The April 17, 2023 Council agenda illustrates just how much transparency is lost when City decisions happen outside of public process. Item CA-9 is an amendment to a 20 year lease agreement (with option to renew for 10 years) for building maintenance and management of services at the Ann Arbor airport.
CA-9 (23-0550) Resolution to Rescind Resolution R-22-374 for a Lease Agreement with Great Lakes Air Repair d/b/a Beacon Aviation and to Approve a Lease Agreement between the City and Herron Aviation Group LLC for a Corporate Hangar Located at the Ann Arbor Municipal Airport (8 Votes Required)
On November 21, 2022 (the very first meeting for five new members), City Council unanimously approved a resolution to award the airport lease to a business partnership led by two entities: Great Lakes Aviation Repair and Herron Aviation Group (doing business as “Beacon Aviation”). This week, Council considers rescinding that resolution to amend the leasing terms and remove one of those partners. As amended, the lease would be awarded to “Herron Aviation Group,” alone.
REQUEST FOR PROPOSALS
Many City decisions begin with the issuance of an RFP, or “Request for Proposals.” This is a transparent, public process that can be found online through the City’s website:
Information about RFP’s issued across the state of Michigan are also published here:
The RFP process publicizes both the City’s needs (the actual “request”) and the list of who submitted proposals to meet those needs (“bid tab”). Prior to a final decision by Council, anyone can look at the results of a City RFP and see the list of entities offering proposals.
In 2019, the City began a process to identify the best entity to manage services and improve facilities at the Ann Arbor airport. That process included an RFP and described a primary objective:
The City of Ann Arbor is seeking qualified firms or individuals to redevelop the Fixed Base Operator (FBO) building located at 719 Airport Drive at the Ann Arbor Municipal Airport (ARB) in Ann Arbor, MI.
The 2019 RFP prompted three proposals:
- Aer Powers (preferred but withdrawn)
- Aviation Center & Wyatt Property Management
- Solo Aviation
In 2020, the preferred proposer could not move forward, which led to another RFP in 2021. The 2021 RFP was updated to include this language:
The City is open to another FBO operation in the building, but not solely focused on that use. Redevelopment of the facility with a primary aeronautical use that benefits the users of the airport and the City is the key objective.
The 2021 RFP also prompted three proposals:
- Whisper Aviation (preferred but withdrawn)
- Solo Aviation
- Ace Aircraft LLC
Meeting minutes of the Airport Advisory Commission confirm that for both RFPs, a subcommittee reviewed proposals, conducted interviews, and recommended a “preferred proposer” to move forward for “due diligence.” The subcommittee’s recommendations were ultimately voted on by the whole of the Airport Advisory Committee. In both 2019 and 2021, the “preferred proposer” withdrew before anything could be sent to City Council for final approval.
In 2022, the process of awarding this airport lease changed significantly. As explained in a memo from 11/21/22:
“At that point, the Airport was approached by three different parties who were interested in the building after the withdrawal of Whisper Aviation. After consultation with the City’s purchasing manager, it was determined that an additional RFP was not needed since the City was not purchasing anything through the process. The lease for Aviation Center has no cost to the City, therefore it is not a traditional contract that requires bidding. The two previous RFPs were issued for transparency and to attract the best possible deal for the city. When they failed, a more directed approach became the City’s best strategy for finding a quality tenant.”
What had begun as a public, transparent process of consideration through an RFP turned into something very different. The 11/21/22 memo explains that “the city proceeded with a third bidding period with pre-selected bidders to reach a final contract award after two public bidding processes failed” (emphasis added).
Minutes from 2022 meetings of the Airport Advisory Committee (AAC) describe discussion among the subcommittee, actions from the Airport Manager (who “reached out to other parties”), and review of a proposal from KARB Ventures that was submitted by Brian Herron and Dale Foerschler. On 5/18/22, the AAC approved a subcommittee recommendation to move the KARB Ventures proposal forward to the due diligence phase. At their 7/20/22 meeting, the AAC approved sending a recommendation to the whole of City Council to approve a 30 year lease with Great Lakes Air Repair d/b/a Beacon Aviation (formerly KARB Ventures).
It is worth noting that the Airport Advisory Committee meetings happen via Zoom. Meeting minutes are the only public record of what is discussed; recordings of these Zoom meetings are not posted anywhere.
REVIEW & OVERSIGHT
The Airport Advisory Committee includes City Council liaisons; current liaisons are Chris Watson and Erica Briggs. In 2022, when the RFP process was abandoned and Beacon Aviation recommended, the only liaison to the Airport Advisory Committee was Council Member Briggs. At the 11/21/22 Council meeting, Briggs explained the airport lease:
The lease that’s in front of us tonight with Great Lakes Air Repair is one that would result in two hundred thousand dollars of improvements made to the site as well as this provider has strong experience as a fixed-base operator. They would be offering the current services as well as new services is my understanding. I know questions have been raised around the paint shop and it’s my understanding that the paint shop operations would actually be occurring in Mason not here locally.
At their 11/21/22 meeting, City Council unanimously approved awarding a 20-year lease to Great Lakes Air Repair (doing business as Beacon Aviation) to be the “Fixed Base Operator” of the Ann Arbor City Airport. A staff memo explained the credentials of Beacon Aviation:
“Beacon Aviation is owned by Dale Foerschler and Brian Herron and is a full service FBO. They will be increasing the services available to the local aviation community by adding avionics, aircraft painting and upholstery repairs in addition to the traditional FBO services. Mr. Foerschler is currently operating a successful FBO (Great Lakes Air Ventures) in Mason Michigan. Brian Herron is a longtime airport tenant, local businessman and the owner of the Herron Aviation Group which handles aircraft sales.”
The qualifications referenced by Briggs and staff can be found in materials attached to the agenda, listing “Key Personnel”:
Retired military officer with 33 years experience in leadership and management. Owner of Great Lakes Air Ventures, a part 61 and 141 flight school in Mason Michigan, last year assisted 65 pilots attain their first license or upgrade to the next level of pilot experience. Owner of Great Lakes Air Repair last year completed over 30 Annuals, 13 avionics upgrades, painted 8 planes and installed 6 plane interiors.
Local entrepreneur and instrument/multi pilot, learned to fly at Ann Arbor and keeps an airplane at KARB. Owner of Herron Aviation Group — Michigan License Aircraft Dealer, Herron Farms — local vineyard, and Herron Holdings Group — Michigan Licensed Automotive dealer. President of Opus IVS, an Ann Arbor high tech business adjacent to the airport that has grown from 2 people to over 400. Real-estate development experience and former licensed Michigan builder
This week, agenda item CA-9 will amend the lease in order to award it to Brian Herron, alone, leading “Herron Aviation Group.” A new lease agreement will no longer include Great Lakes Air Repair. Council members submitted one question on the topic of this lease. Staff response acknowledges the value of the partnership approved in November 2022, explaining that Herron Aviation Group must now find a new partner to provide FBO services:
Herron Aviation Group will be partnering with a new FBO service provider to provide these services to users of the Ann Arbor Airport. Once the lease is in place, Herron Aviation Group will begin making renovations to the dilapidated building before beginning service. After building renovation, initial service will include the traditional “full FBO services” of repairs, maintenance, fueling and pilot support. Other services including flight instruction, avionics and body/interior repair services will be spooled up as staffing, licensing, equipment, and facilities are addressed. It is Herron Aviation Group’s intention to offer the full line of services as originally proposed to the City.
WHY THIS MATTERS
The agreement approved in November 2022 was not the result of an open and transparent RFP process. Instead, City staff pursued a substitute process (“more directed approach”) that did not include the open invitation for proposals, timeline for receipt of questions, or scheduled interviews that had occurred under a formal RFP process. However, the decision and subsequent recommendation was, at least, approved by the Airport Advisory Committee after review and discussion in a subcommittee.
Agenda item CA-9 is a significant change to leasing terms that were previously considered and reviewed by the Airport Advisory Committee (AAC). According to Legistar, the AAC has met twice since November, with two Council liaisons in attendance: Chris Watson and Erica Briggs. The minutes for AAC meetings on 1/18/23 and 3/15/23 include no discussion of the lease amendment on this week’s agenda. Approval of this change would award a 20 year lease – including an option for 10 year renewal, and right of first refusal to develop vacant land immediately to the west of the airport building – without any meaningful consideration or review by the AAC or its relevant subcommittee.
At the links below, you can watch highlights of what happened at the 11/21/22 City Council meeting, when leasing terms for the Ann Arbor Airport were first discussed and approved:
- Public comment: A2Council Update video for November 21, 2023 (timestamp 59s)
- Council discussion: A2Council Update video for November 21, 2023 (timestamp 7m0s)
I look forward to seeing Council discuss this amended lease.
Last week, the Council Administration Committee discussed many details about the future of the Ann Arbor airport: lengthening and shifting of runways, increased traffic concerns, potential expansion, and what would happen if the City ceded control of the airport to the FAA/MDOT. Meetings of this committee are open to the public (audio only) but not recorded by the City. I recorded the meeting and posted it on my YouTube channel: