HomeMy WebLinkAbout10/7/2015 - STAFF REPORTS - 5.B.�y
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1FORON CITY COUNCIL STAFF REPORT
DATE: October 7, 2015
NEW BUSINESS
SUBJECT: Palm Springs Air Museum Lease Amendment for Expansion
FROM: David H. Ready, City Manager
BY: Department of Aviation
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This item considers a request by the Palm Springs Air Museum seeking the
reimbursement for road and aircraft apron leasehold improvements, a boundary
easement to accommodate the improvements, and a concession fee abatement for a
new restaurant.
RECOMMENDATION:
1. Discussion of request by Palm Springs Air Museum; direct staff as appropriate.
STAFF ANALYSIS:
In November 1995, the Palm Springs Air Museum commenced with a land lease at the
Airport for a term of forty years. The purpose of the lease was for the construction and
operation of an aviation museum on a ten -acre parcel of land adjacent to Gene Autry
Drive.
Today, the Air Museum serves as one of the main attractions for the entire Coachella
Valley with a world -class aviation war history-themed venue. Attendees experience war
history through an array of static aircraft, art, and a medley of World War II and
Vietnam -era relics that memorialize these historic events. The Air Museum facility
complex includes three large hangars with office space, an adjacent aircraft apron, and
several public parking lots, including a temporary parking area under a short-term
license agreement.
The Palm Springs Air Museum has unveiled a plan that constructs an additional 20,000-
square-foot temperature -controlled aircraft storage hangar to accommodate the growing
demand. This planned facility expansion would include a full restaurant open to the
public, expanded aircraft apron, and new public roadway. The current leasehold
boundary is adequate to accommodate the hangar and aircraft apron improvements,
ITEM NO. i
City Council Staff Report
October 7, 2015 — Page 2
Palm Springs Air Museum Lease Amendment
however, the new road and associated retention basin do overlap onto airport vacant
property. An easement will be sufficient for addressing this lease boundary protrusion.
As depicted in the drawing below, the proposed road is perpendicular to Gene Autry
and favors the south boundary of the leased property with some overlap onto Airport
property. Abutting this road segment on the diagram's right is the Airport's prime vacant
land of approximately 15 acres. This new road is an improvement that will benefit future
new aviation development on this vacant piece of property.
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At its meeting of September 2015, the Airport Commission voted in favor of
recommending the overall museum expansion plans and the Airport's reimbursement
arrangement through rent abatement for actual construction costs associated with the
street and aircraft apron. The cost estimates obtained by the Air Museum for these two
elements is approximately $205,000. The proposed reimbursement arrangement would
be in the form of ongoing annual leasehold rent abatements, monthly, until the full
construction amount is retired (approximately 6-7 years.) In addition, the Air Museum
requested an ongoing abatement of the 10% concession fee for the sales generated by
the new restaurant. The Airport Commission voted to recommend this request to City
Council as well.
02
City Council Staff Report
October 7, 2015 — Page 3
Palm Springs Air Museum Lease Amendment
The exhibit below identifies the adjacent airport property that will become accessible
with the proposed road improvements.
If City Council agrees to the Air Museum's request, staff will work with the City Attorney
to prepare a revised lease agreement and easements reflecting these changes. The
agreements will be returned to the City Council for final review and approval.
FISCAL IMPACT:
Under the current lease agreement, the Airport receives a combination of fixed rental
and a percentage from sales. In 2015, nearly $38,000 in annual revenue was
generated. To reimburse the requested capital costs, not to exceed $205,000, would
require approximately six to seven years of lease abatements.
Under this scenario, a benefit to the Airport would accrue from having the new
entrance/road constructed off of Gene Autry, and amortized over several years - which
would support future development of the adjacent Airport property.
03
City Council Staff Report
October 7, 2015 — Page 4
Palm Springs Air Museum Lease Amendment
With regard to the ongoing 10% sales concession abatement requested on the new
restaurant, the long-term loss of revenue to the Airport is not knowable at this time. The
Air Museum's request is based on its anticipated overall project investment of $2.5
million and increased operational costs.
Thomas No an, A.A.E. David H. Ready, Esq.,`—
Executive Director, Airport City Manager
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