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HomeMy WebLinkAboutStaff Report 3.C 03/19/2018DATE: March 19, 2018 Agenda Item #3. TO: Honorable Mayor and Members of the City Council through City Manager FROM: Dan St. John, F.ASCE — Public Works and Utilities Director Bob Patterson — Airport Manager SUBJECT: Adoption of an Ordinance Approving a Commercial Lease Agreement Between Mangon Aircraft, Inc., and the City of Petaluma for Hangar 18D Located at the Petaluma Airport for Operation of a Flight School and Related Aircraft Storage; Approving Amendment 1 to the Lease Agreement Between Petaluma Pilot Training Center,. Inc. and the City to Hangar 18B to Terminate that Lease Agreement; and Approving Amendment 3 to the Ground Lease Agreement Between Mangon Aircraft Inc. and the City of Petaluma to Delete Flight School Operations As a Permitted Use Under that Lease RECOMMENDATION It is recommended that the City Council Approve for Second Reading and Adoption of an Ordinance Approving a Commercial Lease Agreement Between Mangon Aircraft, Inc., and the City of Petaluma for Hangar 18D Located at the Petaluma Airport for Operation of a Flight School and Related Aircraft Storage; Approving Amendment 1 to the Lease Agreement Between Petaluma Pilot Training Center, Inc. and the City to Hangar 18B to Terminate that Lease Agreement; and Approving Amendment 3 to the Ground Lease Agreement Between Mangon Aircraft Inc. and the City of Petaluma to Delete Flight School Operations As a Permitted Use Under that Lease. BACKGROUND On March 5, 2018, the City Council unanimously approved the first reading of an ordinance approving a commercial lease agreement between Mangon Aircraft, Inc., and the City of Petaluma for Hangar 18D located at the Petaluma Airport. Mangon will operate a flight school and provide related aircraft storage. The ordinance also approves Amendment 1 to the lease agreement between Petaluma Pilot Training Center, Inc. and the City to Hangar 18B to terminate that lease agreement. In addition, the ordinance approves Amendment 3 to the Ground Lease Agreement Between Mangon Aircraft Inc. and the City of Petaluma to delete flight school operations as a permitted use under that lease. The recommended action provides for a second reading and adoption of the ordinance. FINANCIAL IMPACTS The proposed action to terminate the existing aircraft storage lease of hangar 18B and to initiate a new commercial lease of Hangar 18D at a 50% higher commercial lease rate will increase airport revenue by $4,721 per year for the same size space. ATTACHMENTS 1. Ordinance 2 Attachment 1 EFFECTIVE DATE ORDINANCE NO. N.C.S. OF ORDINANCE Introduced by Seconded by ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING REAL ESTATE TRANSACTION DOCUMENTS, BETWEEN THE CITY OF PETALUMA, AS LANDLORD, MANGON AIRCRAFT, INC., AS TENANT AND PETALUMA PILOT TRAINING CENTER AS TENANT, AND AUTHORIZING THE CITY MANAGER TO EXECUTE ALL DOCUMENTS NECESSARY TO COMPLETE THE REAL ESTATE TRANSACTION WHEREAS, Section 46 of the Charter of the City of Petaluma requires that specified actions for the acquisition, sale, or lease of real property be taken by Ordinance; and, WHEREAS, Landlord owns and operates the Petaluma Municipal Airport located at 601 Sky Ranch Drive, Petaluma, CA., which has been improved with hangars, among which are hangars commonly referred to as Hangar 18B and 18D located within the Aviation Commercial Zoning Area ("Premises"); and WHEREAS, WHEREAS, on March 26, 2105, Landlord and Petaluma Pilot Training Center, Inc., a California Corporation and subsidiary of Tenant, ("PPTC") entered into a lease consistent with form lease documents approved by the Petaluma City Council on February 24, 2014, by Resolution No. 2014-024 N.C.S., approving the use of form Hangar Lease Agreement, for Hangar 1813, also referred to herein as the Leased Premises; and WHEREAS, Mangon Aircraft, Inc. is the Parent Company of PPTC currently leases City property located at 501 Sky Ranch Drive and such lease allows for Tenant to offer flight instruction and aircraft rental; and WHEREAS, Tenant desires to move its flight instruction and aircraft rental to the Leased Premises at Hangar 18D; and WHEREAS, on January 12, 2015, Tenant submitted an application requesting that it be allowed to offer flight instruction and aircraft rental at the Leased Premises of Hangar 18D; and WHEREAS, PPTC and Landlord agree to terminate the lease between PPTC and Landlord for Hangar 1813, effective immediately, to allow for Mangon Aircraft, Inc. to lease the 3 Leased Premises of Hangar 18D for the purpose of flight instruction and training of personnel in flight instruction; and WHEREAS, Landlord deems it advantageous to itself and the operation of the Airport to lease certain portions of Airport land and facilities as further described herein, together with certain privileges, right, uses and interest therein, as hereinafter set forth for the proposed use set forth in the Application; and WHEREAS, Amendment three (3) to the Mangon Aircraft Inc. Lease would require flight instruction and aircraft rental to take place in Leased Premises of Hangar 181); and WHEREAS, the City Council finds this action qualifies for categorical exemption under the California Environmental Quality Act (CEQA) pursuant to Title 14, Chapter 3 of the California Code of Regulations (CEQA Guidelines), sections 15061, 15301 because: a. The proposed plan is consistent with the General Plan Use; b. The project is a permitted use at the Petaluma Municipal Airport; c. The project would not result in any significant effects relating to traffic, noise, air quality, d. or water quality; e. There are no exceptions that would preclude application of the exemption; and f. The project is adequately served by all required utilities and public service. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA AS FOLLOWS: Section 1: Findings. Based upon the City staff report, presentation, and input at the public meeting, based upon substantial evidence in the record, the City Council hereby makes the following findings: a. The above recitals are true and correct, and incorporated herein. b. The Lease is consistent with the City's following the Grant Assurances because it promotes Aviation, follows adopted commercial lease standards, and treats all parties fairly. c. The Lease is consistent with the Lease Standards because of the application process. Section 2: The City Council approves the Commercial Lease Agreement between the City of Petaluma, as landlord, and Mangon Aircraft, Inc., as Tenant for Hangar 18D as attached herein as Exhibit A to the Resolution. Approval of the Commercial Lease Agreement is contingent upon the execution of Amendment No. 1, as attached hereto as Exhibit B. Section 3: The City Council approves Amendment No. 1 to the Hangar Lease Agreement, between the City of Petaluma, as Landlord, and Petaluma Pilot Training Center, as Tenant, a copy of which is attached hereto as Exhibit B. 11 Section 4: The City Council approves Amendment No. 3 to the Lease Agreement between the City of Petaluma, as Landlord, and Mangon Aircraft, Inc., as Tenant, a copy of which is attached hereto as Exhibit C. Section 5: On behalf of the City, the City Manager is authorized and directed to execute documents substantially in accordance with Exhibits A, B, and C as determined by the City Attorney, and all other documents reasonably necessary to complete the lease transaction. Section 6: If any section, subsection, sentence, clause, phrase or work of this Ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of competent jurisdiction or preempted by State legislation, such decision or legislation shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Petaluma hereby declares that it would have passed and adopted this Ordinance and each and all provisions thereof irrespective of the fact that any one or more of said provisions be declared unconstitutional, unlawful other otherwise invalid. Section 5: This Ordinance shall become effective thirty (30) days after the date of its adoption by the Petaluma City Council. Section 6: The City Clerk is hereby directed to publish or post this Ordinance or a synopsis for the period and in the manner provided by the City Charter and any other applicable law. INTRODUCED and ordered posted this _ day of 2018. ADOPTED this _ day of , 2018 by the following vote: Ayes: Noes: None Abstain: None Absent: None ATTEST: Claire Cooper, CMC, City Clerk David Glass, Mayor APPROVED AS TO FORM: Eric W. Danly, City Attorney 5