14 - Airport Management-Fixed Based Operator Full-Time EmployeeItem No. 14
TO: Mayor, Mayor Pro Tem & City Council
FROM: Grayson Path, City Manager
SUBJECT: AIRPORT MANAGEMENT / FIXED BASED OPERATOR
FULL-TIME CITY EMPLOYEE
DATE: June 14, 2021
BACKGROUND:
Jerry Richey of JR Aviation, Inc. has informed the City Manager that he would like to retire and
thereby terminate both his Fixed Based Operator Management Lease Agreement as well as the
Agreement for Airport Management of the City of Paris Municipal Cox Field Airport. Mr. Richey
has served as the City's third party Manager/FBO for many years. His existing contracts are not
set to expire until March 31, 2024. As Manager / FBO, Mr. Richey oversees all Airport operations
in coordination with City Staff, including enforcement of FAA/TxDOT-Aviation Regulations,
property maintenance, aviation activities, tenant and patron customer service, enforcing tenant
leases, etc. Mr. Richey also provides the Fueling Operation as part of his FBO.
STATUS OF ISSUE:
The Airport Management Agreement upon termination would simply revert back to the City for
overall management. The same is not true of the FBO Agreement. Mr. Richey has asked if the
City would like first right to purchase his FBO Agreement. Under the terms of the agreement, Mr.
Richey has the ability to assign this agreement to another entity, thereby selling his fueling
operation to another third party, but he has willingly come to us first to see if we would like to
purchase it. The City does not pay Mr. Richey for his FBO Agreement, but we do for the
Management Agreement.
Mr. Richey has given us an asking price of $89,000.00. With this, we will obtain ownership of
two fueling trucks, some small equipment (ex: air compressor, tools, office supplies, etc.), and
would buy his company out of the remaining contract. Given the annual listed net profit of JR
Aviation as supplied by Mr. Richey through his tax returns as well as our estimated value of the
equipment vs. having to replace it on our own, and given the FBO contract has another three years
remaining, City Staff believe this $89k to be a fair asking price and would recommend approval.
In addition, the City will need to purchase an approximate 10,000 gallons of fuel for a price of
approximately $25,000 - $30,000. Mr. Richey has agreed to sell us the fuel for the price he paid.
We would then turn around and begin selling it ourselves, thus recouping this upfront fuel expense.
The actual number of gallons and price will be determined based on the day we set in the agreement
as fuel is continuously being purchased and sold at the airport.
If the City were to purchase the FBO and equipment, it could assume control of the Airport through
a Full -Time employee. This will provide the City with direct oversight and control of the Airport
instead of through a contracted third party. The City Manager would immediately set out to
advertise and hire a new FT employee to take on this role, working with Jerry Richey to carry us
over to this point and then transition with the new employee. We would estimate approximately
three months from start to finish, assuming we can find a FT employee to hire. If we cannot find
a FT employee, we may have to revisit hiring another third party contractor.
BUDGET:
After examining the expenditures and revenues of both JR Aviation and the City of Paris, making
assumptions for employment and other expenses, we estimate reducing the deficit for the City of
Paris by as much as $40k/year. The City would take on full ownership of fuel sales through this
transaction. There is much work to be done to create an efficient process, but we believe that the
potential rewards — though not without risk — are worth pursuing.
OPTIONS:
1. Approve termination of the Airport Management Agreement and FBO Agreement,
purchasing the FBO Agreement from JR Aviation for a total of $89,000.00 plus the cost
for the fuel of about $30,000.00 (TBD), hire a full-time employee to become the next
Airport Manager and FBO, and authorize the City Manager and City Attorney to prepare a
Bill of Sale to be brought back at the next City Council meeting.
2. Disapprove, edit, and/or request additional information on any of the above.
RECOMMENDATION:
1. Approve termination of the Airport Management Agreement and FBO Agreement,
purchasing the FBO Agreement from JR Aviation for a total of $89,000.00 plus the cost
for the fuel of about $30,000.00 (TBD), hire a full-time employee to become the next
Airport Manager and FBO, and authorize the City Manager and City Attorney to prepare a
Bill of Sale to be brought back at the next City Council meeting.