.,14.--, Los Angeles World Airports. )- / / b..._.. BOAR OF A REPORT TO THE. ' =, - y Services

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1 Y BY Approved y: BOAR OF A.,14.--, amon Oliv res, ir irec Los Angeles World Airports REPORT ' TO THE P RT COMMISSIONERS ' =, - y Services Meeting Date: 3/2/2017 Reviewed by: 2. )'.4.4.- Debbie Bowers, Chief Commercial Officer )- / / b.

ecutive Officer - El Completed CAO Review: KI Pending N/A Reviewed for Date Approval Status I Elv Finance 1 N NA CEQA Procurement i 2/13/2017 I NY YN ON CI Cond MT Guest Experience I 2/16/2017I NY ON

at Van Nuys Airport that will generate approximately $1,147,517 in annual revenue and approximately $11,475,170 over the ten -year term.

1 1 Y BY Approved y: BOAR OF A.,14.--, amon Oliv res, ir irec Los Angeles World Airports REPORT ' TO THE P RT COMMISSIONERS ' =, - y Services Meeting Date: 3/2/2017 Reviewed by: 2. )' Debbie Bowers, Chief Commercial Officer )- / / b..._.. ' tt i, - De orah Flint - Chi-.ecutive Officer - El Completed CAO Review: KI Pending N/A Reviewed for Date Approval Status I Elv Finance 1 N NA CEQA Procurement i 2/13/2017 I NY YN ON CI Cond MT Guest Experience I 2/16/2017I NY ON 1 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. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article Ill, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 3. APPROVE the Second Amendment with Western Jet Aviation, Inc. as referenced in this report. 4. 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 Western Jet Aviation, Inc. Second Amendment/VNY

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.

(Western Jet) for premises located at 16101 Saticoy Street at VNY. March 18, 2014 - Board Resolution No. 25354 The Board approved the First Amendment extending the term to expire on March 31

2 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 31, 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 full - service 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 Western Jet Aviation, Inc. Second AmendmentNNY

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 Base Rent Periodic

77 AC Land - General Aviation 156,756 SF - Hangar /Office $95,626 per month* $1,147,517 annually* July 1, 2020 and every five years thereafter July 1, 2017 and every year in which there is not a

3 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 Base Rent Periodic Rent Annual Rent 8.96 AC Land - General Aviation 156,756 SF - Hangar /Office $93,099 per month $1,117,193 annually July 1, 2015 July 1, AC Land - General Aviation 156,756 SF - Hangar /Office $95,626 per month* $1,147,517 annually* July 1, 2020 and every five years thereafter 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 Western Jet Aviation, Inc. Second AmendmenWNY

APPROPRIATIONS: Approval of this action does not require an appropriation. STANDARD PROVISIONS: 1.

4 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 Ill, 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 Western Jet Aviation, Inc. Second Amendment!VNY

5 WESTERN JET AVIATION, INC. HANGAR SATICOY STREET VAN NUYS AIRPORT Woodley Saticoy Street wr,4 w;,_. 0' ',SKm 0' 1,25Mi. ima..:11 Image courtesy of the U.S. Geological Survey Q 2004 Microsoft Corporation, Terms of Use Privacy Statement Page 5 Western Jet Aviation, Inc. Second Amendment/VNY

Los Angeles World Airports

: Los Angeles World Airports TM RESOLUTION NO. 26187 LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery