HomeMy WebLinkAboutStaff Report 5.B 02/23/2004CITY OF PETALUMA, CALIFORNIA
AGENDA BILL
February 23, 2004
Agenda Title:
Meeting Date:
Adoption of Resolution Approving Assignment of Walter R.
February 23, 2004
Mangon Ground Lease at the Petaluma Municipal Airport to
Mangon Aircraft, Inc.;
Meeting Time: ® 3:00 PM
Introduction of Ordinance Authorizing Amendment No. 1 to Walter
❑ 7:00 PM
R. Mangon Ground Lease
Category (check one): F-1Consent Calendar ElPublic Hearing New Business
❑ Unfinished Business ❑ Presentation
Department:
Director:
Contact Person:
Phone Number:
Public Facilities &
Rick Skladzien
Rick Skladzien/ , '-.
_707-778-4303
Services
, ._ ,_ -
Mike Glose
Cost of Proposal: N/A
Account Number: N/A
Amount Budgeted: N/A
Name of Fund: N/A
Attachments to Agenda Packet Item: Resolution approving assignment of airport lease agreement
between the City of Petaluma and Walter R. Mangon, dated September 6, 1988, to Mangon Aircraft, Inc.;
ordinance authorizing Amendment No. 1 to lease between the City of Petaluma and Walter R. Mangon,
dated September 6, 1988, including said amendment with attached site map (Exhibit A) of surrendered
premises.
Summary Statement:
To optimize the number of new hangars planned for construction at the Petaluma Municipal Airport, it was
proposed that an additional row of T hangars be placed adjacent to and partially on a portion of the Mangon
Aircraft Repair leasehold. This addition would not only help serve the sizeable demand for hangar space,
but would also generate, over time, substantial added income for the airport. To this end, the Petaluma
Airport Commission has come to mutual agreement with the president of Mangon Aircraft Repair, Walter
Mangon, to amend his existing lease with the City to allow the City to reacquire approximately 34,020
square feet of the leasehold to accommodate the development of this extra row of hangars (see site map to
lease amendment, Exhibit A, "Surrendered Premises"), Mr. Mangon also seeks the City's consent to assign
the lease to Mangon Aircraft, Inc., a corporation he has formed to operate his business. If the Council
approves this assignment, then the lease amendment would be entered into with Mangon Aircraft, Inc.
Recommended City Council Action/Suggested Motion:
Adopt resolution approving assignment of airport lease agreement between the City of Petaluma and
Walter R. Mangon, dated September 6, 1988, to Mangon Aircraft, Inc.;
Per PMC Charter section 46, introduce an ordinance approving Amendment No. 1 to September 6, 1988
ground lease between the City and Walter R. Mangon, and authorizing the City Manager to enter into the
amended lease agreement.
Reviewed by Finance Director:
Rev wed b Cit torne :
<ate:
ApprQ ity Mana er:
Date:
ate r°
- 1 �ffF/
Today's Date: _
Revision # and Date Revised:
File Code:
#
1/30/03
s:\pf&s\airport\agreements
CITY OF PETALUMA, CALIFORNIA
FEBRUARY 23, 2004
AGENDA REPORT
FOR
INTRODUCTION OF ORDINANCE AUTHORIZING AMENDMENT NO. 1 TO WALTER R. MANGON
GROUND LEASE LOCATED AT THE PETALUMA MUNICIPAL AIRPORT
1. EXECUTIVE SUMMARY:
To optimize the number of new hangars planned for construction at the Petaluma
Municipal Airport, it was proposed that an additional row of T hangars be placed
adjacent to and partially on a portion of the Mangon Aircraft Repair leasehold. This
addition would not only help serve the sizeable demand for hangar space, but would also
generate, over time, substantial added income for the airport. To this end, the Petaluma
Airport Commission has come to mutual agreement with the president of Mangon
Aircraft Repair, Walter Mangon, to amend his existing lease with the City to allow the
City to reacquire approximately 34,020 square feet of his leasehold to accommodate the
development of this extra row of hangars (see site map to lease amendment, Exhibit A,
"Surrendered Premises"). Mr. Mangon also seeks the City's consent to assign the lease to
Mangon Aircraft, Inc., a corporation he and his son have formed to operate their business.
If the Council approves this assignment, then the lease amendment would be entered into
with Mangon Aircraft, Inc.
2. BACKGROUND:
On September 6, 1988, Walter R. Mangon, President of Mangon Aircraft Repair, entered
into agreement with the City of Petaluma to lease a parcel approximately 63,120 square
feet in size, located at the Petaluma Municipal Airport, where he established a fixed -base
commercial operation. As of September of 2003, Mr. Mangon had occupied the premises
for 15 years of the 40 -year lease. The current rental fee of $.30 per square foot, reflects
the agreement's built in 5 -year, $.05 per square foot cost -of -living increases, and is
consistent with other airport base ground rental agreements.
In exchange for surrender of this portion of his leasehold, Mr. Mangon will receive the
following remuneration: 1) a reduced rental rate to reflect the reduced size of the
premises being leased, 2) proportionate rent credit for the surrendered premises,
retroactive to May 1, 2002, and a credit for possessory interest taxes he has paid to the
County since that same date for the surrendered portion of the premises, in consideration
of actual date of vacating that portion of the leasehold, and 3) extension of the term of the
lease through September 6, 2038. In addition, Mangon Aircraft will enjoy additional
parking space, with the continuation of the new hangar taxiway up to the Mangon
building. The lease amendment also adds clarifying language to the existing lease
provisions allowing assignment and subletting.
Mr. Mangon has recently formed a corporation, Mangon Aircraft, Inc., to operate his
business, and has asked that he be allowed to assign his ground lease to the new
corporation, and also that the amendment to the lease be between the City and Mangon
Aircraft, Inc. as lessee. It is anticipated that assignment of the lease to Mangon Aircraft,
Inc. will have no impact on the operation of the business. Therefore a resolution is
attached to approve this assignment, and the attached proposed lease amendment is
drafted with Mangon Aircraft, Inc. as lessee.
3. ALTERNATIVES:
a) Refuse consent to assignment of the lease.
b) Approve lease amendment, as presented.
c) Modify the proposed lease amendment.
d) Reject the lease amendment, thereby reducing the scope of the hangar
development project.
4. FINANCIAL IMPACTS:
The potential added hangar rental income, with the addition of the extra row of hangar
facilities, will exceed by far any future income the City would receive from continued
ground lease rental of the surrendered portion of the Mangon leasehold, including the rent
and tax credit. The airport has enjoyed a good working relationship with Mangon
Aircraft Repair, benefiting from the services it provides to local and visiting pilots. It has
been a challenge to attract this type of fixed base operation to Petaluma, and the Airport
Commission is in agreement that an extension of the lease will assure continued financial
benefits to the airport.
5. CONCLUSION:
The extra row of T -hangars will be a welcome source of additional revenue for the
airport. We have appreciated Mr. Mangon's cooperation in coming to a mutual
agreement.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR
COMPLETION'
Success will be measured by the construction and subsequent rental of an extra row of
hangars, made possible by surrender of the described portion of the Mangon leasehold.
7. RECOMMENDATION:
Adopt resolution approving the assignment by Walter R. Mangon of his ground
lease at the Petaluma Airport to Mangon Aircraft, Inc.
Per PMC Charter section 46, introduce an ordinance approving Amendment No. 1 to
September 6, 1988 ground lease between the City and Walter R. Mangon, and
authorizing the City Manager to enter into the amended lease agreement.
s\pf&s\airport\agenda
Resolution No.
061
of the City of Petaluma, California
TO APPROVE ASSIGNMENT OF AIRPORT LEASE AGREEMENT
BETWEEN THE CITY OF PETALUMA AND WALTER R. MANGON,
DATED SEPTEMBER 6,1988, TO MANGON AIRCRAFT, INC.
WHEREAS, On or about September 6, 1988, the City of Petaluma, as Lessor, and
Walter R. Mangon, as Lessee, entered into that certain "Lease Agreement Petaluma Municipal
Airport" ("Lease") by which Walter R. Mangon leased approximately 63,120 square feet of real
property at the Petaluma Municipal Airport as more particularly described in Exhibit A to the
Lease; and
WHEREAS, pursuant to paragraph 18 of the Lease, Walter R. Mangon has requested
that Lessor consent to his assignment of his interest as Lessee in the Lease to his business
corporation, MANGON AIRCRAFT, INC.
NOW, THEREFORE BE IT RESOLVED that the City Council of the City of
Petaluma hereby consents to Walter R. Mangon's assignment of his interest as Lessee in the
"Lease Agreement Petaluma Municipal Airport" dated September 6, 1988 to Mangon Aircraft,
Inc.
Under the power and authority conferred upon this Council by the Charter of said 1
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the
Council of the City of Petaluma at a (Regular) (Adjourned) (Special) meeting
onthe .......................... day of......................................................1 20......, by the
following vote:.
AYES:
NOES:
ABSENT:
ATTEST:........................................................................................
City Clerk
Council File ...................................
Res. No . .................................. N.C.S.
Approved as to
form
.......................................
City Attorney
................................................................................................
Mayor
ORDINANCE NO. N.C.S.
Introduced by Seconded by
AN ORDINANCE OF THE COUNCIL OF THE CITY OF PETALUMA
AUTHORIZING AN AMENDMENT TO THE LEASE OF REAL PROPERTY
LOCATED AT THE PETALUMA MUNICIPAL AIRPORT
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA AS
FOLLOWS:
Section 1. The City of Petaluma is planning a hangar expansion project at the Petaluma
Municipal Airport, in the City of Petaluma, County of Sonoma, State of California. The City
would like to include in the expansion a portion of the premises covered by a pre-existing Lease
Agreement between the City and Walter R. Mangon as Lessee, dated September 6, 1988, which
Lease has now been assigned by Walter R. Mangon to Mangon Aircraft, Inc. as Lessee. To this
end, the City and the Lessee have agreed to terms for amendment of the Lease Agreement so that
a portion of the current leasehold will be surrendered back to the City and can be included in the
City's hangar expansion project. Therefore, the City Council hereby authorizes amendment of
the Lease Agreement as proposed in the "Amendment Number One to Lease Agreement"
attached hereto as Attachment "A", which is incorporated herein by reference, and the City
Manager is hereby authorized to sign such Amendment.
Section 2. If any section, subsection, sentence, clause or phrase or word of this ordinance
is for any reason held to be unconstitutional, unlawful or otherwise invalid by a court of
competent jurisdiction, such decision 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
1
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 or otherwise invalid.
Section 3. This ordinance shall become effective thirty (30) days after the date of its
adoption by the Petaluma City Council.
Section 4. The City Cleric is hereby directed to post this ordinance for the period and in
the manner required by the City Charter.
INTRODUCED and ordered posted/published this
ADOPTED this day of
AYES:
NOES:
ABSENT:
ATTEST:
City Clerk
ord
/03 (fink)
2
day of
2004 by the following vote:
Mayor
APPROVED AS TO FORM:
City Attorney
2004.
ATTACHMENT A
RECORDING REQUESTED BY,
AND WHEN RECORDED PLEASE
RETURN TO:
Mail Tax Statements:
Mangon Aircraft, Inc.
Petaluma Municipal Airport
501 Sky Ranch Drive
Petaluma, CA 94954-3908
AMENDMENT NUMBER ONE TO LEASE AGREEMENT
PETALUMA MUNICIPAL AIRPORT
This Amendment Number One to Lease Agreement Petaluma Municipal Airport ("Amendment")
is made and entered into as of the day of , 2004, by and between the
CITY OF PETALLMA, a political subdivision of the State of California, as Lessor, and
MANGON AIRCRAFT, INC., as Lessee.
RECITALS
A. On or about September 6, 1988, the CITY OF PETALUMA (hereafter "Lessor") and
Walter R. Mangon, as lessee, entered into that certain "Lease Agreement Petaluma
Municipal Airport" ("Lease") by which Walter R. Mangon leased approximately 63,120
square feet of real property at the Petaluma Municipal Airport as more particularly
described in Exhibit A to the Lease.
B. Pursuant to paragraph 18 of the Lease, Walter R. Mangon has requested that Lessor
consent to his assignment of the Lease to MANGON AIRCRAFT, INC. as Lessee
(hereafter "Lessee"), and Lessor has consented to the assignment.
C. Lessor is planning a hangar expansion project and would like to include in the expansion
a portion of the premises covered by the Lease, hereinafter referred to as "the
Surrendered Premises."
1
Mangon Lease Amendment No. 1 -Draft date 1/28/04
D. The parties wish to amend the Lease to provide for (i) return of the Surrendered Premises
to Lessor; (ii) reduction of the rent to reflect the reduced size of the premises being leased
by Lessee; (iii) a rent credit in consideration for Lessee's actual vacation of the
Surrendered Premises prior to execution of this Addendum; (iv) Lessee's ability to assign
the Lease with Lessor's consent; and (v) extension of the tern of the Lease through
September 6, 2038.
AGREEMENT
Now therefore, the parties hereby amend the Lease as follows:
1. The premises covered by the Lease shall be amended to exclude the Surrendered
Premises. The parties agree that the Surrendered Premises is approximately 34,020
square feet, in the area shown on Exhibit A attached hereto as "Surrendered Premises."
Within ninety (90) days following execution of this Amendment, Lessor shall cause to be
prepared a survey to determine the exact square footage of the remaining premises
subject to the Lease (shown on Exhibit A as "Amended Mangon Lease"), and shall
prepare a legal description thereof which will be attached to this Amendment as Exhibit
B. Lessee hereby surrenders any and all interest it may have in the Surrendered Premises
under the Lease.
2. The provisions set forth in paragraph 2(a) of the Lease for the base ground rental rate per
square foot shall remain unmodified by this Amendment, however, it is acknowledged
that the total rental due shall be reduced as of May 1, 2002, to reflect the reduced square
footage of the leased premises as described in Exhibits A and B to this Amendment.
3. In consideration of Lessee's actual vacation of the Surrendered Premises on or about
April 18, 2002, Lessor hereby grants to Lessee a rent credit to compensate Lessee for
excess rental paid to the City of Petaluma and possessory interest taxes paid to the
County of Sonoma by Lessee from and including May 1, 2002, through and including the
execution of this Amendment. The total amount of such credit shall be $23,315.85, and
shall be credited to Lessee in thirty-six (36) successive rental installments in the amount
of $647.66 each, commencing with the first rental payment due after execution of this
Amendment.
2
Mangon Lease Amendment No. 1 -Draft date 1/28/04
4. Paragraph 18 of the Lease is hereby amended to read as follows:
It is agreed that Lessee is authorized to assign this lease with the
prior written approval of Lessor, which approval shall not be
unreasonably withheld. It is further agreed that Lessee is
authorized to sublet, with the prior written approval of Lessor, a
portion of the premises to an independent contractor for the
purpose of assisting Lessee in the full utilization of the Limited
Service Commercial Operation as described herein; provided,
however, that as a condition of receiving Lessor's prior written
approval to sublet to any independent contractor for such allowed
use or uses, Lessee shall provide Lessor with a copy of the
proposed sublease for Lessor's approval. Any such sublease
and/or other agreements entered into by Lessee and the
independent contractor shall specify that they shall be subject to
the terns and conditions of this lease. Signed copies of all such
subleases and/or agreements shall be furnished to Lessor upon
execution.
5. The term of the Lease is extended to September 6, 2038.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and
year first above written.
CITY OF PETALUMA, a political MANGON AIRCRAFT, INC.
subdivision of the State of California
City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
, President
3
Mangon Lease Amendment No. 1 -Draft date 1/28/04
Department Director
• "XVITAW
Risk Manager
Finance Director
agrmt
11/13/03 (fmk)
Mangon Lease Amendment No. 1 -Draft date 1/28/04
City of Petaluma
MANGON LEASE PARCEL
NOTE:
ALL LINES ARE PLOTTED FROM DEED DESCRIPTIONS
AND DRAWN ON THE PHOTO. NO FIELD SURVEY WAS
PERFORMED.
EXHIBIT A
CITY OF PETALUMA CITY O F P E T A L U M A I- II""" 12/31/03 I 1 �'
MANGON LEASE PARCEL DEPARTMENT OF PUBLIC C"ECKED 011. GLOSE Irr
FACILITIES AND SERVICES N.T.S.
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S. ALLEN AIRPORT PHOTO I cc