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SR 08-27-2019 3F City Council Report City Council Meeting: August 27, 2019 Agenda Item: 3.F 1 of 4 To: Mayor and City Council From: Susan Cline, Director, Public Works, Airport Subject: Approval of Modification to Lease Agreements at Airport Properties with SNAP, Inc. Recommended Action Staff recommends that the City Council authorize the City Manage r to negotiate and execute a third modification to month-to-month rental agreement for 3000 31st Street Suite A-E and a first modification to lease agreement #10302 for 2772 and 2800 Donald Douglas Loop North with Snap, Inc. (formerly known as Snapchat Inc .), a Delaware- based company, to include, subject to strict approval requirements, industrial laboratory and research and development uses among the permitted uses for the premises. There is no immediate financial impact or budget action necessary as a result of the recommended action. Summary Snap, Inc. (“Snap”) currently operates its research and development laboratory, which primarily houses the tools and equipment necessary in prototyping and testing various pieces of hardware, in Venice, California. Snap wishes to move some of its laboratory operations from Venice into the space it leases from the City either at 2772 and 2800 Donald Douglas Loop North or 3000 31st Street Suite A – E (“Leased Space”) at the Santa Monica Airport. Use of either space for Snap’s laboratory operations would fall outside the current permitted uses under either lease and outside the uses currently authorized under the Santa Monica Airport Leasing and Licensing Guidelines. Staff recommends modifications of the leases to permit Snap to consolidate some of its laboratory operations into its Santa Monica Airport Leased Space. Such modifications require Council approval. Discussion In September 2016, the City entered into lease agreement #10302CCS for City-owned properties at 2772 and 2800 Donald Douglas Loop North and eight small abutting 2 of 4 hangars. The lease term is 67 months, expiring on April 30, 2022, with an option to extend the lease for a period of five years. The current permitted uses of the premises are “general commercial office and administrative uses consistent with uses related to a technology company.” In April 2017, the City entered into a month-to-month rental agreement with Snap for Suites A-E and ground floor hangar space within the City-owned property located at 3000 31st Street. This rental agreement has been the subject of two prior modifications and remains in place subject to termination by either party on 30 days written notice. The current permitted uses of the premises are aircraft storage (in the hanga r space) and “general office and administrative use consistent with a use expected for a commercial business operation in the City of Santa Monica.” Snap has approached the City seeking the ability to consolidate some of its research and development laboratory operations from their current location in Venice, California into the Leased Space. All costs to construct the research and development laboratory will be the responsibility of Snap. In order to ensure that this construction does not hinder the City’s ability to market the space in the future, Snap would be responsible for bearing the costs of returning the premises to its original condition if Snap decides to vacate the premises. Snap has described its research and development laboratory operations as follows: • The R&D lab primarily houses the tools and equipment necessary in prototyping and testing various pieces of hardware and other projects, for example, Snap’s Spectacles. The lab is used daily by a small team of engineers certified to operate the equipment. • The prototyping lab is common to the electronics industry and similar in nature to the prior use of the space as a design center by Audi/VW. The lab operations will be a low intensity use that is compatible with surrounding uses and will not be obnoxious or offensive to the surrounding environment. 3 of 4 • To support the operations, the team, as part of its normal business operations, uses, stores and maintains small quantities of hazardous substances (e.g., paint and solvents) and generates small quantities of hazardous waste (e.g., e-waste) that is sent to a 3rd party for treatment and disposal. All such substances/products shall be stored, used, kept and maintained by Snap in accordance with all applicable laws, regulations or rules. The Airport’s Leasing and Licensing Guidelines (Guidelines) define authorized uses as “low intensity uses that are compatible with surrounding uses, serve the adjacent community, and are consistent with the City’s environmental goals and policies.” The Guidelines list “professional and general offices” as an example of authorized uses but not “laboratory” or “research and development” uses. The Guidelines identify as prohibited uses “any use involving the manufacture, processing, storage, or treatment of products, which by nature of the operation is likely to be obnoxious or offensive to the surrounding environment.” The Guidelines state that leases “outside the parameters established by this Policy, will require City Council approval.” Snap has provided the City with both a list of the chemicals it will be using in its electronics prototyping lab and the procedures it follows for handling and disposing of those chemicals and waste. Snap’s submission has been reviewed by the City’s Water Resources Division, which has determined that its chemical and waste handling procedures are appropriate and that Snap’s use of the chemicals pursuant to those handling procedures will not negatively impact the surrounding environment. Additionally, Snap would be required to obtain an industrial wastewater permit under Santa Monica Municipal Code Section 5.20.170 and be subject to routine inspections. The proposed modifications would require similar review and approval for any additional research and development use of the Leased Space that Snap may propose in the future. The proposed modifications would allow the tenant to consolidate its operations from other locations to their facilities at the Santa Monica Airport and would further foster a beneficial long-term tenant relationship between the City and Snap. 4 of 4 Accordingly, staff recommends that the City Council approve the modifications to the agreements for the Leased Space to permit industrial laboratory and research and development uses, including the operation of an electronics prototyping lab, and any lawful ancillary uses related thereto (e.g., the lawful disposal of any waste generated by the prototyping lab). Past Council Actions 08/14/2018 (Attachment A) Approved the Minimum Standards for Commercial Aeronautical Services 05/10/2016 (Attachment B) Approved a Lease with Snapchat, Inc. for Office Space at 2772 and 2800 Donald Douglas Loop North Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Prepared By: Kate Schlesinger, Senior Administrative Analyst Approved Forwarded to Council Attachments: A. August 14, 2018 Staff Report - Minimum Standards for Commercial Aeronautical Service B. May 10, 2016 Staff Report - Snapchat Lease and Corporate Realty Group Agreement Modification 51016 C. Snap Inc. Oaks Initiative Disclosure Form Minimum Standards for Commercial Aeronautical Services Information Department:Public Works, Airport Division Sponsors: Category:03. Consent Calendar Attachments AIRPORT LEASING AND LICENSING POLICY Consent Decree Minimum Standards for Commercial Aeronautical Service Providers August 8, 2017 Staff Report Responses to Public Comments-First Comment Period Responses to Public Comments-Second Comment Period Written Comments Recommended Action Recommended Action Staff recommends that the City Council: 1. Approve the attached Minimum Standards for Commercial Aeronautical Services (Minimum Standards) that must be met by any person or entity that provides or seeks to provide commercial aeronautical services, as an addendum to the existing Santa Monica Airport Leasing and Licensing Policy for the leasehold and license management of properties at the Santa Monica Airport (Airport or SMO). 2. Extend and clarify the City Manager’s lease-approval authority to lease terms complying with the Leasing Policy and the Minimum Standards with terms of five years or less for non-aviation tenants and three years or less for commercial aeronautical service providers, so long as the leases have an expiration date on or before December 31, 2028. Staff Report Body Summary The City of Santa Monica manages 528 direct leasable spaces located at the Santa Monica Airport. Management of these properties is guided by the Council-approved Santa Monica Airport Leasing and Licensing Policy (the “Leasing Policy”) (Attachment A). Staff recommends minor modifications to the Leasing Policy to ensure consistency with the Consent Decree (Attachment B) and adoption of the Minimum Standards (Attachment C) as an addendum to the existing Leasing Policy. The proposed Minimum Standards are based on industry best practices from general aviation airports across the nation. The City’s adoption and uniform enforcement of the proposed Minimum Standards would ensure best practices are observed by aeronautical lessees while complying with its obligations under the Consent Decree without impacting its rights as the Airport operator. Discussion Since August 8, 2017, the City Manager’s authority to execute leases at the Airport has been limited to leases complying with the Leasing Policy with expiration dates on or before December 31, 2022 (Attachment D). Staff recommends extending and clarifying the City Manager’s lease-approval authority to leases complying with the Leasing Policy and the Minimum Standards with terms of five years or less for non-aviation tenants and three years or less for commercial aeronautical service providers, so long as the leases have an expiration date on or before December 31, 2028. Anything beyond the five-year term or outside the parameters established by the Leasing Policy and Minimum Standards would require Council approval. The increased authority for lease approval would provide greater flexibility to comply with the Consent Decree’s requirements regarding use of Airport property and obtain leases that would support the City’s goal of Airport financial self-sufficiency while the Airport continues to operate through December 31, 2028. Of the 528 leases at the Airport, 400 are for aviation uses while 128 are for non-aviation uses. The proposed Minimum Standards would assist in ensuring that aeronautical service providers comply with applicable regulations and requirements while also demonstrating the City’s compliance with the standards of certain grant assurances that remain in place as a result of the Consent Decree. As a condition of receiving federal grants, the Federal Aviation Administration (FAA) requires airport owners to comply with a number of grant assurances. While the City no longer receives federal grants in connection with airport operations, under the terms of the Consent Decree that governs airport operations through December 31, 2028, the City remains bound to comply with the standards of certain specified grant assurances, including grant assurances 22 pertaining to economic nondiscrimination and 23 pertaining to exclusive rights. Accordingly, the City must continue to make the Airport available to aeronautical users on fair and reasonable terms without unjust economic discrimination and may not grant any aeronautical users an exclusive right to operate at the Airport. In connection with grant assurances that continue to apply to the Airport under the Consent Decree, the FAA has encouraged airport owners, such as the City, to adopt Minimum Standards to establish specific industry benchmarks for various types of commercial aeronautical services. Many general aviation airports in the United States have adopted such Minimum Standards, which generally set forth policy goals, objectives, and practices for leasing to commercial aeronautical service providers on airport properties. The main objective of such Minimum Standards is to ensure that each aeronautical service provider is reasonably fit and willing and able to perform the services it seeks to provide. This would promote good service and fair competition and discourage unqualified applicants. City of Santa Monica California Staff Report 2752 The Minimum Standards would establish uniform baseline requirements that must be met by providers of commercial aeronautical services at the Airport. They would not apply to non-aviation tenants of the Airport or to aviation tenants that use hangars and aircraft parking spaces for personal use. The Minimum Standards would not create any rights to operate at the Airport that do not already exist under the Consent Decree and would not detract from the City’s rights under the Consent Decree, which include the City’s right to close the Airport on or after January 1, 2029. The proposed Minimum Standards are based on best practices from general aviation airports from across the nation. Staff engaged Anderson & Kreiger LLP, a law firm specializing in federal aviation law, to conduct research on best practices nationwide to help prepare appropriate and reasonable minimum standards for the City of Santa Monica. Each of the proposed Minimum Standards is consistent with industry best practices across the United States. The proposed Minimum Standards cover a wide range of commercial aeronautical services conducted at Santa Monica Airport. The Minimum Standards include general information, application procedures, general operator requirements, and detailed specialized requirements specific to certain classes of commercial aeronautical service operators. The Minimum Standards would require all commercial aeronautical service providers to meet specified insurance and security requirements, pay market rates for their leases, pay additional fees as established by the City, maintain appropriate equipment and personnel (permitting subcontracting only with approval from the Airport Director), meet specified insurance and security requirements, and comply with applicable federal, state, and local laws, including noise restricting, environmental, and anti-discrimination laws and regulations. Community Outreach Staff conducted significant outreach prior to bringing this recommendation to Council. This outreach, summarized below, involved notifying stakeholders that have an interest in these Minimum Standards, gathering and responding to stakeholder comments, and obtaining feedback from the Airport Commission. · January 11, 2018 – notices for review and comment sent to 247 recipients including Airport tenants, aviation groups, representatives of the FAA, and Airport Commissioners. Notice posted on Airport website. · January 24, 2018 – meeting with all Airport tenants and aviation stakeholder groups to answer questions about the draft document. · February 6, 2018 – draft Minimum Standards sent for review and comment to those on the City’s Airport community distribution list, including staff from local, state and federal elective offices. Recipients were asked to forward the draft Minimum Standards to their respective airport interest groups and provide written comments by March 9, 2018. · February 12-23, 2018 – six in-person meetings with members of the Airport Commission, Friends of Sunset Park, Airport 2 Park, Venice Neighborhood Council, and Concerned Residents Against Airport Pollution. · March 9, 2018 – 34 comments were received in writing from members of the community. The majority of the comments relating to areas within the scope of the Minimum Standards fell under the following areas of concern: insurance requirements, auditing provisions, environmental requirements, Airport Director’s waiver authority, security, hours of operation for commercial aeronautical service providers, and personnel requirements. · June 5, 2018 – staff presented the revised proposed Minimum Standards including the results of the community and stakeholder outreach to the Airport Commission for review. The presentation to the Airport Commission included a document titled “Responses to Comments – First Comment Period,” which summarized the relevant public comments received, responded to those comments, and included a redline of the revised proposed Minimum Standards showing the changes made from the original draft in response to the public comments (Attachment E). Based on additional comments received from stakeholders, including insufficient time to review, the Commission recommended extending the comment period for an additional two weeks. · June 21, 2018 – deadline for second round of public comment. An additional 49 comments were received during the second phase of the comment period. Staff, in consultation with the City’s outside counsel, Anderson & Krieger, reviewed all comments and prepared a document titled “Responses to Comments – Second Comment Period,” which catalogues all of the comments received, summarizes and responds to those comments, includes a redline of the revised proposed Minimum Standards showing changes from the draft presented to the Airport Commission on June 5, 2018, and includes a redline of the Leasing Policy showing proposed changes in response to the public comments. (Attachment F) Based on feedback from the Airport Commission and additional comments received from stakeholders and community members during the second phase of the comment period, staff revised the five areas of concern listed in the proposed Minimum Standards as follows (Attachment E): 1. Insurance Requirements Staff reviewed and evaluated comments regarding proposed insurance requirements, in conjunction with the City’s Risk Manager. To develop the recommended insurance requirements for Commercial Aeronautical Service Operators at the Santa Monica Airport, the Risk Manager worked closely with the Airport Director to identify the risks associated with each service contemplated in the Minimum Standards. The Risk Manager then contacted the City’s Airport insurance brokers to discuss appropriate insurance lines (e.g., general liability, aircraft liability, pollution liability, etc.) and limits, and review insurance requirements from other airports of similar size and aeronautical service makeup. During these discussions, the Airport insurance brokers confirmed there are no fixed “industry standards” for aeronautical services insurance requirements and that there are constraints to the insurance limits that small business owners providing aircraft-related services can obtain. As a result, it was incumbent on the City to ensure the Airport risk assessment was thorough and complete, and the insurance requirements presented in the Minimum Standards document adequately protect the City and the community it serves while not unduly burdening business owners. It is the Risk Manager ’s position that this has been achieved. Significantly, after reviewing the second set of public comments, the Airport Director and the Risk Manager determined that additional risks had been identified, and, after further review of other Draft general aviation airports’ insurance requirements and further discussion with insurance brokers, the Risk Manager recommended increases to the Commercial General Liability and Pollution insurance requirements for certain aeronautical service providers. 2. Airport Directors’ Waiver Authority After review of public comments, the Minimum Standards were modified both to place stricter limits on the Airport Director’s waiver authority and to impose procedural requirements intended to ensure transparency of the waiver process. In particular, the Minimum Standards were revised to make clear that certain requirements would not be subject to waiver by the Airport Director, including insurance, airport security, nondiscrimination, and legal compliance requirements. In addition, the Minimum Standards were revised to make clear that any waiver by the Airport Director must be justified by clear circumstances rendering the waiver in the City’s best interest, must be presented to the Airport Commission and approved by the City Manager (or in certain limited circumstances the City Council), and must be recorded in a publicly available log that provides the basis for the waiver, the date of its presentation to the Airport Commission, and the date of its final approval or denial. 3. Noise Restrictions The Minimum Standards would not alter the pre-1990 noise restrictions currently set out in the Municipal Code, which are grandfathered and cannot be changed without compliance with the Airport Noise and Capacity Act of 1990 (ANCA). The Minimum Standards would require compliance with these noise restrictions. In response to public comments, the Minimum Standards were revised to make clear that the Airport Director may not waive compliance with these noise restrictions and would require certain Operators to provide pilots with information on the Airport’s Fly Neighborly Program, which suggests operational methods to decrease noise levels over residential neighborhoods. 4. Hours of Operation The Minimum Standards would not alter the Airport’s hours of operation, which are set by the Municipal Code. In response to public comments, the Minimum Standards were modified so that they would not require Operators to provide services during later evening hours, which might be viewed as encouraging operations during these hours. 5. Audit Requirements In response to public comments, the Minimum Standards were revised to require Aircraft Charter, Air Taxi Operators and Air Transportation Arrangers, for each flight providing commercial air transportation, to provide the Airport Director, on request made within 180 days, a report stating the type of aircraft, the number of passenger seats, and the number of passengers actually carried. This information would provide the Airport Director with information necessary to ensure that aircraft operations do not go beyond the scope of those permitted by Operators’ lease or license agreements and to assist in enforcement of the Airport’s noise restrictions. Staff declined to impose additional audit requirements that would require the provision of information not typically required or needed at general aviation airports. Airport Commission On July 23, 2018, staff presented the additionally revised proposed Minimum Standards reflecting the second round of public comments to the Airport Commission. The Airport Commission recommended that City Council adopt the revised minimum standards with consideration of three additional areas: · Provide more specific safety information to pilots rather than just the Fly Neighborly program; · Consider higher insurance levels for limited liability companies; and · Flag air transportation arrangers as an issue to be considered moving forward. Past Council Actions Meeting Date Description 08/08/17 (Attachment D)Council-approved Leasing Policy Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended actions. While there is no reliable way to project the possible impacts of the adoption of the Minimum Standards, the proposed standards would allow all commercial aeronautical service providers to compete at the Airport on a level playing field. Meeting History Aug 14, 2018 5:30 PM City Council Regular Meeting Powered by Granicus City Council Report City Council Meeting: May 10, 2016 Agenda Item: 8.A 1 of 6 To: Mayor and City Council From: Elaine Polachek, Asst. City Manager, City Manager's Office, Administration Subject: Office Space Lease at 2772 and 2800 Donald Douglass Loop North, and Second Modification to Professional Services Agreement No.10248 (CCS) for Commercial Real Estate Leasing Services for the Santa Monica Airport Recommended Action Staff recommends that the Council 1. Authorize the City Manager to negotiate and execute a Lease with Snapchat, Inc. (Snapchat) for office space located at 2772 and 2800 Donald Douglas Loop North, and 8 hangars, reflecting the general terms and conditions below. 2. Authorize the City Manager to negotiate and execute a second modification to professional services agreement No.10248 (CCS) in the amount of $744,844 with Corporate Realty Group (“CRG”), a California-based corporation, to provide additional commercial real estate leasing services for the Santa Monica Airport. This will result in a (3) three-year amended agreement expiring on June 30, 2018 for a total amount not to exceed $1,104,834 with future year funding contingent on Council budget approval. 3. Authorize budget changes as outlined in the Financial Impacts & Budget Actions section of this report. Executive Summary In accordance with the recently adopted Santa Monica Airport (SMO) Leasing Policy, the City is moving forward with leasing city-owned properties, including those that were formerly the subject of subleases. The City owns the two office buildings located at 2772 and 2800 Donald Douglas Loop North and eight hangars. The combined square footage is as follows: 2772 Donald Douglas has 47,343 and 2800 Donald Douglas has 23,130, for a total of 70,473. The eight hangars are small and total 8,900 square feet. Snapchat is an innovator in the creative space realm, with a specialty in image messaging. The proposed lease agreement with Snapchat is for a period of five years, with an option for an additional five year period. The base rent at full occupancy begins at $3.07 per square foot and includes an annual escalator of 3%. A real estate commission fee of $804,834 based on 5% of the value of the total 5 -year lease term, would be due to Corporate Realty Group (CRG) for the proposed lease agreement should the lease be executed on July 1, 2016 The commiss ion would 2 of 6 exceed the funding currently authorized in CRG’s agreement No. 10248(CCS) with the City. Staff anticipates the use of CRG to negotiate additional lease agreements at the Airport during FY2016-17 and FY2017-18. The anticipated commissions through June 30, 2018 would be in an amount not-to-exceed $1,104,834. Background On June 9, 2015 (Attachment A), Council authorized the City Manager to negotiate and execute a month-to-month lease with Milstein Adelman LLP for 23,130 square feet on the second and third floors at 2800 Donald Douglas Loop North and a three year lease agreement with Volkswagen Group of America (Volkswagen) for 43,471 square feet of office space and 8,900 square feet of hangar space at 2772 Donald Douglas Loop North. Milstein Adelman LLP vacated the premises in December 2015. Volkswagen gave notice that it will be vacating the premises at 2772 Donald Douglas Loop North on December 31, 2016. On February 9, 2016 (Attachment B), the City approved a first modification to increase Agreement No.10248 (CCS) with CRG by $180,000 expiring on June 30, 2016 with two annual renewals of $50,000, for a total agreement amount not to exceed $359,990 to provide assistance to City staff in negotiating leases for properties located at Santa Monica Airport, including brokerage services for vacancies that might arise within the contract period. Discussion In April, 2016 CRG notified staff that it had an offer from Snapchat to lease the subject property. Snapchat is an innovator in the creative space realm, with a specialty in image messaging. Snapchat is currently headquartered in Venice, California. Due to significant growth, Snapchat seeks additional office space in Santa Monica. Snapchat proposes to lease both buildings, with a combined square footage of 70,473 for five years, plus eight small abutting hangars for a period of five years plus one option of five years. It should be noted that the subject buildings were and/or are currently occupied by office users, (attorneys and auto designers) hence there is no change in use. Although Snapchat will modify the building with minor interior tenant improvements, Snapchat does not propose to expand the buildings. Accordingly, the proposed project is exempt from CEQA pursuant to CEQA Guidelines Section 15301. Additionally, the proposed project is exempt pursuant to CEQA Guidelines Section 15061(b)(3) in that it can been seen with certainty that the proposed project does not have the potential to significantly impact the environment, since the new and existing uses are largely the same. Snapchat will employ approximately 300 workers on site. Therefore, it should be noted that Snapchat will be subject to the transportation demand management (TDM) 3 of 6 requirements of the City in order to address, any transportation and/or parking management issues. Moreover, Snapchat would be required to comply with all city building code regulations, planning standards, and any applicable FAA regulation, as a condition of the lease. Finally, the lease is consistent with the terms of the voter- approved Measure LC passed in 2014 to regulate future use of SMO property. At full occupancy, the rent shall be $3.07 per square foot, and includes a 3% annual escalation provision. Annual rent paid by Snapchat to the City will be approximately between $2.9M and $3.2M, depending on the year. The proposed rent reflects a market price. Securing this major tenant helps ensure the Airport Fund’s financial self - sufficiency and allow it to repay its $13M debt obligation to the City. Additionally, Snapchat has agreed to spend at least $1.4M in tenant improvements in the two buildings. Any improvements undertaken by Snapchat will revert to the City at the conclusion of the lease term. If Snapchat installs the required tenant improvements, the City will provide a rent credit equal to five months of rent. Commencement Date: Upon execution of Lease Document Term Ends: January 31, 2022 or 67 months from the date of lease execution. Options One five-year option at Fair Market Value Base Rental Rate Rent and absorption of the premises shall be in accordance with the following schedule (includes a three percent annual increase). Execution Date – December 2016: $69,390.00 / month or $3.00/SF Modified Gross – 23,130 SF January 2017 – December 2017: $243,866.90 / month or $3.07SF Modified Gross. January 2018 – December 2018: $251,182.91 / month or 4 of 6 $3.16/SF Modified Gross January 2019 – December 2019: $258,718.39/ month or $3.26 SF Modified Gross January 2020 – December 2020: $266,479.95/ month or $3.36/SF Modified Gross January 2021 – December 2021: $274,474.34/ month or $3.46/SF Modified Gross January 2022 $282,708.57/ month or $3.56/SF Modified Gross Escalations 3% per year starting January 2018. Parking is not subject to escalators. Tenant Improvement Allowance Tenant shall receive a rent credit that is equivalent to Five (5) Months’ rent, with one month payable on January of each year, for a total of ($1,402,784.99) Parking at full occupancy 133 parking spaces at $150 per month equals to $19,950 per month. Modification to CRG Contract Should the proposed lease be approved and executed, the real estate commission fee due to CRG would exceed the current amount authorized in the City’s Agreement No. 10248(CCS). CRG’s real estate commission fee is based on 5 percent of the initial 67 months term. The commission for this proposed lease is estimated to be $804,834. 5 of 6 Staff anticipates CRG will negotiate additional leases in FY 2016-17 and FY 2017-18. Staff anticipates $150,000 in commissions to be paid in each of the fiscal years. Therefore, staff recommends a second modification to increase the professional services agreement with CRG by $744,844 for a total agreement amount not to exceed $1,104,834 expiring on June 30, 2018 for additional commercial lease brokerage and negotiation services for the Santa Monica Airport. It should be noted should Snapchat exercise its option to renew for an additional five - year lease at fair market value, the City would have a future commission obligation to CRG. This obligation would be based on 3% of the value of the total lease term for years six through ten. Financial Impacts & Budget Actions The recommended lease with Snapchat Inc. will generate an estimated $1,782,225 in Airport revenues for FY2016-17, at account 33431.402120. Revenue increases associated with the new lease agreements will be included in the FY 2016-17 Proposed Budget and FY 2017-19 Proposed Biennial Budget. The agreement modification to be awarded to CRG is $744,844 for an amended agreement total not to exceed $1,104,834. In addition to the current budget of $259,990, award of the agreement modification requires an appropriation of $844,844 from the Airport Fund to account 33431.555060 in FY 2015-16. Prepared by: Nelson Hernandez, Senior Advisor to the City Manager Prepared By: Nelson Hernandez, Senior Advisor for Airport Affairs Approved Forwarded to Council 6 of 6 Attachments: A. Staff Report June 9, 2015 B. Staff Report February 9, 2016 C. Written comments D. Powerpoint REFERENCE: Agreement No. 10919 (CCS) & Modified Agreement No. 10302 (CCS)