On July 23, 2007, Alpine Aviation, Inc., DBA Alpine Air, entered into a five (5) year Limited Commercial Aviation Building and Ground Lease with the City of Billings, for a parcel located at the east end of the Airport in the Airport Business Park, referred to as Hangar IP-5.  On September 22, 2008, the Council approved Amendment One to the Lease with Alpine Air to add square footage to its leased premises in order to construct additional office space in the hangar.  During the Summer of 2010, Alpine Air completed significant improvements to the interior of the hangar, which included an office remodel, cleaning and painting the hangar floor, and painting all the interior walls.  Alpine Air subsequently requested an extension to the Lease in order to have additional time over which to amortize the cost of these improvements.  On July 12, 2010, the Council approved Amendment Two to the Lease with Alpine Air to extend the term of the Lease an additional five (5) years to October 31, 2017.  Alpine Air now desires to lease additional square footage within the hangar premises in order to expand its equipment storage capacity. Currently, Alpine Air leases 11,450 square feet of hangar and office space in IP-5.  Additional space recently became available when another tenant canceled its lease and vacated its space in this hangar.  This Amendment adds 1,023 square feet of storage area on the east side of the hangar to the leasehold, providing the additional space desired for the expanded equipment storage.

The City Council may:

• Approve Amendment Three with Alpine Air, providing additional leased space; or
• Not approve Amendment Three with Alpine Air.

The Amendment will add 1,023 square feet to the Alpine Air leasehold and increase its annual rental by $1,802.42 for the first year. The new total square footage will increase to 12,473 square feet and will generate $21,976.20 in rental income in the first year. The annual rental amount is adjusted each year according to the Consumer Price Index for All Urban Consumers (CPI-U) for the previous twelve months.

Staff recommends that Council approve Amendment Three to the Limited Commercial Aviation Building and Ground Lease with Alpine Aviation, Inc., DBA Alpine Air.