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SR-102285-11CAP:HED:mh City Council Meeti.n~ 14/22/85 TO: Mavor and City Council FROM: City Staff ~~ - ~ OCt 2 2 1985 Santa Monica, California 'fir ? ~ SUBJECT: Authorization for Staff to Neeotiate Leases with Gunnell Aviation, Inc, and Danforth Aviation for Fixed Base Operations at the Santa Monica Airport. Introduction This report transmits the results of a staff review of fixed base operator. Leasehold proposals at the Santa Monica Airport and requests that the City Council authorize City staff to negotiate a lease with Gunnell Aviation, Inc. and Danforth Aviation for 2 Fixed Base Operations at the Santa Monica Airport and reject the proposal. received from California Aviation, Tnc. Background As part of the overall implementation of the City's agreement with the Federal Aviation Administration concerning the Santa Monica Ai.rAOrt, the Citv committed to the location of three Airport fixed base operator facilities on the north side of the runway. On June 1, 1985, City staff issued a Request for Proposals (RFP) for three full service Fixed Base Operator leaseholds on 23 acres of vacant land situated north of the runway adjacent to the Santa Monica Business Park. The responses to the Request for Proposal were due at the close of business on Friday, August 30, 1985. /~ OCT 2 2 1985 - 1 - she BFP was advertised in the Los Angeles Times, the Evening Outlook, Pacific Flyer and Business Aviation Weekly. A total of 35 Requests for Proposal were sent to current airport tenants and to aviation businesses throuehout the country. Proposals were received from three firms by the closing date of August 30, 1985. All three proposers are businesses currently located at the Airport. The three proposers are Danforth Aviation, Gunnell Aviation Inc., and California Aviation/C&K Aviation. A City staff committee consisting of the City Manager, and the Airport Director reviewed the proposals according to criteria specified in the RFP. This evaluation criteria cansidered such factors as quality of the proposed development, extent of developer's investment, experience and qualifications of the developer, potential of proposer as a tenant (track record), number of lobs to be created, demonstrated knowledge of and willingness to comply with the noise abatement program and related factors. Staff analysis of the proposals is summarized below: Danforth Aviation Danforth Aviation in association with David G. Price proposed to develop a site of 9 acres as a full service fixed base operation. Danforth proposed to sell fuel. The site would include an officelterminal building of 7,800 sq. ft.; a hangar/shop building of 12,000 sq. ft., and 23 individual aircraft storage hangars. The remainder of the site would be paved. for aircraft tiedown and auto parkin. Danforth Aviation has been in business at the - 2 - Airport r"or a number of years. its owner has manased several fixed base operations. The business has been extremely cooperative with regards to the noise abatement program and its owner has participated in the Airport Working Group. The Danforth proposal contains a demonstrated commitment for financing of the required development cost of $2.14 million. For this reason, staff recommends that Danforth Aviation be accorded an exclusive right to negotiate an FBO lease with the City. Danforth is currently a subtenant on the Airport and has indicated willingness to vacate for a north side parcel. Gunnell Aviation Gunnell Aviation and affiliates proposed to develop a parcel of 10.15 acres as a full service fixed base operation including the sale of aviation fuel. Gunnell proposes an office/terminal complex of 44;000 sa, ft.; a connected hangarlshop area of 30;000 sq. ft. and 24 individual aircraft storage hangars. The remainder of the site would include a fuel farm, aircraft tiedown areas, and automobile parking. The total cost of the proposed development is $5.8 million. Gunnell Aviation has been in business at the Airport since 1958. They have been an excellent tenant. The company has never violated the noise ordinance and has cooperated in teaching noise abatement techniques through its flight school and aircraft rental activities. The Gunnells are active participants in the Airport Warki.n~ Group. Gunnell Aviation and its affiliate the J.M. Foster Company has submitted sufficient evidence of - 3 - financial commitment to the project and have proposed a project completion schedule of seventeen months. Gunnell Aviation has indicated its willingness to locate on a ten acre parcel but has also proposed for a fifteen acre parcel. The City's commitment to accommodate three full fixed base operators dictates a ten acre maximum parcel size. Gunnell. Aviation's proposal is responsive to the City`s Request For Proposal. Gunnell has proposed to vacate its present south side parcel upon completion of north side facilities and to dismiss all pending claims against the City upon execution of a lease. City staff recommends that the Citv Council authorize the City Manager to negotiate a lease for a ten acre parcel for a maximum thirty year period with Gunnell Aviation, Inc. California Aviation California Aviation proposed to the City as developer for a ten acre parcel to accommodate C&K Aviation as lessee/fixed base operator. The proposal envisions a 6;000 sq. ft. office/general aviation terminal building; a 30;000 sq. ft. hangar/shop building and ten individual aircraft storage hangars. The remainder of the site would be devoted to aircraft tiedown; auto parking and. fuel farm. The proposed development cost is $2.4 million. California Aviation and its corporate predecessors have occupied a leasehold on the Airport since 1965. The lease runs until 1996. C&K Aviation has managed the fixed base operation for California Aviation since 1983, California Aviation and its corporate predecessor. Cloverleaf Aviar.ian have been served with - 4 - at least five Pay Rent or Quit Notices, since 1.974, have deposited bad checks twice (most recently in July 1985) and have been sent eight notices of delinquent rent. The company has not actively participated in the Airport Working Group and has aeressively marketed to transient let aircraft which violate the noise Iimit. California Aviation has offered to relinquish its south side parcel only upon award of a north side lease and upon settlement of all outstanding legal disputes between California Aviation and the City of Santa Monica. Award of a north side parcel at this time to California Aviation would result in the corporation having two leases for fixed base operations at the Airport. The corporation has not evinced a funding commitment and has asserted that proof of financing can only be made available to the City upon execution of a lease. To sum, City staff has the following concerns about the proposal: the corporation's poor record in paying rent, an apparent lack of commitment to noise abatement; the terms of relinquishment of its present lease with the City, and the lack of committed financing for the project. Far this reason, Citv staff recommends that the California Aviation proposal be rejected as unresponsive to the stated cri. teria . - 5 - In summary. then, the proposal received from Gunnell Aviation is clearly responsive. The Danforth proposal is responsive. Staff's concerns with the California Aviation proposal are enumerated above. In view of the fact that it is desirable to respond favorably to the two responsive proposers, City staff recommends that both Danforth Aviation and Gunnell Aviation be accorded the right to negotiate a lease with the City for full service fixed base operations on the Airport. City staff recommends that the California Aviation proposal be rejected far the reasons enumerated above. Leases with Danforth and Gunnell will be brought back to the City Council for approval within 60 days. The City's agreement with the FAA commits the City to accommodating three full service fixed base operations at the Airport. California Aviation currently operates a full service fixed base operation on a lease extending until 1996, Successful lease negotiations with Danforth and Gunnell would thus result in the satifaction of the FAA requirement. Staff is therefore recommending that the remaining acreage on the north side be devoted to City tiedown in order to meet the based fleet requirement of 550 aircraft imposed by the FAA Agreement. Fiscal/Budgetary Im,~act The fiscal and budgetary impact of these actions will be explored in the staff report approving full service fixed base operator leases. Staff will recommend any needed bud~etarv adiustments at that time. - 6 - Recommendation City staff respectfully recommends that the City Council: 1) Authorize the City Manager to negotiate a leases with Gunnell Aviation, Inc., for a 10.5 acre parcel and with Danforth Aviation for a 9 acre parcel based on the development concepts embodied in their respective proposals. 2) Reject the proposal received from California Aviation, Inc. Prepared by: Hank Dittmar, Airport Director - 7 - Reference Contract Nos. 4596 and 4597 (CCS).