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Item 1.H.
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| City Council Regular | |
| Date: | 12/09/2024 |
| Title: | Limited Commercial Aviation Ground Lease with Aerotronics Properties, LLC |
| Presented by: | Jeff Roach |
| Department: | Airport |
| Presentation: | No |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends City Council approval of the following: (1) the Limited Commercial Aviation Ground Lease with Aerotronics Properties, LLC, for a twenty-five year term beginning December 1, 2024 and ending November 30, 2049, (2) a new Lessor's Consent to Assignment of Lessee's Interest in Lease to Secure Bank Loan, and (3) a new Memorandum of Limited Commercial Aviation Ground Lease for recording purposes. The City must also sign the documents terminating, releasing or assigning previously approved documents for the leased parcel being exchanged and re-leased to Edwards Jet Center in a related and separate item.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Aerotronics Inc. has been a long-time tenant at the Airport and owns the building located at 1651 Aviation Place, which is situated on the east end of the Airport. Due to retirement, Aerotronics now has a new owner and intends to build a new larger facility at the Airport to replace its aging facility. The company is well known for its avionics services that it provides to the aviation community. Edwards Jet Center (EJC), another long-time tenant and one of the Fixed Base Operators at the Airport, owned the building at 2491 Overlook Drive, which is situated on the west end of the Airport. EJC recently demolished the aging building with the intent to construct a new facility at that location. Seeing opportunity for the new locations, the two companies have entered into an exchange agreement, whereby they would exchange leased locations for the purpose of consolidating their operations which are presently split between non-contiguous locations on opposite sides of the Airport. The consolidated locations will create more campus-like locations for each tenant enabling them to improve operations and also add two new modern facilities to the Airport, both replacing aging facilities in need of expansion and modernization. To facilitate the new development of the subject parcel, a new road, Jetway Drive, will be constructed for access to the new Aerotronics facility. With the new access road, the address will also change.
To effect the exchange of leased locations, current in-term leases and associated auxiliary documents will be terminated, released or assigned, and replaced with new leases and associated auxiliary documents to reflect the new lease locations of each tenant. Since new construction is involved, the new leases will be twenty-five year leases to allow both tenants to secure financing and amortize the cost of construction. The subject lease is part of the exchange, to be accompanied by new leases for EJC in separate related actions.
The subject lease includes a 106,063.90 square feet parcel located on the west end of the Airport and will be addressed as 2497 Jetway Drive. The term of the lease commences on December 1, 2024 and ends of November 30, 2049.
To effect the exchange of leased locations, current in-term leases and associated auxiliary documents will be terminated, released or assigned, and replaced with new leases and associated auxiliary documents to reflect the new lease locations of each tenant. Since new construction is involved, the new leases will be twenty-five year leases to allow both tenants to secure financing and amortize the cost of construction. The subject lease is part of the exchange, to be accompanied by new leases for EJC in separate related actions.
The subject lease includes a 106,063.90 square feet parcel located on the west end of the Airport and will be addressed as 2497 Jetway Drive. The term of the lease commences on December 1, 2024 and ends of November 30, 2049.
ALTERNATIVES
City Council may:
- Approve the new Limited Commercial Aviation Ground Lease and auxiliary documents with Aerotronics Properties, LLC; or,
- Not Approve the new Limited Commercial Aviation Ground Lease and auxiliary documents with Aerotronics Properties, LLC.
FISCAL EFFECTS
The City will receive $35,595.00 rental revenue in the first year of this ground-only Lease. The rental rate will be adjusted on an annual basis on the anniversary date, using the average of the monthly percentage increases for the previous calendar year, as determined by the Department of Labor Consumer Price Index for All Urban Consumers (CPI-U), published by the Bureau of Labor Statistics.