SR-042487-6HRMM:LAM:moxs90hpw
City Council Meeting of 11-24-87
STAFF REPORT
TO: Mayor and City Council
FROM: City Staff
,,~~''NOV 2 ~ 1987
Santa Monica, California
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SUBJECT: Recommendation to Approve Assignment and
Sublease of Lease Agreement Between City
of Santa Monica and Gunnell Aviation, Inc.
Introduction
On June 5, 1986 the City and Gunnell Aviation, Inc. entered
into a Lease Agreement of certain property located at Santa
Monica Airport for the construction, operation and maintenance of
a full service aviation fixed base operator facility.
The Lease Agreement requires Gunnell Aviation, Inc. to
construct various improvements including underground fuel tanks,
a terminal building with associated offices; aircraft storage
hangars and tiedown facilities.
Background
As part of the overall implementation of the City's
Agreement with the Federal Aviation Administration concerning
Santa Monica Airport, the City is required to provide fixed base
operator facilities on the north side of the runway.
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Gunnell Aviation, Inc. is one of the lessees obligated to
provide such fixed base operator facilities at the Santa Monica
Airport.
Assignment and Sublease
In connection with the financing of $4 million of Leasehold
Improvements required by its Lease, Gunnell Aviation, Inc. has
entered into an agreement with Gunnell Properties, a partnership
organized specifically for the purpose of raising the equity and
debt capital necessary to construct such improvements.
The Lease Agreement requires the City's prior consent to
any assignment, sublease or other transfer of an interest in the
Lease.
Gunnell Aviation's assignment of its interest in the Lease
Agreement to Gunnell Properties and a sublease of a portion of
the Premises back to Gunnell Aviation is essentially a financing
mechanism. The City's consent to both the Assignment and
Sublease is contingent upon satisfactory evidence that Gunnell
Properties has raised capital in the form of cash, irrevocable
equity subscriptions and construction loan commitments from
financial institutions in the aggregate amount of at least FOUR
MILLION DOLLARS ($4,000,000.00) for purposes of constructing the
Leasehold Improvements.
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Fiscal/Budget Impacts
There are no direct fiscal/budget impacts resulting from
the actions recommended in this report.
Recommendations
The City Staff respectfully recommends that:
1. The City Council authorize the City Manager to execute
a Consent to the Assignment and Sublease upon receipt of
satisfactory evidence that the financial commitment of $4 million
has been satisfied by Gunnell Aviation and Gunnell Properties.
Prepared By: Hank Dittmar, Airport Director
Robert M. Myers, City Attorney
Linda A. Moxon, Deputy City Attorney
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Reference Contract
No. 4670 (CCS).