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07-F Cox Field Fuel TruckAGENDA INFORMATION SHEET PROJECT: Consider a resolution authorizing the release of the City's security interest and legal title in a fuel truck located at Cox Field Airport. BACKGROUND: The City has received inquiries from Mr. J. B. Richey, the Fixed Base Operator (F.B.O.) at Cox Field Airport, regarding the City releasing or signing over its security interest and legal title to the fuel truck that is located at the airport. The FBO has indicated release of the title is incident to purchase of a new fuel truck for use at the airport. Based on this inquiry, the Legal Department researched its files which referenced the particular fuel truck in question to determine how and on what basis the City obtained the title in the first place. As best as can be determined, and based on an unsigned document attached as an exhibit to Resolution No. 87-071, the issue of the fuel truck first came up with the prior F.B.O., Mr. Roger Sadler, d/b/a Saber Aviation. When Mr. Sadler obtained the F.B.O. contract, apparently the original Lease Agreement required a Certificate of Deposit in the amount of $10,000 as a performance bond to assure Mr. Sadler's performance as the F.B.O. This requirement was apparently included as part of the lease which was authorized by Resolution No. 85-003 in 1985. Subsequently, Mr. Sadler apparently approached the City in 1987 requesting that the Certificate of Deposit be returned to him and in turn he would pledge as a substitute a first lien of $10,000 against the jet fuel truck. This arrangement was then completed by adoption of Addendum No. Two to the Fixed Base Operator Lease dated January 14, 1985. Addendum No. Two was actually approved by Resolution No. 87- 071 on July 13, 1987. The next reference to the truck in the Legal Department files is an apparently new Lease Agreement between the City of Paris and J. B. Richey in which Mr. Richey initially took over the responsibilities as the F.B.O. from Saber Aviation. This document, dated February 8, 1988, and apparently approved by Resolution No. 88-009 on or about February 8, 1988, includes a paragraph VIII B. found on page 8 of said Lease Agreement which references the prior Fixed Base Operator Lease between the City of Paris and Saber Aviation; recognizes the assignment of that agreement from Saber Aviation to J. B. Richey, Inc.; and further references that in order to maintain the rights of the City of Paris, Richey acknowledges that under the prior lease the City had a right to repurchase the 1973 International Jet Fuel Truck. The new lease then references a declining value of the truck beginning in March of 1988 and continuing through March of 1991, and states that the value of the truck following 1991 and any subsequent years would be $2,400. This clause again acted as a performance bond in the sense the City reserved the right, in the event J. B. Richey, Inc. failed to perform under the agreement, to repurchase the fuel truck at the stated price in the contract at the time of the Richey failure to perform. Presumably this arrangement was made not only to secure the performance of Mr. Richey, as was done under the previous contract, but also to assure that the City could have immediate access to the jet fuel truck in the event Mr. Richey no longer performed his duties. Otherwise, the City could have difficulty in continuing to operate the airport. The clause further provides that Mr. Richey, as Lessee, agreed to deliver the title to the fuel truck to the City of Paris or to show the City as a lienholder thereon. The next reference to the fuel truck is similarly found in an update of the Fixed Base Operator Lease Agreement approved by adoption of City Council Resolution No. 93-012 on February 4, 1993. In that agreement, again in Article VIII B., the previous arrangement is apparently preserved in substance, but the dollar values of the truck (and from all appearances it is the same truck) have been changed to reflect that the City would now be obligated to pay what is recognized as the truck's final salvage value of $6,000 if the truck was obtained by the City in the event of Richey's default on or after March 12, 1997. The clause again provides for Mr. Richey to deliver the title to the City or to show the City as a lienholder thereon. Finally, the City approved another new Lease Agreement with Mr. Richey by adoption of Resolution No. 98-153 on November 9, 1998. In this Lease Agreement there is no direct reference to the fuel truck, either as a security interest or as a retained interest by the City. The only reference to a fuel truck is found under Article II, paragraph 2, on page three (3) of the Lease Agreement, which provides that Mr. Richey as Lessee would be obligated to maintain at least one truck with aviation or jet fuel dispensing equipment meeting all applicable local, state, and federal regulations. No reference is made to the City retaining title to the truck as security under the lease. However, the mere fact the new lease does not reference the City's continuing to retain the title does not necessarily resolve the issue. If the intent had been to release Mr. Richey from any obligation to continue to provide some measure of security for his performance, the current contract is silent either way. As a consequence, the only entity authorized to exercise the prerogative to release the City's security or retained interest in the truck, upon a finding that the intent of the City was to do so as a result of the new Lease Agreement, is the City Council. In addition, the issue of whether or not some sort of continued security to assure performance by the F.B.O. is necessary is likewise an issue which requires City Council action or implementation. To that end, enclosed with this agenda information sheet is a copy of an invoice previously forwarded to the F.B.O. in June for costs incurred by the City in cleaning up a fuel spill at the airport. The cause of the fuel spill was clearly the negligence of an employee of the F.B.O. who apparently was using the same fuel truck to fuel an aircraft, and subsequently caused a fuel spill. There appears to be some dispute as to the amount of fuel actually spilled; information from the F.B.O. is that the amount was twenty-five gallons or less, but the Fire Marshall has indicated the amount of fuel spilled was in the neighborhood of seventy-five to eighty gallons. Nevertheless, the cleanup required the normal environmental measures to complete, including the removal of contaminated soil, etc. To date, the City has not been paid for these invoiced costs, even though the negligence and cost is clearly the responsibility of the F.B.O. Obviously, some sort of security or performance bond which is customary in a business arrangement such as that between the City and the F.B.O. would be the City's ultimate protection against this kind of issue. Unfortunately, no such bond is now required under the current F.B.O. contract; however, in order for the Council to be aware of all the facts related to this issue, a copy of the invoice forwarded to the F.B.O. is attached along with the other materials included with this agenda information sheet. DESCRIPTION: The Legal Department has enclosed a resolution which would be appropriate for releasing the City's retained interest and security interest in the fuel truck, and authorizes the Mayor to transfer the title of the fuel truck on behalf of the City of Paris to J. B. Richey. If the City Council is of the belief that additional security should be posted, or that action on release of the truck should be deferred until additional security is provided, then such action would have to be taken by Council motion or subsequent formal action at a later Council meeting. RECOMMENDED ACTION: Consider a resolution authorizing the release of the City's security and retained interest in the title to a fuel truck at Cox Field Airport to the benefit to Mr. J. B. Richey, Fixed Base Operator. COST: The cost to the City would be the release of whatever value the City's retained or security interest is in the title to the fuel truck. STAFF CONTACT: Thomas E. Haynes, Project Director, and Larry W. Schenk, City Attorney SCHEDULE: Not applicable. COUNCIL MEETING: Consider for Council action at City Council's regular meeting of August 13, 2001. ADDITIONAL MATERIALS: See enclosed Resolution authorizing transfer of the title of the truck to Mr. J. B. Richey and a June 22, 2001, invoice for fuel spill expenses at the airport. edI T Yd June 22, 2001 Mr. Jerry Richey J. R. Aviation Cox Field Airport Route 7, Box 146 A-1 Par/s, TX 75462 RE: Fuel Spill - Cox Field Airport Dear Jerry: Listed below is the cost of the fuel spill that occurred on April 12, 2001 at Cox Field Airport. This was a result of your employee's negligence. You will recall that we had to call our public works department to assist in the clean up. Public Works material, labor, equipment Testing fees Disposal fee $ 242.89 $100.00 $140.00 Total $ 482.89 Please remit a check payable to the City of Paris to my attention at City Hall. Sincerely, Tommy Haynes Airport Director TH/as Project\Haynes01~Airpott\LFu¢l Spill June P.O. BOXg037 - PARIS, TEXAS75461-9037 - (903) 785-7511 · FAX (903) 785-8519 DRAFT ALICEhO. ESWORK\CURRENT\FBO Fuel Truck Res August 9, 2001 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE TITLE AND ALL OTHER DOCUMENTS INCIDENT TO THE TRANSFER OF TITLE TO A 1972 INTERNATIONAL JET FUEL TRUCK, SAID TRANSFER OF TITLE TO BE TO THE BENEFIT OF AND TO MR. J. B. RICHEY; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Mr. J. B. Richey, the Fixed Base Operator at Cox Field Airport, has requested the City release its security or retained interest in a title to the refueling truck located at Cox Field Airport; and, WHEREAS, a review of the history of the City's retaining said title indicates the title was originally pledged in part to assure the performance of the Fixed Base Operator under its agreement with the City and to assure that the City could have access to a fuel truck if the Fixed Base Operator agreement were terminated for any reason; and, WHEREAS, Mr. Richey desires to have this title in order to purchase a new fuel truck for use at the airport; and, WHEREAS, the City Council has reviewed the issue of ownership and the City's lien interest in said truck and has determined it is in the best interest of the City and the operation of its airport to transfer the City's retained or lien interest in said vehicle; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the Mayor shall be and is hereby authorized to execute any and all documents incident to the release of the City's interest in and to the legal title to a 1972 fuel truck as identified in a copy of that title attached hereto and for all purposes incorporated herein as Exhibit A, and to execute such documents incident to the transfer of the title of said vehicle to Mr. J. B. Richey. Section 3. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 13th day of August, 2001. ATTEST: Michael J. Pfiester, Mayor Mattie Cunningham, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney AVIATION PARIS TX '~ ', ] ORIGINAL INC 2)~',;ClIY OF PARIS KxuLBIT A