Edwards Jet Center (EJC) desires to construct a new large aircraft hangar on a currently vacant parcel known as Commercial Lot 8 located at the east end of the Airport. This twenty-five (25) year ground Lease would be for 73,094 square feet. The Airport averages two or three leases per year using this type of lease, either for a new lease or for a lease renewal. The Lease identifies that the tenant is responsible for maintaining the leasehold, and includes the appropriate insurance coverage requirements and indemnification language. Additionally, EJC will be financing the construction of this new hangar through Stockman Bank. Stockman Bank is requesting an Assignment of EJC's interest in the Lease to secure the new financing arrangements.

The assignment language has been reviewed by both staff and the City Attorney, and is similar to language used in the past. The City has approved a number of these financing assignments over the years as a means for the banks to secure the loans they provide to the Airport tenants for either construction or purchase of their onsite facilities.

The City Council may:

• Approve the Commercial Aviation Ground Lease on Lot 8 with Edwards Jet Center; or
• Not approve the Commercial Aviation Ground Lease on Lot 8 with Edwards Jet Center.

This ground Lease will generate $18,273.48 in the first year of the Lease. The ground Lease rate of $0.25 per square foot per annum is in line with the rate being paid by other ground lease tenants located in this area. Future lease year rentals will be adjusted annually by the Consumer Price Index for All Urban Consumers (CPI-U).

Staff recommends that Council authorize the Mayor to execute a new twenty-five year Commercial Aviation Ground Lease at Billings Logan International Airport with Edwards Jet Center that commences July 1, 2012 and terminates on June 30, 2037, and the Lessor's Consent to Assignment to Stockman Bank to secure the bank's financing to Edwards Jet Center for EJC's new hangar construction at the Airport. Copies of the Lease and Lessor's Consent to Assignment are on file in the City Clerk's Office.