENT is made and entered into this day of 2013, by and between the CITY OF KALISPELL, MONTANA, a municipal corporation organized and existing under the laws of the State of Montana, 201 First Avenue East, Kalispell, Montana 59901, hereinafter referred to as "City," and RED EAGLE AVIATION, INC., 1880 Highway 93 South, Kalispell, MT 59901, hereinafter referred to as "Contractor." WHEREAS: The City is the sole owner of the Kalispell City Airport for purposes of providing general aviation -related services to the flying public and for the promotion and development of commerce and economic growth for the region; and WHEREAS: The City desires to contract with the private sector in the provision of aviation - related services including but not limited to airfield inspections, airport advisories, NOTAM issuances, public relations, grounds keeping; and other potential aviation -related services that may be developed. In consideration of the mutual covenants and agreements herein contained, the receipt and sufficiency whereof being hereby acknowledged, the parties hereto agree as follows: 1. Purpose: City agrees to hire Contractor as an independent contractor to perform for City services described in the Scope of Services attached hereto as Exhibit "A" and by this reference made a part hereof. 2. Effective Date: This Agreement is effective as of January 1, 2014 and will terminate on the 30th day of June, 2017. 3. Scope of Work: Contractor will perform the work and provide the services in accordance with the requirements of the Scope of Services. 4. Payment: City agrees to pay Contractor pursuant to the schedule of fees and charges as attached hereto as Exhibit "B" for services performed pursuant to the Scope of Services. Contractor shall also have the privilege of managing tie downs and receiving tie down fees at the rate of $20.00 per month. Any alteration or deviation from the described work that involves extra costs will be performed by Contractor after written request by the City, and will become an extra charge over and above the contract amount. The parties must agree upon any extra charges in writing. Airport Management Services Agreement A. Tacifity maintenance: CITY shall provide necessary maintenance and repair of all CITY -owned buildings and transportation surfaces, taxiway lighting and navigational aids systems. CITY shall provide all necessary runway markers and fencing. B. Tenant management: CITY shall approve airport leases and have billing and collection responsibilities for all said leases, commercial and user fees, with the exception of the tie -down fees. 6. Obligations of the Contractor: A. Hours of operation: Contractor agrees to provide daily coverage for services. Contractor agrees to provide emergency, off -hour, and back-up customer service from persons living in the immediate area. Contractor agrees to provide a telephone number for the contact of normal and off -hour related services. This contact number shall be available for posting on aviation related information portals and the city website. B. Airport Management Services: Contractor shall serve as the overall manager of the airport on behalf of the City, implement its general program duties and shall provide the services as set forth in the Scope of Services. 7. Independent Contractor Status: The parties agree that Contractor is an independent contractor for purposes of this Agreement and is not to be considered an employee of the City for any purpose. Contractor is not subject to the terms and provisions of the City's personnel policies handbook and may not be considered a City employee for workers' compensation or any other purpose. Contractor is not authorized to represent the City or otherwise bind the City in any dealings between Contractor and any third parties. Contractor shall comply with the applicable requirements of the Workers' Compensation Act, Title 39, Chapter 71, MCA, and the Occupational Disease Act of Montana, Title 39, Chapter 71, MCA. Contractor shall maintain workers' compensation coverage for all members and employees of Contractor's business, except for those members who are exempted by law. Contractor shall furnish the City with copies showing one of the following: (1) a binder for workers' compensation coverage by an insurer licensed and authorized to provide workers' compensation insurance in the State of Montana; or (2) proof of exemption from workers' compensation granted by law for independent contractors. 8. Indemnity and Insurance: For other than professional services rendered, to the fullest extent permitted by law, Contractor agrees to defend, indemnify, and hold the City harmless against claims, demands, suits, damages, losses, and expenses connected therewith that may be asserted or claimed against, recovered from or suffered by the City by reason of any injury or loss, including but not limited to, personal injury, including bodily injury or death, Airport Management Services Agreement property damage, occasioned by, growing out of, or in any way arising or resulting from any intentional or negligent act on the part of Contractor or Contractor's agents or employees. For the professional services rendered, to the fullest extent permitted by law, Contractor agrees to indemnify and hold the City harmless against claims, demands, suits, damages, losses, and expenses, including reasonable defense attorney fees, to the extent caused by the negligence or willful misconduct of the Contractor or Contractor's agents or employees. For this purpose, Contractor shall provide City with proof of insurance issued by a reliable company or companies in amounts not less than as follows: • Workers' Compensation - statutory • Employers' Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate • Commercial General Liability - $1,000,000 per occurrence; $2,000,000 annual aggregate • Automobile Liability - $1,000,000 property damage/bodily injury; $2,000,000 annual aggregate The City shall be included or named as an additional or named insured on the Commercial General and Automobile Liability policies. The insurance must be in a form suitable to City. 9. Professional Service: Contractor agrees that all services and work performed hereunder will be accomplished in a professional manner. 10. Compliance with Laws: Contractor agrees to comply with all federal, state and local laws, ordinances, rules and regulations, including the safety rules, codes, and provisions of the Montana Safety Act in Title 50, Chapter 71, MCA. 11. Nondiscrimination: Contractor agrees that all hiring by Contractor of persons performing this Agreement will be on the basis of merit and qualification and will not discriminate on the basis of race, color, religion, creed, political ideas, sex, age, marital status, physical or mental disability, or national origin. 12. Default and Termination: If either party fails to comply with any condition of this Agreement at the time or in the manner provided for, the other party, at its option, may terminate this Agreement and be released from all obligations if the default is not cured within ten (10) days after written notice is provided to the defaulting party. Said notice shall set forth the items to be cured. Additionally, the non -defaulting party may bring suit for damages, specific performance, and any other remedy provided by law. These remedies are cumulative and not exclusive. Use of one remedy does not preclude use of the others. Notices shall be provided in writing and hand -delivered or mailed to the parties at the addresses set forth in the first paragraph of this Agreement. Airport Management Services Agreement 13. Modification and Assignability®I This document contains the entire agreement between the parties and no statements, promises or inducements made by either party or agents of either party, which are not contained in this written Agreement, may be considered valid or binding. This Agreement may not be enlarged, modified or altered except by written agreement signed by both parties hereto. The Contractor may not subcontract or assign Contractor's rights, including the right to compensation or duties arising hereunder, without the prior written consent of City. Any subcontractor or assignee will be bound by all of the terms and conditions of this Agreement. 14. Ownership and Publication of Materials: All reports, information, data, and other materials prepared by the Contractor pursuant to this Agreement are the property of the City. The City has the exclusive and unrestricted authority to release, publish or otherwise use, in whole or part, information relating thereto. Any re -use without written verification or adaptation by the Contractor for the specific purpose intended will be at the City's sole risk and without liability or legal exposure to the Contractor. No material produced in whole or in part under this Agreement may be copyrighted or patented in the United States or in any other country without the prior written approval of the City. 15. Liaison: City's designated liaison with Contractor is Doug Russell, City Manager and Contractor's designated liaison with City is James Pierce. 16. ADDlicability: This Agreement and any extensions hereof shall be governed and construed in accordance with the laws of the State of Montana and the venue of law for any dispute shall be the I I th District Court for Flathead County, Montana. IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year first above written. B Doug Russell City Manager Airport Management Services Agreement Dy JaPierce, President 1 Exhibit "A" a) Notify the City of needed maintenance and repair of buildings, grounds and equipment b) Provide NOTAIVI issuances and airport advisories to FAA Flight Services c) Provide daily inspection of runway/apron/taxiway surfaces, lighting and navigational aid systems d) Comply with and enforce applicable regulations and adopted standards pertaining to the airport e) Communication with the City, and FAA if necessary, on field conditions affecting the safe use of the airport f) Report violations of ordinances, policies, or rules regulating the use of the airport to the City g) Provide available personnel to meet the needs of the airport and the flying public h) Work with the City on the planning, budgeting, and development of airport facility modifications and improvements i) Provide customer service to airport users and the flying public j) Provide snow removal services for the runway/aproi-dtaxiway k) Provide mowing/having/weed services for the airport grounds Airport Management Services Agreement HM Management Snow Plowing SCHEDULE OF FEES AND CHARGES Description unit Price Day to day operations, insurance, mowing, weed spraying, liaison with City, FAA, Contractors and public users. Clear taxiways/runways as necessary according to schedule as agreed upon with the City. I each Airport Management SenTices Agreement WIM $36,000.00 $400.00 Received by Email from Bob Hafferman @ 4:00 p.m., December 2, 2013 COUNCIL December2, 2013 - Red Eagle 1. What is the significance of 3.5 years? Why not one or two years? 2. Does the $36,000 payment by the City replace the $34,216 shown on this years budget for personal services? 3. Will Red Eagle still pay the $17,664 office space and attached hanger plus the $3,600 fueling facility annual lease payments as per contract of August 26, 2005 approved by CM Jim Patrick? 3. Does the $18,780 of the 13/14 budget for contract services pertain to item 5A of the contract? COMMENT Revenue to City: $79,226 - $2,500* tie down (amount budgeted for 13/14) = $76,722 *Item 4 and 5B of contract Expenditures to City: Red Eagle contract $36,000** M&O as per 13/14 budget 45,956** Total Expense $81, 956 **Red Eagle is paid for snow removal estimated as $5,000 in 13/14 budget Note that the present proposed contract payments nearly balance the current income. However, with personal services eliminated other individual line items may be eliminated. But there is not any amount set aside for pavement rejuvenation every 5-8 years. If this was a one-year contract I wouldn't have any problem voting aye. There are a number of decisions the Council must agree upon BEFORE obligations on either party are fully aware, such as: what will be done for safety and rehabilitation on the present airport foot print, specific Council enacted regulations, long term maintenance requirements, budgeting matching income and expenses including set asides for non -annual maintenance. etc. A 3.5 year contract today will just "kicks the can down the road" which is what has been going on since 1979. There needs to be Council action to make it clear what is expected of a management entity.