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HomeMy WebLinkAbout04/01/2025 09.D. Resolution authorizing a SIED funding agreement with Yakima County for a Minimum Revenue Guarantee `y � ljlt ' r I!I/ .s BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9.D. For Meeting of: April 1, 2025 ITEM TITLE: Resolution authorizing a SIED funding agreement with Yakima County for a Minimum Revenue Guarantee SUBMITTED BY: Robert Hodgman, Airport Director SUMMARY EXPLANATION: An agreement between the Yakima County and the City of Yakima for a Minimum Revenue Guarantee to fund additional flights to and from the Yakima Air Terminal. Yakima County will fund up to and not to exceed $500,000.00 of the required Minimum Revenue Guarantee with a matching commitment from the City of Yakima for the remaining $500,000.00 to complete the total amount required for the project. ITEM BUDGETED: N/A STRATEGIC PRIORITY 24-25: A Thriving Yakima RECOMMENDATION: Adopt Resolution. ATTACHMENTS: 2025_SI ED_Airport_Revenue_Guarantee_Resolution_Final_ Yakima County Air Service Pledge Agreement (SIED).pdf 120 RESOLUTION NO. R-2025- A RESOLUTION authorizing that SIED 2025 Funding Agreement between Yakima County and City of Yakima for Minimum Revenue Guarantee ("Agreement"). WHEREAS, the City owns and operates the Yakima Air Terminal-McAllister Field in accordance with applicable Federal, State, and Local regulations; and WHEREAS, the Yakima County Board of County Commissioners are fully committed to increasing economic development in Yakima County, and believe that helping to facilitate additional flights to and from Yakima will greatly assist in increasing economic development, tourism, the creation and retention of jobs, and to provide invaluable direct and indirect benefits and value consideration to the citizens of Yakima County and the State and Washington; and WHEREAS, the Yakima Airport operated by the City is seeking to fund a Minimum Revenue Guarantee ("MRG") for commercial air service flights provided by a "Mainline" or "Regional" passenger airline with an Air Operator Certificate issued by the Federal Aviation Administration ("FAA"); and WHEREAS, the contract with the selected airline requires that the City have a MRG Airline Fund in the amount of$1,000,000.00 ("Fund") set aside to pay the difference between the actual costs of the flight and the actual revenue received from those flights over the course of the contract, approximately one year; and WHEREAS, Yakima County will fund up to and not to exceed $500,000.00 of the required MRG with a matching commitment from the City of Yakima for the remaining $500,000.00 to complete the total amount required for the project; and WHEREAS, the$500,000.00 contribution from Yakima County will be held with the County as committed funds, ensuring that the County's portion of the Fund will be available for disbursement when required if explicit condition precedents are met which shall trigger contractual responsibilities under the terms of this Agreement; and WHEREAS, the City Council deems it to be in the best interest of the City and its residents to authorize acceptance and execution of the Agreement, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is hereby authorized to execute the Agreement. A copy of the Agreement is attached hereto and is fully incorporated herein. The City Attorney is hereby authorized to execute the Agreement approving the same as to form. ADOPTED BY THE CITY COUNCIL this 1st day of April, 2025. Patricia Byers, Mayor ATTEST: Rosalinda Ibarra, City Clerk 1 121 FUNDING AGREEMENT BETWEEN YAKIMA COUNTY AND CITY OF YAKIMA FOR MINIMUM REVENUE GUARANTEE THIS AGREEMENT ("Agreement") is entered into effective the 22nd day of April, 2025 (the "Effective Date") by and between the City of Yakima (City), and Yakima County ("The County"). The City and the County are referred to collectively as the "Parties". AGREEMENT RECITALS: WHEREAS, the Yakima County Board of County Commissioners are fully committed to increasing economic development in Yakima County, and believe that helping to facilitate additional flights to and from Yakima will greatly assist in increasing economic development, tourism, the creation and retention of jobs, and to provide invaluable direct and indirect benefits and value consideration to the citizens of Yakima County and the State and Washington, and, WHEREAS, the Yakima Airport operated by the City is seeking to fund a Minimum Revenue Guarantee for commercial air service flights provided by a "Mainline" or "Regional" passenger airline with an Air Operator Certificate issued by the Federal Aviation Administration (FAA); and, WHEREAS, the contract with the selected airline requires that the City have a Minimum Revenue Guarantee Airline Fund in the amount of $1,000,000.00 (the "Fund") set aside to pay the difference between the actual costs of the flight and the actual revenue received from those flights over the course of the contract, approximately one year; and, WHEREAS, Yakima County will fund up to and not to exceed $500,000.00 of the required Minimum Revenue Guarantee with a matching commitment from the City of Yakima for the remaining $500,000.00 to complete the total amount required for the project; and, WHEREAS, the $500,000.00 contribution from Yakima County will be held with the County as committed funds, ensuring that the County's portion of the Fund will be available for disbursement when required if explicit condition precedents are met which shall trigger contractual responsibilities under the terms of this Agreement; and, NOW, THEREFORE, it is agreed between the parties hereto as follows: 122 1. SCOPE OF SERVICE: Yakima County and the City of Yakima have agreed to fund a Minimum Revenue Guarantee (MRG) Fund to support commercial air service flights provided by a "Mainline" or "Regional" passenger airline with an Air Operator Certificate issued by the Federal Aviation Administration (FAA). The purpose of the MRG Fund is to cover any revenue shortfall between the actual costs of the flights and the actual revenue generated by those flights. The City agrees that it shall be fully responsible for the creation, management, control, auditing and accounting of the MRG Fund. The City shall take all reasonable steps to ensure that the MRG Fund is operated under general government accounting principles and adequate internal controls exist with management of the fund. 2. TERMS FOR FUNDING PAYMENTS: Under the terms and conditions set forth herein, Yakima County agrees to provide the City of Yakima with a total of up to and not to exceed Five Hundred Thousand Dollars ($500,000.00) to be applied toward the Minimum Revenue Guarantee (MRG) Fund. These funds will be provided on a reimbursement basis as outlined in section 3 at the discretion of Yakima County if sufficient documentation is provided which at the determination of the County warrants payment of funds for the purpose stated herein. 3. REIMBURSMENT OF FUNDS: The City of Yakima shall submit an invoice to Yakima County requesting reimbursement for MRG-related expenses, accompanied by appropriate detailed documentation from the airline showing a revenue shortfall. Yakima County will then review the request and, at its' sole discretion, if it determines that the request is valid, shall authorize the disbursement of the requested funds to the City of Yakima. Payments to the "Mainline" or "Regional" passenger airline will be split 50/50 between the City of Yakima's Small Community Air Service Development Program funds and the County for invoices reflecting lost revenue. The parties expressly agree that Yakima County shall have the right to reject payment requests that it deems do not contain adequate documentation to support a quarterly payment by the County. The parties also agree that at no point, shall any payment by the County exceed $125,000 per quarter. Payments shall be made expressly proportionately to half of the claimed revenue guarantee of the additional flights. In the event, no additional fights are ultimately obtained and/or the flights do not generate an economic loss, Yakima County shall not be responsible for payment. 2 123 The Project must be completed three years from the date this contract is approved by the County. If the project is not complete by this date, the grant will be terminated and the City will not receive any remaining grant funds not already requested for reimbursement. Frequency of MRG Payments: MRG payments for lost revenue will be made quarterly to help smooth out fluctuations in revenue. If in a given quarter the airline experiences a revenue shortfall in one month, but subsequent months show gains that outweigh the loss, no payment will be required for that quarter. Payments will only be made when the airline's revenue shortfall is confirmed and when necessary to cover the difference between operating costs and actual revenue. Disbursements will occur on a reimbursement basis only after the airline has provided a verified invoice for the revenue shortfall, and the City of Yakima submits the request. All funds will be used exclusively for the payment of any shortfall between the airline's operating costs and revenue generated from the flights. This reimbursement structure ensures that payments are only made when needed and helps manage fluctuations in the airline's revenue over time. 4. MINIMUM REVENUE GUARANTEE (MRG) TERMS AND CONDITIONS: Revenue Calculation: The funds are allocated to a Minimum Revenue Guarantee for commercial air service flights provided by a "Mainline" or "Regional" passenger airline with an Air Operator Certificate issued by the Federal Aviation Administration (FAA). Oversight and Pre-Approval: The County retains oversight and pre-approves the MRG terms for fund allocation. Key considerations for approving MRG payments include: • Method used by the airline to calculate revenue for the flight. • Frequency of revenue reporting (monthly, quarterly, or annually). • Flight schedule, destination city, forecasted load factors, and historical passenger data for travel between Yakima and the destination. • Adequacy of the airline's and local community's marketing plan to attract passengers. • Inclusion of an early cancellation policy in the MRG if flights are underutilized, with County input on the decision. 3 124 • Monthly meetings with the City to review flight utilization and revenue performance to assess if the MRG should continue. GENERAL CONDITIONS: 5. ASSIGNMENT: This Agreement may not be assigned by the City or the County without prior written consent of the other, which consent will not be unreasonably withheld. It is expressly intended and agreed that no third-party beneficiaries are created by this Agreement, and that the rights and remedies provided herein shall inure only to the benefit of the Parties to this Agreement. 6. INTEGRATION: This Agreement represents the entire understanding of the City and the County as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered herein. This Agreement may not be modified or altered except in writing signed by both parties. 7. JURISDICTION AND VENUE: This Agreement shall be administered and interpreted under the laws of the State of Washington. Jurisdiction of any dispute or litigation arising from this Agreement shall be in Washington State. If any part of this Agreement is found to conflict with applicable laws, such part shall be inoperative, null, and void insofar as it conflicts with said laws, but the remainder of this Agreement shall be in full force and effect. Venue for all disputes arising under this Agreement shall be in a court of competent jurisdiction in Yakima County, State of Washington. 8. DISPUTE RESOLUTION: In the event that any dispute shall arise as to the interpretation of this Agreement and if the Parties hereto cannot mutually settle such differences, then the Parties shall first pursue mediation as a means to resolve the dispute. If the afore mentioned method is unsuccessful then the dispute will be resolved through litigation. If both parties consent in writing, other available means of dispute resolution may be implemented. 9. NOTICE: Any notice required to be given under the terms of this Agreement shall be directed to the Party at the address set forth below. Notice shall be considered issued and effective upon receipt thereof by the addressee-party, or seventy-two (72) hours after mailing to the address set forth below, return receipt requested, whichever is earlier. Either Party may change the address for notice to said Party by providing the new address, in writing, to the other Party. TO CITY: Victoria Baker 4 125 City Manager 129 North 2nd Street Yakima, WA 98901 TO COUNTY: Yakima County 128 N 2nd Street Yakima, WA 98901 10. FORCE MAJEURE: Neither Party hereto shall have any liability for delay or non-fulfillment of any terms of this Agreement caused by any cause not within such Party's reasonable control (but excluding financial inability) such as an act of God, war, riots or civil disturbance, strikes, accident, tire, transportation conditions, labor and/or material shortages, governmental controls, regulations and permits and/or embargoes. 11. AMENDMENTS: This agreement contains all terms and conditions agreed upon by the parties. No change or addition to this agreement shall be valid or binding upon either party unless such change or addition is in writing and executed by both parties. 12. WAIVER: Waiver of any breach or default on any occasion shall not be deemed to be a waiver of any subsequent breach or default. Any waiver shall not be construed to be a modification of the terms and conditions of this Agreement. Only a majority vote of a quorum of the Yakima County Board of County Commissioners has the authority to waive any term or condition of this Agreement on behalf of the County. 13. SEVERABILITY: If any term of this Agreement is held invalid by any court, the remainder of the Agreement remains valid and in full force and effect. 14. INSURANCE: The City agrees that at all times during the life of this contract that it will maintain on a primary and non-contributory basis and at its sole expense, the insurance coverage limits, and endorsements described below. All such insurance shall not be subject to any deductible or self-insured retention (SIR). There shall be no cancellation, material change, reduction in limits or intent not to renew the insurance coverage(s) without 30 days' written notice from the contractor or its insurer(s) to Yakima County. The requirements contained herein, as well as the County's or designee's review or acceptance of insurance maintained by The City is not intended to and shall not in any manner limit or qualify the liabilities or obligations assumed by Contractor under this contract. Commercial General Liability Insurance: The City agrees to maintain a policy with a 5 126 limit of liability of not less than two million ($2,000,000.00) each occurrence and five million ($5,000,000.00) General Aggregate coverage. Insurance shall be written on ISO occurrence form CG 00 01 or an alternative form providing equal or broader liability coverage. Such coverage shall not contain any endorsement(s) excluding or limited Products Completed, Operations, or Contractual Liability and/or Cross Liability. The County shall be named as Additional Insured under the coverage with respect to the work performed under this agreement. 15. NONDISCRIMINATION: The City agrees that it shall not discriminate against any person on the grounds of race, creed, color, religion, national origin, sex, sexual orientation, age, marital status, political affiliation or belief, or the presence of any sensory, mental or physical handicap in violation of the Washington State Law Against Discrimination (RCW chapter 49.60) or the Americans with Disabilities Act (42 U.S.C. 12101 et seq.) or any other applicable state, federal or local law, rule or regulation. The City and any subcontractors shall abide by the requirements of 41 CFR §§ 60- 300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals on the basis of protected veteran status or disability, and require affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans and individuals with disabilities. 16. TERMINATION: Either party may terminate this Agreement upon sixty (60) days written notice sent by certified mail to the addresses listed above. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective authorized officers or representatives as of the effective date set forth above. 6 127 CITY OF YAKIMA BOARD OF COUNTY COMMISSIONERS Victoria Baker, City Manager Kyle Curtis, Chair Approved as to Form: LaDon Linde, Commissioner Sara Watkins, City Attorney Amanda McKinney, Commissioner Approved as to Form: Attest: Deputy Prosecuting Attorney Rosalinda Ibarra, City Clerk CONTRACT AUTHORIZATION Attest: Date Julie Lawrence, Clerk of the Board Date 7 128