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HomeMy WebLinkAboutMINUTES - 04222014 - C.12RECOMMENDATION(S): APPROVE and AUTHORIZE the Director of Airports, or designee, to EXECUTE, on behalf of the County, a fourth lease amendment between the County, as lessor, and TDMC, LLC, as tenant, at the Buchanan Field Airport. FISCAL IMPACT: The Airport Enterprise Fund will receive lease rental and other revenues and the County General Fund will receive property, sales and possessory interest tax revenues from this development. BACKGROUND: On April 5, 2005, the Board authorized the Public Works Director to enter into a lease with Concord Jet Service, Inc. for a term of forty years, with a ten year option, for the purpose of constructing and operating a fixed base operator (FBO) hangar and office area at Buchanan Field Airport (the “Lease”). The Lease allowed building the FBO in two phases; the hangar and office space in Phase 1 and the fuel farm in Phase 2. On April 10, 2007, the Board approved a First Amendment to Lease due to construction delays. The first amendment extended the construction rent period. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 04/22/2014 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, (844) 359-8687 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: April 22, 2014 David Twa, County Administrator and Clerk of the Board of Supervisors By: Stacey M. Boyd, Deputy cc: C. 12 To:Board of Supervisors From:Keith Freitas, Airports Director Date:April 22, 2014 Contra Costa County Subject:APPROVE and AUTHORIZE the Director to EXECUTE a Fourth Amendment to Lease with TDMC, LLC for Property at 700 Sally Ride Drive, Buchanan Field Airport BACKGROUND: (CONT'D) In January 2008, the Board approved a Second Amendment to Lease to allow the Tenant to delay construction of the office space, which construction is required for the Premises to be used as a Fixed Base Operator (FBO). The Second Amendment also increased the applicable ground rent to a level that is comparable with other non-FBO tenants at Buchanan Field Airport. On May 20, 2008, the Board approved an assignment of the Lease from Concord Jet Service, Inc. to TDMC, LLC. The Board also approved a Third Amendment to Lease to adjust the property boundary and a Consent to Enter Into Lease (“Option Agreement”) with TDMC, LLC, which waived certain obligations under the Lease to permit Tenant the option to lease the premises for the operation of an executive hangar. This Fourth Amendment to Lease would permit the Tenant to operate the premises as an executive hangar at a rent level that is comparable with other non-FBO tenants at Buchanan Field Airport. The Fourth Amendment also extinguishes the Option Agreement. Further, this Fourth Amendment deletes the requirement to construct the Phase 2 and Phase 3 improvements, which are not required for the operation of an executive hangar. CONSEQUENCE OF NEGATIVE ACTION: If the parties do not execute the Fourth Amendment to Lease, TDMC, LLC will be in default under the Lease for failing to construct the Phase 2 and Phase 3 improvements by the deadline set forth in the existing Lease. CHILDREN'S IMPACT STATEMENT: Not Applicable ATTACHMENTS Fourth Amendment to Lease FOURTH AMENDMENT TO LEASE DISPOSITION OF OPTION AGREEMENT PERMITTED USE OF PREMISES This Fourth Amendment to Lease (“Amendment”) is dated April __, 2014, and is between the County of Contra Costa, a political subdivision of the State of California (the “County”), and TDMC, LLC, a Nevada limited liability company (“Tenant”), as successor in interest to Concord Jet Services, Inc.. Recitals A. The County owns and operates Buchanan Field, a public airport located at Concord, California (the “Airport”). B. The County and Tenant are parties to a lease dated April 5, 2005 (the “Lease”), pursuant to which Tenant is leasing approximately 5.31 acres of land at the Airport. The County and Tenant are also parties to an Option to Enter into Lease dated June 4, 2008 (the “Option Agreement”), the purpose of which is discussed below. C. The Lease is a forty-year ground lease, with a ten-year extension option, that requires Tenant to construct improvements on the site to create a full-service fixed based operation (an “FBO”). Operation of an FBO would require the construction of an aircraft hangar, fuel storage and delivery systems, and office space adjacent to the hangar. The Lease contemplates such improvements being constructed in two phases, with the construction of the hangar and office space being Phase 1 and construction of the “fuel farm” being Phase 2. The Lease established a date by which the Phase 2 improvements were to be completed. D. As a result of delays in construction of the improvements, the Lease was amended by a First Amendment dated April 10, 2007, and a Second Amendment dated January 1, 2008 (the “Second Amendment”). The Lease was further amended pursuant to a Third Amendment to Lease dated June 4, 2008. Among other things, the Second Amendment modified how construction of the improvements would proceed. Pursuant to the Second Amendment, construction of an aircraft hangar is Phase 1; construction of the fuel farm is Phase 2; and construction of office space is Phase 3. The Second Amendment also (i) modified the construction schedule set forth in the lease with respect to Phase 3, and (ii) added a provision that states that Tenant’s failure to construct the Phase 3 improvements by April 5, 2014 (the ninth anniversary of the Lease Commencement Date) is a default under the Lease. E. Under the Option Agreement, certain obligations of the Tenant under the Lease were waived and the Tenant was granted the option to lease the premises for the operation of an executive hangar. F. To permit the Tenant to operate the Premises as an executive hangar, rather than enter into lease pursuant to an exercise of the option under the Option Agreement, the parties desire to amend the Lease to (i) confirm that the requirement for the provision of certain fuel farm services has been deleted, and (ii) delete the requirement that the Phase 3 improvements be completed by April 5, 2014. The parties therefore agree as follow: Agreement 1. Definitions. Defined terms used but not defined in this Amendment have the meaning ascribed to them in the Lease. All references to Sections are to Sections of the Lease. 2. Phase 2 Improvements. That portion of Section 12.A, which reads, “The Phase 2 Improvements, consisting of the fuel farm shown on Exhibit F, must be constructed within ten (10) years from the Commencement Date unless prior to the date which is ten (10) years from the Commencement Date” is hereby deleted. 3. Phase 3 Improvements. Section 28.A (12), which causes the failure to complete construction of the Phase 3 Improvements by April 5, 2014 to be a default, is hereby deleted. Tenant is not required to construct the Phase 3 Improvements. 4. Option Agreement. The Option Agreement is of no further force or effect. 5. Use of Premises. The Premises may only be used for the purposes set forth in Schedule 1 to this Amendment, i.e., as an executive hangar, and for no other purpose. Schedule 1 is hereby incorporated into this Amendment by reference. 6. Applicable Ground Rent. The Rent applicable to the Lease is the Phase 1 Ground Rent. 7. Continuation of Lease. Except as modified by this Amendment, and as the context of the provisions of this Amendment so require, the Lease remains in full force and effect. 8. Modifications. Any modifications to this Amendment must be in writing and signed by both parties. [Remainder of Page Intentionally Left Blank] 9. Entire Agreement. This Amendment is the entire agreement between the parties with respect to its subject matter. The parties are signing this Amendment as of the date set forth in the introductory paragraph. COUNTY TENANT CONTRA COSTA COUNTY, TDMC, LLC, a political subdivision of a Nevada limited liability company the State of California By: By: ________________________ Keith Freitas Name: _________________ Director of Airports Its: ___________________ RECOMMENDED FOR APPROVAL: By: ___________________________ Beth Lee Assistant Director of Airports RECOMMENDED FOR APPROVAL: By: ___________________________ Karen Laws Principal Real Property Agent APPROVED AS TO FORM: Sharon L. Anderson, County Counsel By: ___________________________ Kathleen M. Andrus Deputy County Counsel Schedule 1 to Amendment Permitted Uses of Premises Uses Permitted on the Premises: The Premises may only be used for the following purposes. (1) Storage of aircraft owned by Tenant. (2) Maintenance of aircraft owned by Tenant or of aircraft owned by a subtenant of Tenant, provided that such maintenance is performed ONLY by (1) the owner of the aircraft, (2) a bonafide employee or contractor of the owner of the aircraft, or (3) an established Buchanan Field Airport Fixed Based Operator. (3) Operation of corporate aircraft on a non-commercial aviation basis. (4) The initiation (start up or taxi out of aircraft) or (2) termination (taxi in and shut down of an aircraft) for FAR Part 135 or Charter operations. (5) Aviation-oriented use of office space. (6) Hangar storage of aircraft other than Tenant-owned aircraft, only on a month-to- month basis. (7) Self-fueling of based aircraft, subject to the following limitations: Tenant may operate a fueling facility or fuel truck on the Premises for the purpose of self- fueling of based aircraft only. All self-fueling must be in compliance with Federal Aviation Administration Advisory Circular 150/5190-5. No fueling is allowed for automobiles or trucks. With respect to non-Tenant aircraft, Tenant may not taxi such aircraft to Tenant’s fueling facility, or deliver fuel to such aircraft by operation of a fuel truck, or provide any other assistance in the fueling of such aircraft. Uses Not Permitted on the Premises: The following uses of the Premises are specifically prohibited: (1) All commercial activities, including but not limited to, Charter or FAR Part 135 operations, including enplaning and deplaning passengers, except as, expressly permitted above. (2) Maintenance, except as expressly permitted above. (3) Use or subletting of any portion of the Premises for storage purposes, except as expressly permitted above. (4) Flight instruction for hire. (5) Sale of aviation supplies or services. (6) Aircraft fueling for commercial purposes. (7) Any use not expressly permitted above. Two violations of these restrictions within a twelve-month period is a default of the Lease.