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Item 1.H.
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| City Council Regular | |
| Date: | 08/28/2023 |
| Title: | Commercial Aviation Ground Lease with Edwards Jet Center Montana, Inc. |
| Presented by: | Jeff Roach |
| Department: | Airport |
| Presentation: | No |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends City Council approval of the Commercial Aviation Ground Lease with Edwards Jets Center Montana, Inc (EJC) for a twenty-five (25) year term, beginning September 1, 2023 and expiring on August 31, 2048, and a new Memorandum of Commercial Aviation Ground Lease to be utilized for recording purposes. Staff also recommends City Council authorize the City Administrator to sign a new Lessor's Consent to Assignment of Lessee's Interest in Lease to Secure Bank Loan once EJC finalizes its financing details.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Edwards Jet Center (EJC) is a Fixed Based Operator (FBO) at the Airport, providing aviation support operations for both commercial airlines, general aviation, and charters. EJC has a number of leases at the Airport that provide space for its various aviation support activities. One of EJC's leases is for the ground space for a large hangar and airfield ramp space on the west end of the airport. EJC subleases space in this hangar to a number of airport tenants for a variety of aviation uses. EJC purchased the current hangar from a previous tenant in 2011. The hangar is starting to deteriorate and no longer meets EJC's operational needs. EJC intends to demolish the old hangar in the near future and replace it with a modern structure that better meets their needs and the requirements of newer aircraft. EJC has been discussing options for improvements and replacement of the old hangar; however, they did not have a formal proposal ready for consideration when the previous lease was expiring. In order not to lose the space, EJC requested a short-term lease term of one year, in order to provide time to formalize a proposal for future use of this space. This short-term lease is the lease that expires August 31, 2023.
EJC has now determined the space it needs for its new hangar and ramp development, is in the process of finalizing the building design, and is requesting a new lease for space for this development. The new Commercial Aviation Ground Lease will be for a twenty-five (25) year term, beginning September 1, 2023 and expiring on August 31, 2048. The new leased parcel will comprise 106,063.90 square feet and retain the 2491 Overlook Drive address. Additionally, the new lease also includes the 2,000 SF parcel for EJC's self-fueling facility that will remain in place and in use. EJC estimates that demolition of the old hangar, site preparation, and construction of the new hangar/ramp development will begin sometime in 2024. EJC also plans to finance the new development, at which time both parties to the lease will need to execute a new Lessor's Consent to Assignment of Lessee's Interest in Lease to Secure Bank Loan once the financing details are finalized.
EJC has now determined the space it needs for its new hangar and ramp development, is in the process of finalizing the building design, and is requesting a new lease for space for this development. The new Commercial Aviation Ground Lease will be for a twenty-five (25) year term, beginning September 1, 2023 and expiring on August 31, 2048. The new leased parcel will comprise 106,063.90 square feet and retain the 2491 Overlook Drive address. Additionally, the new lease also includes the 2,000 SF parcel for EJC's self-fueling facility that will remain in place and in use. EJC estimates that demolition of the old hangar, site preparation, and construction of the new hangar/ramp development will begin sometime in 2024. EJC also plans to finance the new development, at which time both parties to the lease will need to execute a new Lessor's Consent to Assignment of Lessee's Interest in Lease to Secure Bank Loan once the financing details are finalized.
ALTERNATIVES
City Council may:
- Approve a new twenty-five year lease with Edwards Jet Center Montana, Inc; or,
- Not Approve a new twenty-five year lease with Edwards Jet Center Montana, Inc.
FISCAL EFFECTS
The annual rental revenue for the first year of the new lease will be $34,829.04. The rental rate will be adjusted on an annual basis each September on the anniversary date, 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.