Los Angeles World Airports

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Allyson Dixon
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1 : Los Angeles World Airports TM RESOLUTION NO LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery J. Daar Gabriel L. Eshaghian Beatrice 0, Hsu Thomas S. Sayies Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer BE IT RESOLVED that the Board of Airport Commissioners approved the Second Amendment to Lease VNA-8627 with Western Jet Aviation, Inc. to extend the term by ten (10) years, increase the demised premises and to include all standard administrative requirements, covering leasehold located at Saticoy Street within Van Nuys Airport, as referenced in the Board-adopted staff report attached hereto and made part hereof; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Chief Executive Officer to execute said Second Amendment upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council; and BE IT FURTHER RESOLVED that the issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III Class 1(18)(c) of the CEQA Guidelines; and BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 606. ooo I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, March 2, Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS L / j 1 World Way Los Angeles California Mail RO. Box Los Angeles California Telephone Internet

2 BOAR, Los Angeles World Airports REPORT TO THE COMMISSIONERS Meeting Date: item I Tiber h#e A Approved by: lamon Olivares, Direcl Services 3/2/2017 Completed ADA axa Reviewed by: Debbie Bowers, Chief Commercial Officer CAP Review: Pending N/A City Attpri Reviewed for Date Approval Statins By Finance Y N NA CEQA Y N 'uit Procurement 2/13/2017 BY DN Cond MT Deborah Flint - Chu iecutive Officer 2/16/2017 Guest Experience BY ON BY SUBJECT: Approval of the Second Amendment with Western Jet Aviation, Inc. at Van Nuys Airport Approve the Second Amendment to Lease with Western Jet Aviation, Inc. at Van Nuys Airport that will generate approximately $1,147,517 in annual revenue and approximately $11,475,170 over the ten-year term. RECOMMENDA TIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. APPROVE the Second Amendment with Western Jet Aviation, Inc. as referenced in this report. AUTHORIZE the Chief Executive Officer to execute the Second Amendment with Western Jet Aviation, Inc., after approval as to form by the City Attorney and approval by the Los Angeles City Council. Page 1

3 DISCUSSION: 1. Purpose To provide business continuity to Western Jet Aviation, Inc. (Western Jet) for its existing aircraft maintenance operations at Van Nuys Airport (VNY). 2. Prior Related Actions March 5, Board Resolution No The Board of Airport Commissioners (Board) approved Lease No. VNA with Western Jet Aviation, Inc. (Western Jet) for premises located at Saticoy Street at VNY. March 18, Board Resolution No The Board approved the First Amendment extending the term to expire on March Current Action Western Jet was founded 18 years ago and is owned by Jim Hansen. Initially, Western Jet occupied just a portion of one end of the large Quonset hut-style hangar, which was shared with Raytheon Training and Services Company s (Raytheon) defense division. Western Jet operated as a subtenant to Raytheon for 10 years until five years ago when Western Jet assumed control of the entire hangar after Raytheon moved out. The hangar was upgraded with Federal Emergency Management Agency (FEMA) funds after the 1994 Northridge earthquake to meet modern seismic standards. The hangar serves as an aircraft maintenance shop and recently expanded into a fullservice avionics installation and repair center. Today, the company has grown to provide approximately 60 jobs, having hired many graduates from Los Angeles Unified School District s (LAUSD) airframe and mechanics school at VNY. With its flagship location at VNY, Western Jet is currently the world s largest independently-owned maintenance facility for Gulfstream aircraft. In consideration of the additional 10-year term, Lessee, at no cost to LAWA, has agreed to invest a minimum of $3,000,000 in a building electrical upgrade no later than April 1, 2018, and the rest by March 31, 2020 in other facility improvements. Once the electrical upgrade has been completed, Western Jet will (1) make LAWA-approved qualified investments in the property and/or (2) pay LAWA any amount of the $3,000,000 that is not expended on LAWA-approved qualified investments in the premises. Western Jet may use a payment plan to pay any portion of the $3,000,000 not invested in the premises over five years with 7.5% interest annually, beginning April 1, The proposed Second Amendment increases the premises by approximately 0.77 acres of underutilized vacant land adjacent to the premises and includes all standard LAWA and Los Angeles City administrative requirements for leases. Page 2

4 The following table summarizes the proposed Second Amendment*: Current Proposed Effective Date April 1,2014 April 1,2017 Expiration Date March 31, 2017 March 31, 2027 Premises 8.96 AC Land - General Aviation 156,756 SF - Hangar/Office 9.77 AC Land - General Aviation 156,756 SF - Hangar/Office Base Rent $93,099 per month $1,117,193 annually $95,626 per month* $1,147,517 annually* Periodic Rent July 1,2015 July 1, 2020 and every five years thereafter Annual Rent July 1,2016 July 1, 2017 and every year in which there is not a Periodic Rent * The proposed Base Rent represents the current Board-approved rental rates including applicable annual adjustments; the increase is due to the additional premises. Action Requested Staff requests the Board approve the proposed Second Amendment and authorize the Chief Executive Officer to execute the Second Amendment after approval as to form by the City Attorney and approval by the Los Angeles City Council. Fiscal Impact Approval of the proposed Second Amendment will generate approximately $1,147,517 in annual revenue to LAWA and approximately $11,475,170 over the remaining term, not including annual and five-year market adjustments. 4. Alternatives Considered Take No Action This action is not recommended. Approval of the proposed Second Amendment will allow Western Jet to continue to operate its aircraft maintenance business which employs over 60 people. Run a Competitive Process Staff considered this but because FEMA funds were invested into the facility, this hangar does not require major upgrades unlike the hangar adjacent to it (the hangar currently occupied by Clay Lacy Aviation). Consistent with the VNY Redevelopment Plan, LAWA will run a competitive process for this adjacent hangar, with additional vacant space, in order to Page 3

5 allow for a long-term lease considering the major investment that will be required. Staff believes that running competitive processes for both parcels simultaneously is not wise considering the market and large investment that will have to be completed on the adjacent premises. APPROPRIATIONS: Approval of this action does not require an appropriation. STANDARD PROVISIONS: 1. The issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18) (c) of the CEQA Guidelines. 2. This contract is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Western Jet is required by contract to comply with the provisions of Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to leases. 6. Western Jet Aviation is required by contract to comply with the provisions of the Affirmative Action Program. 7. Western Jet Aviation has been assigned Business Tax Registration Certificate number Western Jet Aviation is required by contract to comply with the provisions of the Child Support Obligations Ordinance. 9. Western Jet Aviation has approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). 11. Western Jet Aviation has submitted the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program. 12. Western Jet Aviation must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the lease amendment. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Western Jet Aviation has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions. Page 4

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