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SR-20080513-1G~~~ City Council Report City of Santa Mon?ca City Council Meeting: May 13, 2008 Agenda Item: ~ _ To: Mayor and City Council From: Robert Trimborn, Acting Airport Director Subject: Approval of Location and Operation of the Museum of Flying. Recommended Action Staff recommends that the City Council: 1) Approve the. designation 3090/3100 Airport Avenue as the new location for the construction and operation of the Museum of Flying; and 2) Authorize the City Manager to negotiate .and execute a lease agreement between the City of Santa Monica and Museum of Flying for the operation of the Museum at its new location on the Santa Monica Airport. Executive Summary Due to financial problems, the Museum of Flying ("Museum") which was formerly operated on the north side of the Airport closed in mid-2002.. Since its closure, there has beeh an effort to bring the Museum back to the Airport on a more economical scale that would still showcase the long history of aviation at the Airport and in the City of Santa Monica. Initially it had been proposed that the Museum would be relocated into a hangar with an adjoining office and ramp space on the Atlantic Aviation parcel, but issues arose as to its close proximity to an active jet operating area and ease of access to the area by the general public. Subsequently two other potential Museum sites on the south side of the Airport were examined: One site is located directly east of the Santa Monica Air Center (Barker Hangar) and the other at the southwest corner of Airport Avenue and Donald Douglas Loop South (known as 3090/3100 Airport Avenue). The 3090/3100 Airport Avenue site was deemed the more desirable of the two because of its immediate proximity to the DC-3 Monument Plaza and Airport Park. The combination of the Museum of Flying and DC-3 Monument Plaza would create an historical & cultural focal point on the Airport that would be easily accessible to the public. After careful review and. analysis of the sites, staff presented the proposed 3090/3100 Airport Avenue location to the Airport Commission which subsequently supported the. site as the preferred alternate location-for the Museum of Flying. Background The Museum of Flving Originally founded as the Donald Douglas Museum and Library in 1974, the Museum of Flying originally operated just south of Airport Avenue in a structure now occupied by Santa Monica College. Ih May 1987, the City entered into a Lease modification with Supermarine of Santa Monica that called for Supermarine to construct space for what became the Museum of Flying. The Museum operated within the Supermarine complex from April of 1989 when the facility was completed until it suspended operations in July 2002 -citing lack of funding sources to sustain the Museum's operational expenses such as insurance, labor and other operational costs that would enable it to remain open during. hours convenient to the public. Subsequently staff met on numerous occasions with Supermarine management in an attempt to retain the Museum on the field to display artifacts and exhibits .relevant to the history of the Douglas Aircraft Company, the Airport and the City of Santa Monica. With the Museum space no longer in use, Supermarine approached the City with a request to sublease the space to a new tenant for use as an automotive design studio. With the additional revenues generated by the new tenant, Supermarine staff indicated that they would be willing to accommodate a reorganization of space on their leasehold. premises to retain the Museum of Flying at no rental cost for the premises plus an operating subsidy for the Museum for the term of its sublease with Supermarine. Initial discussions with Supermarine focused on relocating the Museum .into ahangar/office space directly across the ramp from its previous location; though reduced in size to approximately 12,000 square feet, including ramp space, it was expected that the new. location would provide valuable interaction with the aviation exhibits and related memorabilia, 2 However, the discussions revealed certain inherent problems with converting the hangar structure into museum space, especially in an area of the ramp adjacent to the active movement of jet aircraft. The proposed Museum location would require structural and construction upgrades to meet applicable technical codes such as fire regulations for facilities open to the. public. Although the aircraft display area was to be enclosed with afence-type structure to partially shield visitors, it would still have been adjacent to the direct impact of jet aircraft operations on the adjoining ramp. The South Side Site Alternatives Concurrently with the changes on the Supermarine leasehold, the south side of the Airport was also undergoing reorganization. With the construction of Airport Park in the southeast portion of the Airport, the Antique Mart was moved farther west to an area in the middle of the Airport just. south of Airport Avenue. The relocation of Park's Maintenance Division operation from 3011 Airport Avenue to another City site created the opportunity to return the south side site to aircraft parking areas for smaller piston- powered aircraft. It also created the opportunity to explore other site locations on the south side of the Airport fora use that would complement the growing number of community events and uses. After discussions with Supermarine, the Museum of Flying and other City staff, it was decided to explore prospective South Side locations for the Museum. After careful review of potential sites along Airport Avenue, staff narrowed the search to a location that would meet the need of the Museum of Flying and provide easy public access. The first site considered was located at 3011 Airport Avenue and following staff's review and analysis, it was decided to bring the north .and south site locations before the Airport Commission for their review and consideration. The Airport Commission however raised several concerns regarding the first south side site under consideration. 3 Airport Commission Review During the July 23, 2007 Airport Commission meeting, staff presented the two proposed site locations for the reestablishment of the Museum of Flying. The North Side option would have moved the Museum into a 12,000 square foot hangar directly across the Atlantic Aviation ramp from its previous location; this site was deemed the least desirable due to structural & space limitations and adverse operational effects on visitors because of the direct impact from jet aircraft operations on the Atlantic Aviation ramp. The South Side Option proposed to move the Museum into the 3011 Airport Avenue facility directly west of the Santa Monica Air Center. This site is comprised of an existing 6,720 square foot hangar, 2,1.09 square foot office space and approximately one-acre aircraft parking ramp. The South Side site was deemed more desirable by staff due to its location near a growing number of community events and uses on the south side of the Airport; however, many of the Airport Commissioners and members of the public felt it was. too far from Airport Park and did not provide easy access for the general public. Following the presentation of the staff report, the Airport Commission discussed the attributes/drawbacks of the proposed sites and voted to recommend that staff explore other sites on the north side of the Airport and to have it integrated it into a facility plan. Following the July 23rd meeting staff explored other alternate locations on the north side of the Airport as well as other potential sites on the south side. Continuing. planning work on the DC-3 Monument Plaza led to suggestions that development of the Museum of Flying adjacent to the DC-3 Monument at the 3090/3100 Airport Avenue site would address concerns regarding the 3011 Airport Avenue site further to the west. Coordinating the relocation of the. Museum of Flying with the development to the DC-3 Monument site (which was approved by City Council on February 27, 2007) would create a site that would be easily accessible to the public, 4 have ample parking, be directly across the street from Airport Park and be in close proximity to restaurants and the Airport Administration Building. Staff subsequently returned to the Airport Commission on September 24, 2007 with an update on potential sites for the Museum of Flying and presented the proposed 3090/3100 Airport Avenue site for their review and consideration. The Airport Commission voted to support the site and requested that staff return with estimated development & operations cost -which will be brought back to the Commission following Council approval of the site location and once construction estimates .have been- developed. 3100/3090 Site Under the City Council approved. Santa Monica Airport Non-Aviation Leasing Policy adopted on November 28, 2000, the 3100/3090 Airport Avenue site is designated as a mixed-use facility with an adjoining parking lot. The facility is not designated as an exclusive artist leasehold space. There are currently thirteen tenants located within the 3100 Airport Avenue leasehold complex.. All existing tenant leases will expire in February 2009 thereby. facilitating the development of the Museum of Flying. The expiration of all the leases at the proposed site is not a unique occurrence. Many of the leases that were prepared under the City Council approved Non-Aviation Leasing Policy will be coming to an end at that time. Currently, thirty-six leases (artists and other uses) are set to expire throughout the non-aviation use area of the Airport in February of 2009. All available non-aviation lease space is currently occupied and there is a waiting list of prospective tenants. The stated purpose of the Non-Aviation Leasing Policy was to provide leases that would be "incubator" or "start-up" opportunities for a fixed term and then made available to a new set of users. Tenants were advised at the time they signed their leases of the City Council policy. There are currently 46 artist spaces in designated art use buildings located at 3026, 3000 and 2900 Airport Avenue. 5 As was previously stated, under the established Leasing Policy, lease renewals are not automatically offered to existing tenants in order to assure that leasing of public property optimally benefits the City and its residents. Therefore property is periodically offered on the marketplace as a means of providing competitive access to its use, and that property is managed with an objective of meeting the needs of the Santa Monica community. However; the existing tenants whose leases will expire will be given the opportunity to reapply and join the waiting list for lease space opportunities at the Airport. The 3100 leasehold generates approximately $20,147 in gross monthly rental -which includes $500.00 in overnight parking fees for a limousine company tenant. The following is a breakdown of the 3100 tenants: 31D0#A Miles Automotive Electric Vehicle Wholesale Dealer 3100#B Fallout Films Independent films 3100#C JDC Limousine Limousine Service 3100#D Timothy Carter Construction Company 3100#E Fallout Films Independent films 3100#F Bedford Artist 3100#G Drive Around the World Non Profit 3100#T1 Ted Rogers Storage Only 3100#T2 Vaupen/Fielden Artist 3100#T3 Susan Sandler Artist 3100#T4 Buttwinicks Artist 3100#T5 Dick Minium Construction 3100#T6 Leon Sankey Artist 3090 Airport Avenue is currently unoccupied. The previous tenants performed unauthorized modifications to the facility making it structurally unsound and unfit for 6 occupancy in its current condition. The Museum of Flying is proposing to revamp and preserve the facility and integrate it into the Museum complex. Discussion The proposed Museum of Flying/DC-3 Monument complex located at 3090/3100 Airport Avenue would create a cultural focal point for the Airport. It would display aircraft, artifacts and exhibits relevant to the history of the Douglas Aircraft Company, the Airport and the City of Santa Monica. Attached is a plot plan of the proposed Museum of Flying site and its location relative to the DC-3 Monument. This new alternative location has been conceptually approved by the Museum of Flying and Atlantic Aviation and has gained support from tenants on the field. The Boeing Employee Foundation (previously the Douglas Employee .Foundation) has indicated their support of the location (both from a financial & operational perspective) due in part to its location adjacent to the DC-3 Monument Plaza. The Museum of Flying proposal provides for a minimum of $800,000 in renovations of the facility including the construction of additional aircraft display structures. Monthly rental is subject to negotiation should this site be selected and approved by the City Council. Hours of operation and parking for the Museum would be coordinated with existing neighboring tenants so as not to interfere with events and activities. Although the recommended South Side Option is not on Atlantic Aviation's leasehold, the new South Side Option is consistent with the primary concern of the prior Lease amendment of providing a location on the Airport for the Museum and a source of support for its operational costs. Going forward with the new South Side Option will increase the probability that the Museum will not only re-open at the Airport, but will be able to continue operation well into the future. 7 Atlantic Aviation Commitment The Museum Agreement and Guaranty restate Atlantic Aviation's master lease obligation to construct a new museum structure and provide financial support through June 30, 2015. Currently the Museum AgreemenYexpands the potential Museum sites to 3011 Airport Avenue on the south side of the Airport. In order to provide greater assurance that the Museum will be built and operationally funded through June 30, 2015, a Guaranty was also executed and can be invoked if Atlantic Aviation defaults on its Lease and Museum Agreement ("Museum Agreement") obligation. Although .not a signatory to the Museum Agreement or the Guaranty, the City is specifically named as a third party beneficiary of the Museum Agreement and Guaranty with the right to enforce either agreement if there is a breach. The Museum Agreement also provides a cross- default provision that makes a breach of the Museum Agreement a breach of-the Master Lease with the City. If the City Council approved the expansion of the acceptable sites for the Museum td include the 3090/3100 Airport Avenue site, the Museum Agreement and Guaranty, plus any other applicable documents, would be modified to reflect the inclusion of the new site. Budget/Financial Impact The Museum of .Flying will fully fund the Museum's construction and operation over the seven year term of a lease with the City. The proposed monthly rental is currently $2,000 per month and is subject to further negotiations. The proposed rent takes into account the Museum of Flying's minimum investment of $800,000 in facility improvements amortized over the term of the lease. The impact on the Airport Fund from the reduced rental rate is anticipated to be minimal due to corresponding increase in rent from other leaseholds. Prepared by: Robert D. Trimborn, Acting Airport Director 8 Approved: Robert rimborn Acting. Airport Director Forwarded to Council: ~~ P. ont Ewell ~ - City Manager Attached DC-3 Monument Plaza & Proposed Museum of Flying Site-Plan 9 10 DG3 Monument Plaza & Proposed Museum of Flying Site Plan Reference Contract No. 8925 (CCS).