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ITEM 1 |
City Council Memorandum Airport Memo No.
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Date: |
September 19, 2022 |
To: |
Mayor and Council |
Thru: |
Joshua H. Wright, City Manager Andy Bass, Deputy City Manager Ryan Reeves, Airport Manager |
From: |
Chris Andres, Airport Planning Program Manager |
Subject: |
Ordinance 5021 Approve Ground Lease with Chandler Air Service, Inc. |
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Chandler Air Service, Inc., has been the Fixed Base Operator (FBO) at Chandler Municipal Airport since 1983 under a long-term ground lease, which is due to expire in February 2042. The company's work includes, but is not limited to, aircraft fueling services, aircraft ground support services, flight crew and passenger services, flight instruction, aircraft rental, and engine and airframe repair. As identified in the 2020 Airport Master Plan, Chandler Municipal Airport has an abundance of demand for sizable hangar facility offerings capable of accommodating new aviation businesses and their aircraft wishing to relocate to Chandler, as well as the expansion of existing businesses at the Airport. To increase the Airport’s facility offerings, a request for proposal (RFP) was issued in August 2021 for the property at 2250 S. Stinson Road, formerly the site of Venture Aviation from 1983 through 2019. The site currently has one 80’ x 80’ hangar facility and taxilane-adjacent ramp and aircraft tiedowns. Of the three submittals received, Chandler Air Service’s was selected by City Council in February 2022 for the RFP award and subsequent lease negotiations. Their proposed site redevelopment will be constructed on the 1.6-acre site in phases and is ultimately projected to include a single hangar with approximately 14,400 square-feet of space with an adjoining 3,000 square-feet of office space, a design which staff believes is the most flexible facility design to provide the maximum economic benefit. During Phase 1, Chandler Air Service will utilize its existing facilities while completing the National Environmental Policy Act (NEPA) requirements for site development. Phase II will see the demolition of the existing hangar facility and construction of the new hangar facility. Chandler Air Service’s ownership believes anticipates obtaining a Certificate of Occupancy within two years of lease execution. Given the benefit the tenant provides to the Chandler Municipal Airport and the tenant's desire to expand offerings at the Airport, both have agreed to enter into a new ground lease for mutual benefit, subject to City Council approval. The basic terms of the agreement are:
- One 20-year lease term with two 10-year options to extend;
- 14,400 square-foot hangar capable of housing the Airport’s Ultimate Design Aircraft.
- 3,000 square feet of office space.
- Tenant will complete the construction no later than two years from the effective date of the lease. If not completed within two years, the City can grant additional time or provide a 30-day notice to end the agreement.
- Initial ground lease rate of thirty cents ($0.30) per square foot per year, and $0.33 per square foot per month for the existing hangar;
- During construction, a ground lease rate of 15% of the Monthly Base Rent, which shall continue until the issuance of the Certificate of Occupancy.
- After the issuance of the Certificate of Occupancy or the second anniversary of the lease’s effective date, whichever comes first, the ground lease shall be thirty cents ($0.30) per square foot per year.
- Annual ground lease rent escalator based on the Consumer Price Index beginning in the fourth year of the lease
- Permitted uses including aircraft maintenance, fixed base operations, fueling, and other commercial aviation uses subject to an Airport business permit and the Airport Rules and Regulations and Minimum Standards.
The agreement also includes updated contractual language regarding insurance, indemnification, environmental liability, property inspections and other business matters. The lease was presented to the Airport Commission and approval is recommended. This Ordinance was introduced and tentatively adopted at the Regular City Council Meeting on August 18, 2022. |