SR-800-005 (11)
RMD:EDD:GK:F:\RESOURCE\SHARE\STAFFREPORTS\Bills Air Center Mod 9-10-02.DOC
Council Meeting: September 10, 2002 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Authorize the City Manager to Negotiate and Execute a
First Modification of Lease Agreement #7009 CCS with Bill?s Airplane and
Repair, Inc.
INTRODUCTION
This report recommends that the City Council authorize the City Manager to negotiate and
execute a First Modification of Lease Agreement #7009 CCS with Bill?s Airplane and
Repair, Inc. for the lease of hangar and ramp space at 3147 Donald Douglas Loop South
at the Santa Monica Airport.
BACKGROUND
Bill?s Airplane and Repair, Inc. has been located at the Santa Monica Airport for service to
the propeller aircraft fleet, and is one of the original tenants in the Specialty and Limited
Fixed Base Operator Hangar, a six-bay structure on the south side of Santa Monica
Airport, since its construction in 1989. The leased premises consist of 5,058 square feet
within the hangar. The tenant also has nonexclusive access to and use of approximately
5,000 square feet of adjacent ramp (exterior airside) area.
Bill?s Airplane and Repair, Inc. provides the following aviation-related activities: aircraft
maintenance, airframe and power plant maintenance; repair and restoration; aircraft
sales and leasing; flight schools and training; aircraft charter service; assembly of
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RMD:EDD:GK:F:\RESOURCE\SHARE\STAFFREPORTS\Bills Air Center Mod 9-10-02.DOC
Council Meeting: September 10, 2002 Santa Monica, California
airplane kits; sales of aircraft parts and related products/merchandise; aircraft storage
and ancillary office uses.
The original lease (contract #5313) was for a term of five years commencing April 18,
1989, with three five year options. Modifications were made and a new lease #7009 CCS
was executed, for a term of five years commencing April 1, 1994, with two five year
options.
DISCUSSION
Upon exercise of the most recent option, appraisals were conducted to provide a basis for
renegotiation of fair rental value. Santa Monica Airport is an active general aviation airport
experiencing a change in fleet mix that is adverse to the tenant. The specialty hangar
building in which Bill?s Airplane and Repair, Inc. is located is relatively new and in good
condition, with fair parking and access. Santa Monica-based users and aviation
businesses are subject to significant restrictions on usage, noise, and hours of operation,
thereby limiting the rental value of the space as compared to other general aviation
airports operating with fewer restrictions. In addition, propeller-driven air traffic through
Santa Monica Airport has decreased recently, thereby limiting the number of aircraft sales
and service opportunities for propeller-related aviation tenants. A recent real estate
appraisal provided analysis of comparable hangar rental rates, the general business
climate, and aviation-specific trends and resulted in a recommendation to reduce the rental
rate from $2,023.20 to $1,500.00 per month.
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Discussions with the tenant ensued and resulted in agreement on tentative terms and
conditions. The City has proposed, subject to Council approval, that the lease continue
and option periods be modified to run from 2004 ? 2009 and 2009 ? 2014 (two five year
option periods).
The rent will be $1,500.00 per month, with nonexclusive access to the adjacent exterior
ramp area. All other previous terms and conditions also remain unchanged. Conclusion of
this agreement will provide important continued service to propeller aircraft and assist in
maintaining a healthy fleet mix at Santa Monica Airport.
BUDGET/FINANCIAL IMPACT
Funds received from this lease are booked to Airport revenue account number
33631.402110. If Council authorizes negotiation of the lease as proposed, the agreement
is anticipated to become effective October 1, 2002. The Airport revenue account would
accordingly be reduced by $4,725 to reflect the reduction in rent.
RECOMMENDATION
It is recommended that the City Council authorize the City Manager to negotiate and
execute a First Modification of Lease Agreement #7009 CCS with Bill?s Airplane and
Repair, Inc. for the lease of hangar and ramp space at 3147 Donald Douglas Loop South
at the Santa Monica Airport.
Prepared By: Jeff Mathieu, Director of Resource Management
Bob Trimborn, Airport Manager
Mark Richter, Economic Development Manager
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