|
Item 1.M.
|
| City Council Regular | |
| Date: | 02/14/2022 |
| Title: | West End Hangar Ground Lease with Beacon Air Group, 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 Beacon Air Group, LLC for a 25-year term commencing October 1, 2021 and ending September 30, 2046, and rescind the previously approved West End Hangar Ground Lease with Monarch Limited of Montana, LLC.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Kevin Button of both Monarch Limited of Montana, LLC (Monarch Ltd.) and Beacon Air Group, LLC (Beacon Air) desires to construct a new 100 ft. x 120 ft. hangar in the West End Large Hangar Area created for large hangar construction to accommodate large corporate and private aircraft. On October 11, 2021, City Council approved a new twenty-five year West End Hangar Ground Lease with Monarch Ltd. on this parcel. That Lease commenced October 1, 2021 and terminates September 30, 2046. The leased premises include a 38,700 square foot parcel on the newly named street Altimeter Drive. The Monarch Ltd. hangar would be the first hangar constructed in the new West End Large Hangar Area. As a principal owner in Monarch Ltd., Beacon Air, and BAG Billings, LLC, Mr. Button intended to coordinate the Monarch Ltd. hangar construction with the construction of the Fixed Base Operator (FBO) hangar and office building that will be constructed by BAG Billings, LLC under a separate twenty-five year Commercial Aviation Ground Lease.
Monarch Ltd.'s insurance provider was unable to fulfill all of the insurance requirements required under the Lease, specifically the addition of the City of Billings as a primary additional insured to Monarch Ltd.'s comprehensive liability policy. As a result, the City did not execute the Lease with Monarch Ltd. Mr. Button desires to proceed with the hangar construction as noted, subsequently staff worked with him on alternatives.
Mr. Button has requested a revision to the Lease approved on October 11, 2021, to change the name of the Lessee from Monarch Ltd. to Beacon Air. He has provided an updated insurance certificate to cover this parcel that meets the insurance requirements of the Beacon Air Lease and is acceptable to the City. No other changes to the Lease, including the term, are required. Legal has advised staff that this request for revision requires approval of the City Council.
Monarch Ltd.'s insurance provider was unable to fulfill all of the insurance requirements required under the Lease, specifically the addition of the City of Billings as a primary additional insured to Monarch Ltd.'s comprehensive liability policy. As a result, the City did not execute the Lease with Monarch Ltd. Mr. Button desires to proceed with the hangar construction as noted, subsequently staff worked with him on alternatives.
Mr. Button has requested a revision to the Lease approved on October 11, 2021, to change the name of the Lessee from Monarch Ltd. to Beacon Air. He has provided an updated insurance certificate to cover this parcel that meets the insurance requirements of the Beacon Air Lease and is acceptable to the City. No other changes to the Lease, including the term, are required. Legal has advised staff that this request for revision requires approval of the City Council.
ALTERNATIVES
City Council may:
- Approve the 25-year West End Hangar Ground Lease with Beacon Air Group, LLC and rescind the approval action of the October 11, 2021 West End Hangar Ground Lease with Monarch Limited of Montana, LLC; or
- Not Approve the above action request and advise staff on how to proceed.
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.