Agenda

Return

C. 18

To:	Board of Supervisors
From:	Keith Freitas, Airports Director
Date:	December 13, 2011

Contra

Costa

County

Subject:

Approve and Authorize Second Amendment to Lease with The Hangars at Buchanan LLC for a Buchanan Field Airport Development Project

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 12/13/2011

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Gayle B. Uilkema, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:

Beth Lee, (925) 646-5722

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: December 13, 2011
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

APPROVE and AUTHORIZE the Director of Airports, or designee, to execute, on behalf of the County, a lease amendment between the County, as Lessor, and The Hangars at Buchanan LLC, as Tenant, that relates to the lease of approximately 0.86 acres located north of the Airport Offices. Pacheco Area.

FISCAL IMPACT:

There is no negative impact on the General Fund. The existing terms of the lease allow the tenant to terminate the lease on or before September 1, 2012. If the lease is not terminated, the Airport Enterprise Fund will receive lease and other revenue and the County General Fund will receive property, sales and possessory interest tax revenues from this development of hangars at this site. The lease amendment eliminates a one-time extension fee of $500 and reduces the amount of rent payable in the first twelve months following the completion of construction from $1,498.47 per month to $1,092.63 per month. Ground rent will increase annually by the CPI inflator. Every 10 years the lease will be revalued based on market appraisals.

BACKGROUND:

The project site is approximately 0.86 acres of vacant County owned land at the Buchanan Field Airport, located entirely within the unincorporated County on the east side of Marsh Drive and north of Sally Ride Drive and the County Airport offices. The parcel is proximate to the Buchanan Field runways. The property is designated for aviation use on, and has been determined to be in compliance with, the approved Buchanan Field Master Plan. The project is also consistent with the County General Plan.

On July 13, 2010, the Board authorized execution of a lease that would allow for the construction of five infill aircraft hangars (three 50 x 50 and two 45 x 40), one with a small attached office space. The project is structured as a leasehold condominium for aircraft hangars; the developer’s interest as lessee under the lease will be assigned to a condominium owners’ association once 80% of the hangars have been sold to third party condominium purchasers. The condominium owners will hold title to their condominium and a sublease of their condominium and common area from the condominium owners’ association.

On September 21, 2010, in order to provide additional time to market the condominiums during these difficult economic times, the Board authorized execution of the first lease amendment that allowed Hangars at Buchanan LLC to extend the lease termination period to September 1, 2012, in exchange for the payment of a monthly fee equal to $100 in the first year and $150 in the second year.

The Hangars at Buchanan LLC has continued to market the project in order for them to secure tenants as required by the project lender. Unfortunately due to the continuing poor economic climate, the Hangars at Buchanan LLC have not been able to secure the necessary tenants in the first termination period and they have now entered into the second termination period as provided for in the first lease amendment.

This second lease amendment will further support the marketing and intended development of this project by eliminating a one-time $500 fee, modifying the initial ground rent, and making non-substantive changes to the lease-end maintenance plan provisions.

CONSEQUENCE OF NEGATIVE ACTION:

Not granting the modified terms could result in the termination of the project and a delay in developing vacant and underutilized land at Buchanan Field Airport. Such a delay will negatively impact general aviation aircraft facilities, services, Airport demand needs and the Airport Enterprise Fund and County General Fund.

CHILDREN'S IMPACT STATEMENT:

Not Applicable