NOTE: This meeting was tape recorded and the tape is available at the airport office.

1. CALL TO ORDER

Vice President Mike Mohn called the meeting to order at 7:10 p.m. Present: Directors Bozack, Mohn and Farris, and Rosenthal. Directors Bates was absent. Also present were District Manager and District Counsel Scott Nave through telephone conferencing.

2. PLEDGE OF ALLEGIANCE TO THE FLAG

Director Farris led the pledge of allegiance to the flag.

3. CONSENT CALENDAR

A. Approval of Minutes of Regular Meeting of October 8, 2003 and waive further reading of the Minutes.

B. Approval/ratification of the Payment Register of November 5, 2003.

C. Acceptance of Financial Report for September, 2003.

D. Authorization to release retention funds to Magnum Enterprises for project # Aip03-06-0110-15, construction of airport rescue and fire fighting facility, in the amount of $143,323.28 and close the referenced grant.

E. Authorization to release retention funds to Kern County General Services for project # AIP03-06-0110-15, construction of airport rescue and fire fighting facility, in the amount of $61,400.68

There was a comment by Director Bozack regarding the payment to Ridgenet. Ms. Bass explained that this expense is for additional space on the website. Ms. Bozack said that she understood the cost was only 8.00 per month. Ms. Bass will double check on this to see if the cost is lower and also if a discount for annual payment is given.

Motion was made by Director Mohn, seconded by Director Rosenthal, TO APPROVE THE CONSENT CALENDAR AS PRESENTED. Motion was passed by voice vote: 4 ayes, 1 absent.

4.A. APPROVAL OF LEASE BETWEEN DISTRICT AND QUOIN, INC.

Ms. Bass distributed information received on November 5 from Ms. Beth Sumners of Quoin. No representative of Quoin was present at the meeting.

Ms. Bozack asked how the $400.00 per month proposed by Ms. Sumners relates to the square footage cost. Of $00.033 per square foot per year as stated in the proposed lease. Mr. Rosenthal said that would be brought up in the discussion.

Director Mohn stated that there has been no committee meeting since this matter was discussed at the October meeting; however, Mr. Mohn believes that the incubation period has gone on for eight years and the business should now be examined in light of what is charged to others for similar property. The committee decided on the lowest rate at the field which is for non-buildable property and is $00.033 per square foot per year. He added that the rental increase is a shock to them as they use a lot of land and the payment is therefore high compared to what they have been paying. Ms. Bass said that the District could gerrymander the site in order to reduce the land area. Motion was made by Director Rosenthal, seconded by Director Bozack, to approve the lease as proposed.

Ms. Bozack verified that they have been paying $ 225.00 monthly. Mr. Rosenthal said that the area is estimated at 20 acres, resulting in an approximate monthly payment of $ 2400.00. This is still computed at the non-buildable rate and the committee believes this is an equitable amount. They have had the incubator rate for many years and hence have received an enormous benefit from the District. An artificially low rate actually costs the airport for security and other services. Mr. Rosenthal added that if Quoin chooses to move out, this is a decision they will make if they can find a cheaper location.

Ms. Bass clarified that Ms. Sumners said the estimated number of units sold is not correct. The price of the average unit is lower, which would increase the number of units sold. Mr. Rosenthal and Ms. Bozack said that this is not an issue for the District.

Ms. Bozack stated that the District is required to charge similar rates to airport users, and the square footage rates are commonly used at the airport. Mr. Farris said that the District should try to work with Quoin; they are not using the entire area so they should not be charged. He believes the huge rent increase would be unacceptable to him as a businessman. Ms. Bass said that they originally said they would plan to construct a facility on leased land at the airport when the business became a going concern. At a later date they said they were considering purchasing adjacent property and using the bunkers for storage of their flammable/hazardous materials. Neither of these plans ever came to fruition. Ms. Bass added that it has been brought to the attention of the District that the propellant they are using at the site is probably a hazardous substance and this is another worry for the District.

Mr. Farris continued that the rent needs to be increased but perhaps the lines could be redrawn. Ms. Bass said that the land in between the bunkers would then be unusable by anybody else. Mr. Mohn pointed out that others, for example hangars, have to pay for the area around their site without using it.

Mr. Mohn brought up the FAA assurances and the requirements the District has to comply with. Ms. Bass said that Mr. Kunkle pays $777.00 per month for about 1.6 acres for his site. The Quoin site is partially improved, as the bunkers are existing and have been used for a manufacturing facility for years. Mr. Rosenthal added that Quoin has also built structures on the site.

Ms. Bozack asked about meeting with them to discuss a graduated increase. Mr. Mohn said that even at the new rate, averaged over the last several years it is reasonable. Ms. Sumners indicated that if the rent is more than $400.00 the business will relocate. Mr. Farris stated that the District should try to find a way to work with them, and every tenant at the airport is of value. Mr. Farris added that Quoin should be billed for any repairs or other costs that the District incurs. The area has not been surveyed, so the cost at this time is an estimate only. It may be possible that the acreage will be reduced when the site is actually measured by a surveyor.

Ms. Bozack asked about adjusting the rate annually using the CPI (Consumer Price Index) which is included in the lease. Ms. Bass said that she dislikes using the CPI, but Mr. Nave said this is a standard in the industry. If the increase is every five years, it usually is a large increase. There was a lengthy discussion about use of the CPI. Mr. Mohn asked if the District would have to go by this. The consensus of the Directors was to remove the CPI clause as it presently is worded as it is required. There is another lease at the airport which is tied to the CPI, and that is the Kinlin lease. (That lease was done with CPI at the request of the tenant.) Mr. Mohn suggested that this be reviewed by the Board of Directors at the time of review and they can make the determination whether to increase the rent. There was a short discussion about how other District leases are reviewed. Mr. Nave gave some examples of other methods to review the leases. Mr. Nave agreed that there could be a provision in the lease which states the Board will extend the lease on the same terms but the cost will be reviewed by the Board of Directors at the time the extension is considered. There was a discussion about the term of the lease and various ways to extend. Mr. Nave presented some alternatives but said that the term should be specified. Ms. Bass said that if the company wants to obtain a loan from a bank, the term must be long enough to satisfy the lender.

The Board voted at the October meeting to make any rent increase effective October 1. At this time Quoin is asking that this item be continued to the December meeting. Several Directors indicated that they believe this is a ploy to obtain more time. Ms. Bozack said she does not understand why the proposal they said they would make was never received by the District.

Ms. Bass suggested that the existing agreement be continued with provisions that the Board wants, and no Board action is needed. The manager has the discretion to change the month to month agreement. Then the permanent lease may be discussed again at committee with a Quoin representative present. Various wording for a new motion was discussed. Various periods for rent adjustments on existing leases were discussed.

Ms. Bozack asked about Section 4 (use of premises). Quoin has never informed the airport they are testing a propellant for rockets. The provision in the lease will require that any new or additional uses must be given to the District for approval. Ms. Bozack recalled a tour of the Quoin facility and there was another use at that time. Ms. Bass said that the District had been told that generator motors were being tested on the site, but no propellant testing was brought up. The method used for painting the flares results in paint remaining on the vegetation and the ground, and this may also be a hazardous substance.

There is a provision in the proposed lease regarding hazardous or toxic materials and the clean-up if needed. Mr. Nave explained that this is put into the lease, but ultimately if a site is not cleaned up it becomes the responsibility of the owner. The lease provision is the best that can be done to protect the District. It was suggested that the District request a list of items used, and also the District may contact the Fire Department, the Health Department, and the BATF regarding the substances permitted on the site. Ms. Bass said that clean-up insurance is nearly non-existent at this time because of the tremendous cost. Mr. Nave mentioned that in the event of a bankruptcy the District would have to do the clean-up on their own. Mr. Rosenthal maintained that it is better to include the provision in the lease than to omit it.

Ms. Bozack asked if there is anybody else available to represent Quoin when Ms. Sumners is unavailable. The answer was yes, there are other people with the firm. Mr. Mohn said that the District has been really patient in this matter.

Ms. Bass suggested an alternative. She suggested that the month to month agreement be approved with the rent to be estimated at the increased amount. Then negotiations could be completed with Ms. Sumners and the matter returned to the Board no later than the December meeting. Mr. Mohn likes this action, and the Board can be innovative with the final lease.

Director Rosenthal amended his motion, and Ms. Bozack seconded the amended motion, as follows:

TO APPROVE THE PROPOSED LEASE ON A MONTH TO MONTH BASIS, DELETING SECTION 3.(b), WITH THE INCREASE IN THE RENTAL AMOUNT EFFECTIVE OCTOBER 1, 2003 AND TO CONTINUE THE ITEM FOR A PERMANENT LEASE TO THE DECEMBER AGENDA FOLLOWING NEGOTIATIONS WITH QUOIN

Motion was passed: aye - Directors Bozack, Mohn, Rosenthal. No - Director Farris. Absent - Director Bates.

The committee will schedule a meeting with Ms. Sumners as soon as possible to complete negotiations.

4.B. AUTHORIZE FILING OF NOTICE OF COMPLETION FOR PROJECT # AIP 03-06-0110-15, CONSTRUCTION OF AIRPORT RESCUE AND FIRE FIGHTING FACILITY

Ms. Bass reported that the fire station project is complete. Motion was made by Director Mohn, seconded by Director Farris, TO AUTHORIZE FILING OF NOTICE OF COMPLETION FOR PROJECT #AIP 03-06-0110-15. Motion was approved by voice vote: 4 ayes, 1 absent.

5. DISTRICT COUNSEL REPORT

Mr. Nave had no report.

6. DISTRICT MANAGER 

Ms. Bass explained that the District has a tenant who is five months behind in his rent. The tenant has issued bad checks, made promises to pay and not kept them, and it does not appear that he will pay the rents. A letter of termination was sent to him on October 7. Mr. Nave explained the process that is used to actually evict a tenant, an Unlawful Detainer action. This is a legal action that must be approved by the Board, but it is the quickest action that can be used. As far as money lost, the District must have an auction of the items remaining on the premises and apply the proceeds to the unpaid bills. Ms. Bass was directed to put the item on the December agenda for action.

7. COMMITTEE REPORTS

There were no committee reports. Director Bozack requested a meeting of the Finance/Personnel Committee which will be scheduled.

8. PUBLIC COMMENT

There was no public comment.

9. BOARD COMMENT

DIRECTOR BOZACK – Ms. Bozack commented that the new water/soda machine in the pilot lounge is greatly appreciated. Ms. Bass explained that the District is not responsible for stocking the machine, so there is no cost or profit to the airport. The price of the product is kept low because of this.

DIRECTOR ROSENTHAL – Mr. Rosenthal reminded everybody of the lunar eclipse which will be at sunset on Saturday November 8. The moon will actually rise in total eclipse. The full moon will then come out of the shadow and it will be very dramatic.

10. ADJOURNMENT

Motion was made by Director Farris, seconded by Director Rosenthal, TO ADJOURN THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF INDIAN WELLS VALLEY AIRPORT DISTRICT OF November 5, 2003 at 8:25 p.m.. Motion was approved by voice vote: 4 ayes, 1 absent.

Submitted by:
Nancy Bass, Executive Secretary