HomeMy WebLinkAboutDoc 390 - Redmond - Airline Revenue ProgramDeschutes County Board of Commissioners
1300 NW Wall St., Suite 200, Bend, OR 97701-1960
(541) 388-6570 -Fax (541) 385-3202 -www.deschutes.org
AGENDA REQUEST & STAFF REPORT
For Board Business Meeting of July 10,2013
Please see directions for completing this document on the next page.
DATE: July 3, 2013
FROM: Erik Kropp Phone # 541 388-6584
TITLE OF AGENDA ITEM:
Consideration of County Administrator Signature on Document 2013-390, A Letter of Agreement with
the Redmond Chamber of Commerce Regarding Airline Revenue Guarantee Program.
PUBLIC HEARING ON THIS DATE? NO
BACKGROUND AND POLICY IMPLICATIONS:
The Board of Commissioners has agreed to allocate $25,000 toward a revenue guarantee program for
American Airlines to operate daily scheduled commercial passenger service between Redmond, Oregon
and Los Angeles, California. The Board has approved the use of the Economic Development Fund
(Fund 105) for this purchase.
Document 2013-390, the letter of agreement with the Redmond Chamber of Commerce, documents the
terms of the airline revenue guarantee program.
FISCAL IMPLICATIONS:
$25,000 -funds are available in Fund 105.
RECOMMENDATION & ACTION REQUESTED:
Board Approval of County Administrator Signature on Document 2013-390, A Letter of Agreement
with the Redmond Chamber of Commerce Regarding Airline Revenue Guarantee Program.
ATTENDANCE: Erik Kropp
DISTRIBUTION OF DOCUMENTS:
Erik Kropp
Central Oregon Community Revenue Guarantee (COCRG) -Letter of Agreement
EFFECTIVE DATE:
Upon approval by the Deschutes County Board of Commissioners
PARTIES:
Deschutes County (URG Partner")
Board of County Commissioners
1300 NW Wall Street
P.O. Box 6005
Bend, OR 97708
Redmond Chamber of Com merce & CVB CRG Manager")
446 SW ih Street.
Redmond, OR 97756
RECITALS:
A. In an effort to expand the available air service options from the Redmond Mun icipal Airport, the
City of Redmond is negotiating with American Airlines to operate a daily scheduled roundtrip
service between Redmond, Oregon and Los Angeles, California.
B. The service is proposed to begin in June 2013. American Airlines will operate a daily scheduled
roundtrip, 50-seat regional jet service between Redmond, Oregon and Los Angeles, CA. The
service aircraft will be a Canadair Regional Jet 200 or equivalent aircraft. All flights will be
operated with American's normal passenger in-flight services. American will use its normal
marketing, promotion, and revenue management systems and strategies with respect to the
Scheduled Service. American will establish the fares on the Scheduled Services consistent with
its normal course of business
C. American Airlines is willing to provide the above service if there is a Revenue Guarantee of
$600,000 for a period of 24 months from the date air service commences. The City of Redmond
LEGAL COUNSEL DC -2013-390
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has received a $500,000 grant toward the Revenue Guarantee. There is a need for additional
Revenue Guarantee commitments totaling $100,000 from the community.
D. On behalf of this effort, the Redmond Chamber of Commerce has agreed to manage the
financial support/membership in an air service support program for the proposed American
Airlines service.
E. On behalf of this effort, the Redmond Chamber of Commerce has established a designated fund
with a local bank, to be known as the Central Oregon Community Revenue Guarantee fund or
COCRG. All funds transferred to this account will be committed towards the revenue guarantee
to American Airlines. When payment is made to the Airline, the funds will be utilized on a pro
rated basis between both the DOT grant totaling $500,000 and the COCRG totaling $100,000.
AGREEMENT:
In consideration of the above, the parties agree as follows:
1. Conditions. This Agreement is conditioned upon the RG Manager obtaining RG Partner funding
totalling $100,000. If there are not sufficient RG Partner Agreements and the sum of $100,000 is
not received on or before July 1, 2013, RG Manager shall return to each of the RG Partners who
contributed to the COCRG the sums contributed without interest. Upon the return of the funds, all
obligations of the RG Manager shall cease and the RG Manager shall have no further obligation
and no liability of any nature arising out of this Agreement or any related Agreements.
2. Funding. The RG Partner agrees to pay to the RG Manager the sum of $25,000 on or before
August 30,2013. The funds shall be used as a portion of the Revenue Guarantee with American
Airlines, and may be transferred to American under the terms of the Agreement between the City
of Redmond and American Airlines.
3. Term and Termination. This Agreement shall begin on the Effective Date stated above and shall
continue for a period of 24 months beginning on the date American Airlines Services begins. This
Agreement may be terminated early if the Agreement between the City of Redmond and
American Airlines terminates. The termination of this Agreement, regardless of how it occurs, will
not relieve a party of obligations that have accrued before the termination date.
4. Return of Funds Upon Termination. Upon the termination of this Agreement, if there are any
funds remaining in the Revenue Guarantee account, the RG Manager shall remit such balance or
balances to the RG Partners in proportion to the RG Partners contribution to the Revenue
Guarantee account.
5. Deposits and Interest. RG Partner's funds shall be deposited and maintained in an FDIC insured
Bank in a designated Revenue Guarantee account unless used as part of the revenue guarantee
or returned to the RG Partners. The RG Manager shall be the holder and manager of that
account. The funds may be commingled with other Revenue Guarantee funds received by the
RG Manager. Any interest accrued on the Revenue Guarantee account shall be used as part of
the Revenue Guarantee. No interest on the Revenue Guarantee funds will be paid to the RG
Partners.
6. Signatures. This Agreement may be signed in counterparts. A fax transmission of a signature
page will be considered an original signature page. At the request of a party, the other party will
confirm a fax-transmitted signature page by delivering an original signature page to the
requesting party.
7. Representations. This writing constitutes the entire agreement between the parties, but is subject
to the provisions of the Revenue Guarantee Grant Agreement between the City of Redmond and
the Department of Transportation and the agreement between the City of Redmond and
American Airlines. There are no other agreements between the parties. This agreement can
only be amended in a writing signed by both parties. Each party acknowledges that they are
represented by counselor sought such advice as that party deemed necessary during the
negotiations and execution of this Agreement. The parties agree that the rule of construction of
written agreements is construed against the party preparing or drafting such agreements shall
specifically not be applicable to the interpretation of this Agreement, or any documents executed
and delivered under this Agreement. Any disputes or conflicts will be settled through mediation.
IN WITNESS WHEREOF, the parties have set their hands the day and year first above written.
RG Manager:
By Date
Title
RG Partner:
By Date
Title Deschutes County Administrator
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