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Item 1.D.
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| City Council Regular | |
| Date: | 05/27/2025 |
| Title: | Limited Commercial Ground Leases with Marchi Family Enterprises, LLC |
| Presented by: | Jeff Roach |
| Department: | Airport |
| Presentation: | No |
| Legal Review: | Template Contract |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends that City Council approve the two Limited Commercial Ground Leases with Marchi Family Enterprises, LLC for 10-year terms commencing March 1, 2025, and ending February 28, 2035.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Marchi Family Enterprises, LLC has a long tenant history at the Airport. On February 19, 1994, the City Council approved a twenty-six year Ground Lease with Jon Marchi, the family's patriarch. At that time, Mr. Marchi was Chairman of the Board of Directors for Big Sky Airlines. Under this Ground Lease, Mr. Marchi built and subleased a new hangar facility to Big Sky Airlines. Mr. Marchi later built an office building and also subleased that facility to Big Sky Airlines. On October 10, 2000, the City Council approved an Amendment to the Ground Lease to extend the lease term by five additional years to February 28, 2025, allowing Mr. Marchi an additional term over which to amortize his investment. Big Sky Airlines ceased operations on March 8, 2008. After Big Sky Airlines left the Airport, the hangar and office building were vacant for a number of years. Mr. Marchi eventually subleased the hangar for maintenance and aircraft storage to Cape Air, the current Essential Air Service airline operating at the Airport, and the office building to the Federal Aviation Administration. Both of these entities continue to lease the building space from the Marchi family. The Marchi family desires to renew the leased ground space and divide the leasehold into two separate ground leases, one for the hangar building ground space and the other for the office building ground space. Two new ten-year ground leases with new space exhibits were prepared for the same total ground space that was on the recently-expired lease. No additional ground space was added. The two new leases commence on March 1, 2025 and end on February 28, 2035.
ALTERNATIVES
City Council may:
- Approve both Limited Commercial Ground Leases with Marchi Family Enterprises, LLC; or,
- Not Approve both Limited Commercial Ground Leases with Marchi Family Enterprises, LLC.
FISCAL EFFECTS
These Ground Leases will generate a total of $23,421.28 in rental revenue in the first year of the lease. Lease rentals in subsequent years will be adjusted on an annual basis on the anniversary dates, 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.