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SR-07-14-2015-8C SUPP.From: Martin Pastucha, Director of Public Works /Airport Director Subject: Supplemental Information Regarding the Unblended Rates Listed for the Proposed Airport Leases on the Council Agenda for July 14, 2015, Item 8 -C This supplemental staff report provides additional information further clarifying the composition of proposed lease rates at the Airport. Blended market rates for the proposed leaseholds were provided as a part of Item 8 -C on the Council agenda for July 14, 2015. The blended market rates are outlined with additional detail in Attachment A. The proposed leases recommended to Council for approval are based on specified terms and market valuations. After the July 14, 2015 Council agenda was posted there were requests by members of the community for a breakdown of the blended rates in Item 8- C for each of the proposed leaseholds. Attachment A of this supplemental staff report provides a breakdown by square foot by type of property within each of the leaseholds, the annual appraised rates per square foot provided in the April 23, 2015 appraisal report and the proposed annual and monthly rates negotiated per square foot. Prepared By: Stelios Makrides, Airport Manager Approved: Forwarded to Council: Martin Pastucha Rick Cole Director of Public Works /Airport Director City Manager Attachment: A — Breakdown of Lease Rates 1 of 1 Attachment A RrpnkrVnwn of I pace Rafipc RUSKIN GROUP THEATER COMPANY TYPE APPRAISEDVALUES= ANNUAVNi`E ANNUAL RENT_ REf9T & Theater 2,663 $ 16.20 IS 16.20 $43,140.601 $3,595.05 ATLANTIC AVIATION " 3 - TYPE - 'sq.FT _-APPRAISED VALUES ANNUALRSF ANN LRENT MONTHLY REryi- 16 Executive Hangars 7,350 $ 4.50 $ 4.50 $33,075.00 $2,756.25 8 Corporate Hangars (,3,000 sq.ft.) 15,317 $ 4.68 $ 4.68 $71,683.56 $5,973.63 10 Large Hangars (,3,000 sq.ft.) 41,670 $ 4.32 $ 4.32 $180,014.40 $15,001.20 Aviation - First Floor Main Bldg 10,434 $ 9.00 $ 12.00 $125,208.00 $10,434.00 Aviation -Annex Hangar 1,200 $ 6.75 $ 6.75 $8,100.00 $675.00 :- - $418,080.96 $34,840.08 Land - Included" 253,236 $ $0.00 $0.00 Concrete A ran 56,404 $ 0.70 $ 0 .70 $39,482.80 $3,290.23 Additional Land 64,460 $ 3.12 $ 3.12 $201,115.20 $16,759.60 TOTAL - - $658,678.96 $54,889.93 *The appraiser stated that "improved leaseholds on the airport, charges for the supporting land is considered to be included in the building rentfor facilities with a site coverage ratio of 30 %or more; to calculate the supporting land included in the rentfor an improved facility, the building square footage is divided by 30 %. The leaseholds with a site coverage ratio less than 30% are considered to have excess land. The land rentfor excess land associated with improved leaseholds, as well as the rentfor land parcels on the airport is $3.12 1sq.ft. /year. RRUEGERAVIATION APPXAISEDVALUES' ANNUALR 'ANNUAL RENT. ;MONTHLY REST i Office Building 3,400 $ 7.20 $ 24,480.00 $ 2,040.00 Maintenance Hangar 1 7,2001 Is 4.80 1 $ 34,560.00 1 $ 2,880.00 Land - Included • 29,667 is TOTAL $59,040.001 $4,920.00 *The appraiser stated that "improved leaseholds on the airport, charges for the supporting land is considered to be Included in the building rent for facilities with a site coverage ratio of 30 %or more, to calculate the supporting land included in the rentfor on improved facility, the building square footage Is divided by 30 %. The leaseholds with a site coverage ratio less than 30% ore considered to have excess land. The land rentfor excess land associated with improved leaseholds; as well as the rentfor land parcels on the airport is $3.121sq.ft. /year. GUNNELL PROPERTIES ';SQ.FT APPRAiSEDYALUE$?: ANNUALpSF `ANNUMRENT- -,MONTHLY Office Building * 17,915 $ 9.00 $ 23.85 $ 427,272.75 $ 35,606.06 Aviation Storage 1,604 $ 2.25 $ 2.25 $ 3,609.00 $ 300.75 11 Large Hangars 56,360 $ 4.32 $ 4.32 $ 243,475.20 $ 20,289.60 4 Corporate Hangars 38,280 $ 4.32 $ 4.32 $ 165,369.60 $ 13,780.80 93T -Han ors 47,130 $ 4.50 $ 4.50 $ 212,085.00 $ 17,673.75 $ 1,051,611.55 $ 87,650.96 ConcreteA ran 65,340 $ 0.70 $ 0.70 $ 45,738.00 $ 3,811.50 Land - Included ** 244,251 $ $ $ TOTAL $ 1,097,549.55 $ 91,962.96 * Aviation market rate for office space was apprased at $9 per square foot. The negotiated rate was for non - aviation appraised values. *The appraiser stated that "Improved leaseholds on the airport, charges for the supporting land is considered to be Included in the building rentfor facilities with a site coverage ratio cf30 %or more; to calculate the supporting land Included in the rent for an improved facility, the building square footage is divided by 30 %. The leaseholds with a site coverage ratio less than 30% are considered to have excess land. The land rent for excess land associated with improved leaseholds, as well as the rent for land parcels on the airport is $3.12 1sq.fr. /year. AMERICAN FLYERS - '_ 'TYPE SQ.Fi APPRAISED VALUES =: ANNUALRSF - ANNUAL RENT '. MONTHLY RENT Office Building 3,600 $ 5.40 $5.40 $19,440.00 $1,620.00 Maintenance Hangar 4,90T $ 3.60 $3.60 $17,665.20 $1,472.10 16 Hangars 31,0001 $ 3.15 $3.15 $97,650.00 $8,137.50 Land - Included" 131,6901 $0.00 $0.00 $0.00 TOTAL - $139,755.20 $11,229.56 *The appraiser stated that "improved leaseholds on the airport, charges for the supporting land is considered to be Included in the building rentfor facilities with o site coverage ratio 0)'30% or more; to calculate the supporting land included in the rentfor an improved facility, the building square footage is divided by 30%. The leaseholds with a site coverage ratio less than 3D% are considered to hove excess land. The land rentfor excess land associated with Improved leaseholds, as well as the rentfor land parcels on the airport is $3.12 1sq.Jt. /year. SPITFIREGRILL Outdoor Dining SQ :R 1,0621 APPRAISED VALUES: $ 6.60 ANNUALRSF 1 $6.601 ANNUAL RENT $7,009.201 ;y MONTHLY REST $584.10 Restaurant 1 4,7821 $ 19.80 1 $19.801 $94,683.60 1 $7,890.30 TOTAL • _ ` -_ $101,692.80 $8,474.40 *The appraised rental rotefor restaurants took into consideration the short duration of the term offered to establish a market rate which combined a base rental rate or 6% or gross receipts whichever amount is greater each month. TYPHOON RESTAURANT TYPE APPRA7SED VALL ES:- ANNUAL RSE ANNUALRENT MONTHLYRENT Restaurant 4,040 $ 18.00 $18.00 $72,720.00 $6,060.00 TOTAL • - I I $72,72D.001 $6,060.00 *The appraised rental rote for restouants took into consideration the short duration of the term offered to establish o market rate which combined abase rental tote or 6 %or gross receipts whichever amount is greater each month. Ift City of Report Santa moniexi City Council Meeting: Date Agenda Item: 8 -C To: Mayor and City Council From: Marsha Jones Moutrie Subject: Update on Airport Issues: Meeting with Representatives Lieu and Bass and FAA Associate Administrator Angeles Executive Summary This supplemental report provides information about the July 8, 2015 meeting in Washington D.C, arranged by Representatives Ted Lieu and Karen Bass to provide officials and community members with the opportunity to express their views on the Santa Monica Airport (SMO) and related issues to Eduardo Angeles, the Associate Administrator of Airports of the Federal Aviation Administration (FAA). That meeting occurred after the main staff report was finalized. Both Representatives, several members of their staffs and several FAA staff members attended. Mayor McKeown, Mayor Pro Tern Vazquez and Councilmember Himmelrich represented the City, and about 20 community members attended. Both Representatives made statements at the start of the meeting. Mr. Angeles made a very short statement, reiterating that he was present only to listen. The Mayor and Council members spoke, followed by 12 community members — nine in opposition to airport operations and their impacts; three in support of the Airport and its continued operation. The meeting lasted a little over an hour. Later in the day, Representative Lieu's senior advisor and another staff member met with the attendees from Santa Monica and Los Angeles and answered questions. Both the Representatives and Representative Lieu's staff members pledged their strong support to the City and the community. They made no representations about what could be accomplished but they promised to do all that they could to achieve local control and local goals. Background In response to constituents complaints about SMO's adverse impacts on health, safety, and quality of life, Representatives Lieu and Bass asked the FAA's Associate Administrator of Airports to meet with City officials and members of the community. Associate Administrator Edwardo Angeles agreed to meet for one hour, on July 8, 2015, in Washington D.C. However, he specified that, because of the pendency of litigation he would be in "listening only mode" and would not comment on any issues related to SMO. Mayor McKeown, Mayor Pro Tern Vasquez and Councilmember Hemmelrich attended the meeting, accompanied by the City Attorney. Discussion Following is a summary of the remarks made at the meeting based on contemporaneously taken notes: Representative Lieu observed that SMO is unique both because its runway is noncompliant with current safety standards and because the runway ends are within 300 feet of homes. He said that his office had received input from about 900 people regarding the meeting and that 87% were against the Airport. He said that he was aware of the ongoing disputes about the Airport but that the FAA should realize that in 2023, at the outside, would be "game over for jets." Representative Bass said that she has lived in West Los Angeles for 40 years and has seen the Airport transformed from a hobbyist airport to a jet port. She expressed a commitment to work to address residents' concerns and that the expiration of the 1984 Agreement is a good time to take a new look at Airport issues. Associate Administrator Angeles thanked everyone for attending and that the meeting was a good opportunity for him to listen but not to speak because of the pendency of legal proceedings. He added that he has a long- standing relationship with Representative Lieu. 4 The Mayor and Council members each spoke. The Mayor delivered his prepared remarks. Councilmember Himmelrich modified her prepared remarks to emphasize concerns about the FAA's Metroplex proposal making SMO more attractive to jet operations because decoupling SMO and LAX departures will make SMO even ore convenient. Mayor Pro Tern Vazquez emphasized the impacts of Airport operations on his neighbors in Sunset Park, including constant anxiety about a jet crash. The nine community members who expressed their concerns and anger about the Airport made various points about the Airport's adverse impacts. This is a partial list of those points: The most adverse impacts are suffered by LA residents, which isn't fair; The toxicity of emissions is well documented; If implemented, the Metroplex proposal will grow SMO into a premier jet port; Leasing to aviation businesses at less than the rates that could be charged to high tech companies is an illegal gift of public funds for which the City is liable; The 1984 Agreement allows the City to close the Airport now; The attempts to extend operations through legal proceedings and a ballot measure are unavailing; The FAA should give its formal consent to City exercising its proprietary powers; Residents living nearest to the eastern end of the runway can't open their windows or use their yards because of the air pollution from emissions; Douglas Aircraft moved because the runway is too short for jets; it still is; The FAA should let Santa Monica end aviation leases, fuel sales, and the use of the too short runway by jets; The Airport is a safety disaster waiting to happen; 191 It's wrong to have this Airport in the middle of a residential neighborhoods; SMO is not unique and closing it would only shift burden to other airports; Closure won't happen; Public access to the air space must be protected; A working group of all concerned should be formed to find solutions; All should support better fuel and NextGen (Metrolplex) to improve air quality and the installation of EMAS for improved safety; SMO is an essential emergency facility and so the Airport can't be closed; and The air pollution comes from the 1 million cars and trucks that operate within a mile of the Airport daily; not from aircraft emissions. At the conclusion of testimony the Congress members thanked everyone and expressed their commitment to ongoing efforts to improve the situation. Mr. Angeles also thanked everyone. And, the meeting ended. Later in the day, Representative Lieu's Chief of Staff Mark Cevasco and staff member Megan Price met with community members who had traveled to the meeting from Santa Monica and Los Angeles. Mr. Cevasco explained that Representative Lieu could not be present because of votes occurring that afternoon. He reiterated the Congressman's commitment to work with the community to reduce adverse impacts and ultimately achieve local control. He provided information and took questions from those present. When asked about the possibility of the FAA relinquishing its claims of control over the Airport land, Mr. Cevasco indicated that the FAA will not relinquish its claims. When concern was expressed about litigation being a slow solution to the problem of regaining local control, he indicated that Congress does not afford a quick solution either. However, Representative Lieu has repeatedly expressed his commitment to a long- 2 term effort and to working, meanwhile, to alleviate adverse impacts on health, safety and the residents' quality of life. Prepared by: Marsha Jones Moutrie, City Attorney Approved: Forwarded to Council: Wytio� Mrneyt�' L. r uvA- Rick Cole City Manager Reference: Lease Nos. 10102 (CCS) — 10108 (CCS)