On May 24, 1999, Corporate Air entered into a twenty-five year Commercial Aviation Ground Lease with the City of Billings and subsequently built a 12,400 square foot building to accommodate a new U.S. Postal Service sort facility on the leased parcel located at 1761 Aviation Place on the east end of the Airport.  The parcel contains 161,892.89 square feet.  In October 2004, Corporate Air sold the building and assigned its Lease interest to Industrial Properties, Inc., the current Lessee.  Industrial Properties now desires to sell the building it owns and assign its Lease interest to Daniel W. Wells and Julane Wells, Joint Tenants (Wellses).  This Assignment and Transfer will formally transfer the Lease on this parcel from Industrial Properties, Inc. to the Wellses.  However, since the original ground Lease is dated and requires updated language, the ground Lease has been revised to reflect an updated property description and current insurance and non-discrimination language.  Additionally, the revised Lease will extend the Lease term to accommodate the amortization of the Wellses' investment in the purchase of the sort facility building from Industrial Properties. Lastly, since the Wellses will be financing the building purchase, a Lessor's Consent to Assignment of Lessee's Interest to Secure Bank Loan is also required.  Copies of the Assignment and Transfer, revised Commercial Aviation Ground Lease, and Lessor's Consent to Assignment of Lessee's Interest to Secure Bank Loan are on file in the City Clerk's Office.

City Council may:

• Approve the Assignment and Transfer, revised Commercial Aviation Ground Lease, and Lessor's Consent to Assignment of Lessee's Interest to Secure Bank Loan; or
• Disapprove the Assignment and Transfer transaction.

There is no financial impact from the Assignment and Transfer; the name on the Lease is all that changes with this action.  The new Lease commences May 1, 2015 and terminates on April 30, 2025.  Annual rent for the first year is $35,616.48 and will be adjusted annually on the Lease's anniversary date by the Department of Labor Consumer Price Index For All Urban Consumers (CPI-U), published by the Bureau of Labor Statistics, for the previous twelve months to keep pace with annual inflation.

Staff recommends that City Council approve the following:  (1) Assignment and Transfer of the Commercial Aviation Ground Lease from Industrial Properties, Inc. to Daniel W. Wells and Julane Wells, Joint Tenants, (2) Revised Commercial Aviation Ground Lease with the Wellses, and (3) Lessor's Consent to Assignment to Secure Bank Loan.