SR 09-24-2019 3A
City Council
Report
City Council Meeting: September 24, 2019
Agenda Item: 3.A
1 of 5
To: Mayor and City Council
From: Susan Cline, Director, Public Works, Airport
Subject: Execute Lease Agreement with Santa Monica Air Center for Land at 3021
and 3025 Airport Avenue and Auxiliary Storage Structures
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a Lease with Santa Monica
Air Center Inc., a California-based company, for the land underlying and
immediately surrounding the buildings located at 3021 and 3025 Airport Avenue,
and the land directly beneath four storage units and one T-hangar in an area
adjacent to these buildings for a term through December 31, 2028 at a monthly
base rent of $30,690 per month.
2. Authorize budget changes as outlined in the Financial Impacts & Budget Actions
section of this report.
Summary
As part of operating the Santa Monica Airport, the City enters into leases for buildings
and facilities under the Airport Leasing and Licensing Policy with all proceeds going to
the Airport Fund for airport operations and maintenance. Santa Monica Air Center, Inc.
(SMAC) is a long-term Airport tenant that has leased City-owned land under and
adjacent to Barker Hangar. Over time, SMAC’s business has evolved
from providing aviation services as a fixed-base operator to organizing and holding
special events at Barker Hangar. SMAC also subleases to subtenants for both aviation
and non-aviation uses. As the Airport Leasing and Licensing Policy precludes
subleasing for City-owned buildings, this is the final airport lease to be brought into
compliance with that Policy.
SMAC’s land lease expired on June 30, 2015. Since then, SMAC has remained a
holdover tenant. Staff negotiated a new proposed lease with SMAC to:
2 of 5
1. Reduce the area of the leased premises to the land underlying and immediately
surrounding the buildings located at 3021 and 3025 Airport Avenue (includes
Barker Hangar) and directly beneath four storage units and one T -hangar
used for events held at Barker Hangar;
2. Increase the base rent to a fair market value of $30,690 per month, subject to 3
percent annual increases beginning on the third year of the lease. The term of
the proposed lease agreement is through December 31, 2028. In order to
accommodate the City’s plans to expand Airport Park, the proposed lease will
include conditional clauses allowing the City to terminate the lease, for the
portions of the leased land that would accommodate the expansion, after two
years, with six-months written notice.
Under the terms of the proposed lease, SMAC would retain ownership of the buildings
and pay for improvements for these buildings during the lease term, but ownership of
the buildings and improvements would be transferred to the City upon termination of the
lease.
Discussion
The City executed lease agreement #8545 with SMAC on March 16, 2006 for
approximately 300,000 square feet of land at the Santa Monica Airport. The lease
permitted SMAC to sublease buildings, conduct aviation-related activities, and conduct
non-aviation activities including using the space (primarily Barker Hangar) for special
events and filming activities. The lease expired in June 30, 2015, and since that time
SMAC has, with the permission of the City, retained possession of the premises on a
month-to-month basis pending negotiation and execution of a new lease agreement
with the City. Currently SMAC’s monthly base rent is $19,420 per month.
The proposed new lease with SMAC would reduce the size of the leasable land from
approximately 300,000 square feet to approximately 99,000 square feet. The land
subject to the proposed new lease consists of three separate parcels: Premises A,
which is approximately 90,000 square feet of land underlying and immediately
surrounding the building located at 3021 Airport Avenue (Barker Hangar); Premises B,
3 of 5
which is approximately 7,000 square feet of land underlying and immediately
surrounding the building located at 3025 Airport Avenue (adjacent to Premises A); and
Premises C, which is 2,000 square feet of land adjacent to Premises A that underlies
four storage units and one T-Hangar used by SMAC for business purposes. Attachment
A contains three exhibits (A, B, and C) showing the three parcels constituting Premises
A, B, and C.
SMAC would be responsible for all utilities, services, repairs, replacements,
maintenance, improvements or items related to compliance associated with the
premises. SMAC would also be responsible for paying possessory interest taxes directly
to the County of Los Angeles and for any other taxes that may be levied on the
premises during the lease.
The proposed lease would allow SMAC to use the premises for event space, wholesale
and retail sales, filming, general office space, and related uses. All other uses will be
subject to reasonable approval from the City. During the lease term, SMAC would be
allowed to retain existing subleases and enter into new subleases on Premises A, B and
C. Subleases on the larger areas formerly leased by SMAC but excluded from the
proposed lease (“Added Event Areas”) would be terminated. Attachment A contains
three exhibits showing the Added Event Areas: Exhibit D (East Parking Areas A and B),
Exhibit E (Taxi lane), and Exhibit F (West Parking Area B-1).
The proposed lease would also grant SMAC priority, subject to availability, for the use of
the Added Event Areas for events (whether for parking or other event-related needs) as
long as SMAC provides the City with more than 72 hours’ notice of their intent to use
these areas. Use of the Added Event Areas would be either pursuant to a license
agreement for parking at a cost of $2 per space per day, or on a short-term, fixed daily
area rental rate that would range from $140 to $1,540 depending on the particular
Added Event Areas used.
The term of the proposed lease would be from September 24, 2019 through December
31, 2028. To accommodate the City’s plans to expand Airport Park into Premises B,
4 of 5
Premises C, and certain parts of the Added Event Areas, the proposed lease would
include provisions that: (a) allow either party to terminate the lease for Premises B on
six months’ notice any time after two years following lease commencement; (b) allow
the City the right to terminate the lease for Premises C on six months’ notice any time
after two years following lease commencement; and (c) allow SMAC to terminate the
lease in its entirety on six months’ notice if two of the Added Event Areas (East Parking
Areas A and B) are permanently removed from availability for SMAC’s use during
events or in the event SMAC, with reasonable documentation, demonstrates that SMAC
business operations are no longer financially viable.
SMAC currently owns the buildings on the leased land and will remain responsible for
implementing improvements on the leased land (including Barker Hangar), with the
exception of the driveway east of Barker Hangar that is approximately 15,500 square
feet where the City will be responsible for the one-time capital cost of paving the
driveway within the first five years of the lease term. Under the terms of the proposed
lease, SMAC would retain ownership of the buildings and pay for improvements during
the lease term, but ownership of the buildings and improvements would be transferred
to the City upon termination of the lease.
Financial Impacts and Budget Actions
Staff budgeted $294,420 in lease revenue for FY 2019-20 from SMAC, which
represented an anticipated increase in rental revenue from $19,420 to $25,000 per
month for 11 months. Under the proposed agreement, the annual leasing revenue will
be $336,724, with the commencement date of September 24, 2019, later than
previously anticipated. Therefore, the recommended lease with SMAC will generate an
additional $42,304 in Airport revenues during FY 2019-20 in account 57500001.409900.
5 of 5
Prepared By: Stelios Makrides, Airport Manager
Approved
Forwarded to Council
Attachments:
A. Exhibits A, B, C, D, E, F
B. Santa Monica Air Center, Inc. Oaks Initiative Disclosure Form
0 200 400
ft
This map of the City of Santa Monica has been provided for illustration purposes only.Every reasonable effort has been made to ensure the
accuracy of the maps provided,however,some information may not be accurate.The City of Santa Monica ("City")provides this map on an
"AS IS"basis.The City assumes no liability for damages arising from errors or omissions.THE MAPS ARE PROVIDED WITHOUT WARRANTY
OF ANY KIND,either expressed or implied,including but not limited to,the implied warranties of merchantability and fitness for a particular
purpose.Do not make any business decisions based on this map before validating your decision with the appropriate City office.
Notes
Legend
City Boundary
Aerial Imagery
Santa Monica 4in Aerial Imagery 2017
Red: Band_1
Green: Band_2
Blue: Band_3
Los Angeles Region Imagery Acquisition Consortium (LARIAC) Program | Los Angeles Region Imagery Acquisition Consortium (LARIAC) | Emilio Solano
Los Angeles County
Assessor
500 W Temple Street
Los Angeles, CA 90012
esolano@assessor.lacounty.gova
Exhibit A
Premises A - 3021 Airport Avenue 90,000 Sq. Ft.
0 200 400
ft
This map of the City of Santa Monica has been provided for illustration purposes only.Every reasonable effort has been made to ensure the
accuracy of the maps provided,however,some information may not be accurate.The City of Santa Monica ("City")provides this map on an
"AS IS"basis.The City assumes no liability for damages arising from errors or omissions.THE MAPS ARE PROVIDED WITHOUT WARRANTY
OF ANY KIND,either expressed or implied,including but not limited to,the implied warranties of merchantability and fitness for a particular
purpose.Do not make any business decisions based on this map before validating your decision with the appropriate City office.
Notes
Legend
City Boundary
Aerial Imagery
Santa Monica 4in Aerial Imagery 2017
Red: Band_1
Green: Band_2
Blue: Band_3
Los Angeles Region Imagery Acquisition Consortium (LARIAC) Program | Los Angeles Region Imagery Acquisition Consortium (LARIAC) | Emilio Solano
Los Angeles County
Assessor
500 W Temple Street
Los Angeles, CA 90012
esolano@assessor.lacounty.gova
Exhibit B
Premises B - 3025 Airport Avenue 7,000 Sq. Ft.
0.0
Miles
0.0
Notes
Legend
0.020
1:1,128
Disclaimer: This map of the City of Santa Monica has been provided for illustration purposes only. Every reasonable effort has
been made to ensure the accuracy of the maps provided, however, some information may not be accurate. The city of Santa
Monica ('City") provides this map on an "AS IS" basis. The City assumes no liability for damages arising from errors or
omissions. THE MAPS ARE PROVIDED WITHOUT WARRANTY OF ANY KIND, either expressed or implied, including but not
limited to, the implied warranties of merchantability and fitness for a particular purpose. Do not make any business decisions
based on this map before validating your decision with the appropriate City office.
Address Numbers
Public Places
City Boundary
Exhibit C
Premises C - Hangar and Storage Units 2,000 Sq. Ft.
0 200 400
ft
This map of the City of Santa Monica has been provided for illustration purposes only.Every reasonable effort has been made to ensure the
accuracy of the maps provided,however,some information may not be accurate.The City of Santa Monica ("City")provides this map on an
"AS IS"basis.The City assumes no liability for damages arising from errors or omissions.THE MAPS ARE PROVIDED WITHOUT WARRANTY
OF ANY KIND,either expressed or implied,including but not limited to,the implied warranties of merchantability and fitness for a particular
purpose.Do not make any business decisions based on this map before validating your decision with the appropriate City office.
Notes
Legend
City Boundary
Aerial Imagery
Santa Monica 4in Aerial Imagery 2017
Red: Band_1
Green: Band_2
Blue: Band_3
Los Angeles Region Imagery Acquisition Consortium (LARIAC) Program | Los Angeles Region Imagery Acquisition Consortium (LARIAC) | Emilio Solano
Los Angeles County
Assessor
500 W Temple Street
Los Angeles, CA 90012
esolano@assessor.lacounty.gova
Exhibit D
Parking Area East
Parking A
r
e
a
E
a
s
t
A
Parki
n
g
A
r
e
a
E
a
s
t
B
0 450 900
ft
This map of the City of Santa Monica has been provided for illustration purposes only.Every reasonable effort has been made to ensure the
accuracy of the maps provided,however,some information may not be accurate.The City of Santa Monica ("City")provides this map on an
"AS IS"basis.The City assumes no liability for damages arising from errors or omissions.THE MAPS ARE PROVIDED WITHOUT WARRANTY
OF ANY KIND,either expressed or implied,including but not limited to,the implied warranties of merchantability and fitness for a particular
purpose.Do not make any business decisions based on this map before validating your decision with the appropriate City office.
Notes
Legend
City Boundary
Aerial Imagery
Santa Monica 4in Aerial Imagery 2017
Red: Band_1
Green: Band_2
Blue: Band_3
Los Angeles Region Imagery Acquisition Consortium (LARIAC) Program | Los Angeles Region Imagery Acquisition Consortium (LARIAC) | Emilio Solano
Los Angeles County
Assessor
500 W Temple Street
Los Angeles, CA 90012
esolano@assessor.lacounty.gova
Exhibit E
Taxilane
0.0
Miles
0.0
Notes
Legend
0.020
1:1,128
Disclaimer: This map of the City of Santa Monica has been provided for illustration purposes only. Every reasonable effort has
been made to ensure the accuracy of the maps provided, however, some information may not be accurate. The city of Santa
Monica ('City") provides this map on an "AS IS" basis. The City assumes no liability for damages arising from errors or
omissions. THE MAPS ARE PROVIDED WITHOUT WARRANTY OF ANY KIND, either expressed or implied, including but not
limited to, the implied warranties of merchantability and fitness for a particular purpose. Do not make any business decisions
based on this map before validating your decision with the appropriate City office.
Address Numbers
Public Places
City Boundary
Exhibit F
West Parking Lot (B-1 Parking Lot)
CITY OF SANTA MONICA
OAKS INITIATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by
an entity, rather than an individual person, the information includes the name of every
person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten
percent interest in the entity.
Public benefits include:
1. Personal services contracts in excess of $25,000 over any 12-month period;
2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12-
month period;
3. Purchase, sale or lease of real property to or from the City in excess of $25,000
over a 12- month period;
4. Non-competitive franchise awards with gross revenue of $50,000 or more in any
12-month period;
5. Land use variance, special use permit, or other exception to an established land
use plan, where the decision has a value in excess of $25,000;
6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12-
month period; or
7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12-
month period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: ____________________________Title: __________________________
Signature: ______________________________________ Date: ________________
Email: ____________________________________ Phone: ____________________
FOR CITY USE ONLY:
Bid/PO/Contract # ____________________________ Permit # ___________________________
REFERENCE:
Lease No. 10940 (CCS)