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Item 1.E.
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| City Council Regular | |
| Date: | 10/11/2021 |
| Title: | West End Hangar Ground Lease with Monarch Limited of Montana, LLC |
| Presented by: | Kevin Ploehn, Director of Aviation and Transit |
| Department: | Airport |
| Presentation: | No |
RECOMMENDATION
Staff recommends that City Council approve the West End Hangar Ground Lease with Monarch Limited of Montana, LLC for a 25-year term commencing October 1, 2021, and ending September 30, 2046.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Kevin Button of Monarch Limited of Montana, LLC (Monarch Ltd.) desires to construct a new 100 ft. x 120 ft. hangar on the west end of the Airport. The Airport has created a new West End Large Hangar Area to create space for large hangars that accommodate storage of large corporate and private aircraft. This newly created area has space available to accommodate Monarch Ltd.'s request. Staff has worked with Monarch Ltd. on a new 25-year West End Hangar Ground Lease that commences October 1, 2021, and terminates September 30, 2046. The proposed leased premises includes a 38,700 square foot parcel on the newly named street Altimeter Drive. The Monarch Ltd. hangar will be the first hangar constructed in the new West End Large Hangar Area. As a principal owner in both Monarch Ltd. and BAG Billings, LLC, Monarch Ltd. intends to coordinate the construction of this hangar with the construction of the FBO hangar and office building that will be constructed by BAG Billings, LLC under a separate 25-year Commercial Aviation Ground Lease.
ALTERNATIVES
City Council may:
- Approve the West End Hangar Ground Lease with Monarch Limited of Montana, LLC for a 25-year term; or
- Not Approve the West End Hangar Ground Lease with Monarch Limited of Montana, LLC for a 25-year term.
FISCAL EFFECTS
The initial annual rental for this Lease will be $11,029.56. Lease rentals in subsequent years will be adjusted on an annual basis 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. For the Monarch site, the infrastructure costs for the City were $235,000. This site could accommodate four of these size hangars. At $11,029 per hangar, this would total $44,116 per year. After 25 years, the revenue would be $1,102,900 providing a 4.7x ROI.