Meeting Minutes for:
Finance Committee Meeting
Yuma International Airport, Conference Room
Tuesday, December 06, 2022 at 12:02 PM

    Call to Order:
    The Yuma County Airport Authority, Inc. (YCAA) Finance Committee Meeting of the Board of Directors was called to order at 12:02PM on December 6, 2022, in the Yuma International Airport Conference Room, 2191 E. 32nd Street, Suite 218, Yuma, Arizona 85365. The Presiding officer was Stanley Gourley, Chairman.

    Stanley Gourley, Chairman & YCAA Treasurer
    Reetika Dhawan, Director
    Albert Gardner, Director


    Bill Craft, President
    Ken Scott, Director
    Gladys Brown, Airport Director
    Gerald Hinkle, Jr., Chief Financial Officer
    Silvia Gunderman, 1st Bank Yuma
    Mark Pancrazi, Pancrazi Insurance Agency

    There were no Public Comments.

    1) Discussion and possible recommendation related to YCAA long-term debt

    The Airport Director described in some detail the YCAA’s remaining long-term debt, including a description of the capital infrastructure acquired with the proceeds, and a summary of existing terms. The discussion continued with Mr. Hinkle, the Chief Finance Officer, who explained the advantages of retiring all, or part of, the only remaining long term note payable commonly referred to as Note #1713 held by 1st Bank Yuma. Mr. Hinkle explained that since Note #1713 has a fixed annual rate of interest of 3% through the year 2025, the ever increasing prime rate of interest is not a current concern. He further explained that due to the terms of Note #1713, paying down a portion of the remaining balance would not reduce the required monthly debt service payment no matter how significant the pre-payment. According to Mr. Hinkle, and confirmed by Ms. Gunderman, the monthly payment would be re-calculated in 2025 based on the remaining balance and the interest rates then in effect. Mr. Hinkle also informed the Committee that by retiring the note entirely at a cost of just over $ 2.2 Million would end the required monthly installments which are currently $14,747 monthly or $176,964 annually and save an estimated $550,000 over the remaining term. Mr. Hinkle suggested that rather than paying down debt, the Committee could consider investing in airport improvement projects or even adding revenue producing facilities.

    Airport Director, Ms. Brown, informed the Committee that this agenda item was the result of YCAA’s Board President, Mr. Craft’s request, to examine the possibility of pursuing further debt reduction considering the YCAA’s current Capital Reserves is more than $4.6 Million that are held in a commercial savings account earning less than 1% annual interest.

    After being asked by Ms. Dhawan of some examples of airport investments that would generate revenue for the YCAA, Ms. Brown referred to Agenda Item #2 which includes consideration to invest in bring electrical power to Rolle Airfield Airport at an estimated cost of $800,000, as well as providing some insight into considerations of using existing resources, along with additional capital to construct a large commercial hangar in the Defense Contractor Complex. Ms. Brown indicated that the timing is not advantageous at the moment due to the ever-increasing cost of capital as well as the current inflationary environment which has made construction costs dramatically more expensive.

    Mr. Craft reminded the Committee that his request to address the issue was simply intended to initiate a dialogue on the subject and that he had no opinion of whether or not to take action to further reduce the YCAA’s long term debt. Mr. Craft indicated that the Committee could decide to establish a target amount of Capital Reserves to keep on hand while considering the expenditure of amounts in excess towards either debt reduction or further investment into the airport. Ms. Dwahan expressed her support for Mr. Craft’s concept since investing in bringing electricity to Rolle Airfield Airport is a very good idea and agreeing that paying down debt is always good.

    Mr. Gardner expressed his desire to keep Capital Reserves available to address future needs as they arise. He continued by describing how the aviation industry is changing at a rapid pace in areas such as the integration of UAV’s along with manned aircraft as an example of how unknown investments may be necessary in the future.

    Mr. Craft asked Mr. Hinkle about the possibility of investing the YCAA’s Capital Reserves rather than leaving the funds on deposit with the bank. Mr. Hinkle informed the Committee that the YCAA’s reserves are considered “Public Funds” which are heavily regulated as far as investment opportunities. He described how these funds must be “collateralized” to eliminate the risk of loss in the case a financial institution holding the funds was to go under. Mr. Hinkle mentioned that the State of Arizona has what is called the “Local Government Investment Pool” or LGIP which is intended for this purpose, but reminded the Committee that the nature of the YCAA’s entity as a non-profit and its lease with the County of Yuma sets the expectation that there is no intention to accumulate excess funds and expend them through investment. Rather, Mr. Hinkle explained, the entity would be expected to either invest its excess earnings into the airport or to reduce its rates and charges. Ms. Brown, the Airport Director further explained stipulations in the YCAA’s lease with the County of Yuma that address how revenues in excess of expenditures would be returned to the County.

    Ms. Brown then reminded the Committee that the amount of Capital Reserves on hand is a result of the operational grants provided by the FAA during the pandemic. She described how her efforts to increase Capital Reserves to an amount necessary to provide acceptable security in the case of unexpected financial hardship was supplemented by these grant funds which ended up being far in excess of amounts necessary. Ms. Brown said staff would provide the Committee with an analysis of the YCAA’s Capital Reserves history to help evaluate what levels of Capital Reserves to leave on hand.

    After some discussion, the Committee Chair, Mr. Gourley instructed staff to provide a presentation on possible future investments in airport facilities as well as an analysis of reducing the remaining balance of Note #1713 by, 25%, by 50% and by not taking any action at all. YCAA Staff was directed to schedule another meeting of the Committee in January or February, to allow for further consideration.

    2) Discussion and possible recommendation on the “Off-Budget” expenditure of Capital Reserves to bring electricity to Rolle Airfield Airport.

    Ms. Brown described Rolle Airfield Airport for those unfamiliar and important elements of its management including the existing “Contract and License Agreement” between the County of Yuma and the Bureau of Reclamation (BOR), as well as negotiations currently underway which will ultimately lead to an agreement directly between the BOR and the YCAA.

    After describing the facilities available at Rolle Airfield Airport as a result of YCAA’s investments, Ms. Brown addressed the largest factor currently restricting growth and expansion of aviation activities, namely the lack of electrical power. Ms. Brown continued by explaining to the Committee that Rolle Airfield Airport’s potential for expansion is reflected in its Master Plan and is highly anticipated by the City of San Luis as well as the entire South County. Its location is advantageous since it lies along the alignment of Avenue E just South of County 21st street, a short distance from the San Luis II Port of Entry and its 250-acre Industrial Park.

    Ms. Brown explained to the Committee several steps that staff has taken to determine what is necessary to bring electricity to Rolle Airfield Airport including:

    ·Meeting with APS representatives to obtain initial plans to bring electricity to the airfield including a cost estimate.
    ·Contracted a local electrical engineer to design the improvements necessary to install electrical components and wiring to not only meet the airfield’s current needs but prepare for significant future development as well.
    ·Obtained a cost estimate from a local contractor to install the improvements according to the electrical design.
    ·Obtained a feasibility study.

    Ms. Brown informed the Committee that the estimated cost to bring electricity to Rolle Airfield Airport includes $350,000 for APS to bring the power from almost 2 miles away and another $400,000 to construct the improvements necessary to utilize the electricity at the airport to provide for its existing facilities and provide for significant expansion in the future.

    Ms. Brown described the necessary coordination and approvals, which will include the BOR, the City of San Luis and the County of Yuma, all of which will likely provide their full support. Ms. Brown also provided the Committee with a copy of the recently completed feasibility study which was commissioned to provide answers to key questions that may be asked regarding the property and its ability to support future development.

    Ms. Dhawan described what she believed to be a source of additional grant funding that may be available in support of Rolle Airfield Airport and agreed to work with Ms. Brown to obtain such funding. Ms. Brown described her efforts to seek funding from the Arizona Commerce Association (ACA) and the YCAA’s relationship with the Greater Yuma Economic Development Corporation (GYEDC) who seeks out such opportunities on the YCAA’s behalf.

    After some discussion, the Committee reached a consensus to recommend that the Board of Directors authorize the investment into electrical service from Arizona Public Service for Rolle Airfield Airport to further its primary objective to Promote and Foster Civil Aviation through an “Off-Budget” expenditure of Capital Reserves in the estimated amount of approximately $750,000 but up to $800,000.

    3) Discussion and possible recommendation on options available to offset the lack of liability insurance related to skydive operations.

    Ms. Brown reminded the Committee that the YCAA approved the continued lease of an aircraft storage hangar at Rolle Airfield Airport to Skydive San Luis for the purpose of operating a commercial skydiving operation, even though the YCAA’s commercial liability insurance policy specifically excludes coverage for such operations. The action taken by the Board authorized the Airport Director to amend the existing agreement, which was set to expire on November 1, 2022, for another three years.

    Ms. Brown explained that the amendment to extend the term has yet to be executed by either party and as a result, the agreement has reverted to “month to month”.

    Ms. Brown then introduced Mr. Pancrazi of Pancrazi Insurance Agency, who provides brokerage services to the YCAA, as well as risk management consulting. Mr. Pancrazi addressed his concerns to the Committee and described the significant amount of risk to the YCAA and the County of Yuma involved in allowing the Skydiving operation to continue without liability insurance coverage. Mr. Pancrazi described the waiver and the likelihood of it being difficult to prove the YCAA, as landlord, liable for any catastrophe but reminded the Committee that simply providing a legal defense for both the YCAA and the County could become very expensive.

    He described his efforts at convincing available underwriters to remove the existing exclusion for Skydive operations from any proposed liability insurance policy and may have found one willing to do so. Mr. Pancrazi told the Committee that convincing an underwriter to remove the exclusion, if possible, would come with additional cost, but would be vital in securing the YCAA’s and the County of Yuma’s interest.

    The Committee Chair, Mr. Gourley instructed staff to work with Mr. Pancrazi to obtain a proposal for liability insurance that includes such coverage and make a cost-benefit determination once the information becomes available.

    There were no Public Comments.

    There being no further business before the Committee the meeting adjourned at 1:35PM.

    // Approved //
    Stanley Gourley
    Treasurer, Yuma County Airport Authority; Finance Committee Chairman

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