On August 8, 2005, Sarpy Creek Land Company, L.L.C., entered into a twenty-year Non-Commercial Aviation Ground Lease with the City of Billings and subsequently built a hangar on a 19,142 square foot leased parcel located in the executive hangar area on the west end of the Airport at 2410 Overlook Drive. This Lease expires on August 31, 2025. Sarpy Creek utilized the hangar for a number of years and has now opted to sell the hangar to the United States Department of Agriculture (USDA). This Assignment and Transfer will formally transfer the Lease on this parcel from Sarpy Creek to the USDA.

The USDA has requested additional term on the Lease to accommodate its investment in the purchase of the hangar. Additionally, the USDA utilizes a standard General Services Administration (GSA) form in its realty transactions, so the assigned Lease must be re-written using the government's required standard form. To provide for both the additional term and to utilize the standard government form, a new lease with the USDA has also been prepared with an extended expiration date of August 31, 2031.

The Assignment and Transfer language has been reviewed by staff and the City Attorney, and is similar to language used in the past for similar transfers. The City Council has approved a number of these transfers when hangar ownership changes. Copies of these documents are on file in the City Clerk's Office.

The City Council may:

• Approve the Transfer of the leased parcel and hangar ownership from Sarpy Creek to the USDA and the new extended term Lease with the USDA; or
• Not approve the Transfer of the leased parcel and hangar ownership from Sarpy Creek to the USDA and the new extended term Lease with the USDA.

Assignment and Transfer is a condition allowed under the current Lease with Sarpy Creek. The companion extended term Lease provides six (6) additional years of lease term and an extended revenue stream from this parcel of land. The annual rent of $4,747.44 will be adjusted on the September 1, 2012 anniversary date using the Consumer Price Index For Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items Figure (1982-1984 = 100) for the previous twelve months to keep pace with annual inflation.

Staff recommends that City Council approve the following: (1) the Assignment and Transfer of the Non-Commercial Aviation Ground Lease from Sarpy Creek to the USDA, and (2) the new Government Lease for Real Property with the USDA.