sr-042286-6r
AP:HED:mh Santa Monica, California
Council Meeting 4/22/80 _
APR 2 2 1986
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T0: Mayor and City Council ~~~
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FROM: City Staff
SUBJECT: Authorization to Execute Two Leases for Full Service
Fixed Base Operations at the Santa Monica Airport and
Recommendation to Adopt a Resolution Declaring the
City's Intent to Limit the number of Full Service
Fueling Providers at the Airport
Introduction
This report recommends that the City Council authorize the City
Manager to execute two leases with Gunnell Aviation; inc., and
Supermarine Aircraft; Ltd. for north-side fixed base operations
at the Airport and adopt a resolution which declares the
Council's 'intent to limit the number of full service fuel
providers at the Airport
Backeround
The City Council acted on October 22, 1985 to authorize staff to
negotiate fixed base operator leases with Gunnell, Inc. and
Supermarine Aircraft, Ltd. (a consortium of Gary Danforth and
David G. Pricel. Execution of these leases is an important step
in the implementation of the Airport plan:
Staff has worked closely with the two business entities to
develop a standard lease document which bath meets the City's
long term Airport goals and enables the two Fixed Base Operators
to obtain financine for a major investment at the Airport. With
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APR 2 2 1986
one maior exception, the two leases are very similar. The basic
lease terms are enumerated below:
1. Both leases run until July i, 2015, with the lease
improvements reverting to City ownership at that time.
2. Both leases are percentage leases, with a guaranteed
minimum base rent of $113,009 per year for Gunnell
Aviation and $98,212 per year for Supermarine Aircraft.
3. After an initial five year period, minimum rental is
adiusted every three years by the increase in the Consumer
Price Index.
4. Both operators must construct the full service fixed base
operations specified in their proposals within an eighteen
month period.
5. Leases and permits are conditioned on compliance with City
laws and regulations, in particular the Airport Noise
Code.
6. Both operators must comply with FAR reeuirements,
including affirmative action hiring and minority and women
owned business oblieations.
In order to avoid destructive competition in the sales for
aviation fuels, to avoid duplication, to enhance public safety
and to properly allocate scarce space at the Airport, City staff
is recommending that the City Council adopt a resolution pursuant
to its authority as the operator of a publicly owned airport
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which limits the number of full service aviation fueiine
providers to two. The proposed Gunnell lease designates them as
such a fuel. provider by virtue of their greater experience and
greater investment.
Supermarine Aircraft is accorded an option as a full service fuel
provider should one of the two authorized fuelers cease to sell
fuel. In the interim, they have the right to sell fuel on their
leasehold; but are prohibited from installing storage tanks. A
fuel flowaee fee is imposed equivalent to current airport
charges.
Ancillarv revenues to the city are expected to flow from the
following sources in the followine amounts: possessory interest -
$15.000; utility tax-$6-8,000; sales tax-$40,000-$45,000;
business license tax $30,000. A rough estimate of funds flowing
to the General Eund from these developments would be
$90,000-$100,000 annually once construction is completed.
If the Council authorizes the City Manager to execute the leases,
both lessees would immediately proceed with the preparation of
working drawings for the improvements. Actual construction could
begin within 90-120 days.
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Budeetarv/Fiscal Impact
There is no budaetarv/fiscal impact from these leases in
FY1986-87 as revenues do not begin to flow until the lessees
occupv the premises.
Recommendations
City staff respectfully recommends that the City Council:
1. Authorize the City Manaeer to execute a lease with Gunnell
Aviation, Inc. for a fixed base operator leasehold of 10.4
acres at the Santa Monica Airport;
2. Authorize the Citv Manaeer to execute a lease with
Supermarine Aircraft, Ltd. (Gary Danforth and David G.
Price) for a fixed base operator leasehold of 9 acres at
the Santa Monica Airport.
3. Adopt a resolution declaring the City Council's intent to
limit the numbers of full service fueling providers at
Santa Monica Airport.
Prepared hy: Hank Dittmar, Airport Director
Attachment: Resolution
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