On December 18, 2006, Corporate Air entered into a ten-year Limited Commercial Aviation Ground Lease with the City of Billings for a parcel on which it owned a large hangar. The parcel is situated on the west end of the Airport at 2491 Overlook Drive, and contains 243,108.48 square feet. Corporate Air utilized the hangar to perform aircraft maintenance and repair operations for a number of years, and in April 2008, finalized the sale of its hangar and assigned its lease to Corporate Jet, LLC. Corporate Jet utilized the hangar for its startup operations as a second Fixed Base Operator (FBO) at Billings Logan International Airport and proposed to offer charters, fueling, and other operations consistent with an FBO. At that time, Edwards Jet Center Montana Inc. (EJC) was the sole FBO operating at the Airport.
 
On December 10, 2007, Corporate Jet also entered into a Commercial Aviation Ground Lease with the City for a fuel farm site on the east end of the Airport, and subsequently completed installation of fueling equipment. In July 2008, after purchase of the hangar and upon completion of the fueling equipment installation in the fuel farm, Corporate Jet requested, and City Council approved, an amendment to the Corporate Jet FBO west end ground lease to increase the square footage by 1,200 square feet to provide a preferred location for Corporate Jet to construct and place a fuel sale sign on the airfield near its hangar leasehold.

Corporate Jet has now opted to sell its hangar and fuel farm installation to EJC and to assign its leasehold interests to EJC. These Assignments and Transfers of Leases will formally transfer the Leases on the west end FBO parcel and east end fuel farm parcel from Corporate Jet to EJC.

Additionally, as part of the transfer process, Corporate Jet and EJC have entered into an asset purchase agreement so that EJC can purchase the large Corporate Jet hangar on the west end FBO parcel, and the fueling equipment installed on the east end fuel farm parcel. EJC is working with Stockman Bank to finance the purchase of these assets. Stockman Bank seeks to secure its loan through a financing assignment.  The assignment language has been reviewed by staff and the City Attorney, and is similar to language used in the past. The City has approved a number of these financing assignments over the years as a means for the banks to secure the loans they provide to the Airport tenants for either construction or purchase of their hangar or fueling facilities. City Council had approved similar financing assignments for Corporate Jet with Stockman Bank in May 2008. Upon approval of the financing assignments with EJC, Stockman Bank will release its financing assignments with Corporate Jet.

The City Council may:

• Approve the Assignment and Transfer of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site from Corporate Jet to EJC, and the Assignment of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site with EJC to Stockman Bank, to secure the bank's loan to EJC for the purchase cost of the hangar and fueling equipment installed; or
• Not approve the Assignment and Transfer of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site from Corporate Jet to EJC, and the Assignment of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site with EJC to Stockman Bank, to secure the bank's loan to EJC for the purchase cost of the hangar and fueling equipment installed.

There is no financial impact from either the Assignments and Transfers from Corporate Jet to EJC or the Assignments from EJC to Stockman Bank to secure its financing loans. The name on the Leases is all that changes with these Assignments and Transfers, all other terms and conditions of the Leases remain unchanged.

Staff recommends that City Council approve the Assignment and Transfer of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site from Corporate Jet to EJC. Staff also recommends that City Council approve the Assignments of the Limited Commercial Aviation Ground Lease and the Commercial Aviation Ground Lease for a Fuel Farm Site with EJC to Stockman Bank, to secure the Bank's loan to EJC for the purchase cost of the hangar and fueling equipment installation.