SR-800-005 (14)
RMD:BT:F:RESOURCE/STAFFREPORTS2005/FBOLeaseApprovalRecommendation.doc
City Council Meeting: January 10, 2006 Santa Monica, CA
To: Mayor and City Council
From: City Staff
Subject: Recommendation to Authorize the City Manager to Negotiate and Execute
Lease Agreements With Three Aviation Service Providers Located at Santa
Monica Airport.
Introduction
This report recommends that the City Council authorize the City Manager to negotiate
and execute lease agreements with three aviation service providers located at Santa
Monica Municipal Airport (?Airport?); Santa Monica Air Center, Inc. (?SMAC?), Krueger
Aviation, Inc. (?KAI?), and American Flyers? all fixed base operators (?FBOs?) located on
the south side of the Airport.
Background
The dominant segment of the Airport?s general aviation market, piston-powered aircraft,
relies heavily on the aviation businesses on the south side of the Airport. The three
leases under consideration will ensure the continuation of significant long term tenants
on the south side of the Airport, while providing the City with leasehold improvements to
enhance the safety of the Airport.
Negotiations with American Flyers commenced in the early summer of this year in an
effort to solidify a long-term relationship with a first-class neighborhood compatible FBO.
American Flyers has operated the facility since December 15, 1997 following the
termination of the Cloverfield Aviation and Jet Center holdover tenancy. American
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Flyers successfully minimized previous noise and compatibilities conflicts and has
provided uninterrupted basic services to the flying public.
Discussions with KAI and SMAC began in 2003 as a result of a court ruling requiring the
City to reach multi-year lease agreements with KAI and SMAC. The resolution of the
dispute through the proposed leases addresses broader issues of mutual benefit to the
City and the lessees. Through the mediation mandated by the federal court, the
lessees must fulfill obligations under a multi-year lease to upgrade the leasehold
improvements to ensure safe operations on and adjacent to the leaseholds. The
conceptual agreement with the two lessees will satisfy the City?s obligation and result in
leasehold improvements by the lessees, while ensuring the provision of mandated
aviation services to the dominant users of the Airport, piston-powered light aircraft.
Discussion
The following is a synopsis of the three aviation service providers under consideration:
American Flyers
American Flyers is a full service fixed base operator located at 2501 Airport Avenue.
The company clearly understands the sensitivity of the parcel?s proximity to the
residential area near the leasehold and has focused its business plan upon piston-
driven aircraft. Airport staff has never received a complaint regarding American Flyers
operations. American Flyers lease expired on August 31, 2005 and they are currently
on a hold-over tenancy.
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During the term of the lease American Flyers will be required to conduct the following
activities and provide the following services to the public consistent with the provisions
of applicable federal, state and local laws and regulations, including, but not limited to,
the Santa Monica Municipal Code:
Rental of aircraft open tie down space and aircraft storage facilities.
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Rental of commercial leaseholds for aviation related uses.
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Ramp services for transient aircraft.
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Aircraft fueling services from City approved facilities, including the sale,
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dispensing of avgas (aviation gasoline) from the existing fuel farm, and storage of
aviation petroleum products.
Aircraft maintenance, repair, overhaul or modification of aircraft.
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Operation of a flight school.
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Rental or lease of aircraft.
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Working with the City to ensure that pilots adhere to the City?s Aircraft Noise
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Abatement Program.
The term of the lease will be five (5) years commencing upon the date of the execution
of the lease agreement with an option period extending the lease to June 30, 2015. The
granting of the option period is conditioned upon the completion of required leasehold
improvements intended to improve the overall appearance, security and safety of
American Flyers operation.
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Krueger Aviation
KAI is a limited fixed base operator located at 2701 Airport Avenue. KAI has been in
continuous operation since October 22, 1974 when the assets of Lease-A-Plane of
Santa Monica were sold to Ken Krueger dba Krueger Aviation Inc. KAI conducted
business under the original lease through its expiration on November 15, 1986 and as a
month-to-month tenant thereafter.
During the term of the lease KAI will be required to conduct the following activities and
provide the following services to the public consistent with the provisions of applicable
federal, state and local laws and regulations, including, but not limited to, the Santa
Monica Municipal Code:
Maintain and provide aircraft parking spaces in either open tie down space or
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aircraft storage facilities.
Maintain and provide transient aircraft parking spaces in either open tie-down
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space or aircraft storage facilities.
Aircraft maintenance and repair, overhaul or modification of aircraft.
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Rental of commercial leasehold space for aviation-related uses.
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Retail or wholesale sale of aircraft parts, components, accessories and allied
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equipment.
Retail or wholesale sale of aircraft.
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Working with the City to ensure that pilots adhere to the City?s Aircraft Noise
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Abatement Program.
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The term of the lease will be five (5) years commencing upon the date of the execution
of the lease agreement with an option period extending the lease to June 30, 2015. The
granting of the option period is conditioned upon the completion of required leasehold
improvements intended to improve the overall appearance, security and safety of
Kruger Aviation?s operation.
Santa Monica Air Center
SMAC is a limited fixed base operator located at 3021 Airport Avenue. SMAC has been
in continuous operation since April 28, 1970, when Pacific-Air, Inc. assigned the original
lease of the premises to James L. Barker to operate a limited FBO which has continued
to operate under James Barker?s heir, Judi Barker. The original lease term expired on
August 31, 1979 and the lease has continued as a month-to-month tenancy.
During the term of the lease SMAC will be required to conduct the following activities
and provide the following services to the public consistent with the provisions of
applicable federal, state and local laws and regulations, including, but not limited to, the
Santa Monica Municipal Code:
Provide aircraft tie down space and aircraft storage facilities, which conform to
?
federal, state and local requirements.
Operation of an Aviation Supply Store providing for sale to the public of
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predominately aviation-related items.
Rental of commercial leasehold space for aviation-related uses.
?
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Working with the City to ensure that pilots adhere to the City?s Aircraft Noise
?
Abatement Program.
The term of the lease will be five (5) years commencing upon the date of the execution
of the lease agreement with an option period extending the lease to June 30, 2015. The
granting of the option period is conditioned upon the completion of required leasehold
improvements intended to improve the overall appearance, security and safety of Santa
Monica Air Center?s operation.
Airport Commission Review
The Airport Commission considered the proposed FBO leases during its November 28,
2005 meeting and recommended that the City Council authorize the City Manager to
negotiate and execute lease agreements with the three aviation service providers.
Budget/Financial Impact
Lease revenues to the Airport Fund will increase approximately $18,600 per year as a
result of the action on this recommendation. This has been included in the budget for
FY 05-06.
Recommendation
Staff recommends that the City Council authorize the City Manager to negotiate and
execute lease agreements with Santa Monica Air Center, Inc.; Krueger Aviation, Inc.;
and American Flyers.
Prepared by: Jeff Mathieu, Airport Director
Bob Trimborn, Airport Manager
Rod Merl, Senior Administrative Analyst, Special Projects
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Reference Contract Numbers: 8545(CCS) (SMAC), 8546(CCS) (KAI)
& 8547(CCS) (Am.Flyers)
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