SR-02-27-1979-11ESanta Monica, California, February 20, 1979
TO: Mayor and City Council H
FROM: Staff tEB 2 7 1979
SUBJECT: Aircraft Fueling Facility, Recommendation to Upgrade
and Lease.
Introduction
The aircraft fueling facility at Santa Monica Airport has
been operated by the City with great success over the years.
The net profit from the fueling facility last year has
been reported to be $68,000 by the Airport Director. Newly
instituted safety and environmental protection regulations
necessitate extensive upgrading of the facilities at this
time. The cost of this upgrading has been estimated at
approximately $84,000.
Background
The City staff has been seeking methods by which income
from aircraft fueling operations can be maximized. After
receiving no bids from suppliers of aviation fuels under
the present conditions wherein the City operates the
facilities, efforts were made to attract interest from
sources that could both operate and supply the facility.
All known major aircraft petroleum suppliers were contacted
with the proposal that they lease the facilities, accomplish
the needed upgrading of the equipment and operate the retail
sales enterprise.
As a result of these contacts, we are presently in negotiation
with a producer which could supply major brand fuels,
accomplish the upgrading and operate the retail facility.
Agreement has been reached in many areas. Details of the
proposed plan have not been reduced to writing since all
factors have not been agreed upon as yet. Basically the / I k'
FEB 2 7 1979
proposed agreement would make the accomplishment of the
upgrading the responsibility of the prospective lessee at
a total cost to the City of $75,000. This $75,000 would
be amortized off against rent during the first three years
of any ensuing agreement. Under the rental terms the City
would be guaranteed a minimum of $100,000 net annually.
The leasehold is proposed to be a three year lease with
two five year options.
A feature of the proposed agreement is that the lessee
will offer employment to three present City employees
involved in the fueling facilities. These three
positions could thenceforth be eliminated from the Airport
budget.
Alternatives:
A. City could close the aircraft fueling facility in
order to avoid liability under new safety and
environmental regulations which require approximately
$84,000 to be spent in upgrading.
B. City could spend the $84,000 and continue to operate
under the present organization. Income under this
plan could be estimated at a net of approximately
$65,000 annually.
C. City could lease the facility for $100,000 per year
net rental proceeds with an obligation to allow $25,000
per year for the first three years of the lease to
amortize the upgrading which would be accomplished
by the lessee. A clause reserving the City's right
to terminate the agreement if airport use is changed
has been anticipated. The City would additionally be
able to reduce staff at the airport by a minimum
of three positions under this alternative.
Recommendation
The airport commission has recommended approval-of a lease
arrangement similar to alternative "C ".
Staff recommends that the City Council adopt the policy
outlined under alternative "C" and authorize the City
Manager to execute a contract with a lessee which will
accomplish the lease of the airport fueling facilities
as outlined above.
Prepared by:
aaministrazive
Joyce Snider
City Clerk
CITY C11
S r'1N'lA MONICA
CALIFORNIA
1685 Main Street, Santa Monica, Ca. 90401
Telephone (213) 393 -9975
April 17, 1979
Oasis Petro Energy Corporation
5995 Sepulveda Boulevard
Culver City, California 90230
Attention: Finn Moller, President
Dear Sir:
Attached is Contract No. 3201(CCS) fully executed
between the City of Santa Monica and Oasis Petro
Energy Corporation.
Sincerely,
Joyce Snider
City Clerk
BY: Joan Jensen
Deputy City Clerk
JS :jj
Attachments: 2 copies of contract
c
Agenda Item' 11 -E: , Presented at this time was a recommendation regarding
gasoline dispensing facilities at Santa Monica Airport. Lincoln Vaughn
spoke in support of leasing the aircraft fueling facility at Santa
?Monica Airport to Oasis Petro Energy Corporation. After discussion,
Councilmember Scott moved to refer to staff the matter of negotiating
with the proposed lessee the lease of the aircraft fueling facility at
Santa Monica Airport and that the lease be returned to City Council for
review. Second by Councilmember Reed.
Council Vote: Unanimously approved 6 -0
Absent: Mayor Swink
CITY COUNCIL MINUTES - FEBRUARY 27, 1979