Consideration and Approval of Lease Amendments:  Amendment of Flagstaff Airport Leases to abate rent for at least six (6) months, due to the COVID-19 pandemic.

The Flagstaff Airport lessees are requesting rent abatement, because airport travel has practically cease as a result of the COVID-19 pandemic.  The proposed lease amendments will abate rent for the period of April 1, 2020 through September 30, 2020.   No rent, nor late penalty or interest will be owed.

ADDITIONAL EXTENSIONS:
OPTION 1 - Any additional extensions for two (2) additional three (3) month periods may be approved by the City Manager. ("Abatement Period").
OPTION 2 - Any additional extensions for two (2) additional three (3) month periods may be approved by the City Council. ("Abatement Period").

All proposed lease amendments are in draft form, and final versions will be attached prior to the May 19, 2020 council agenda.

If rent abatement is approved, the Flagstaff Airport will not receive 6-months of lease revenue of approximately $356,785. This health emergency has created a loss in revenues for the airport lessees at a grand scale. The Flagstaff Airport received word that we will be receiving an $18.1 million CARE grant that will help us to recover these lost lease revenues and will help enable continued airport operations.

Goal: Transportation and Other Public Infrastructure: Provide airport infrastructure to enhance tenant and patron experience and secure a second airline.

No

-  Approve the COVID-19 Rent Abatement Lease Amendments and selected Option 1 or Option 2 for any additional extensions if warranted.
-  Not Approve the COVID-19 Rent Abatement Lease Amendments

On January 31, 2020 U.S. Secretary of Health and Human Services declared a public health emergency as a result of the COVID-19 pandemic; on March 11, 2020 Arizona Government Douglas Ducey declared a state public health emergency, and on March 15, 2020 Flagstaff Mayor Coral Evans declared a local public health emergency.

Since April 2020 airline passenger traffic through the Flagstaff Airport has practically ceased due to the COVID-19 pandemic, causing an associated decline in flight revenues.

On April 4, 2020 the Federal Aviation Administration (“FAA”) issued “Information for airport sponsors considering COVID-19 restrictions or accommodations” which states that “a decision to abate rent…is a local decision” and provides guidance for any abatement.

Lessee's have requested and City desires to provide financial relief to the Lessee's to help preserve continued airport related operations to the extent feasible at the Flagstaff Airport.

In considering rent relief, airports are encouraged to consider the business situation of the tenant; the changed circumstances created by the public health emergency; the desirability of having solvent tenants that can resume normal operations when the emergency ends; the availability of other governmental or insurance relief that such relief; and possible subsequent conditions that, if triggered, would end the abatement.

This rent abatement will provide much needed relief to our current tenants so that when circumstances improve the Flagstaff Airport can go back to normal operations.

This lease abatement will assist our goal to keeping  our tenants solvent to ensure that the airport can remain open and operating safely.