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SR-07082008-1I~~~ City of Santa Monicam City Council Report City Council Meeting: Agenda Item: I - Z To: Mayor and City Council From: Robert Trimborn, Acting Airport Director Subject: Lease of space at 3011 Airport Avenue and 3159 Donald Douglas Loop South at the Santa Monica Airport. Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute lease agreements with two existing specialty fixed base operators: Justice Aviation and Santa Monica Aviation providing for the continued operation of their business activity at new locations on the Santa Monica Airport. Executive Summary Justice Aviation is a long standing specialty fixed base operator tenant who desires to relocate its operation to a designated aviation use facility at 3011 Airport Avenue. The seven-year term of the proposed lease agreement will not extend past June 30, •2015. Justice aviation has been operating a flight school at the Airport since 1994 and is currently located at the specialty aviation facility west of the Airport Administration Building. Their twenty piston-powered rental and flight .school aircraft are. located in a tiedown area one hundred yards from their operations office. This arrangement has proved to be only marginally successful. Customers and flight instructor access to their tiedown area creates an on-going safety and security concerh. Relocating Justice Aviation will correct these operational issues and create a much safer, secure and compatible operating environment. The relocation to the new site will also reduce parking congestion in and around the Airport Administration Building. Justice Aviation plans to renovate the new leasehold space to approve its overall appearance and functionality. Santa Monica Aviation is another long standing specialty fixed base operator located within the specialty aviation facility at 3141 .Donald Douglas Loop South. Santa Monica Aviation desires to relocate to a larger leasehold located in the same building. The seven-year term of the proposed lease agreement will not extend past June 30, 2015. Santa Monica aviation has been conducting piston-powered aircraft maintenance, flight/ground school and rental/sales-business at its present location since 1989. Due to 1 space constraints, this arrangement has proved to be only marginally successful with. very little room for customer aircraft to park and wholly inadequate meeting and training space. Relocation to the new facility will improve spatial relationships allowing technicians to have more space to work on customer aircraft thereby creating a safer more efficient working environment. Santa Monica Aviation also plans to also renovate the new leasehold space to approve its overall appearance and functionality. Background Justice Aviation Justice Aviation is a long standing existing specialty fixed base operator tenant who desires to relocate its operation to a designated aviation use facility comprised of a 6,720 sq ft hangar, a single-story 2,109 sq ft office and an adjoining aircraft tiedown area which is located at 3011 Airport Avenue, Santa Monica, California 90405: The seven-year term of the Lease Agreement will not extend past June 30, 2015.The leasehold space is located in a designated aviation use area on the north side of Airport Avenue and is adjacent to the lower taxiway. Justice aviation has been operating apiston-powered flight school and aircraft rental operation at Santa Monica Airport since 1994. Justice Aviation moved from the Krueger Aviation leasehold to their present location in the specialty aviation facility located just west of the Airport Administration Building at 3163 Donald Douglas Loop South in 2002. The twenty piston-powered rental and- flight school aircraft are located in the midlevel tiedown area adjacent to Airport Park. This arrangement has proved fo be only marginally successful -the office area is cramped with little room for ground school training. The aircraft tiedown area is located a considerable. distance away from the office. Customers and flight instructors must walk from the Justice Aviation office east on the Airport service road, through a secure pedestrian gate (with a cipher lock) and upwards of one hundred yards to get to the aircraft tiedown area. This is arrangement is considered a safety and security concern that needs to kie rectified. Even though there has not been an incident to date, the cipher code on the pedestrian gate can easily be dissemiriated to individuals who don't have business being on the airport. Pedestrians walking on the service road and across aircraft ramps pose a safety concern that needs 2 to be addressed. Relocating Justice Aviation to the 3011 Airport Rvenue Leasehold facility will correct .these operational issues and create. a much safer and secure operating environment that is considerably more customer friendly. Their business plan. will not change following the completion of the move. 3011 Airport Avenue. is a designated aviation use facility. During its 60+ years of existence, it has been used by several aviation service providers and for .other uses. The facility was temporarily used as an interim home for the City's Park Maintenance Division due. to methane contamination at their. previous location at the City Yard,. Coinciding with the construction of Airport Park (which displaced aircraft tiedowns), 3011 Airport Avenue was returned to aviation use to comply with the tenets of the 1984 Settlement Agreement to provide for the requisite space for aircraft parking.. Park Maintenance was subsequently relocated to the old Fisher Lumber site. The Hangar and office space is currently being used as temporary storage space for reserve fire apparatus and equipment. The Fire Department will relocate their equipment to other locations to allow for. the Justice Aviation use of the facility. The outside tarmac is already used for aircraft parking -these aircraft will be moved to the tiedown spaces vacated by Justice Aviation. Santa Monica Aviation Santa Monica Aviation is another long standing existing specialty fixed base operator located within the specialty aviation facility at 3141 Donald Douglas Loop South (west of the Airport Administration Building). Santa Monica Aviation desires to relocate their operation to a larger leasehold space located in the same facility. The proposed leasehold is comprised of 8,535 sq ft of hangar space; 3,410 sq ft of office/meeting/training room areas and four aircraft tie-down spaces. The new location is located at 3159 Donald Douglas Loop South, Santa Monica, California 90405. The seven-year term of the Lease Agreement will not extend past June 30, 2015. The leasehold space is located in a designated aviation use area. 3 Santa Monica aviation has been conducting piston-powered aircraft maintenance, flight/ground school .and aircraft rental/sales operations at its present. location since 1989. Its two rental and flight school aircraft are located in the tiedown area adjacent to the facility. Due to space constraints, this arrangement has proved to be only marginally successful with very little room for customer aircraft to park and wholly inadequate meeting and training space. Relocation to the new facility at 3159 Donald Douglas Loop South will improve spatial relationships allowing technicians to have more space to work on customer aircraft thereby creating a safer more efficient working environment. Santa Monica Aviation plans to renovate the new leasehold space to approve its overall appearance and functionality. Their business plan will not change following the completion of the move. Airport Commission Review During the June 2, 2008 Airport Commission meeting, staff presented Santa Monica Airport Applications for Commercial Operations Permit (COP) for both Justice Aviation and Santa Monica Aviation for the Commissions review and recommendation. Subsequently, the Airport Commission recommended that the City Manager conditionally approve the COPS with the stipulation that the City .Council approve the Lease Agreements. Discussion The relocation of these specialty fixed base operators to new facilities will improve efficiency, security and safety of the Airport. Additionally, the new locations will afford much improved customer access and service. Both Justice Aviation and Santa Monica Aviation have proven to be model tenants with exemplary reputations within the industry. Their business plans exclusively revolve around compatible piston-powered aircraft -the desired type of aircraft operations expressed by the community and the Airport Commission. Justice Aviation and Santa Monica Aviation actively participate in the Fly Neighborly Program and fully cooperate with the City in the enforcement of the provisions of the Airport Code and regulations of the Noise Abatement Program. Both 4 are required to fully brief and give new customers a copy. of the City's aircraft noise abatement regulations and procedures. The tenants are responsible for all approved leasehold improvements -the City will not do the work. The planned renovations will restore spaces that have been vacant for many months and. in need of facility repair. These repairs include inoperative doors, leaks, floor resurfacing and painting. Thee proposed improvements will greatly enhance the value of the City's assets. The cost of the improvements will be borne by the tenants. Financial Impacts & Budget Actions Justice Aviation will pay the City $4,822 per month in initial rent for the leasehold facility. The monthly rental is subject to an annual CPI increases commencing September 1, 2009. Justice Aviation will expend a minimum of $75,000 in leasehold improvements to improve the appearance and functionality of the facility. Santa Monica Aviation will pay the City $4,778 per month in initial rent for the leasehold facility. The monthly rental is subject to an annual CPI increases commencing .September 1, 2009. Santa Monica Aviation will expend a minimum of $160,000 in leasehbld improvements fo enhance the appearance and functionality of the facility. The proposed FY2008-09 budget- reflects the increased rent of the 33203.402110 Airport Hangar account. . Prepared. by: Robert D: Trimborn, Acting Airport Director Approved: Forwarded to Council: 5 Reference Contract Nos. 8945 (CCS) and 8946 (ccs).