HomeMy WebLinkAboutMINUTES - 03112014 - C.03RECOMMENDATION(S):
APPROVE and AUTHORIZE the Director of Airports, or designee, to waive the Consumer Price Index rent
adjustment for airport tenants starting April 1, 2014, for a one-year period. Concord and Byron Areas (District III and
District IV).
FISCAL IMPACT:
This action has no direct financial impact on the County General Fund. The Airport Enterprise Fund will not
recognize additional revenue estimated at $52,788 annually based on a 2.6% Consumer Price Index factor.
BACKGROUND:
In 2013 the Airports Division created and began to implement a business retention and attraction program to
strengthen and grow the Buchanan Field and Byron Airports. Airports staff analyzed the tenant and business loss data
and competitive market rental rates to understand underlying factors for downturn in based aircraft and increased
tenancy turnover at both airports; but most notably at Buchanan Field. The findings showed a decline in tenants and
based aircraft due, in large part, to increased costs coupled with a soft economy. As such, On March 19, 2013, the
Board authorized a one-year waiver (from April 1, 2013 to March 31, 2014) of the Consumer Price Index (CPI)
adjustment.
Airport staff conducted a market rate rent comparison in January 2014 and found that the Contra Costa County fair
market hangar rental rates continue to exceed the competitive average and, as a result, are negatively affecting
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 03/11/2014 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, 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: March 11, 2014
David Twa, County Administrator and Clerk of the Board of Supervisors
By: Stacey M. Boyd, Deputy
cc:
C. 3
To:Board of Supervisors
From:Keith Freitas, Airports Director
Date:March 11, 2014
Contra
Costa
County
Subject:Consumer Price Index Rent Adjustment Waiver for the Buchanan Field and Byron Airports
tenancy. Many, but not all, of the airport leases and rental agreements include an annual Consumer Price Index (CPI)
rent adjustment. Of those that have this increase, some include the following language: “In no event will the Ground
Rent for any year be less than the Ground Rent in effect for the immediately preceding year.
BACKGROUND: (CONT'D)
In the event there is a decrease in the CPI or in the fair market rental value of the Premises, Ground Rent for the year
in question will be the same as the Ground Rent for the preceding year (emphasis added)”. The emphasis is on
fairness and equity to best ensure that adjustments are supported by market conditions.
As indicated in the above information, the Contra Costa County fair market hangar rental rates continue to exceed the
competitive average and, as a result, are negatively affecting tenancy. A majority of hangar tenants will get a CPI
rent increase on April 1, 2014, as these agreements do not include the fair market rental value language. As such, to
better attract and retain hangar tenants, a one-year CPI waiver is being requested starting April 1, 2014, based on the
fair market rental rate comparison, in order to make our rental rates more comparable to other regional general
aviation airports.
The CPI waiver is a crucial component in the County’s economic retention and development program for the
airports. Airports staff will work with tenants, businesses and other stakeholders to develop additional retention and
attraction programs for the airports.
The Aviation Advisory Committee reviewed and supported the CPI waiver at their February 13, 2014, meeting.
On March 3, 2014, the Airport Committee of the Board of Supervisors reviewed a one-year CPI waiver for hangar
tenants and expanded to include all applicable tenants at both airports to strengthen and promote economic viability.
The Airport Committee also approved scheduling this item before the full Board of Supervisors for their review and
approval.
CONSEQUENCE OF NEGATIVE ACTION:
Delay in project approval will result in the airports’ tenants receiving a rental increase; making our rates even less
competitive which may prompt additional loss of tenants and associated revenue.
CHILDREN'S IMPACT STATEMENT:
Delay in project approval will result in the airports’ hangar tenants receiving a hangar rental increase; making our
rates even less competitive which may prompt additional loss of tenants and associated revenue.