Picacho Aviation L.L.P. (Picacho) has two ground Leases and hangars at the Airport.  Picacho desires to sell one of its hangars (on Lot 10) to another Airport tenant, the Experimental Aircraft Association Chapter 57, Inc. (EAA).  The hangar sale will also require the Assignment of Picacho's ground Lease to the EAA.  Picacho entered into a West End Hangar Ground Lease with the City on January 24, 2000, for a twenty-year term beginning February 1, 2000 and terminating on January 31, 2020.  Picacho subsequently built a hangar on the 5,950 square foot leased parcel, which is located at the west end of the Airport at 2507 Overlook Drive.  Since the commencement of Picacho's ground Lease, several standard lease requirements have changed; therefore, in conjunction with the Assignment of the 2000 Picacho ground Lease, an updated Lease with the EAA should be implemented on this parcel to bring the lease language up-to-date with standard lease requirements.  The EAA would also be given an extension on the term of the updated Lease, with the updated Lease term commencing on July 1, 2015 and terminating on June 30, 2025.  The updated Lease will replace the original 2000 Lease with Picacho.  
 
The EAA also has an existing hangar (on Lot 1) at the Airport, and with the purchase of the Picacho hangar, desires to sell their hangar to another Airport tenant, R. W. McKamy.  The sale of the EAA's current hangar will also require the Assignment of the EAA's ground Lease to  R.W. and Donna G. McKamy. The EAA renewed its 5,250 square foot West End Hangar Ground Lease with the City on February 24, 2014, for a twenty-year term beginning October 1, 2013 and terminating on September 30, 2033. This hangar is located at 2581 Overlook Drive.  The EAA Lease included additional term so that the EAA could amortize the cost of its ramp improvements over a longer term. Since the commencement of this ground Lease in 2014, lease requirements have changed; therefore, in conjunction with the Assignment of the 2014 EAA ground Lease, an Amendment One to the 2014 Lease will be implemented on this parcel to bring the lease language up-to-date on standard lease requirements.  The term of the renewed Lease will not be impacted by the Amendment.  Both Assignments are interdependent; if one Assignment is not approved, the other Assignment also fails.  Copies of all documents are on file in the City Clerk's Office.
 

City Council may:

• Approve the Assignment and Transfer from Picacho to the EAA, the updated Lease with the EAA on the parcel located at 2507 Overlook Drive, the Assignment and Transfer from EAA to the McKamys, and Amendment One on this assigned Lease; or
• Disapprove both of the  transfer documents from Picacho to EAA, and the transfer documents from EAA to the McKamys.

 

There is no financial impact from either of the Assignments, the new EAA Lease, or Amendment One to the 2014 EAA Lease.  The names on the Leases change with each Assignment and Transfer;  standard lease language is updated through both the new Lease and the Amendment, and the term is extended by the new Lease.  The rental rate on the Leases will continue to be adjusted annually on the anniversary of each Lease using the Department of Labor Consumer Price Index for All Urban Consumers (CPI-U), published by the Bureau of Labor Statistics, for the previous twelve (12) month period.
 

Staff recommends that City Council approve the following: (1) Assignment and Transfer of the West End Hangar Ground Lease from Picacho to EAA,  and the EAA's updated West End Hangar Ground Lease on the parcel located at 2507 Overlook Drive, and (2) the Assignment and Transfer of the 2014 West End Hangar Ground Lease from EAA to R. W.  and Donna G. McKamy, and Amendment One to this Lease on the parcel located at 2581 Overlook Drive.