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Item 1.F.
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| City Council Regular | |
| Date: | 10/24/2022 |
| Title: | Amendment One to BLM Lease for IP-6 and IP-7 Buildings and Wareyard Ground Space at Billings Logan International Airport |
| Presented by: | Kevin Ploehn, Director of Aviation and Transit |
| Department: | Airport |
| Presentation: | No |
| Legal Review | Yes |
RECOMMENDATION
Staff recommends that Council approve Amendment One extending the term of the Lease with the Bureau of Land Management (BLM) for office and storage space in Airport Buildings IP-6 and IP-7, and additional ground space for agency vehicle and equipment wareyards, all located in the Airport Business Park. The Lease term will be for an additional ten years beginning September 1, 2022, and ending August 31, 2032.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
The U.S. Department of Interior on behalf of the BLM, leases Buildings IP-6 and IP-7 in the Airport Business Park and additional ground space west of these buildings for two fenced agency vehicle and equipment wareyards. The BLM, a long-time tenant of the Airport, utilizes this space to house and support its Regional Wildland Fire Cache operations. The Fire Cache operation is part of the BLM campus located in the Airport Business Park, which also includes a tanker base, dispatch center, and a wildlands fire fighting station. The leased building space consists of 3,080 square feet of office space and 3,721 square feet of storage space. The two wareyards total 37,155 square feet. The current Lease commenced September 1, 2012, and expired August 31, 2022. The BLM requests to extend the Lease term for an additional ten (10) years, to expire on August 31, 2032. Staff began working on the extension months prior to the expiration. Many Federal agencies are experiencing short staffing and also have a significant number of employees still working from home. This has caused delays in finalizing terms and agreements. The Amendment also includes reimbursement for the additional water the BLM uses for equipment washing and the additional garbage pickup the BLM requests during peak Summer operations. The Lease rates are comparable to other Airport tenants and to local advertised commercial building rental rates as advertised in Montana Listings Commercial Real Estate, Eastern Montana Commercial Real Estate, and NAI Business Properties website. The unheated warehouse space is $4.45 per square foot per year, office space (including utilities) is $13.07 per square foot per year, heated storage space is $9.20 per square foot per year, and the ground space is $0.33 per square foot per year.
ALTERNATIVES
City Council may:
- Approve Amendment One extending the term of the Lease with the BLM for an additional ten years beginning September 1, 2022, and ending August 31, 2032; or
- Not Approve Amendment One extending the term of the Lease with the BLM, terminating the Lease, and direct staff on how to proceed.
FISCAL EFFECTS
The City will receive $77,984.88 rental revenue in the first year of the Lease. Subsequent years will continue to be adjusted each anniversary by the Department of Labor, Bureau of Labor Statistics Consumer Price Index for Wage Earners and Clerical Workers (CPI-W), the index preferred by Federal agencies. The City will also receive reimbursement for the actual additional water usage for equipment washing and additional garbage collections the BLM uses during its Summer fire operations and are not included as part of this Lease.