In January 2020, the Council was briefed on the recommendation to change the structure of the management of Addison Airport from one provided by third-party contractors to one that is in-sourced to the Town of Addison.
On January 14th, the Council approved a contract with Landrum and Brown, Inc., (L&B) to negotiate contracts for the airport operations, management, and real estate services. The council also discussed the long-range goal of bringing the operations, management, and real estate management services of the airport in as Town functions.
At the January 28th meeting, the Council agreed with Staff’s recommendation to:
- Negotiate a new agreement for real estate services at the airport with new terms and conditions
- In-source the airport operations, management, and financial management to the Town
- Early terminate the airport management and operations contract with AECOM and pay the early termination fee of $42,500 and other reasonable demobilization costs, as provided for in the contract with AECOM.
On March 6, 2020, an early termination letter was sent to AECOM to formally terminate the contract on September 30, 2020.
In February/March 2020, a red-lined version of the current contract with SAMI Management, Inc., was drafted that considered and included new terms and conditions, an evaluation of the compensation, and assessment of liabilities, and the development of internal controls.
During this time, L&B and Staff also analyzed various management structure scenarios in order to facilitate negotiations and determine what steps may be in the Town’s best interest. In doing so, L&B and Staff came to the opinion that bringing the asset management and leasing management functions into the Town’s structure would have a positive impact on reducing the airport’s costs by eliminating the need for a management fee and incentive bonus, while not negatively affecting the efficiency of the real estate function. This would also provide stronger institutional knowledge within the Town and less risk of disruption to the real estate services.
After discussions with the City Manager, L&B and Staff spoke with the airport asset manager and leasing manager who expressed a desire to become Town employees. At this point, however, discussions with the real estate manager still centered on negotiating a third-party contract.
Subsequently, through discussions between the real estate manager and the airport director, and analysis by L&B and Staff, a recommendation emerged to in-source the real estate manager position at this time as well. This recommendation is based on the critical nature of the real estate manager’s daily interaction with the airport director and the rest of the airport staff. Having the position be a Town employee would greatly simplify this interaction.
The in-sourcing of all the operations, management, and real estate functions at the airport reduces the annual cost of the management and operation of the airport by $564,662.72. While this was not a viable option for SAMI in January, it is the one that has resulted after negotiations.
The briefing to Council will focus on the progress since January, an update on the contract discussion with SAMI Management, a review of the costs to on-board the airport staff, and a comparison of those costs to the Fiscal Year 2020 adopted budget cost for the third-party contracts.
The presentation that will be provided is included in this agenda item. |
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