During the 2001-2002 time frame, Edwards Jet Center Montana, Inc. (EJC) acquired the assets of Lynch Flying Service, Inc. (Lynch), a long-time Fixed Base Operator (FBO) at the Airport, and assumed the Lynch Leases at the Airport. EJC subsequently also assumed FBO related leases held by Corporate Air.   In April and December 2001, the City Council approved twenty-year Commercial Aviation Ground Leases by and between Lynch DBA EJC, EJC, and the City of Billings. These Leases covered Commercial Lots 3, 3A, and 5, and Fuel Farm Lots 3 and 4, all of which comprise the majority of the FBO business of EJC.  On July 14, 2008, the City Council approved a five-year renewal of a lease on Commercial Lot 2, another parcel key to EJC's FBO operations. 

EJC's original commercial loan to finance the FBO operations was with US Bank, and Consent to Assignments of the leasehold interests to US Bank for security purposes were approved by the City Council in November 2006.  EJC desires to move its primary financing arrangements from US Bank to Stockman Bank.  As a result, Stockman Bank is requesting an Assignment of the EJC and Lynch DBA EJC interests in the Leases to secure the new financing arrangements.  If these Assignments are approved by the City, releases of the Assignments to US Bank will also be obtained.  EJC is currently one of two FBOs at the Airport.

The Assignment language has been reviewed by both 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, improvements to, or purchase of their onsite facilities.

The alternatives for the Council to consider are:

• Approve Assignment of the three Leases to Stockman Bank and authorize the Mayor to sign the three Lessor's Consent to Assignment documents; or
• Not approve the Assignment of the three Leases to Stockman Bank and require EJC to continue with the current Assignments to US Bank.

There would be no financial impact to the City, as EJC and Lynch DBA EJC will still be required to pay the annual ground lease rentals as established in the following Leases dated:

1. April 9, 2001, by and between Lynch and the City of Billings for Commercial Lot 5 and Fuel Farm Lots 3 and 4,
2. December 10, 2001, by and between EJC and the City of Billings for Commercial Lots 3 and 3A, and
3. July 14, 2008, by and between EJC and the City of Billings for Commercial Lot 2.

Staff recommends that Council approve the Assignment of the three EJC and Lynch Commercial Aviation Ground Leases to Stockman Bank to secure financing for EJC's FBO operations at the Airport.