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SR-11-B (7) . fftJlJ-- <<J3 . SH.1i.: HED : mh Councll Meetl~g: 9/25/84 Santa Mon~ca, Californ~a TO: ~Iayor and Cl ty Councll 11-.8 SEP H ., FRO~'I : Clty Staff SUBJEC~: Authorlzatlon for Clty to operate alrcraft fuellng fac~llty at Santa Honlca Alrport on ~mergency basls and related appropriations from the Alrport Fund Introductlon Thl~ repcrt s~wmarizes varlOUS actlons related to alrcraft fuellng at the Sant~ ~onlca Alrpcrt. requests authorlzatlon for the C~ty to o~e~ate an alrcraft fuellns fac~lity at the Santa Hon~ca Alrport, 3stahllshes permanent positlons and wakes ~elated approprlat~ons fro!", the ;<ir;,-ort l"und, and requests City Counell adoption of a resolut~on WaJVlng COmpetlt~Ve bidding procedures for a period of 90 day~ to allow the purchase of aviation fuels on the open market. Background The Clty for nany years profltably operated the alrcraft fuel~ng facilltv at the Santa Monlca Alrport. During the energy crisis of lQ77-78, the Clty had lncreasing difflculty In ob~alnlng a guaranteed source of supply for aVlation fuel. After unsuccess- fully gOlng out to bld for a contract for aviatlon fuels, the City was ~pproached by OaS1S Petro Energy Corporation wlth a proposal not only to supply fuel but also to operate the facility wlth a suaranteed annual income to the City of $100,000 accrued 11-3 SEP25~4 - - S~~:EED:mh Septenber 25, 1984 =ro~ ~onthly rent of $6,000 per month and commlSSlonS on the sales of fuel. The agreement wlth OaS1S was entered lnto on "March 19, 1979 (Contract No. 3021 (CCS). The lease was for three years from April 1, 1979 to March 31, 1982, wlth two optlons for addltiona1 flve year perlods. On Aprll 1, 1982, Oasis exercised its flrst flve year optlon, WhlCh extended their lease to March 31, 1987. On June 3, 1983, OaS1S lnforned the Clty that effectlve June 1, 1983, OaS1S would pay the Clty $500.00 per month rent untll alleged lease and safety vlolatlons were resolved and that monles remaining due to Clty would be kept ln escrow. Verbally and by letter, the Clty lnformed OaS1S that a payment ot $500 would not be accepted as full payment of rent. The Clty further, lnformed OaS1S of their responsibllity to submit prompt payment 0= the full lease amount for June 1983 and all subsequent months. OaslS contlnued to submlt $500 payments from June 1983 to the present date. One June 1, 1984, after exhaustlng all informal avenues of negotiatlon with Oasis, the Acting Airport Director requested that the City Attorney serve Oasis with a Three-Day Notice. ?he Notlce was served and following Oasis's failure to respond the Clty filed Stilt agalnst OaS1S. 2 - - SHA:HED:rrh September 25, 1984 The case was to corne to trial on Thursday, September 20, 1984. On wednesday afternoon, September 19, 1984, Oas~s Petroleum's attorney ~nformed the Clty Attorney's offlce of Oasls's decision to vacate the premises as of midnight on Wednesday, September 19, 1984. As of September 19, 1984, the balance due the City of Santa Mon1ca was $87,000. The C1ty is sUlng for damages. The removal of Oas~s from occupancy of the fuel1ng station left the A1rport w1th only one fueler on the Alrport; Cal1forn~a Avia- tion, Wh1Ch sells only two of the three types of aviation fuel ava1lable. Clty staff feels that it is essential that at least two fuel suppllers be 1n operatlon on the Alrport, and lndeed federal regulations 1nclude requ1rements for competltive services. The City could pursue two options for the provision of fuel at the Airport: 1) the lease could be rebid; or 2) the City could re- sume management of the aircraft fuellng statlon. For several reasons, the second option 1S recommended. Pr1Gar1ly, staff do not belleve that it would be prudent to enter into a lo~g term lease for the facility at this stage in the devel- opment o~ the A1rport. Such a lease would limit the Clty'S op- tlons for development of that portlon of the south side of the A1rport and would compl1cate policy cholces yet to be made con- cern1ng alrcraft fuel1ng operat1ons by F1xed Base Operators. 3 - - SHA:HED:mh September 25, 1984 Airport staff have extensive experience ~n the operat~on of the fuel~ng statlon, and believe that the station could again be operated profltab1y by the Clty on an ~nter~m basis until con- structlon beglns on Fixed Base Operator Leaseholds. Successful aperatlan of the facillty will requlre the addition of flve Alrport Attendant I posltions to Airport staff. There per- sonnel wll1 be responslb1e for aircraft fueling and the collection of cash and credlt card payment for the fuel. In response to the emergency nature of the fuel supply problem at the Alrport, the Acting Clty Manager exercised his authority under Sectlon 2509 of the Santa Monlca Municlpa1 Code to authorize the Purchaslng Agent to purchase aVlation fuel on the open market prlor to receivlng City Councl1 approval at tonlght's meetlng. Fuel was dellvered on Frlday, September 21, 1984 and the Airport Dlrector opened the fueling station for business on Satuurday, September 22, 1984. The faci11ty was thus closed for only two days. In order to assure an lnterim supply of aviation fuel, it will be necessary to walve competltive bidding procedures for a period of 90 days; a reso1utlon authorlzlng thlS walver 18 attached. Budgetaryj?lnanCla1 Impact In order for the City's Alrport to operate the aircraft fueling statlon, the following budget adjustments are necessary. These 4 " - - SMA: HED : J"",h September 25, 1984 ~ adJustments are based on prellminary estimates of demand for aviation fuel, addltlonal operating costs and wholesale and retail prices. Durlng the mld-year budget reVleW approprlate adJustments will be reconrnended to the Council. I. Increased A~proprlation Authority Item Tltle (~o.) Amount Comment Permanent Employees (100) $32,430 Five positions of Insurance-Emp1.-Health/ 5,547 Airport Attendant I Dental (174) for six months Insurance-Worker Camp (173) 710 Retlrer.ent Contrlbution (177) 2,271 Other Fringe Benefits (197) 42 Temporary Employees (150) 16,215 F~ve positions of A~rport Attendant I for three months. Overtlf'le (149) 1,926 Five posltion x 10 hrs/ mo. x 6 months Airport Field Maintenance (621) 20,000 Varl0us minor items for operation of fueling statlon Fue1/Lubrlcants for resale 745,000 ( 297) Total addltlonal Approprlation Authorlty $847,926 5 - " SMA:HED:rrh September 25, 1984 II. Increased Revenue Estlmate Alrport - Petro Sales (215) $971,000 Recor1.,'lendatlon Clty staff respectfully recommends that the Clty Council: 1) authorlze the operatlon of an a1rcraft fuellng statlon at the Santa Monica Munlcipal Airport by the City; 2) approve the hlrlng of 5 Airport Attendants I to operate the faclllty; 3) approve attached Resolutlon walvlng competitlve Dldding procedures for a perlod of 90 days to allow the purchase of aVlation fuels on the open market; 4) approve revlsed Airport Budget flgures as described in the BUdgetary/Financlal Impact Section. Prepared by: Hank Dittmar, Actlng Alrport Dlrector Mlke Dennls, Flnance Dlrector 6 " - BEFORE DISTRIBUTION CHECK CONTENT OF ALL FOR CITY C~ERK'S ACTION DIS fRIBUTION OF RESOLUTION ij ,< -/ :'J / ORDINANCE 1/ - , . j>,. . -~.( CouncIl ~eetlng Date ,I or i Introduced: !\genda Item It //- J/ /- / / -i---/ - Adopted: * ALWAYS PlTBLISH JlOOPTED ORDINANCES cross out Attorney J s approval . "- Do back sheet on Word Processor Was It amended? I~~) VOTE, AffIrmatIVe" :",:~L ,', \'egatlve: AbstaIn" Absent" DISTRIBUTION: ORIGINAL to be SIgned. sealed and filed in Vault. ~EWSPAPER PUBLICATION COate: Department origInatIng staff report ( Management Serv~ce5 Lynne Barrette urdlnances only ~ Agency mentIoned In document or staff report (certihed?) ~ J SubJect file (agenda packet) Counter fJ Ie 1 1 Others: AIrport ParkIng Auth. ),udI torum Personnel BUIldIng Dept. Plannlng EnVlron. Servo Pollee (en- forcement?) FInance Purchaslng FIre Recr/Parks General Serv LIbrary Transportation_____ Treasurer )\1anage r SEND FOUD, COP IES OF AU ORDniA!\CES TO: CODED SYSTEMS, At~n Peie~ Maclearie 120 r~aln C:tr':'et AV0~1 ~ew Jersey_07717 SE~D FOUR 'COPIES OF Al.T. ()Rl1PJA"1rFc; TO: PRESJDI'\G JUDGE SANTA ~lO:\ICA ;vrU)\;ICTPAL COURT 1725 MAI:-.J STREET SANTA ~ONICA. CA 90401 *Check Code SectlOns before sendll1g. TOTAL COPIES LJ .' . ,. CA: RMM: CMD: JW Clty Councll Meetlng 9-25-84 Santa Monica, Californla RESOLUTION NO. 6921(CCS) (City Cauncll Serles) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA WAIVING COMPETITIVE BIDDING PROCEDURES AND AUTHORIZING DIRECT NEGOTIATION FOR PURCHASE OF AVIATION FUELS WHEREAS, effectlve September 20, 1984, Oasis Petroleum discontlnued selling aVlation fuels at the Santa Monica Alrport because it has vacated premises leased from the City, and WHEREAS, in order to ensure adequate supplles of fuels for Airport users, the Clty intends to sell fuel; and WHEREAS, It will take approximately ninety (90) days for the Clty to evaluate lnterlm operating experlence and to purchase appropriate amounts of aVlatlon fuels through competitive blddlng procedures, NON, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. Competltlve biddlng for the purchase of aVlatlon fuels is hereby walved for a period of nlnety days. SECTION 2. The purchase of aV1.atlon fuels for the next nlnety (90) days through negotiatlons on the open market is necessary for the preservatlon of the publlC health, safety and weltare. SECTION 3. The City Manager is hereby authorlzed to execute a purchase order negotiated on the open market to purchase necessary aVlation fuels at the lowest reasonable price. ':" - - SECTION 4. The Clty Clerk shall certlfy to the adoption of thls Resolution, and thenceforth and thereafter the same shall be In full force and effect. APPROVED AS TO FORM: ~\-,~ ROBERT M. MYERS Clty Attorney . - Adopted and approved thIS 25th day of September, 1984. W~L) - 1"Iayor I hereby certIfy that the foregoing Resolution No. 6921(CCS) was duly adopted by the CIty CouncIl of the CIty of Santa MonIca at a meetIng thereof held on September 25, 1984 by the followIng CouncIl vote: Ayes: CouncIlmembers: Conn, EpsteIn, JennIngs, Press, Reed, Zane and Mayor Edwards Noes: Councllmembers: None AbstaIn: Councilmembers: None Absent: Councilmembers: None ATTEST: ~~,~ CIty Clerk