On November 1, 1993, Robert Redman entered into a twenty-year West End Hangar Ground Lease with the City of Billings and subsequently built a hangar on a 5,950 square foot leased parcel located on the west end of the Airport at 2571 Overlook Drive. This Lease expires on October 31, 2013. Mr. Redman utilized the hangar for a number of years and has now opted to sell his hangar to Steven A. and Susan K. Vold. This Assignment and Transfer will formally transfer the Lease on this parcel from Mr. Redman to the Vold Trusts.

The Volds are financing the purchase of the hangar and have requested an additional term on the Lease to accommodate their loan amortization. To provide for both the additional term and to update the lease language, a new twenty-year lease with the Vold Trusts has also been prepared. Additionally, the Volds are working with First Interstate Bank on financing for the purchase of this hangar. A Lessor's Consent to Assignment to Secure Financing is included to meet the bank's requirements, as First Interstate Bank seeks to secure its loan for the costs of the hangar purchase by the Volds.

The Assignment and Transfer language has been reviewed by staff and the City Attorney, and is similar to language used in the past. The City Council has approved a number of these transfers and financing assignments over the years as a means for hangar owners to sell their hangars, and the banks to secure the loans they provide to the Airport tenants for either construction or purchase of their hangar facilities. This is the case with the hangar previously owned by Robert Redman.

Copies of all documents are on file in the City Clerk's Office.

The City Council may:

• Approve all the documents transferring the leased parcel and hangar ownership from Mr. Redman to the Vold Trusts, extending the term of the Lease, and permitting the financing bank to secure its loan; or
• Not approve all the documents transferring the leased parcel and hangar ownership from Mr. Redman to the Vold Trusts, extending the term of the Lease, and permitting the financing bank to secure its loan.

Assignment and transfer is a condition allowed under the current Lease with Mr. Redman. The companion extended term Lease with the Vold Trusts provides an extended revenue stream from this parcel of land.  The annual rent will be adjusted on the November 1, 2012 anniversary date using the Consumer Price Index for All Urban Consumers (CPI-U) for the previous twelve months to keep pace with annual inflation. The name on the Lease changes with this Assignment and Transfer, the new Lease provides for the extended term and updated lease language, and the Lessor's Consent provides for the financing bank to secure its loan to the Volds.

Staff recommends that City Council approve the following: (1) the Assignment and Transfer of the West End Hangar Ground Lease from Robert Redman to Steven A. Vold Revocable Trust and Susan K. Vold Revocable Trust as Tenants in Common, (2) the new 20-year West End Hangar Ground Lease with the Vold Trusts, and (3) the Lessor's Consent to Assignment to Secure Financing with First Interstate Bank.