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Meeting Minutes for:
Finance Committee Meeting
Yuma International Airport, Conference Room
Thursday, December 03, 2020 at 12:03 PM
Call to Order:
The Yuma County Airport Authority, Inc. (YCAA) Finance Committee Meeting of the Board of Directors was called to order at 12:03PM on December 3, 2020 in the Yuma International Airport Conference Room, 2191 E. 32nd Street, Suite 218, Yuma, Arizona 85365. The Presiding officer was Eric Saltzer, Chairman.
YCAA FINANCE COMMITTEE MEMBERS PRESENT WERE:
Eric Saltzer, Chairman & YCAA Treasurer
Albert Gardner, Director
Randall Nelson, Director
Reetika Dhawan, Director (exited the meeting at 12:39PM)
YCAA FINANCE COMMITTEE MEMBERS ABSENT WERE:
Dean Hager, 1st Vice President
ALSO PRESENT WERE:
Gladys Brown, Airport Director
Gerald Hinkle, Jr., Chief Financial Officer
Andrea Lopez, Executive Assistant
Minda Davy, Airport Legal Counsel
REGULAR AGENDA
1) Discussion and possible recommendation regarding the status of the T-Hangar Rental Agreement with Tornado Aircraft, Inc. dba Tornado Aviation and the personal property on the Airport premises.
The Airport Director, Ms. Gladys Brown, described how Tornado Aviation’s aircraft storage hangar lease had been terminated as a result of non-payment and the lock was changed. Ms. Brown described the nature of Tornado’s activities on our airport and the contents of aircraft storage Hangar 1C which are now under control of the YCAA under a “landlords’ lien”.
Ms. Brown explained that YCAA had offered to provide an additional six months of time to sell or otherwise remove the property in return for signing a settlement agreement, a promissory note and a personal guaranty. These documents, if executed, would allow for an additional 6 months of storage before further action. In return, Tornado would agree to make six equal installments to pay balance of amount due ($6,315) in addition to paying regular monthly “storage fee” payments equal to previous lease rent.
The Committee is being asked to provide direction, since the Principal of Tornado, Mr. Baptista has yet to execute the agreement offered and has yet to make additional payments on amounts due.
Mr. Gardner asked how good of a response are we getting from Tornado responding to our legal or requests for information or attorney phone calls. Minda said it’s really not great, she’s had to knock the door down to get a response. Mr. Baptista is a lot more comfortable speaking with airport staff but thinks that goes to the fact he has been on late payment for so long. In the beginning when she was brought on he may have made a small payment but she doesn’t expect a payment. He has been a late pay for so long and she doesn’t see him being very responsive with her. He continued to raise the question of how does he know his property is still there, to which she assured him his property is still here after he expressed concern. Ms. Brown confirmed one person did come to see the items in September. Junior’s team always calls and follows up but we turned to the attorney.
Mr. Gardner asked how many other aircraft are on the airfield and who do they belong to, to which Ms. Brown clarified there are three additional aircraft on the airfield that Mr. Baptista purchased a total of six aircraft from Mr. Ewing and began to transition them from Yuma to Florida. Mr. Gardner asked the status of those aircraft. Ms. Brown responded they are considered non-flyables and are part of his overall property. The decision would be to remove all of his property from the airport, the contents of his hangar as well as the non-flyables.
Mr. Gardner said if we are having problems with him working with us and getting a response to our inquiries and that sort of thing, it’s a different color on the whole situation than if he’s forthcoming and working with us to fulfill whatever it is he said he’s going to do. Ms. Dhawan said it is obvious he is not responding with payment. Ms. Brown confirmed there’s been no payment and in November he spoke with her briefly but never followed back up so he does respond, it’s just when he’s able to and it’s very short.
Mr. Hinkle directed the Committee to the Database tab of the packet and then the Account Summary tab.
Minda shared there’s not a lot of follow through. She recommended she can call him to explain to explain to him the Finance Committee met and expresses their desire to continue to work with him to resolve and cooperate with him while he is getting a buyer but it’s going to require his cooperation as well. She would send him a letter which will serve as his 60-day notice regarding the potential sale of his property on the airport premises. And that way it would cover the airport for that 60 days, which she doesn’t think is necessary, but it covers the airport from the legal standpoint and then you have 60 days to see what he’s going to do, in terms of cooperation. Once the 60 days runs out, if there’s no cooperation whatsoever, the Airport Authority could then determine to proceed with the sale of the items.
Mr. Nelson asked if the Airport unilaterally made a statement that it wouldn’t sell his stuff for 6 months? Was that when the lease was still in effect? Ms. Brown clarified the airport provided him a settlement offer that says if he makes these payments or lump sum payment to store his aircraft, the airport will give him six months to resolve it. It’s not six months free, but he has to sign the agreement. This give him six months to pay off the other debts that he has and then be able to figure out how he’s going to transition out of the facility or maintain it after the six months and then go into an agreement, a newer agreement, month to month.
Minda said she is not aware of making a statement that we would not sell his stuff, it was purely a settlement offer, so the airport put an offer on the table and he has yet to do anything with that. Mr. Nelson confirmed, contingent upon him paying. Minda said yes, it is contingent upon him signing the document which includes a personal guarantee upon the settlement agreement and that was made after the lease was tardy and he did not follow through with those documents which means payments for past due rent but also payment for storage could continue to be a prospect here.
Mr. Saltzer asked if the lien action applies to the aircraft on the airfield or just about the other aircraft, or only the contents of the hangar. Minda will evaluate the lease however he obviously knew he had property located on the airport premises that wasn’t in his hangar and he was continuing to pay some rent over the years and believes it to be all inclusive. She just wanted to raise that as an item for legal counsel to evaluate if the landlord lien is to be pursued.
Mr. Saltzer confirmed the timeline to remove his property is pretty tight. Ms. Brown responded with the Airport Authority’s protocol about non-flyables. If you don’t fly your aircraft for a certain matter of time, if it doesn’t fly, it doesn’t move, the tires get marked and after so many days the owner gets a notice, usually we try to give them an extra 30 days and then we send them another notice and then they are charged a cost per square foot and there’s a set amount for the space occupied and it goes on from there. Mr. Ewing has non-flyables but he has an actual MOP, miscellaneous operating permit, because he sells the aircraft, rather than just someone who is storing it down there. Mr. Saltzer clarified the Airport Authority has received back payments for that as well, to which Ms. Brown confirmed we’ve had that happen before to where we’ve had to settle it or get a salvage debt. Mr. Saltzer asked if those had been tied to a hangar with a lease and $6,000 debt. Ms. Brown said no, and clarified it is what’s in the facilities themselves and the aircraft he owns. She will look again at the tail numbers listed on it, associated with the lease agreement cause now his lease is terminated.
Mr. Saltzer asked if the airport gave him a deadline to make a decision to come back with something before we say that at this point on we are going to pursue action. Minda responded yes, the initial letter that we sent asked for response in 14 days and then in an effort to truly try to resolve this so that the Airport Authority did not have to take on the step of having to sell the property, we made further attempts to call him and there was a little bit of back and forth in terms of phone calls and emails and by October 24th, she asked him when will he get back to her, which he said today. She says that was the deadline. Mr. Saltzer said that’s good. So now, the aircraft that’s in the hangar, like the value, if we went with option B and take the aircraft and sell it to try to re-coop some of the cost, has anyone looked at the logs of the aircraft to determine the value of the aircraft. Is it even worth going after of the $6,600 that’s left?” Mr. Gardner said the value is negligible in terms of what it would take to recover that and get them out of here. You would almost have to give them away to talk someone into taking them. Mr. Saltzer said that’s the other point he is making is what would the possibility be to give him a deadline to remove the aircraft, clear the debt and he pay to have it removed so that we don’t have to have the cost of have them removed and deal with that. Has that been approached or no?” Ms. Brown responded no, because once you go and decide if we’re going to execute the landlord’s lein then our staff will have to coordinate that, it just a part of the business. There are so many options that I think it’s going to overwhelm him and she believes Minda’s recommendation gives him time to make sure he can go through this and give him the proper notification and then after that going through what’s necessary to vacate the premises themselves. She continued many would say to cut it up and haul it off, because we’re not going to be rebuilding an aircraft, if we have to get it disposed of or we’ll get somebody to come and do it for free cause they’ll piece out what they want to recycle and then they’ll dump everything else.
Mr. Saltzer asked if the cost could actually be lower if we go to action and after 60 days we take possession of it and we have an auction and get the aircraft out. At the end of it we will lose the $6,000 and the fees for making this happen. Ms. Brown asked Junior the total amount owed, Junior responded $5,760 as of November 1st, another $550 due on December 1st for a total amount of $6,643.17. Minda said technically the lease ended in September so the charges after then would be considered as storage charges. Junior confirmed the Airport Authority stopped sending him invoices when the lease was terminated. Minda shared he could have a lawyer say that technically he should not be responsible for those storage charges but he did not agree to pay those storage charges. However, if you are unable to lease that hangar out to somebody else and earn rent on that then that would kind of offset. She believes the Airport Authority can still take a position that he owes that money but certainly the five thousand number.
Mr. Gardner said he is inclined to think that we move ahead with anticipation that this guy is not going to pay any money. Ms. Dhawan agreed and said we should go with legal recommendation. Mr. Saltzer asked if that the most painless, cost effective way, to which Ms. Brown confirmed yes, as it helps give clarity because we’ve been working with him for a long time. Minda will contact him to explain the Finance committee’s decision. If he doesn’t pick up the call, then Junior can call on a 3 way with Minda on the call. The one thing he brings up is if his items are still there. The truth is they’ve never been touched, the only thing we’ve done is changed the lock and closed it off, other than that we’ve not touched anything.
Mr. Nelson asked if the $6,700 include legal or collection fees and why not because that should be part of the settlement. Ms. Brown said it would be difficult to recoup legal or collection fees when we can’t get a regular monthly payment of $500.00 out of him, it would be difficult to get him to pay the hourly rate of our attorney. The more we work with her the more cost we are accruing versus getting clear direction and going from there. Minda confirmed the Airport Authority has the right and the lease says that if you don’t agree, then we are going to pursue legal action and you will be responsible. Mr. Nelson: shared if the Airport Authority makes a settlement, legal fees should be added on as part of the negotiations. Minda said so far we haven’t been able to get him to agree to pay what he owes and that’s part of the settlement agreement is a release that says even though we have legal claims against you and you owe us more money, we are going to agree to forego that if you agree to a payment amount. You certainly have the right to demand legal fees but Ms. Brown makes a very good point that continuing to chase this, and if you go to court, the court could order reimbursement of those and then you’ll have to try to collect that.
Mr. Saltzer asked how did this go on for so long, for over almost a year, why did we let it go on for so long? Ms. Brown explained he would make small payments and interact with staff and tell his situation. She continued the working relationship we have with him was easy and he makes himself a little bit whole. The months add on, and the Board has made it clear to staff work with the client and provide a solution and make sure the entire time we work with legal so there is no perception that we are going to make an exception for one person but not the other. So we treat everyone the same. What we need to know now is we’ve done all the right things based on the current agreement that most GA tenants have but now we are exhausted even the opportunity to even having the settlement to where they’re non-responsive or responsive and not following through. If you go before any court, which we’ve all experienced, they’ll ask did you have correspondence, what are the things you’ve done, did you make any exceptions, and the answer is no. Have we followed what we said we would do, yes, and then once he contacts us then we go where are we at now. And now he is saying he never agreed to any of the settlement terms and that’s why I knew it was time for us to sit with the Finance committee because we’ve done everything we typically do for each of our clients and we understand that he is a GA pilot but he was running his own commercial operation of sales but it wasn’t in the state of Arizona, he was doing that in his home state of Florida.
Mr. Saltzer said it may be a good idea in the future so we don’t get walked on or abused is to set a deadline of six months which is a reasonable time because we get to a year and we have attorney’s fees and we are losing a lot, just so we don’t get walked on so we need to set a deadline. A year is a long time.
Mr. Gardner agreed we need to be careful not to be mean to our tenants which means we probably bent over backwards more than in retrospect that you would have. The thing that concerns him a little bit about this one is that he’s not sure he has anything left here worth any money, that he has removed the valuable aircraft from the field that was worth to extract. The three aircraft here are salvage. Mr. Saltzer agreed it’s going to cost more money to remove the airplanes. Ms. Brown confirmed the Airport Authority did its due diligence to communicate, and now we are at the point where he is not willing to sign a new agreement that we’ve proposed that was reasonable for him to begin to resolve all of his past dues and by the 6 month mark be done and figure out what he wants to do with his property or how we can help. At this point, the only way we help is if he throws his hands up we just go and get the property and dispose of it or whatever we can from it whether it be salvage cost from the metal. At this point it’s not about the profit it’s about clearing the facility.
Mr. Saltzer asked if we would have to conduct a public auction. Minda said no, if we were to sell something that was truly worth $50,000 for $10 that would be a problem but you don’t have to go to auction. She further explained that you cannot derive more proceeds than what they actually owe, if you do you have to give that back to make you whole. She will confirm whether we have to go to auction but doesn’t see that we do and said that there would be fees to even hold the auction. Regarding Mr. Gardner’s comment that there may not be any value, she said to keep in mind that he did recently make a $2,000 payment in September and he had a potential buyer and he was very interested in making sure that buyer got into here so she sees him having some value in the hangar. It’s just a matter of getting him to communicate and work with us. She believes he hasn’t truly rebuked our offer and that’s something that if we move forward with her making a phone call or doing so with airport staff and putting that $6,300 out there. Mr. Gardner said we got a partial payment of $2,000 out of him and he almost owes $6,000 so that gets people off your back for a little while. There’s a negative way of looking at that also, he continues the process. His recommendation is to clean this thing up in the least expensive way possible. Mr. Nelson agreed he’d like to get it off the books and asked if we can go to small claims court. Minda explained small claims court is $3,500, and Justice court is $10,000 but you are going to spend a few thousand dollars in attorney’s fees to get a piece of paper then try to collect on that. Right now your contract is with the LLC on the lease out of Florida and we don’t know what aspect that LLC has. You do not have a contract with Mr. Baptista directly and you would have to go through a whole process to go after him personally unless he signed a personal guarantee which is in our settlement offer. It is not her recommendation that we pursue a lawsuit.
Mr. Saltzer asked if since the airport weren’t able to rent it out, that should reduce the taxes, to which Junior confirmed.
The committee consensus is to tell him the settlement offer is off the table. We we’re going to put out a 60 day notice regarding enforcement of the landlord lien, however if you first pay half of the amount owed for the past due rent and late fees then you must remove your property within 60 days. Even if payment is made, and you do not remove your property within 60 days you are giving permission and authorization for all aircraft and property on the airport and premises within the hangar to be liquidated or disposed of.
Junior will call Mr. Baptista to let him know Minda will be reaching out to him about the Finance Committee’s decision.
2) Discussion and possible recommendation regarding the status of the Promissory Note and Guarantees between the YCAA and AQST Space Systems Group, LLC.
The Airport Director, Ms. Brown, reminded members of the Committee of the aerospace company called AQST who requested their lease be terminated after becoming delinquent on lease rents due on their long-term lease of the Joe Foss facility. She described how YCAA agreed to terminate the lease, forgoing more than $3.5 Million in future lease rents, in return for paying past due amounts of rents through October 2019 in the amount of $108,631.82. She explained how the balance due was to be paid by a single $30,000 installment (which was received) and twenty-four monthly installments of $3,485.01 each with security in the form of a $30,000 bond and a personal guarantee of both principals.
Ms. Brown explained how AQST has become delinquent on their payments due under the agreement and is asking the Committee to provide direction. Ms. Brown did specifically address a stipulation contained in the bond that requires YCAA to notify the Surety when AQST attempts to make an installment with a “non-sufficient funds” check, or AQST becomes delinquent, which is now the case.
Minda explained why there is no Board action required. The board approved the documents, we are pursuing terms of documents, if pursue lawsuit then would need to go to the board.
Eric said they should have been well aware that this would happen. Gladys said they understood the obligations of the debt that is owed and we have done multiple things to try to collect. The Airport Authority is obligated to report to the Surety company.
Randy stated we had a contract in default we negotiated a settlement, we need to enforce it. Albert said this can’t be coming as a surprise to them if they’re not making their payment, and gives the appearance they are trying to get away with not making a payment. The majority of us are leaning toward option number 1.
Eric asked if the Airport Authority is worried about keeping good relationships with them, will they ever come back? Gladys responded we always try to keep good relationships while in keeping with contractual obligations and keeping the Finance Committee informed. If they can give us immediate response they are unable to pay the balance owed, then the Airport Authority can exercise the claim against the bond.
Minda reminded the Airport Authority does not need permission to make the claim. If staff attempts to contact them, it should simply be to let them know they are delinquent and in default, the airport has notified the Surety company of the delinquency and we are demanding the full amount due, if not paid within 7 days then we will pursue the remedy of making payment with the bond. It gives the opportunity to pay the amount owed. AQST has created a new LLC in Mississippi called AQST USA, LLC, Mr. Soto is not a principal of this new LLC. She recommends taking steps to obtain current amounts owed as it seems like the current AQST may not be around in the near future and we don’t know what the extent of the personal assets are.
Minda will reach out to their attorney to let them know the notice of default has been sent to the surety company with demand to pay the entire amount due. If payment is not received in full the Airport Authority is not working on any type of settlement or further negotiations. Regardless if they make a $30,000 payment, the Airport Authority will make a claim on the bond for remaining amounts owed.
Gladys clarified Minda will continue to work directly with AQST’s legal team. If that person no longer represents AQST, she will contact Mr. Soto directly.
The consensus of the Committee was to direct staff to provide notification of the delinquency to the Surety as soon as possible, as well as notifying AQST of YCAA’s intent to demand the entire balance due on the note. The Committee instructed legal counsel to craft the notification providing 7 days to pay the entire balance due. Failure to do so will cause YCAA to make a claim on the bond. The Committee stated its desire to address possible action necessary to collect of amounts remaining due after these actions have run their course when we got to that point.
ADJOURNMENT
There being no further business before the Committee the meeting adjourned at 1:30PM.
// Approved //
Eric Saltzer
Treasurer Yuma County Airport Authority; Finance Committee Chairman | |
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