ITEM 9-A

Council Meeting: April 18, 2000 Santa Monica, California

TO: Mayor and City Councilmembers

FROM: City Staff

SUBJECT: Recommendation for City Council to Authorize the City Manager to Negotiate and Execute a Lease Extension for the Third Fixed Base Operator Facility at the Santa Monica Airport

This report recommends that City Council authorize the City Manager to negotiate and execute a lease extension with American Flyers for the management and operation of the third fixed base operator (FBO) facility consisting of existing aircraft hangars, aircraft tiedowns, offices, shops and a vehicle parking area on approximately five acres located at 2501 Airport Avenue.

The third FBO leasehold is designated as a full service fixed base operation facility providing aircraft fueling, transient line services, aircraft rental, aircraft maintenance and repair, and other necessary aviation services for the flying public. The other two FBOs are Gunnell Aviation, Inc. and Supermarine of Santa Monica located on the north side of the Airport. The third FBO facility also maintains the mandated competition on the field and provides an alternative source of aviation fuel at the Airport. A lease with a third FBO complies with the provisions of the 1984 Agreement with the Federal Aviation Administration (FAA) which requires leases with three full service fixed base operators on the Airport prior to the development of the non-aviation land.

The leasehold encompasses approximately five acres, and has been operated as an FBO facility for over 34 years. The leasehold is comprised of an administration building, a large maintenance hangar, aircraft tie down spaces, aircraft storage hangars, shops, vehicle parking lot, roadway access off Airport Avenue and established signage. The parcel has the necessary facilities and infrastructure in place to provide the required and other necessary services to adequately serve piston-powered general aviation aircraft operators.

Following the termination of the lease with the previous tenant, Cloverfield Aviation and Jet Center, the City entered into a month-to-month lease agreement with American Flyers on December 15, 1997 to operate the facility on an interim basis. The Airport Commission expressed its desire for this month-to-month agreement to continue only long enough to resolve matters related to the long term use of the third FBO parcel.

The overriding concerns raised by the public and the Airport Commission regarding future use of the third FBO facility at the Airport focused on turbine aircraft usage of the parcel and the inherent incompatibility of related impacts upon the surrounding residential areas. An additional concern was whether there was a better location for such a facility than the southwest area of the Airport given land use planning provided by the 1983 Airport Master Plan.

In contrast, American Flyers over the past two years has successfully minimized noise and compatibility conflicts, focused its operation on piston-driven aircraft and provided uninterrupted basic services to the flying public. American Flyers also assumed responsibility for the operation, maintenance and repair of the existing aircraft fueling facility, a 12,000 gallon aviation gasoline fuel tank and associated hardware.

Upon taking possession of the leasehold facility, American Flyers removed the outdoor paging system, curtailed late-night operations, ceased aircraft charter activity, shifted the provision of line service and fuel sales to piston driven aircraft and eliminated the operation of auxiliary power units. American Flyers understands the sensitivity of its proximity to the residential areas near the leasehold and has focused its business plan upon piston-driven aircraft enhancing compatibility with the nearby neighbors. Airport staff has not received complaints from the surrounding community regarding the American Flyers activities, operations, or other impacts emanating from its services.

The existing month-to-month agreement with American Flyers makes provision of the fuller range of FBO services necessary to serve the flying public and amortization the functional improvements and investments necessary to operate the business infeasible.

Though American Flyers has been servicing its own aircraft, it has not been able to provide piston-powered aircraft maintenance, inspection, and repair to the public. Recruiting and engaging accredited personnel to supervise and perform aircraft maintenance to the public is difficult given the existing month-to-month facility rental agreement. Several of the buildings located on the parcel are in need of structural repair and utility service (i.e. electrical) refurbishment. American Flyers has been understandably reluctant to invest capital and embark upon such deferred maintenance repairs again due to the uncertainty of their lease term. The proposed lease extension will make this economically viable.

The City entered into the existing month-to-month lease with American Flyers with the understanding that it would be a short term agreement to assure services pending the outcome of an Airport Master Plan Update which would include a comprehensive land use study and technical analysis to determine appropriate uses around the Airport and mandated environmental review and analysis.

The Airport Master Plan Update is scheduled to commence in calendar year 2001 and may take approximately three years to complete, including requisite CEQA and or NEPA review. That process could take a longer time if relocation of the facility is recommended in the master plan update. Following the completion of the master plan update, staff estimates that it will take an additional six months to bid, advertise, and select a new FBO. During this interim period, the light aircraft users of the Airport need a stable and reliable source of services and fueling which cannot be realized by the existing month-to-month lease term.

The Airport Commission considered the extension of the American Flyers lease during its January 24, 2000 meeting. After taking public comment and carefully considering various alternatives, the Airport Commission unanimously supported the extension of the lease at the existing site and approved the required, permitted and prohibited FBO services as outlined in the attached exhibit for a 42 month term (3 1/2 years), The period of time necessary to complete the Master Plan Update process. The Airport Commission emphasized that the current site at 2501 Airport Avenue should be considered interim and the Master Plan Update process should ascertain the permanent location of the third FBO.

Staff respects the recommendation of the Airport Commission and suggests that an optional lease extension of up to 60-months be included should the Master Plan Update process take longer than forecasted by staff.

The existing base rental rate is $3,000 per month, which is generally consistent with current area rental rates for this type of FBO facility.

Base rental income in FY 2000-01 is projected to be $36,000 which is deposited into the Airport Fund revenue account #33631.402130. In addition to the base monthly rental rate, American flyers will pay to the City the prevailing fuel flowage fee of $0.03 per gallon of aviation fuel and $0.15 for each gallon of aviation oil dispensed into aircraft, which is estimated to generate an additional income of $5,000 per year and will be deposited into Airport Fund account #33631.402100. These revenues were anticipated in the FY 2000-01 budget and no Council action is required at this time.

Staff recommends that the City Council authorize the City Manager to negotiate and execute a lease extension with American Flyers for the management and operation of approximately five acres of fixed base operator space including existing hangars, office, shop and parking space, located at 2501 Airport Avenue effective May 1, 2000.

Prepared by:

Jeff Mathieu, Director of Resource Management
Bob Trimborn, Airport Manager

Attachment:

1. Environmental Review (Not available electronically.   Available at the City Clerk's Office and at City libraries.

2. Proposed services by the ad hoc Services Committee of the Airport Commission (see below)

1) Required activities and services to be continuously provided:

Rental of aircraft open tie-down space and aircraft storage facilities

Rental of commercial leaseholds for aviation related uses.

Ramp services for transient aircraft

Aircraft fueling services from City approved facilities, including the sale, dispensing and storage of aviation petroleum products from one underground storage tank

Rental of aircraft

Aircraft maintenance, repair and overhaul

Operation of a flight school

Operation of public restroom facilities

2) Permitted activities and services (subject to periodic review and renewal):

Retail or wholesale of aircraft parts, components, accessories, and allied equipment

Sale of new and used avionics and electronic equipment

Sale of new and used aircraft instruments

Sale of pilot supplies and accessories

Aircraft charter operations

Retail or wholesale of aircraft

Operation of a UNICOM radio, transmitter and receiver

Washing, detailing and waxing of aircraft

Upholstery, cabinetry and interior services for aircraft

Servicing or parachute, fire extinguisher and oxygen systems for aircraft

Operation of food/drink vending machines

Maintenance and servicing of FBO owned and operated ramp service vehicles and equipment

Leasing of aircraft

Modification of aircraft

3) Prohibited activities and services:

Engaging in the commercial storage of motor vehicles, trailers, boats or other recreational vehicles

Engaging in any operation which uses the leasehold as a base for helicopters, or any operation involving the repetitive, frequent or continuous use of helicopters

Engaging in any type of helicopter flight training

Engaging in any activity or providing any service likely to violate the night-time curfew on aircraft take-offs.

Salvage yard activities

Overnight camping at the premises

Storage of aircraft in excess of 12,500 lbs without prior written approval

Aircraft stripping or painting

Scheduled passenger or airfreight services under FAR Part 121 or Part 135

4) Other Services and uses:

Only the services and uses specified in section 1 and 2 listed above are authorized, and those services and uses are authorized only when conducted by the FBO or a subtenant that has been approved in advance by the City in accordance with the terms of the FBO lease agreement. Contemplated services or uses not specified above would require prior written approval by the City.