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CITY OF 7ETALUMA, CALIFORNIA
3
AGENDA BILL,
• Agenda Title: Meeting Date:
Introduction of Ordinance for Airport Hanger Ground Lease January 16, 2001
Department: Director: Contact Person: Phone Number:
Public Facilities & Skladzien Close Batty 707 778 4345
Services
Cost of Proposal: n/a A Account.Number:
N/A
Amount Budgeted: n/a Name of Fund:
Attachments to Agenda Packet Item:= •
Lease Agreement
Ordinance Approving Lease Agreement
Summary Statement:
The Petaluma Municipal Airport has property planned and available for the development of privately
owned executive-type hangers. The. Airport Commission has previously approved the agreement and
recommends the development of the pared, located next to the Pflendler hanger. Development of this
area is consistent with the Airport.Layout.Plan.
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Council Priority: THIS AGENDA ITEM IS CONSIDERED TO BE PART OF, OR NECESSARY TO, ONE OR
MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30, 1999
AND MARCH 18, 2000.
Priority(s): N/A
Recommended City Council Action/Suggested-Motion:
Introduce the Ordinance approving the lease agreement and directing the City Manager to enter into the
agreement. -
Reviewed by Finance.Director: Reviewed by City Attorney;-, Approved by City Manager:
illDate: Date: --7 ,.. Date:
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Today's Date: Revision #'and Date Revised:. `File Code:
December 1, 2000 - .
CITY OF PETALUMA, CALIFORNIA
• January 16, 2001
• AGENDA REPORT
FOR
GROUND LEASE AGREEMENT — AIRCRAFT HANGER
1. EXECUTIVE SUMMARY: The Petaluma Airport has spaceavailable for the development of privately
owned aircraft hangers. Mr. Bud'Toly has agreed to enter into asground'lease for the purpose of
building a private executive-type aircraft;hanger on a city-owned,site next to an existing hanger. The
location conforms to the Land Use-Plan for the airport (see,attached,site plan). Mr. Toly is willing to
enter into a long-term lease agreement and to pay for all improvements to the site, including utility
extensions. The lease rate, at 25 cents per square foot of parcel space, is consistent with similar airport
land leases in the area The term of the lease is thirty (30)years?,with a first right of refusal for an
additional twenty (20) years,subject to obtaining a mutually agreeable lease with the City. An annual
CPI adjustment is included in the rate.
2. BACKGROUND:, Last summer, Mr. Toly and others approached-the Airport.Commission regarding
interest in obtaining a long-term lease.to erect a private executive hanger at the airport. After several
months of discussion, the other parties withdrew from the project. Mr. Toly is interested in proceeding
with the lease and construction on his own. The development of the•hanger would contribute to the
overall development of the airport property and is,consistent in location with the Airport Land Use Plan.
• In consideration that the airport currently has no funds to develop or extend utilities and other
improvements to the building site Mr. Toly agrees to front the cost of those improvements. The City
has offered a"credit" on his rent, based on actual documented expenses, to off set those costs not to
exceed $20,000, computed at 40% of his base rent. Based on an approximately lot size of 20,000 sq ft,
revenue to the City during the initial 30 year period would be,$150,000, plus CPI. At the end of the
term of the lease, the City could negotiate a renewal or may`takepossession of the improvements for use
as the City sees fit in accordance;withthe use regulations.
3. ALTERNATIVES:
Recommend modifications to the-lease
Not approve the lease and opt for the City to build it's own building or wait for some other proposal at
some future date.
4. FINANCIAL IMPAC-TS:
Development of this project will provide another long-term tenant at the airport. Tenant will purchase
fuel and other services from the airport and-its other tenants, thereby increasing the viability of the
airport. No development costs will be attributed to the City. Development fees will be assessed.
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Airport Hanger Lease •
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December 1, 2001
Page 2
5. CONCLUSION:
The proposal is consistent with the development,guidelines of the airport and would be a welcome
addition to the existing facilities, both public and private.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESSOR COMPLETION:
Success will be measured by the timeline for construction contained in the lease;agreement.
7. RECOMMENDATION: -
Approve the lease agreement and introduce the ordinance approving the lease.
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g./forms/2000 Agenda Bill devised 042 100
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NON:COMMERCIAL,LEASE AGREEMENT
PETALUMA MUNICIPAL AIRPORT
THIS LEASE AGREEMENT is made and, entered into as of the day of
20 by and between. the CITY OF PETALUMA, a political "subdivision of the State of California,
hereinafter referred to as "Lessor" or "City" and Bud Toly, hereinafter referred to as "Lessee."
WITNESSETH
WHEREAS, the Lessor herein is a political subdivision duly organized and operating under the laws of
the State of California, and owns E1l1 that certain real property located at the. Petaluma Municipal
Airport, Petaluma, California, a city airport, hereinafter referred°to as "Airport"; and
WHEREAS, Lessor deems it advantageous to itself and the operation of the Airport to lease unto
Lessee a certain parcel of land described herein, together with certain privileges, right, uses and
interest therein, as hereinafter settforth;°and •
• WHEREAS, Lessee proposes to lease a :ground area consisting :of those portions of the Petaluma
Municipal Airport described in Exhibit "A" and shown on the plat marked,Exhibit "B," attached hereto
• and incorpofated herein by reference (the "Premises"). Said properties shall be used as a general
aviation aircraft storage hangar; and
WHEREAS„Lessee ha"s'indidated,a willingness and ability to properly keep and maintain and improve
the leased ground in accordance with'standards established-by Lessor;;and
WHEREAS, Lessee desires to obtain and avail itself of the=privileges, rights', uses and interest therein
and herein.
NOW, THEREFORE,IT:IS;AGREED AS FOLLOWS:
1. TERM
Lessor, for and;in consideration of all the covenants, conditions, and'agreements to be set forth
hereinafter to'be kept and performed by Lessee and by Lessor, does hereby lease unto Lessee,
on all the conditions; :covenants, terms and agreements hereinafter set forth, those certain
premises described in Exhibits A„andB attached hereto and incorporated herein, for a term of
• thirty (30) years, commencing on and ending on
Lessor hereby grants to Lessee a first right of refusal to extend this lease by not more than
twenty (20) years, subject-to obtaining a mutually agreeable lease with Lessor.
2. RENTAL •
Lessee shall pay to Lessor a rental in accordance with the following provisions:
(a) The annual base ground rental for the total premises, as described in Exhibits A and B
shall be at $0.25 per square foot. Said rental shall be payable in advance, on execution
of this lease, for the first year of this.;lease. Thereafter, the rentalh"rate for the;.remaining
period of the lease term shall be determined at the commencement of each successive
lease,year period at the rental rate applicable for the immediately'preceding lease year
adjusted for an increase in the Bureau of Labor Statistics Cost ofLiving Index - San
Francisco.- Oakland, all items; for said preceding year. In no event,lshall the rental rate
for any lease year be less than the applicable rental rate for the immediately preceding
lease year..
(b) Beginning with the second lease year; thetbase ground rent shall be'payable, in advance,
in semi-annual'installments for each (6) six-month period of the lease. Lessor shall send
a billing for such semi-annual payment.thirty. (30) days prior to-the due date; however,
failure by Lessor to send, or failure'by Lessee to receive, such billing, shall not excuse
Lessee's obligation to pay rent hereunder nor constitute a waiver by Lessor of its:right
to rent under this Lease. In the event such payment is not made within.,five (5) days of
the due date, there shall be a penalty of six percent (6%) of the amount due and owing,
which penalty shall become part of that' rental payment:
Furthermore,, and in addition thereto, any amount'of rental payment, and penalties •
• unpaid after thirty (30) days shall have a one and one-half percent (1'A%)' per month
interest charge on the unpaid;amounts, which interest shall likewise become,part,of the
rental payment.
• (c) In consideration of costs associated with off-site improvements, including extension of
utilities, Lessor shall grants. to Lessee a credit against the semi-annual rental; as
provided hereafter: Such credit shall:be pro-rated equally among-the semi-annual lease
payments, not to exceed forty percent (40%)'of any one senii-anrival-payment; until'full'
credit, as defined hereafter, is received._ "Full credit".shall mean actual out-of-pocket,
documented expenses for the off-site improvements, not to exceed $20000. Lessee
shall provide Lessor*with documentation of any expenses claimed under-this provision
when claiming all or any part of such credit.
3. ' OFF-SITE IIVIPROVEMENTS
Lessor 'shall set the necessary boundary monuments and grade stakes on the leased premises at
Lessee's 'expense. . Lessee shall provide a paved taxiway, or ramp to the leased premises' of
,adequate width to permit access to csaid premises by taxiing aircraft, as may be required by
Lessor. Lessee shall not be responsiblefor maintenance of any off-site improvements.
4. ON-SITE IMPROVEMENT REQUIREMENTS; DEADLINE FOR COMMENCEMENT OF
• CONSTRUCTION'
The Lessee shall be required to construct on the Premises a building'. in conformity with all
applicable laws, ordinances, rules and regulations. The building shall be approved by the Site
Plan and Architectural Review Committee of the City of Petaluma, or, at the Option of the
Community Development Director, by administrative SPARC approval. If Lessee has not
secured all necessary administrative approvals and commenced actual construction on or before
the date which is twelve months after the commencement of this Lease, then this Lease shall
become null and void, and Lessee shall promptly vacate the leased premises. If Lessee has not
' completed construction within twenty-four (24) months of the commencement of this Lease,
then this Lease shall become hull and void, and Lessee shall promptly vacate the leased
premises.
5. UTILITIES
Lessee shall pay for all water; sanitary sewage, gas,•service, electric power, telephone service,
and all other services supplied to the said premises by Lessor, or any public utility, and shall
pay all costs for the installation and connection to such services.
6. USE OF PREMISES •
The leased premises shall be used as follows:
• (a) For the storage of general aviation aircraft in a hangar to.be.constructed by Lessee.
(b) Common Facilities
Lessee and/or Sublessee shall have the right of access to and use of facilities at Airport
designed for common use, such as landing area, aprons, taxiways, flood lights, landing
light, beacons, navigational aids, tower communication, public address systems, and
other common use facilities supplied by Lessor for convenience and accommodation in '
operation, landings, and take off of aircraft. The rights herein extended to Lessee shall
be inclusive of the rights to:land,rtake off; taxi, tow, load, or unload'aircraft.
(c) Lessee and/or Sublessee 'shall not conduct scheduled' air carrier operations on the
premises or at the airport.
(d) Air charter services, if desired, will be subject to the restrictions as may be required by
the City of Petaluma;"or'other regulatory agencies which may apply.
7. OPERATION OF AVIATION BUSINESS BY LESSEE
Conditions of Federal Grant:
(a) This lease shall be subordinate and subject-to the Grant Agreement, by and between the
United States of America, Federal Aviation Agency, and Lessor, and subsequent grants
and agreement.
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8. SURETY BOND
Prior to'the commencement of construction of the hangar, Lessee, at its sole cost and expense; •
shall 'furnish the Lessor a surety bond of,an admitted surety company licensed to transact
business in.the State of California and satisfactory to Lessee, in a sum not less than Five
Hundred Thousand Dollars ($50Q000) or substitute security guarantee as maybe approved by
the City.
9. MAINTENANCE AND REPAIRS
Lessee shall, at.his.sole cost and expense, keep and maintain said.premises:and appurtenances,
and every pan thereof, in good and sanitary order, condition and repair, and hereby waives all
right to,make repairs at the expense of Lessor as provided in Section 1942„et seq., of the Civil
Code of the State of California. Any failure to maintain or make said repairs upon being
notifiedbyLessor shall constitute a default by Lessee.
10. ALTERATIONS AND ADDITIONS`
Subsequent to completion of die improvements and facilities as herein agreed to, Lessee:shall
not make any alterations to the exterior thereof or erect any additional structures or
improvements on the leased premises; without prior written consent of Lessor: Any such
exterior alterations or,additions approved by Lessor shall be constructed at the sole expense of
Lessee.
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11. SIGNS •
Lessee shall be privileged to erect such signs as comply with applicable City of Petaluma
ordinances and to place the same upon the. improvement,to be erected pursuant hereto: The
text color, and design of all signs shall be subject to the prior approval of Lessor.
12. UNLAWFUL USE
No building, structure, or.improvement of any kind shall be erected, placed=upon;:operated, or
maintained on the leased'premises, nor shall any business or operation be conducted or carried
on therein or thereon in violation of any ordinance, law, statute, order, or rule •of any
governmental agency having jurisdiction.thereover, nor shall any use be made of the leased
premises which has.not,been specifically allowed.
13. . WASTE, QUIET CONDUCT
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Lessee, shall not commit, or suffer to be committed, any waste upon said premises, or any
nuisance .or other act or,'thing which may disturb the quiet enjoyment of the use of the
surrounding airport property
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14: RULES, REGULATIONS, POLICIES AND STANDARDS •
• Lessee agrees to observe and obey .all rules and regulations, promulgated and enforced by
Lessor or any other="appropriate`authbrity having jurisdiction•over-the Airport during the term of
this lease.
15. INSURANCE
Lessee agrees to procure and maintain,at its own cost and expense, and at all times during the
term of this lease, comprehensive liability insurance naming Lessor, its officers, boards,
commissions, employees and agents as additional insureds in the following amounts: property
damage, $ bodily injury, $ per person; and
$ per occurrence:
Evidence of such insurance shall be provided by Lessee by filing with the Lessor a copy of the
policy or policies, together with a•duly executed certificate of the insurer to the effect that the
insurance required by this lease is in force and effect. •Said policy or policies or certificates
shall contain a provision that written notice of cancellation or any material change shall be
delivered to the Lessor ten (10) days in advance of the effective date thereof Lessee shall also
secure and maintain fire and extended coverage insurance on the buildings and structures to be
erected by Lessee as a part;ofthe'aviation operation created,by this Lease Agreement. Said
insurance coverage shall be to the full insurable value of the structures and buildings and
• contents as erected and placed upon the leased premises; subject to the customary deductible
for the construction of hangar facilities, and shall name Lessor as'an additional insured. Lessee
further agrees that in the event of any fire or partial or complete destruction of the structures
erected by Lessee, any proceeds of'insurance ,received..by Lessee shall be held in trust and
utilized solely in the replacement, reconstruction, or repair of the damaged or destroyed
improvements.
16. TAXES
Lessee agrees to pay prom" ptly all'taxes and assessments related to items of property including
both real and personal property within the purview''of'this Lease, which may be levied or
assessed upon said properties leased or owned by Lessee, as.Lessee's interest may appear when
the said taxes and assessments become due and pa 'able during the'occupancy of the leased
premises under any levy or assessment by County, City or other legally authorized
governmental authority.
17. INSPECTION AND NOTICE •
Insofar as it may be necessary for the protection of;the<Lessor's rights, the Lessor or its agents
shall at any and all reasonable times, and upon reasonable notice to Lessee, have the right to go
upon and inspect the land and premises hereby leased'and any structure or improvement erected
• or constructed', or in-the course of being erected or constructed, repaired, added to, rebuilt, or
restored thereon.
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18. ASSIGNMENT OR SUBLETTING
It-is-agreed that Lessee is,authorized to sublet the leased premises to a Sublessee, subject,to the
terms and,conditions of this lease. Any such sublease shall be subject to-the written approval of
Lessor; which approval shall,not be unreasonably withheld.
19: . IMPROVEMENTS
It is agreed that all improvements constructed by Lessee shall be deemed 'personal property
during the term of this lease, and that during the term of this lease and any•extension thereto
Lessee shall at all times have legal title to said improvements, but Lessor shall have a.lien
thereon to secure faithful performance of Lessee's obligations under the approval of Lessor.
Lessors lien shall"be subordinate to a security instrument, approved by Lessor, and'held by any
recognized lending institution but, shall not be subordinate to any other encumbrance of any
kind: Said security instrument shall not provide-for'renioval of said improvements.
20. INSOLVENCY, ETC.
If;the Lessee be adjudicated as bankrupt or become insolvent, or if possession of any interest in
the leased premises shall be taken,by virtue of any attachment, execution, or receivership, the
Lessor may, at its election, unless such bankruptcy proceedings be terminated in favor of its
election, unless such bankruptcy proceedings be terminated in favor of Lessee and such
insolvency be cured, or such possession regained within ninety (90) days thereafter, •
immediately terminate this lease by service of notice to such effect upon:Lessee in any manner
provided`:bylaw:.
21. LENDER:SECURITY
Notwithstanding, anything to the contrary contained in this lease, it is understood and agreed
that Lessee may, without the consent of Lessor, assign, transfer, mortgage or encumber
Lessee's:interest-under this lease and leasehold-estate created, to a lender„on the security of the
leasehold estate for sole purpose of providing security for thesrepaydente of a loan:or loans
made' and used to finance the construction of substantial improvements' by Lessee upon the
leased premises and Lessee may:execute any and all instruments in connection therewith
necessary and proper to complete .any such loan and perfect the security therefor as may be
required by 'such lender. Any such lender,_shall have the right at any time during the term
hereof and while this lease is in full force and effect
(a) •To do any act or thing required of Lessee hereunder and all such acts or things done
hereunder shall be as effective'to prevent a forfeiture of Lessee's rights hereunder as if
done by Lessee;.
(b) To realize on the security of the leasehold estate and to acquire and succeed to the
interest:of the Lessee hereunder by foreclosure on by a deed of'assignment given in lieu '
of foreclosure and thereafter at such lender's option to convey or assign the interest or
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title,to this leasehold estate to any other person "subject to the terms, conditions and
•, covenants of this lease; and
(c) To cure, within sixty (60) days after, notice of default by Lessee under the terms of this
lease.
A copy' of any security devices or other 'instrutnents .shall be filed with Lessor prior to the
effective date,thereof and the Lessee shall give Lessor prior written notice of changes thereto.
22. SURRENDER OF POSSESSION
At the expiration of the leasehold term, Lessee agrees to yield and deliver to Lessor the
possession of the leased premises and all buildings; fixtures, physical improvements and
appurtenances erected by Lessee pursuant to paragraph.4.hereof
23. DEFAULT
In the event of default' by Lessee' 'in,*the performance of any of the terms, covenants, or
conditions hereof, including the failure to pay rent, Lessor shall make written demand by
registered mail upon Lessee.to,remedy said default and if, thereafter, Lessee remains in default
for sixty (60) days; Lessor, by and"through its Airport Manager, shall have the right to take
immediate possession of said premises During said sixty-day. (60) period, Lessee may appeal
to the Petaluma City Council'and request consideration of any circumstances claimed to cause
such default, provided that any such circumstances shall not be'deemed to be a waiver of such
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default, in the event the City Council extends the aforesaid sixty-clay (60) period.
No waiver of Lessor or default by Lessee of any Of the terms, covenants, or conditions hereof
to be performed, kept, or;.observed by Lessee shall be construed to be or act as waiver by
Lessor of any subsequent default of any of the terms; covenants, and conditions herein
contained to be performed, kept, and observed,by Lessee.
24. RESERVATION AS TO NAVIGATIONAL AID
Lessor reserves the right"during the'term of this lease;:or any renewal.and/or extension thereof,
to install air navigational aids; including .lighting, in on, over, under, and across the leased
premises. In the exercise of any of therights hereof,Lessor. agrees to give Lessee not less than
ninety (90) days' written notice of'its 'intention to install such air navigational aids. If the
Lessee's 'enjoyment of the premises'under this.lease is substantially interfered'with by any such
installation, the Lessee's.rent,shall be ieduced in proportion to such interference.
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25. INDEMNITY
Lessee hereby, covenants and agrees' to, and shall, indemnify, save harmless and defend, the
Lessor, its ,agents. officers and/or employees against all claims; demands, costs, and liabilities
which
may be `made against Lessor py reason of.or arising from anything done,.performed, or
omitted to be done or performed on the leased premises by the Lessee or arising out of Lessee's
performance of its obligations pursuant to this .agreement: 'However, this indemnity does not
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extend to any loss, damage or expense arising out of the negligence or willful misconduct of
the Lessor, its agents, employees or officers..
26. EMINENT DOMAIN
It is .expressly agreed by Lessor and Lessee that in the event eminent domain proceedings are
undertaken by any governmental agency affecting the whole of the Airport, or any part•thereof,
which would adversely affect Lessee's interest hereby Lessee shall be entitled.to compensation
by virtue thereof, consistent with current eminent domain laws and appraisal,procedures.
27. NATIONAL:EMERGENCY
In the event that,a national emergency or a declaration by federal, state or county government
causes a drastic curtailment o£civilian aviation activities, Lessee shall be entitled to submit a
' request for reduction in the;lease rental rate. Lessee shall be entitled to present:facts and:data to
show that such 'a; curtailment has taken place and that the curtailment has seriously”affected
Lessee's utilization of the leased premises. If such facts and data indicate that a reduction in
lease.rent is warranted, then Lessor;and Lessee shall.agree to negotiate a reduction in;the_rental
rate during the period of curtailment.
28. NOTICES
Any and all notices to be given under this lease, or otherwise, may be seived,by enclosing the
same in a sealed envelope addressed to the party intended to'receive the,same, at its address; . •
•and deposited in,the United.States Post Office as registered mail with postage prepaid. When
so given, such notice shall be effective from the date of the mailing of the same. For the
purpose thereof, unless otherwise provided in writing by the parties hereto, the address of the
Lessor; and the proper party to receive(any such notices on its behalf is:
.,City Clerk
City of Petaluma
11'English Street
Petaluma, California 94953
and•the address,of the Lessee is
• Bud Toly
1340 Commerce Street
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Petaluma, California 94954
29. INVALID PROVISIONS;.SEVERABILITY
It is expressly understood and "agreed by and between°the parties hereto that in the event any
covenant, condition, or provision contained herein is invalidated by a court of competent
jurisdiction, the invalidity of any such covenant, condition,or'provision shall not invalidate any An
other covenant, condition, or provision of this agreement, provided, however,.;that the invalidity lip
of any such covenant, condition, or provision shall not materially prejudice:either the Lessor or
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the Lessee in their respective rights and obligations. contained in the valid covenants,
•. conditions, and provisions ofthis agreement.,
30. . BINDING`OF SUCCESSORS
The covenants and conditions herein contained shall apply to and bind the heirs, successors,.
executors, administrators, and assigns of all the parties_hereto.
31. TIME
Time is of the essence in this lease.
IN WITNESS WHEREOF, the parties'hereto have set their hand'the day and year first above written.
CITY OF PETALUMA LESSEE
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By
City Manager Name
ATTEST:
Title
• City Clerk Address
APPROVED AS TO FORM: •
City State Zip
City Attorney Telephone
APPROVED:
Director of Public Facilities andServices
APPROVED:
Risk Manager
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APPROVED:
Finance Officer
S
agrmt
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1/5/01 (fmk)
. 9
TOLY GROUND LEASE
EXHIBIT "A"
(To be provided after survey is taken.and staked by Lessor)
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4 ORDINANCE NO. N.C.S.
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10 Introduced by Seconded by
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19 AN ORDINANCE OF THE COUNCIL OF THE CITY OF PETALUMA
20 AUTHORIZING A LEASE OF REAL PROPERTY LOCATED
21 AT THE PETALUMA MUNICIPAL AIRPORT
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4 BE IT ORDAINED BY THE COUNCIL OF THE CITY OF .PETALUMA AS
25 FOLLOWS:
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28 Section 1. Certain real property located in the City of.Petaluma, County of Sonoma,
29 State of California is hereby authorized to be leased under the terms and conditions set forth in
30 the Non-commercial Lease Agreement by and 'between the City of Petaluma and Bud Toly,
31 which lease agreement is attached hereto as Exhibit "A" and incorporated herein by reference.
• 32 The City Manager is hereby authorized to sign said lease agreement which is to construct•and
33 maintain an airport hangar.
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35 Section?2. If any section, subsection, sentence; clause or'phraseror word of this ordinance
36 is for any reason held to •be unconstitutional, unlawful or otherwise invalid by a court of
37 competent jurisdiction, such decision shall not affect the validity of the remaining portions of
38 this ordinance. The City Council of the City of Petaluma hereby declares that it would have
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1 passed and adopted this ordinance and each and all provisions thereof irrespective of the fact that
2 any one or<more of said provisions be declared unconstitutional, unlawful or otherwise,invalid.
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4 Section 3. The City Clerk is hereby directed to post this ordinance for the period and in
5 the manner required:by the City Charter. .
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7 INTRODUCED and'ordered posted/published this day of , 2001.
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9 ADOPTED this day of ,..2001 by the following vote:
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11 AYES:
12 NOES:
13 ABSENT:
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17 Mayor
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19 ATTEST. . APPROVED AS TO FORM:
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23 City Clerk City Attorney
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28 •
29
30
31
32
33
35
36
37
38
39 ord
40 . 12/18/00(link)
2 •