HomeMy WebLinkAbout7/2/2014 - STAFF REPORTS - 2.G. ppLM SA
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DATE: July 2, 2014 CONSENT AGENDA
SUBJECT: AMENDMENT NO. 5 TO SIGNATURE FLIGHT SUPPORT LEASE
AGREEMENT A4821
FROM: David H. Ready, City Manager
BY: AIRPORT DEPARTMENT
SUMMARY
This action considers for Palm Springs International Airport tenant Signature Flight
Support, to lease a vacant aircraft hangar and modify leasehold parcel boundaries.
RECOMMENDATION:
1. Approve Amendment No. 5 of Agreement No. A4821 with Signature Flight
Support for the long-term lease of the aircraft hangar and apron located on
Parcel 5 (Exhibit A attached), and release undeveloped, underutilized leasehold
parcels back to the airport, commencing on July 15, 2014.
2. Authorize h i the City Manager to execute all necessary documents as required.
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STAFF ANALYSIS:
Signature Flight Support is a Fixed Base Operator (FBO), conducting business on the
Palm Springs International Airport under a long-term lease which extends through 2044.
This leasehold consists of fourteen different parcels dispersed over a third of a mile in
the West quadrant of airport property abutted by El Cielo and East Alejo roads. The
nucleus of the Signature Flight Support property is a general aviation terminal complex
and apron adjacent to the new FAA Air Traffic Control tower.
There are several airport controlled parcels mixed within the large Signature leasehold
area. One of the most prominent parcels is a large 30,000 square foot aircraft hangar
recently vacated by a corporate tenant Heckmann Enterprises. This parcel includes
hangar facilities, apron, and adjacent vehicle parking which are in excellent condition
and well suited for continued use by Signature Flight Support's operations. Signature
ITEM NO.
City Council Staff Report
July 2, 2014 -- Page 2
Amendment No. 5 Signature Flight Support Lease A4821
has been subleasing the property from Heckman Enterprises for several years for the
purposes of storing aircraft. Now that the hangar is available, Signature wishes to
incorporate it into their long-term lease with the City.
In addition to interest in the vacant corporate hangar, Signature Flight Support and staff
have identified other leasehold parcels that either do not have taxiway access or have
not been developed since the inception of their lease. Under this amendment, these
identified parcels will be surrendered by Signature and returned to the airport's control
for future development plans. The following exhibit illustrates all of the parcels involved
in this lease amendment.
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ADDING PARCELS-LAND AND BUILDING
III SIGNATURE FLIGHT SUPPORT-LEASE BOUNDARIES
NOTES:TAXIWAY DIMENSIONS BASED ON ADG-II.SF MEASURMENTS ARE APPROXIMATE.
1.PARCELS BASED ON SCALED INFORMATION,NOT SURVEYED.
2.DRAWINGS ADJUSTED TO THE BEST SCALE P05SI RUE.
3.PARCELS 1,2 AND 4 BO UN CARIES DETERMINED FROM TERMINAL CAD DRAWINGS
4.REMAINING PARCEL BOUNDARIES DETERMINED FROM"AIRPORT PARCELS"AERIAL MAP
AND"EXHIBIT B"FROM LEASEHOLD DOCUMENTS.NEITHER OF THESE DOCUMENTS ARE
TO SCALE.
i
Under the amendment, Signature Flight Support would rent the vacant corporate hangar
(Parcel 5), including the adjacent aircraft apron and vehicle parking lot, for the
remainder of their long-term lease. The facility would be used for storage of transient
and based aircraft, and Signature would have full responsibility for the maintenance and
operation under a triple net basis. The airport would not have any financial obligation
and the tenant accepts the facility in the current condition.
City Council Staff Report
July 2, 2014 — Page 3
Amendment No. 5 Signature Flight Support Lease A4821
The lease amendment will include the return of three Signature held parcels, outlined
above in green, and two easement areas highlighted in purple. All of these parcels will
be utilized for other airport needs including accommodating future development of the
terminal car rental facilities.
A collaborative meeting has been held with Sunmor Neighborhood Association
representatives to provide them with all the facts related to this lease assignment in
follow up to questions that they raised. It was thoroughly explained that Signature
Flight Support had already been occupying the hangar for at least a half decade, under
a sublease, for the same purpose as intended in this lease amendment. The manager
of Signature was present at the meeting to describe how under their company's full
control, the use of the hangar will be more neighbor friendly. There will no longer be
engine startups right in front of the hangar because their procedure is to tow the aircraft
to a common startup location. The neighborhood representatives expressed
appreciation for the meeting and clarification of the hangar's use.
The Airport Commission recommended the approval of this lease amendment.
FISCAL IMPACT:
With the vacant hangar incorporated into the long-term Signature lease, the rental
generated to the airport from Parcel 5 will be $12,684 per month compared to the prior
tenant's $4,497.50 per month. The rental rates will then escalate predicated on
consumer price indexing. In addition to rent, there are other concession revenues
generated by the FBO customers as a percentage of gross sales on services ranging
from aircraft parking to fuel sales, and various other services.
The return of vacant undeveloped parcels reduces Signature's current leasehold rent
obligations by $4,311 per month. However, this same property is projected to generate
higher rents in future due to the land rates being adjusted to current market values. The
car rentals expansion, which is on the near horizon, will also generate higher revenues
from what is already the airport's single largest revenue source.
Thomas Nolan,
Executive Director, Airport
David H. Ready, C' rjager
Attachments: Lease Amendment No. 5
03
AMENDMENT NO. 5 TO LEASE 4821
SIGNATURE FLIGHT SUPPORT CORPORATION
OPERATING AND LEASE AGREEMENT
FOR FIXED BASE OPERATOR (FBO) SERVICES
AT PALM SPRINGS INTERNATIONAL AIRPORT
THIS AMENDMENT NO. 5 TO LEASE #4821 is made and entered into this
fifteenth day of July 2014 (the "Effective Date"), by and between the CITY OF PALM
SPRINGS, a charter city and California municipal corporation ("City"), and Signature
Flight Support Corporation a Delaware corporation ("Tenant"). City and Tenant may
hereinafter be referred to individually as a "Party" and collectively as "Parties".
RECITALS
WHEREAS, on January 21, 2004, City and Tenant entered into that certain
Lease with Tenant for Fixed Base Operator (FBO) Services ("Agreement"), for
Tenant's lease and operation of its FBO at Palm Springs International Airport
("Airport') as more specifically described in the Agreement;
WHEREAS, on October 24, 2004, and before Tenant, through its authorized
subcontractor, commenced construction of improvements at the Airport on Parcels 3
and 6 pursuant to the Agreement, the Parties entered into Amendment No. 1 to the
Agreement ("Amendment No. 1") in order to restrict construction on Parcels 3 and 6 to
ensure appropriate and adequate access to the structures being constructed thereon
exists at the Access Way, as such term is defined therein;
WHEREAS, on January 12, 2005, Amendment No. 1 was superseded in its
entirety by Amendment No. 2 to the Agreement which added designated building
setbacks on Parcels 3 and 6;
WHEREAS, on March 15, 2006, Amendment No. 3 to the Amendment removed
certain language requiring a payment upon completion of the demolition to the Hangar
located on Parcel 13;
WHEREAS, on September 1, 2010, Amendment No. 4 to the Agreement added
definitions for flight school aircraft tie-downs, Aircraft Rescue and Firefighting (ARFF)
emergency route, and revised the description of Parcels 1, 2, 4 and 6;
WHEREAS, the parties wish to amend the Agreement pursuant to the terms of
this Amendment No. 5 as follows;
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NOW THEREFORE, in consideration of the City's covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, City and Tenant mutually agree as follows:
Additional Premises: Parcel 5 and associated Improvements - Approximately
30,000 sq. ft. of Hangar, 2,000 sq. ft. of office/shop as well
as associated car parking, and aircraft ramp area as
depicted in Exhibit A.
Term: Commencing on the Effective Date through the existing
Term of the Agreement - expiring on May 31, 2044.
Additional Rent: For, vehicle parking area, aircraft ramp area, and other
non-building space on Parcel 5 Tenant shall pay $0.44 per
square foot by 106,659 square feet ($46,929.96 annually)
plus $3.29/SF for the 32,000 square feet Hangar/Office
space ($105,280.00 per annum). Tenant also agrees to pay
an additional $40,000.00 per annum, to be paid in equal
monthly installments of $3,333.33 each, for the variance of
existing corporate hangar space from the specifications as
required by the Airport's current FBO minimum standards.
At such time as Tenant meets or exceeds the additional
corporate hangar space specified in the FBO Minimum
standards, in place as of the Effective Date, such additional
$40,000.00 annual fee shall be immediately discontinued.
The foregoing equates to total additional rent of
$192,209.96 per annum (plus applicable taxes), paid in
twelve equal monthly installments.
Deleted Premises: Parcels 01 and 02, which do not have access to aircraft taxi
lanes, and Parcel 10, together totaling 50,595 square feet.
Parcel 12, as well as parts of Parcels 1, 2, 4, 7, 11 and 13
located within the taxi lane object free areas, or a total of
approximately 107,858 square feet. The foregoing area,
totaling 158,453 square feet, is hereby deleted from the
description of Demised Premises under the Agreement.
The annual rental credit in favor of Tenant for such
combined space is $51,734.99.
Premises: The modified Demised Premises, including the Additional
Premises as described above shall be comprised of
approximately 1,187,167 square feet of land as well as all
improvements on such land, as more particularly depicted
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on Exhibit A attached hereto and incorporated herein by
this reference.
Movement
Easement Area: The land and improvements located within the areas
identified as the Movement Easement Area(on Exhibit A)
do not form a part of the Demised Premises or Additional
Premises and Tenant shall have no obligations to pay rent
for or maintain the Movement Easement Areas as of the
Effective Date. Tenant, and the employees, contractors,
customers and subtenants of Tenant and other users of the
Airport infrastructure shall at all times be permitted to travel
on or across Movement Easement Area and City or any
other parties may not park or block such areas at any time.
Tenant shall at no time be obligated to facilitate any
maintenance, improvements or other investment as may be
required for the Movement Easement Areas. Landlord shall
delineate the boundaries of the Movement Easement Areas
within 90 days of the Effective Date.
Base Rent: The Tenant will provide total annual Base Rent (which
includes the Additional Rent for Parcel 5 as described
above) totaling $497,221.08. Payments will be made in 12
equal monthly installments of $41,435.09 each. The
adjusted Base Rent payments shall commence upon the
Effective Date.
Escalation: Base Rent shall increase based in accordance with the
terms and conditions of the existing Agreement.
Permitted Use(s): Tenant shall have the right to utilize Parcel 5 in accordance
with the terms and conditions of the Agreement.
Capital Improvements
& Due Diligence: The Premises on Parcel 5 shall be delivered in an "As-Is"
condition. Tenant shall have the option to perform any and
all due diligence on the property and building on or before
90 days from the Effective Date. Tenant may, at Tenant's
sole discretion, seek to terminate the Agreement with
respect to the Additional Premises only within such 90 da
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period. Termination shall reduce the Base Rent by the
same amount allocated to Parcel 5 as set forth above
identified as Additional Rent, and Tenant shall have no
further obligations to Landlord with respect to Parcel 5. As
of the 91s calendar day following the Effective Date.
Tenant shall no longer have the option to terminate
Premises from the leasehold under the Agreement. The
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environmental condition as of the Effective Date shall be
benchmarked via a Phase t and/or Phase 2 environmental
analysis and any pre-existing conditions shall not be the
liability of Tenant. Tenant shall be responsible only for
environmental conditions arising from and after the
Effective Date. Should the Tenant discover any condition
that requires mitigation and/or expense, the City shall have
the right to terminate the Agreement as to Parcel 5 within
30 calendar days after the notice from the Tenant.
Operating Costs/Taxes: As of the Effective Date, Tenant shall be responsible for the
Operating Costs, Utilities, Maintenance Costs and Property
Taxes (if any) for the Demised Premises and Additional
Premises for the duration of the Term.
Full Force and Effect: Except as expressly modified herein all other provisions of
the Agreement shall remain unmodified and in full force
and effect.
Corporate Authority: The persons executing this Agreement on behalf of the
Parties hereto warrant that (i) such Party is duly organized
and existing, (ii) they are dully authorized to execute and
deliver this Amendment on behalf of said Party, (iii) by so
executing this Amendment, such Party is formally bound to
the provisions of the Amendment, and (iv) the entering into
this Amendment does not violate any provision of any other
agreement to which said Party is bound.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the Parties have executed and entered into this Agreement as of the date first
written above.
ATTEST: CITY OF PALM SPRING
a municipal corporation
By: By:
City Clerk City Manager
APPROVED AS TO FORM:
By:
City Attorney
TENANT: Check one: _Individual _Partnership_Corporation
Corporations require two notarized signatures: One from each of the following: A. Chairman of Board,
President, or any Vice President: AND B. Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, or Chief Financial Officer.
SIGNATURE FLIGHT SUPPORT CORPORATION SIGNATURE FLIGHT SUPPORT CORPORATION
By: By:
Signature (notarized) Signature (notarized)
Name: Name:
Title: Title:
State of State of
County of County of
On before me, On before me,
personally appeared personally appeared
who proved to me on the basis of satisfactory who proved to me on basis of satisfactory
evidence to be the person(s)whose name(s) evidence to be the person(s)whose name(s)
is/are subscribed to the within instrument is/are subscribed to the within instrument
and acknowledged to me that he/she/they and acknowledged to me that he/she/they
executed the same in his/her/their authorized executed the same in his/her/their authorized
capacity(ies), and that by his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), signatures(s) on the instrument the person(s)
or the entity upon behalf of which the or the entity upon behalf of which the
person(s) acted, executed the instrument. person(s)acted, executed the instrument.
I certify under PENALTY OF PERJURY I certify under PENALTY OF PERJURY
under the laws of the State of California that under the laws of the State of California that
the foregoing paragraph is true and correct. the foregoing paragraph is true and correct.
WITNESS my hand and official seal. WITNESS my hand and official seal.
Notary Signature: Notary Signature:
Notary Seal: Notary Seal:
5
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ADDING PARCEL 5-LAND AND BUILDING
I I II SIGNATURE FLIGHT SUPPORT-LEASE BOUNDARIES
NOTES:TAXIWAY DIMENSIONS BASED ON AOGII.SF MEASURMENTS ARE APPROXIMATE.
1.PARCELS BASED ON SCALE D INFORMATION,NOT SURVEYED. 4 �.
2.DRAWINGS AD LISTED TO THE BEST SCALE POSSIBLE T
3.PARCEB 1,2 AND A BOUNDARIES DETERMINED FROM TERMINAL CAD DMWINGS -
A.REMAINING PARCEL BOUNDARIES DETERMINED FROM"AIRPORT PARCELS'AERML MAP
AND`EXHIBIT B'FROM LEASEHOLD DOCUMENTS.NEIINER OF THESE DOCUMENTS ARE
TO SCALE.
6
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SUNmnR
Naghborhood Organization
PO Box 1178
Palm Springs, California 92263
June 30, 2014
Board of Directors
David Ready, City Manager, Palm Springs City Hall
Nar<sufzka Thomas Nolan, A.A.E. Executive Director, Palm Springs International Airport
9 E nn 274 uan
2749 '3 Livmo n 3200 E. Tahqitz Canyon War Ave ue Y Y
760-408-9727 Palm Springs, CA 92262
Jeffrey Nc,,don
Vita-Chni'man
2740 E. _ivmor Avenue Dear Mr. Ready and Mr. Nolan:
415-225-4619
Jasor'ress The Sunmor Board of Advisors thanks you and your staff for meeting with our
rreosure( representatives regarding the proposed Amendment to Signature's lease. We
205 Airline Drive have reviewed the proposed Amendment and the lease itself and hereby
917-885-s 78 P P Y
request that the following changes be incorporated into the proposed
Charlie Car Amendment prior to the City Council's consideration thereof. We think these
234-l`len changes will redound to the benefit of both the City and the Sunmor
234 ielena circle 9 Y
76c-409-9,96 neighborhood, and if they are made, the Sunmor Board of Advisors will
Alexandra Baskc withdraw its objection to the proposed Amendment. If you have any questions
225 n.Sybil Bond regarding the proposed changes, please contact Sunmor resident Mike
646-789-8177 Maloney at 323/422-6385.
Bill iertel
226 A-lane D,ve 1) In Section 6.3(a) under Prohibited Uses, the following should be
76_- 25-9749 inserted after"Airport"in line 9: "or any residents of any residential
Keirh easel community contiguous to the Airport property". This change would
669 Junnaa Dr,ve clarify and ensure that the city could assert an event of default if
760-902-0070 Signature's operations cause a nuisance to Sunmor residents.
2) Given the lengthy duration of the proposed lease, the Amendment
should include a termination right for any reason (i.e., not conditioned on
default), which the City should have the right to exercise every three (3)
years on or about the anniversary date of the lease. This change would
give the City the right to revisit the lease at regular intervals throughout its
duration, and if Signature's operations are negatively impacting Sunmor's
quality, it would allow the City to terminate the lease without
demonstrating Signature's default and absorbing any related litigation
risk.
3) The anti-discrimination provisions should be updated to include"sexual
orientation" and any other protected classes typically included in these
type of provisions currently.
Thank you for your consideration.
Regards,
Sunmor Board of Advisors �{
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