HomeMy WebLinkAboutAgenda Bill 5.C 06/07/2004I A
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CITY OF rETALUMA, CALIFORNIA_
AGENDA BILL
June 7., 2004
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Agenda Title
Meeting_ Date:
June 7, 2004
Introduction of Ordinance Authorizing Amendment No. 1 to Two -
Niner Inc. Ground Lease Located at the Petaluma'Municipal Airport
Meeting Time ® 3:00 PM
❑ 7:00 PM
- Category (check one ❑Consent Calendar . ❑ Public 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.Budueted N/A
Name of Fund: N/A
Attachments to Agenda Packet item
® Ordinance authorizing Amendment ,No. 1 to agreement ; between the City of Petaluma and Two-
Niner Inc., dated April 3, 1989, including said amendment with attached site map (Exhibit A)
Summary Statement
Too optimize the ..number of new'han ars fanned for construction.at the Petaluma Municipal Airport, it was
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proposed that four box hangars be placed adjacent to and partially on , a portion of the Two - Niner, Inc.
leasehold. This addition would not only help sere 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 mu tual agreement with the president of Two- Niner, Inc., Marion Hodge, to
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acquire approximately 43,818 square feet of her leasehold to accommodate the development of these four
planned box hangars (see site map to lease amendment, Exhibit A, "Surrendered Premises ").
Recommended City Council Action /Suggested .Motion
Per Petaluma Municipal Code, Charter section 46, introduce an ordinance approving Amendment No. 1 to
April 3, 1989 ground lease between the City and Two- Niner-, Inc., and authorize the City Manager to enter
into the amended lease agreement.
Reviewed by Finance Director:
' Reviewed by City Attorney
A roved b 'Cit Mana er:
Date•
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- Date:
Date.
Toda ' at :
Revision # d
evised:
File Code :
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12/19/0
s:pf &s /airport/ceagends /agreements
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CITY OF PETALUMA, CALIFORNIA
JUNE 7, 20'04
AGENDA REPORT
FOR
INTRODUCTION OF ORDINANCE AUTHORIZING AMENDMENT No. I To TWO - MINER, INC.
GROUND LEASE LOCATED.AT THE PETALUMA MUNICIPAL AIRPORT
EXECUTIVE SUMMARY
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To optimize the number of new hangars planned for construction at the Petaluma
Municipal Airport,it was proposed that four box. hangars: be placed adjacent to and
partially on a portion of the Two-Ni ner Inc: 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 lend, the Petaluma Airport Commission
has come to mutual agreement with the president of Two -Niner Inc., Marion Hodge, to
acquire approximately 43,818 square feet of her leasehold to accommodate the
development of these planned box hangars (see site map to lease amendment, Exhibit A,
"Surrendered Premises ").
2. BACKGROUND
On April 3, 1989, Marion Hodge, President of Two -Niner Inc., entered into agreement
with the City of Petaluma to lease a parcel approximately 3 acres in size, located, at the
Petaluma Municipal Airport, where she established a. fixed -base commercial operation.
As of April of 2004; the Two - Niner Association had occupied,the premises for 15 years
of their 35 -year lease., The current rental rate reflects the agreement's built in cost -of-
living increases, and is consistent with other airport base ground rental agreements.
Amendment No. 1 to the Two =Niner lease proposes the following provisions:
The City (Lessor)
1) Return of the Surrendered Premises to Lessor.
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Two -Niner Diner (Lessee)
1) Reduction of the rent to reflect:the reduced size of the premises being leased by
Lessee.
2) Provide a,rent credit in consideration for improvements constructed by Lessee on the
Surrendered Premises.
3) Lessee's>ability to assign the Lease with Lessor's consent.
4) Lesee's one -time right of first - refusal to rent one of the new City hangars.
5) Lesee's first right to negotiate. a new lease at the 'end of the term.
6) Extension of the term of the Lease through March 31, 2039.
Staff believes that theproposed provisions of the lease - amendment will be beneficial to
both the Lessee and the City, by making the surrendered premises available to the City
and by providing security and stability for this important tenant, thus encouraging
additional investment in its businesses and facilities.
3. ALTERNATIVES:
a) Approve lease amendment as presented.
b) .Modify the proposed lease amendment.
c) 'Reject the lease amendment, thereby reducing the scope of the hangar
development project by four .box hangers.
4. FINANCIAL IMPACTS
With the addition of the four extra box hangars, the potential rental income will exceed
by far anyTature income the City might receive from continued ground lease rental. The
City is currently receiving approximately $1,200 inmonthly payment:for the :surrendered
premises, while the minimum estimated income with four planned box hangars on the
sameparcel.is'$4,000 to $5 per month. The airport has benefited from the services
the Two -Hiner Association provides to local and visiting pilots, and recognizes thatthis
type of fixed base operation has been difficult to attract to Petaluma. At the same time,
Two- Niner, Inc. will benefit from. the additional potential clients which the extra hangars'
will most certainly draw. The Airport Commission is in agreement that an extension of
the lease will`be of mutual benefit to both parties.
5. - CONCLUSION
The four additional box hangars will be a welcome source of additional revenue for the
airport. We have lappreciated Ms. Hodge's cooperation in coming to a mutual agreement.
6. OUTCOMES FOR 'PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR
COMPLETION:
Success will be measured bythe construct ion .and subsequent rental of the`four.additional
box hangars, madepossible by surrender ofthe described portion of the Two =Nines
leasehold.
7. RECOMMENDATION
Per Petaluma Municipal Code, Charter section 46, introduce an ordinance :approving
Amendment No. 1 to April 3, 1 -989 ground Jeasel between the City and Two - Niner, Inc.,
and authorize the City Manager to enter into the amended lease agreement.
s \pf& s\airpbrt \agend a
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ORDINANCE NO.
Introduced by
N.C.S.
Seconded by
AN ORDINANCE ,OE THE 'COUNCIL OYTHE CITE' OF PETALUMA
AUTHORIZING AN AMENDMENT TO THE LEASE OF REAL PROPERTY
LOCATED AT THE PETALUMA,` U NICIPAL AIRPORT
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PETALUMA AS
FOLLOWS:
® Section 1 . A hangar expansion project is planned 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 Two -Niner Inc., dated. April 3,, 1989. To this ,end, the Lease Agreement is amended as
proposed, per Attachment "A ", which is incorporated herein by reference, and the City Manager
.is hereby authorized to sign the amended Lease Agreement for the'purpose of.including a portion
of the current Two - Niner- Inc. leasehold in the hangar expansion.
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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
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 (3'0) days after the date of its
adoption by the Petaluma City Council.,
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Section 4 . The City Clerk is hereby directed to post this ordinance for ,the period and in.
the mannerrequired by the City Charter.
INTRODUCED and ordered posted/published this day of , 2004.
ADOPTED this day of
AYES':
NOES
ABSENT:
ATTEST:
City Clerk
ord
/03 (fmk)
2004 by the following vote:
Mayor
APPROVED AS TO FORM:
City Attorney
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a
RECORDING REQUESTED BY,
AND WHEN RECORDED PLEASE
RETURN TO:
Mail Tax Statements:
As Before
ATTACHMENT A.
AMENDMENT N UMBER .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 PETALUMA, a political subdivision of the. State of California, hereinafter referred to
as "Lessor" and TWO- NINER, INC., a California corporation, hereinafter referred to as
"Lessee."
RECITALS
A. Lessor and Lessee„ are parties to that, certain "Lease Agreement Petaluma Municipal
Airport" dated April 3, 1,989 including an undated "Addendum to Lease Agreement
Petaluma Municipal' Airport," signed for Lessor by Gene Beatty and for Lessee by
Marion Hodge, (collectively, "Lease ").
B. 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," including a portion of the landscaping, paving and other
improvements constructed thereon by Lessee.
C. 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 improvements constructed by Lessee on
the Surrendered Premises; (iv) Clarification of Lessee's ability to assign and sublet the
Lease with Lessor's consent; (v) extension of the term of the Lease through March 31,
2039; and (vi) the grant to Lessee of additional rights as set forth below.
Two -Nines Lease Amendment No. 1
AGREEMENT
The Lease is hereby amended 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 41
square feet, in .the area shown on Exhibit A attached hereto as "Surrendered Premises."
Within ninety (9.0) 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 Two- Niner. ,Lease "), and shall
prepare z 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' urrendered 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.
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that the total rental due shall be reduced . pro -rata as of the date of execution of this _
Amendment to reflect the ,reduced square footage of the leased premises as described in
Exhibits A and B to this Amendment.
I In consideration of landscaping, paving and other improvements constructed on the
Surrendered Premises by Lessee, Lessor herebygrants to Lessee a "Computed Credit" in
the aggregate sum of $65,200.00, to be credited to Lessee in successive equal rent
installments over the period beginning January 2004 and ending February 1,.2016.
In the event the Lease is' terminated for any reason prior' to February 1, 2016, Lessor
shall, within sixty (60) days of such termination, pay to Lessee the full amount of the
Computed Credit remaining unpaid as of such termination date.
4. As part of the consideration for Lessee's agreement to surrender the Surrendered
Premises hereunder, Lessor hereby grants to Lessee a "right of first refusal" to rent, on
terms acceptable to Lessor, any one of the four proposed new executive hangars to be
built upon the Surrendered' Premises at such! time as it shall become vacant and available
for rent. Such "right of first refusal" shall be exercisable by Lessee only once, therefore
once Lessee elects to rent an .executive hangar by use of such right of first refusal, if
Lessee thereafter ceases to rent that hangar', Lessee shall not subsequently have any
special preference for the rental of that or any other of the four executive hangars.
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1'wo -Nines Lease Amendment No. 1
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5. Paragraph 18 of the Lease is hereby amended to read as follows:
Lessee is authorized to assign this lease and/or sublease the
premises; subject to the terms and. conditions of this lease. Any
such assignment-and/or sublease shall be subject to the approval of
Lessor, which approval shall not be unreasonably withheld. Such
assignment and/or subleasing shall 'specify, that the assignee and/or
sublessee shall be °subject to the terms and conditions of this lease.
Signed copies' of all such assignments and/or subleases shall be
furnished' to Lessor upon execution.
6. Paragraph 22 of the Lease 'is hereby amended to read as follows:
Lessee shall have the first right to negotiate with Lessor for a new
lease at the beginning of the last „year of the terms of this lease,
which right maybe exercises by providing written notice thereof to
Lessor no later than one hundred eighty (180) days prior to the last
day of this lease. Provided Lessee furnishes such notice to Lessor
® within the aforementioned time period, a new lease shall be
negotiated and effective as of the end of this lease term. If Lessee
® and Lessor do not execute such a new lease by such date, Lessor
shall have the right to negotiate a lease with any other interested
party or not to lease the premises at all.
7. The term of the Lease is extended to March 31, 2039.
IN WITNESS WHEREOF, the parties hereto have executed, this Amendment as of the day and
year first above written.
CITY OF PETALUMA, a political
subdivision of the State of California
City Manager
ATTEST:
TWO- NINER, INC., a California
corporation
By
Name
Title
• City Clerk
(signatures continued on next page)
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Two -Niner Lease Amendment No. 1
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APPROVED AS TO FORM:
City Attorney
APPROVED:
Department,Director
APPROVED:
Risk Manager
APPROVED:
Finance Director
agrmt
5/3/04 (fmk)
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Two -Hiner Lease. Amendment No. I
City of Petaluma
TWO —MINER LEASE PARCEL
NOTE:
ALL LINES ARE PLOTTED F DEED DESCRIPTIONS
AND DRAWN ON THE PHOTO. NO FIELD SURVEY WAS
PERFORMED.
DESKNED IFD SHEET
CITY OF P&ALTiMA C I T Y bY PIF T A L U M- A 11' 12_ a 1 /03
TWO-NINER LgA8E PARCEL DEPARTMENT OF PUBLIC
I�J 'jL ITY
jC . - Al� Q IDPOWN BY; N.T.S. �c, AD
PETALUMA AIRPORT —1
= NWFH'MC W&ELL BLVD. PETALUUk 94084. 778-4303 rZO FLL
B; kLLEk,,.. J1 AIRPORT PHOTO