Auburn City Council
April 13, 2022

1 AUBURN CITY COUNCIL

SPECIAL SESSION AGENDA
City Hall, via Zoom Only
1225 Lincoln Way, Auburn, CA 95603
Wednesday, April 13, 2022
Special Session 6:00 p.m.

Meeting facilities are accessible to persons with disabilities. Requests for Assistive Listening Devices or other considerations should be made through the City Clerk’s Office at (530) 823-4211, Ext. #112 This Special Session of the City Council is being held pursuant to Government Code section 54953(e) related to teleconferencing of meetings. The Governor’s Proclamation of a State Emergency is still in effect and the City Council has made the necessary findings under the law to hold teleconference meetings in this manner. Proper notice was given for this meeting, all persons are permitted to join remotely and address the City Council directly, and the meeting will be delayed in the event of a City-caused disruption. This meeting will be held in all respects according to the requirements of Government Code section 54953(e).

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CALL TO ORDER

ROLL CALL
Public Comment
This is the time provided so that persons may speak to the Council on any item on this agenda.

1. Ground Lease for the Development of the Hangars at the Auburn Airport By RESOLUTION, authorize the City Manager or his designee to execute a 40- year ground lease between the City of Auburn, a municipal Corporation and Auburn East Hangars Phase II Owners, an Unincorporated Association and further authorize the execution of all related documents.

ADJOURNMENT
Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the City Clerk’s Office, 1225 Lincoln Way, Room 9, Auburn, CA 95603 during normal business hours.
1 To: Honorable Mayor and City Council Members
From: Jonathan Wright, Economic and Planning Manager, Office of the City Manager Meeting Date: April 13, 2022
Business Type: General Business
Subject: Ground Lease for the Development of the Hangars at the Auburn Airport.

The Issue
Shall the City Council approve a ground lease between the City of Auburn (Lessor) and the Auburn East Hangars Phase II Owners (Lessee), for the development of hangars at the Auburn Airport and authorize the City Manager to execute all related documents?
Conclusion and Recommendation
By RESOLUTION, authorize the City Manager or his designee to execute a 40-year ground lease between the City of Auburn, a municipal Corporation and Auburn East Hangars Phase II Owners, an Unincorporated Association and further authorize the execution of all related documents.

Background
The Auburn Airport is a truly active and vibrant airport. Because of this, demand for hangar and ramp space is high and the developed parts of the Airport are full, leaving the City to try and figure out ways to keep up with the growth. Currently there is a growing waiting list for tie-down spaces and staff is not aware of any serviceable vacant hangars.

It is this demand that has prompted interest by some in leasing from the City an area known as the east end hangar section. This area, aptly named due to its location on the east side of the airport, was established by the City in the early 2000’s and has led to the development of six (6) hangar rows, with the last one being constructed in 2017 (Delta Row). Remaining are the taxiways and rough-cut pads for the development of six (6) more hangar rows.

In 2019 the six (6) remaining hangar rows were a focus of the Airport Layout Plan update as many of the scenarios being developed by this plan were all to try and address the growth of the airport. Herein a conceptual layout plan was developed for the remaining East End hangar rows and incorporated into the FAA acknowledged plan. This layout depicted a mix of both box and T-style hangars so that there would be space for a range of different budget types.
2 In September of 2021, the City was contacted by an individual interested in developing all remaining hangar rows and in December of 2021 staff began to negotiate a new lease. The prospective lessor has experience developing hangars at the Auburn Airport having received the lease for other existing East End hangar rows and having successfully completed the development of those hangars. It should be noted also that during the lease negotiation period the prospective lessor already has commitments from sublessors for many of the hangars to be developed. This is once again testament for the high demand for aircraft parking and storage at the Auburn Airport.

Subject Lease Area
3 The development plan for the site is consistent with the Airport Layout Plan and will offer a mix of hangar types, albeit not necessarily in the order that they appear in the site plan below.

In order to facilitate the development of the remaining rows as outlined in the lease proposal, the City will need to extend water to the area. Currently, water is developed to the end of Delta row and will require that some saw cutting and trenching take place within the existing taxi way surfaces. Staff has consulted with PG&E, who owns the 100 foot wide Wise Canal (FERC regulated) easement and is already seeking approval for the proposed crossing. The waterline will need to be designed in order to get final approval from PG&E for the crossing as well as PCWA. As provided in the lease (Exhibit A), the lessee will pay the City back for the cost of the waterline development on a pro-rata basis as the hangars are developed. The same is true for power, which is already onsite, but infrastructure required to provide power to the hangars may be at the obligation of the City, with costs to be reimbursed. The total cost for both elements is not anticipated to exceed $500,000. Sewer is not being developed to the hangars at this time; however, due to stringent requirements of crossing a FERC regulated canal, staff is researching whether it would be prudent to install the sewer line in the area of the easement at the same time as the waterline to avoid having to go through the process a second time.
4 Environmental Determination
Review of development will come with the application for a building permit; however, it should be noted that this project is located in the Airport Industrial Design Control District Zone as provided by the City’s official zoning map wherein “Airport Facilities” are permitted outright. Furthermore, this project was contemplated by the 2007 Auburn Airport Layout Plan when assessing environmental factors and further scoped in the 2019 Layout Plan Update. The planning and development of this project spans a decade and a half, with half of the hangar rows having already been developed during that time. Site preparations and paving are all complete and earth disturbance is limited to trenching for footings and utilities.

Alternatives Available to Council; Implications of Alternatives

1. Adopt a Resolution authorizing the City Manager or his designee to execute the ground lease at the Auburn Municipal Airport, between the City of Auburn and the Auburn East Hangars Phase II Owners, an Unincorporated Association, Lessee, as it relates to the build-out of the East End Area Hangar Project and authorize the execution of all related documents.

2. Amend and adopt a Resolution authorizing the City Manager or his designee to execute the ground lease at the Auburn Municipal Airport, between the City of Auburn and the Auburn East Hangars Phase II Owners, an Unincorporated Association, Lessee, as it relates to the build-out of the East End Area Hangar Project and authorize the execution of all related documents.

3. Do not adopt a Resolution and direct staff accordingly.

Fiscal Impact
The City has conducted a blanket appraisal for the Airport that found an initial rate for Ground Leases to be $0.72 per sq ft annually which, is consistent with rents for other Airports in the area. The lease is proposed at 40 years, which is consistent with other leases out at the airport and, based off the time it will take to develop the 6 hangar rows and the size of the investment required to complete this project, a ten (10) year option has been provided. The total area proposed for lease is 72,687 sq feet which would yield a rate of $52,334.64 annually once fully constructed. The rents will be adjusted by the change in the Consumer Price Index (CPI). Rents would begin after the 180-day free rent period, as hangar rows commence development. The project is estimated to take 5 (five) years to fully develop.

Attachments

1. Exhibit A - Resolution
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28 RESOLUTION NO. 22 -

RESOLUTION APPROVING A LEASE AGREEMENT BETWEEN THE CITY OF

AUBURN AND THE AUBURN EAST HANGARS PHASE II OWNERS FOR THE

DEVELOPMENT OF ROWS G-L AT THE AUBURN AIRPORT AND
AUTHORIZING THE CITY MANAGER TO SIGN ALL DOCUMENTS.
------------------------------------------------------------------------------------ THE CITY COUNCIL OF THE CITY OF AUBURN DOES HEREBY RESOLVE:

That the City Council of the City of Auburn does hereby approve the lease agreement between the City of Auburn and the Auburn East Hangar Phase II Owners for the development of 6 (six) hangar rows as provided in the 2019 Airport Layout Plan Update. The City Manager is authorized and directed to execute the lease agreement on behalf of the City of Auburn.

A true and correct copy of said lease agreement is attached hereto as Exhibit “A.”
DATED: April 13, 2022
_________________________
Sandy Amara, Mayor
ATTEST:
_____________________________
Amy Lind, City Clerk
I, Amy Lind, City Clerk of the City of Auburn, hereby certify that the foregoing resolution was duly passed at a special session meeting of the 6 1
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28 City Council of the City of Auburn held on the 13
th day of April 2022 by the
following vote on roll call:

Ayes:

Noes:

Absent:
_____________________________
Amy Lind, City Clerk
7 East Area Hangar Lease Phase II
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AUBURN MUNICIPAL AIRPORT GROUND LEASE
EAST AREA HANGAR BUILDINGS – ROWS “G-L”
(City of Auburn, Lessor)

AUBURN EAST HANGARS PHASE II OWNERS,
AN UNINCORPORATED ASSOCIATION, Lessee)

SUMMARY OF

GROUND LEASE
Page
Recitals......................................................................................................................... 1 I. Premises........................................................................................................... .2 II. Use & Inspection................................................................................................ 3 III. Term .................................................................................................................. 4 IV. Rent ................................................................................................................... 5 V. CPI Adjustment.................................................................................................. 7 VI. Fair Market Value Adjustment............................................................................ 8 VII. Assignment...................................................................................................... 10 VIII. Hangar Sub-Leases......................................................................................... 10 IX. Hangar Sub-Lease Insurance .......................................................................... 11 X. Right of First Refusal ....................................................................................... 12 XI. Lessee Improvements...................................................................................... 12 XII. Mandatory Improvements ................................................................................ 15 XIII. Utilities ............................................................................................................. 15 XIV. Maintenance and Repairs ................................................................................ 16 XV. Taxes............................................................................................................... 17 XVI. Lessee Insurance............................................................................................. 18 XVII. Lessor Insurance ............................................................................................. 19 XVIII. Indemnity ......................................................................................................... 20 XIX. Default ............................................................................................................. 20 XX. Termination of Lease ....................................................................................... 21 XXI. Notices............................................................................................................. 22 XXII. Miscellaneous .................................................................................................. 23 XXIII. Warranty .......................................................................................................... 23 XXIV. Mediation ......................................................................................................... 24

EXHIBITS

EXHIBIT A - DESCRIPTION OF THE PREMISES

EXHIBIT B - MAP

EXHIBIT C - FAA REQUIREMENTS
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AUBURN MUNICIPAL AIRPORT GROUND LEASE
EAST AREA HANGAR BUILDINGS– ROWS “G-L”
This Lease is made and entered into as of this ___ day of April, 2022 (the “Commencement Date”), by and between the City of Auburn, a Municipal Corporation (“City” or “Lessor”), and Auburn East Hangars Phase II Owners, an unincorporated association (“Lessee”).

Recitals
A. WHEREAS: City owns and maintains an airport, comprised of several parcels of real property located in the City, commonly known as the Auburn Municipal Airport, together with improvements and appurtenances consisting of equipment, aprons, taxiways, runways, approaches, buildings and structures located upon said real property, and certain avigation rights (herein “Airport”).

B. WHEREAS: This Lease relates to that certain parcel of unimproved real property located in the Airport, commonly known as the Auburn Airport East Area Hangars Rows “G-L,” a part of Assessor Parcel Number 052-190-045-000, and more particularly described on Exhibit “A” (Description of the Premises) attached hereto and incorporated herein by reference (the “Premises”).

C. WHEREAS: The Airport’s occupancy is near 100% capacity for both tiedowns and hangers.

D. WHEREAS: Lessor projects the need for approximately 38,000 ft.² of additional hangar space by the end of the Lessor’s 2007 Airport Master Plan Phase 3.

E. WHEREAS: Development of the East End Area Phase II, as provided herein, will support planned growth of the Airport and help meet current demand for hangar space.

F. WHEREAS: This Lease is consistent with and supports Lessor’s 2007 Airport Master Plan and Lessor’s 2019 Airport Layout Plan.

G. WHEREAS: Lessor intends that (i) City approved aircraft hangars, suitable for aeronautical purposes and individually occupied by sub-lessees, be constructed upon the Premises (hereinafter “Hangar” or “Hangars”), (ii) all costs of such construction be borne by Lessee, its subtenant, or both, and not by City, (iii) the Hangars shall serve as an accommodation to the users of the Airport, and ultimately (iv) the ownership of the Hangars will revert to City at the termination of this Lease. 9 2
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H. WHEREAS: Lessee intends:
(i) To enter into this Lease to lease the Premises;
(ii) To promptly commence construction of the Hangars; and (iii) To use its best efforts to complete construction of the Hangars within thirty-nine to sixty (39-60) months after the Commencement Date.

For and in consideration of the mutual covenants hereof, City hereby leases to Lessee and Lessee hereby hires from City the Premises upon the terms and conditions hereinafter set forth.

I. Premises

1. The Premises consist of six (6) Hangar building rows with a total area of approximately 72,687 sq. ft. of real property being a portion of the Airport, more particularly described and shown on Exhibit “A” (Legal Description of the Premises) and Exhibit “B” (Map), attached hereto and incorporated herein by reference. On and after the Commencement Date, it shall be the responsibility of Lessee to, and Lessee shall, maintain any boundary pins for the full term of this Lease.

2. The Premises consist of that portion of the parcel of real property which the Hangars will physically occupy (herein “Footprint”) as defined by the outer perimeter of the Hangars and any overhanging eves or structures attached thereto, together with the remainder of the Premises that lies without the Footptrint, which, for all purposes, shall remain as non-exclusive common area for the benefit of all users of the Airport (herein “Premises Common Area”).

3. In conjunction with, and as a part of this Lease, Lessor hereby grants to Lessee and any sublessees, the non-exclusive right to use, at all reasonable times and for the intended purposes, the specified areas indicated on the Airport site plan which are normally open to and usable by members of the public, including but not limited to aprons, taxiways and runways, with all use subject to all federal, state, and local laws and regulations as amended from time to time including, but not limited to, the Airport rules and regulations (herein “Airport Common Area”). It is the intent of the parties herein that the Premises Common Area be a part of the Airport Common Area, for all purposes including, but not limited to, rights-of-way for public ingress and egress, as well as rightsof-way for all underground utilities. Lessor reserves unto itself, for itself and for the benefit of the public and all airport users, all rights in and to the Premises Common Area not otherwise specifically granted to Lessee herein.

4. In conjunction with, and as a part of this lease, Lessor hereby grants to Lessee, for the duration of this lease unless sooner terminated, rights in and to the Airport Common 10 3
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Area, consisting of: (i) a non-exclusive utility right-of-way reasonably necessary and convenient to provide utilities for the operation and maintenance of Lessee's improvements and equipment, (ii) a non-exclusive right-of-way for ingress and egress reasonably necessary and convenient to construct the Lessee Improvements, defined hereinafter, and (iii) a non-exclusive right-of-way for ingress and egress reasonably necessary and convenient to store, operate, and maintain aircraft and related equipment stored on the Premises in accordance with this Lease. The location of said rights of way shall become fixed upon construction of the Lessee Improvements definedhereinafter.

5. In accordance with paragraphs 40 through 51 below and as a part of this Lease, Lessor hereby grants to Lessee the right to construct improvements upon the Premises consisting of City approved aircraft Hangars, together with other usual and necessary related improvements, as approved by Lessor, including but not limited to necessary and convenient approach aprons and other aircraft related structures, but not including fueling facilities.

6. Notwithstanding paragraph 48 below, Lessee shall neither have nor acquire any right to remove, destroy, dismantle, disassemble or otherwise compromise the physical structure of the Lessee Improvements, defined hereinafter, constructed or to be constructed as contemplated hereunder, or any other permanent structure on or improvement to the Premises. Neither shall Lessee have any right to sell, transfer, assign, sub-lease nor in any manner alienate any interest in the Lessee Improvements or any permanent structure on or improvement to the Premises, except to the extent Lessee shall have the right to sell, transfer, assign or sub-lease its interest in this Lease as such right is set forth in paragraphs 27 through 35 below.

7. Lessor covenants that Lessor is seized of good and sufficient title and interest to the Premises. Lessor Covenants that Lessee shall peaceably and quietly enjoy all of the Lease rights herein granted.

II. Use & Inspection

8. Lessee's use of the Premises shall be specifically limited to (i) the construction of the LesseeI Improvements, defined hereinafter, (ii) aeronautical purposes, (iii) access to and use of the Premises Common Area and the Airport Common Area, and (iv) related activities such as routine maintenance and repair of the resident aircraft; but not for use as retail space or other uses not authorized by this Lease. Operations as provided in 14 Code of Federal Regulations Part 135 and 145 may be allowed subject to applicable federal, state, and local laws and regulations as amended from time to time including, but limited to, the Airport rules and regulations and the Auburn Municipal Code, provided Lessor grants advanced written approval, which approval shall not be unreasonably withheld.

9. Lessee shall not use the Premises, or permit anything to be done in or about the Premises, which will in any way conflict with any law, statute, ordinance or governmental 11 4
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rule, regulation or guideline now in force or which may hereafter be enacted or promulgated. Lessee shall comply with the licensing and permit requirements of any and all federal, state, municipal or local authorities, and shall at all times comply with all federal, state, municipal or local statues, ordinances, laws, rules, regulations and guidelines, as amended from time to time.

10. Lessor shall be given access to the Premises and all structures thereon, and shall be permitted to enter and inspect the Premises and structures thereon, at any and all reasonable times.

III. Term

11. The term of this Lease shall commence on the Commencement Date and shall remain in effect until the fortieth (40th) anniversary of the Commencement Date, unless terminated earlier as provided below. Lessee shall have the option to extend the term of this Lease subject to the following:
a. Lessee shall have one option to extend the term of this Lease for an additional ten (10) year term by giving notice in writing to City of Lessee's exercise of this option. If Lessee elects to exercise its option to extend, and provided that Lessee has timely paid the "Lease Option Consideration" as defined in the following subparagraph, such written notice shall be made at any time prior to the thirty-fifth (35th) anniversary of the Commencement Date . Upon timely delivery of such notice to City, the parties shall be bound by all the terms and conditions of this Lease for an additional ten (10) year term. Unless terminated earlier as provided below, the extended Term of the Lease shall expire on April 12, 2072.
b. The option to extend the term of this Lease is contingent on Lessee paying a one time payment of $10,000, due on or before the date notice is sent by Lessee pursuant to paragraph 11.a. (herein “Lease Option Consideration”). The Lease Option Consideration shall be subject to CPI adjustments pursuant to the same formula as the Rent, defined hereinafter. The Lease Option Consideration is in addition to the Rent.

12. If Lessee properly and timely completes construction of all Lessee Improvements, defined hereinafter, then upon written demand therefor from Lessee, Lessor shall promptly execute a certification of compliance or an estoppel certificate evidencing such completion by Lessee.

13. Lessee shall have the unilateral right to terminate this Lease at any time, provided that at least six (6) months prior notice is first given to Lessor, without any compensation, offset, or reimbursement due to Lessee.
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IV. Rent

14. Rent in consideration for this Lease including, but not limited to, use and occupancy of the Premises as described herein, shall be payable annually in advance on each anniversary of the Commencement Date and continuing thereafter, except as provided below (“Rent”).

15. Rent for the first five (5) years of the term of this Lease shall be determined based on the date construction begins for Hangars, more particularly described in paragraph 43 below, as follows:
a. For each Hangar building row, no Rent shall be payable for the period from the Commencement Date until one hundred eighty (180) days after the Start of Construction (herein “Rent Abatement Period”). The “Start of Construction” as used herein shall be the date a building permit is issued by City for any given Hanger building row or part thereof.

b. Following the Start of Construction for each Hangar building row, within ten (10) days after the expiration of the Rent Abatement Period, Lessee shall pay to Lessor Rent in an amount equal to the Annual Rent, defined hereinafter, for the subject Hanger building row, multiplied by the number of days remaining from the expiration of the Rent Abatement Period until the next anniversary of the Commencement Date, divided by 365.
c. Thereafter, the Annual Rent, defined hereinafter, for each Hanger building row shall be paid and received by Lessor on or before the 10th day after each anniversary of the Commencement Date or be late. At Lessor’s election, the Annual Rent when due may be prorated and payable on or before the first day of each calendar month following the first anniversary of the Commencement Date or be late. Upon such election, in addition to the Annual Rent, Lessee shall pay Rent attributable to the number of days from the first anniversary of the Commencement Date until first day of the following month. Following thirty (30) days’ written notice of default in the payment of Rent and/or Annual Rent, a late charge shall be due in the amount of ten percent (10%) of the Rent and/or Annual Rent then remaining unpaid. The late charge shall be calculated and applied each time a payment is due and unpaid following notice as provided herein.

16. The calculation of Rent for each calendar year shall utilize the following terms:
a. Base Year: The Base Year shall be the first year of each five-year adjustment period, commencing on the Commencement Date and every fifth anniversary of the Commencement Date thereafter.
b. Base Year CPI: The Base Year CPI (see paragraph 19, below) shall be the most recently available CPI as of the Commencement Date and every fifth 13 6
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anniversary of the Commencement Date thereafter. As an example, as of May 1, 2022 the most recently available CPI is the CPI for February 2022. c. Base Year Rent: Initially, the Base Year Rent is the Rent set forth at paragraph

17.c. below; thereafter, the Base Year Rent is the Annual Rent determined by a Fair Market Rental Value adjustment, defined hereinafter, if requested by either party, or if not requested by either party, the Annual Rent as of each fifth anniversary of the Commencement Date.
d. Annual Rent: The actual Rent due on the Commencement Date (not taking the Rent Abatement Period into account) and on each anniversary of the Commencement Date thereafter.

17. Commencing for the Base Year:
a. The Base Year shall be the twelve (12) month period commencing on the Commencement Date.
b. The Base Year CPI shall be the most recently available CPI as of the Commencement Date.
c. The Base Year Rent shall be based upon the actual square footage of the Footprint times the base rental rate of $0.72/ sq. ft./ year. d. Subject to final calculations and confirmation in accordance with the provisions of this Lease, Base Year Rent for each Hangar building row is initially estimated to be:

1. G (Golf) Row – Six thousand nine hundred forty dollars and eight cents ($6,940.08) per year (9,639 sq. ft. x $0.72/ sq. ft./ yr = $6,940.08/ yr);

2. H (Hotel) Row – Ten thousand three hundred and sixty-eight dollars ($10,368) per year (14,400 sq. ft. x $0.72/ sq. ft./ yr = $10,368/ yr);

3. I (India) Row – Seven thousand six hundred twenty dollars and fortyeight cents ($7,620.48) per year (10,584 sq. ft. x $0.72/ sq. ft./ yr = $7,620.48/ yr);

4. J (Juliet) Row – Eight thousand five hundred and nineteen dollars and four cents ($8,519.04) per year (11,832 sq. ft. x $0.72/ sq. ft./ yr = $ 8,519.04/ yr);

5. K (Kilo) Row – Eight thousand five hundred and nineteen dollars and four cents ($ 8,519.04) per year (11,832 sq. ft. x $0.72/ sq. ft./ yr = $ 8,519.04/ yr); and
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6. L (Lima) Row – Ten thousand three hundred and sixty-eight dollars ($ 10,368) per year (14,400 sq. ft. x $0.72/ sq. ft./ yr = $10,368/ yr). e. The Base Year Rent shall be adjusted for the actual square footage of the Footprint as constructed or planned to be constructed. Provided however, that said rental adjustment shall not be adjusted below fifty two thousand three hundred thirty four dollars and sixty four cents ($52,334.64).

18. A new Base Year and a new Base Year Rent shall be established on every fifth anniversary of the Commencement Date:
a. The lease year commencing on each fifth anniversary of the Commencement Date shall become the new Base Year.
b. The Base Year CPI shall be changed to the most recently available CPI for the commencement of the new Base Year.
c. At the request of either party, the new Base Year Rent shall be set to the Fair Market Rental Value, as determined below (see paragraphs 23 through 26); if either party does not request a Fair Market Rental Value adjustment, then the new Base Year Rent shall be the prior year’s Annual Rent adjusted for the increase in CPI. d. The Annual Rent for the new Base Year shall be the new Base Year Rent.

V. CPI Adjustment

19. CPI shall mean the Consumer’s Price Index – California, All Urban Consumers, for the California area, published by the Bureau of Labor Statistics of the United States Department of Labor (All Items, 1982-1984 = 100). (See http://www.dir.ca.gov/DLSR.)

20. If the "base year" for the CPI tables is changed, then the CPI calculation shall be made utilizing the appropriate conversion factor(s) published by the U.S. Department of Labor, Bureau of Labor Statistics (or successor agency) to equate the new tables to the base year of the CPI herein specified. If no such conversion factor is published, City shall, if possible, make the necessary calculation to achieve such conversion in a manner that shall avoid any compounding effect. If such conversion is impossible, or if the publication of the CPI is discontinued, or if the basis of calculating the CPI is materially changed, CPI shall mean comparable statistics on the cost of living as computed by an agency of the United States Government performing a function similar to the Bureau of Labor Statistics, or, if none, by a substantial and responsible periodical or publication of recognized authority most closely approximating the result which would have been achieved by the CPI.

21. For each year of this Lease except for a Base Year for which either party has requested a Fair Market Rent Value adjustment, the Annual Rent shall be increased in 15 8
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an amount equal to the change in the most recently available CPI to the Base Year CPI.

In the event the CPI shall decline for a given year, the Annual Rent shall not be reduced from the preceding year’s Annual Rent, but instead shall remain unchanged. Lessor shall give Lessee thirty (30) days’ written notice of the adjusted Annual Rent.

22. By example, assume the Commencement Date is October 1, 2021, and the most recent CPI available is for the prior June:

Annual Rent Oct 1, 2022 = Base Year Rent 2021 x CPI June 2022/CPI June 2020
Assume:

Base Year Rent = $1,000.00
CPI June 2020 = 300
CPI June 2021 = 306
CPI June 2022 = 302 (negative CPI)
CPI June 2023 = 318
CPI June 2024 = 318 (no change)
Then:

Annual Rent Oct 1, 2020 = $1,000.00 (Annual Rent = Base Year Rent) Annual Rent Oct 1, 2021 = $1,000.00 x (306/300) = $1020.00 Annual Rent Oct 1, 2022 = $1,000.00 x (302/300) = $1020.00 (no reduction) Annual Rent Oct 1, 2023 = $1,000.00 x (318/300) = $1060.00 Annual Rent Oct 1, 2024 = $1,000.00 x (318/300) = $1060.00 (no change) VI. Fair Market Value Adjustment

23. Effective every Base Year commencing on the fifth anniversary of the Commencement Date, and continuing thereafter for the tenth, fifteenth, twentieth, twentyfifth, thirtieth, thirty-fifth, fortieth, and forty-fifth anniversaries of the Commencement Date (each such anniversary, an “Adjustment Date”), at the request of either party, which shall be provided in writing to the other party at least one hundred eighty (180) days before the Adjustment Date, the Annual Rent shall be adjusted to correspond with the Fair Market 16 9
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Rental Value (herein “FMRV”) of the Premises or according to a master fee schedule that will provide a rental fee per square foot for the entire Auburn Municipal Airport as updated from time to time and adopted by the City Council.

24. If the Annual Rent is adjusted according to the FMRV, the FMRV shall be established according to the following standards:
a. FMRV shall be the then current fair market value of Rent for the Premises as of that Adjustment Date, excluding the value added to the fair market value of Rent by virtue of the construction by Lessee of the Hangar.
b. The FMRV shall be established according to the rental rates at which tenants lease comparable land for similar purposes at comparable general aviation airports, as of the Adjustment Date. Comparable general aviation airports are:

Nevada County, Placerville, Georgetown, Columbia, Truckee, Marysville and Lincoln. Should one or more of the listed airports cease operations or not have a comparable facility, a Federal Aviation Administration (herein “FAA”) classified comparable airport lying Northerly or Easterly of Sacramento shall be substituted in its place.
c. The FMRV for comparable land shall not be established by a simple averaging of rental rates, but shall be weighted in comparison to the Auburn Municipal Airport to reflect relative size, the population served, the amount of air traffic, the commercial value of air traffic, the supporting and surrounding commercial development and its value, and such other factors as shall fairly compare the rental rates at each respective airport.

25. In the event Lessee disputes what sum represents the FMRV of the Premises, it shall be determined as follows:
a. Within 15 days after the Adjustment Date, the parties shall select a licensed appraiser, or a licensed and practicing real estate broker, who must have at least 10 years’ experience and be familiar with commercial and industrial real estate in Placer County and surrounding counties. Within 15 days after selection of such neutral, each party shall submit to the neutral its determination of the FMRV together with the assumptions, calculations, methods and comparables underlying its determination. Within 15 days after receipt of both parties’ determination of FMRV, the neutral shall select one of the party’s determination of FMRV, and that shall be the FMRV as of the Adjustment Date. The neutral shall not recalculate FMRV, nor select an FMRV between the two parties’ determinations; the only authority granted herein is to choose one of the parties’ determination of the FMRV. The parties shall bear the cost of the neutral equally. 17 10
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26. If neither requests a FMRV adjustment prior to a new Base Year, then the Annual Rent for the new Base Year shall be the Annual Rent for the prior year adjusted in accordance with the provisions of paragraphs 19 through 22 above.

VII. Assignment

27. Lessee shall not be permitted to sell, transfer, or assign, in whole or in part, any interest in this Lease or in Lessee’s rights hereunder, without first having received the written consent of Lessor, which consent to such sale, transfer, assignment, or other transfer shall not be unreasonably withheld, delayed or conditioned.

28. As a reasonable condition of such consent, Lessor shall not be obligated nor required to release Lessee from all or any of its obligations and duties hereunder. Unless so released in writing, Lessee shall continue to remain obligated under all covenants and conditions of this Lease.

29. As a further and reasonable condition of such consent, Lessee shall demonstrate by clear and convincing proof of the creditworthiness of the purchaser, transferee, or assignee (herein “Assignee”), and of the ability of said Assignee to assume the financial, regulatory, administrative and enforcement requirements of this Lease, and to undertake all liabilities of Lessee hereunder contemplated.

30. Notwithstanding the foregoing, and as a further and reasonable condition of such consent, Lessor may require that an Assignee execute a written assumption of this Lease wherein Assignee shall assume each and every covenant of this Lease, shall be bound to each and every term and condition hereof, and shall discharge each and every obligation imposed hereunder. Any such sale, transfer, or assignment shall not be valid unless the purchaser, transferee, or assignee shall first assume in writing all obligations of Lessee under this Lease.

31. Any sale, transfer, or assignment in violation of the provisions of this Lease shall be for all purposes a default hereunder and a material breach hereof, and shall be cause for termination of this lease and forfeiture of all right, title and interest hereunder or otherwise, without notice.

32. Should a dispute arise with respect to a sale, transfer, or assignment and the interpretation of this Article VII, Lessor and Lessee agree that Article XXIV shall apply.

VIII. Hangar Sub-Leases

33. The provisions of this Article VIII shall apply to subleases of individual Hangars.

Lessee shall not be permitted to enter into separate sub-leases of individual Hangars with any person or entity without first obtaining Lessor’s written approval of the form of the proposed sub-lease, which shall contain at least the material provisions of this Lease, as determined by City, and without first receiving the written consent of Lessor through the 18 11
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City Manager of City or his or her designee (the “City Manager”), which approval and consent shall not be unreasonably withheld, conditioned or delayed.

34. As a reasonable condition of such consent, Lessor shall require substantial and continued compliance with, and proof of, the following:
a. The identity of the sub-lessee including, but not limited to, the name, address and telephone number of the sub-lessee, as well as such other information related to the ownership, maintenance and operation of the aircraft as may reasonably be required by Lessor, the FAA, or other government entity or regulator; b. The identity of all resident aircraft to be stored in the sub-leased Hangar including, but not limited to, the owner’s name and, for each aircraft, the registration number, make, model and year of production;
c. Proof of all insurance for use of the Premises and aircraft, as required by City, this Lease, the Airport rules and regulations, and/or the FAA; d. The express written agreement between Lessee and the sub-lessee that the sublessee will comply with all of the requirements sought to be imposed upon the sublessee by this Lease, and will cooperate with Lessee in Lessee's compliance with all of the requirements imposed upon Lessee by this Lease; and The ability of the sub-lessee to assume the financial, regulatory and administrative requirements sought to be imposed under this Lease upon the sub-lessee, and to respond to all liabilities of sub-lessee hereunder contemplated.

35. If any sub-lessee shall be in violation of the foregoing paragraphs 33 and 34, such violation shall be considered for all purposes a default hereunder and a material breach hereof, and shall be cause for termination of this Lease and forfeiture of all right, title and interest hereunder or otherwise, if not cured within one-hundred eighty (180) days after City provides written notice thereof to Lessee.

IX. Hangar Sub-Lease Insurance

36. Lessee shall require each sub-lessee to carry and maintain, during the term of sublease, general liability insurance coverage in relation to the sub-leased portion of the Premises and aircraft insurance in relation to each of the resident aircraft stored in the sub-lesed Hangar(s), which insurance coverage shall comply with each of the insurance provisions under this Lease at paragraphs 62.a, 62.b, and 62.c.

37. Lessee shall enforce all insurance requirements hereunder against each such sublessee. Failure by Lessee to require, and to promptly and diligently enforce the requirement, that each sub-lessee provide and maintain the insurance required by this Lease shall constitute, and for all purposes be, a default hereunder and a material breach hereof, and shall be cause for termination of this Lease and forfeiture of all right, title and 19 12
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interest hereunder or otherwise, if not cured within one-hundred eighty (180) days after City provides written notice thereof to Lessee.

X. Right of First Refusal

38. In Favor of Lessor:
a. Before Lessee may sell, transfer, or assign this Lease or any interest in this Lease, in whole or in part (except as provided at paragraphs 33 through 35), to a bona fide transferee for value, Lessee shall give sixty (60) days written notice to Lessor of Lessee’s intention to so sell, transfer, or assign this Lease or any interest in this Lease. Within sixty (60) days of receiving said notice, Lessor shall give written notice of its intention to meet the terms of such sale, transfer, or assignment and to acquire Lessee’s interest sought to be transferred. b. Within sixty (60) days after sending notice to Lessee, Lessor shall pay to Lessee the consideration contemplated by the sale, transfer, or assignment, or Lessor’s offer to acquire such interest shall, for all purposes, be deemed withdrawn, and Lessee shall be free, for a period of three years, to sell, transfer, or assign this Lease in accordance with the provisions of paragraphs 27 through 33.

39. In Favor of Lessee:
a. If, at the expiration of the term of this Lease, City should wish to lease the Premises, City shall first give notice to Lessee of the terms and conditions thereof. Lessee shall thereafter have a period of sixty (60) days in which to enter into a new lease for the Premises.
b. If Lessee does not lease the Premises within sixty (60) days after receiving notice from City, City thereafter shall be relieved of any obligation to lease the Premises to Lessee.
c. Nothing in this Lease shall require Lessor to lease the Premises at the expiration of the term of this Lease.

XI. Lessee Improvements

40. Lessee, at Lessee's sole cost and expense, shall design, finance and construct Hangars similar to Hangars currently existing at the Airport (herein “Lessee Improvements”). Lessee commits to spend a minimum of $5.5 million to complete the Lessee Improvements and any additional sums that may be required to satisfy federal, state, and/or local laws and regulations. Such laws and regulations include City laws and regulations. Construction of the Lessee Improvements shall be performed by a contractor 20 13
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and/or sub-contractors properly licensed by the State of California for the type of work performed.

41. Lessor shall promptly cooperate and reasonably approve the design of the Lessee Improvements within a reasonable time not to exceed sixty (60) days after Lessee's submittal of complete plans to Lessor. The scope of Lessor’s approval shall contemplate aesthetic design, as well as the overall functionality of the improvements in relation to the Airport site plan, when current and future airport uses are considered as a whole.

Lessor’s approval shall not be unreasonably withheld, delayed or conditioned. Within the meaning of this paragraph, Lessor’s approval shall neither mean nor include approval required to be obtained for new construction from the City Building Department, or otherwise, but rather is intended to mean acceptance by the City Manager of the design and functionality of the Hangars, and of the Airport usages, when taken as a whole. In the event Lessee chooses to change the types of Hangars after any approval is given, Lessor will negotiate in good faith to resolve and approve the proposed changes. Any such changes will remain within the square footage outlines of each Hangar currently planned, as shown on the attached Exhibit B.

42. Lessee shall secure, and maintain in full force and effect during the course of construction, any and all certificates, permits and approvals necessary for the construction of the Lessee Improvements that may be required by any federal, state, municipal or local authority, as well as satisfactory soil boring tests (herein “Approvals and Tests”). Lessor shall cooperate with Lessee in its efforts to obtain such Approvals and Tests and shall take no action that would adversely affect the status of the Premises with respect to the proposed use by Lessee. In the event any of the Approvals and Tests shall for any reason be unsatisfactory to Lessee including, but not limited to, cancellation, lapse, or termination thereof, Lessee may terminate this Lease with ninety (90) days’ written notice to Lessor without any compensation, offset, or reimbursement due to Lessee. Lessor agrees to cooperate with Lessee to the extent possible in all negotiations with other regulatory agencies such as City’s Fire Department, Placer County Water Agency, Pacific, Gas & Electric Company, and the FAA.

43. Lessee shall adhere to the schedule of construction as follows:
a. Within eighteen (18) months of the Commencement Date, Lessee shall have completed one (1) entire Hangar building row which, as used in this lease, “completed” shall be defined as the receipt of a “certificate of occupancy” (conditional or otherwise) from the City’s Building Official.
b. Within thirty six (36) months of the Commencement Date, Lessee shall have completed three (3) entire Hangar building rows.
c. Within sixty (60) months of the Commencement Date, Lessee shall have completed all six (6) entire Hangar building rows.
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d. Lessee will diligently and actively pursue to completion of all six (6) hangar building rows depicted in Exhibit B, all of which shall be completed no later than the fifth anniversary of the Commencement Date. Lessor may grant, at its sole discretion, deviations from the schedule of construction herein, which shall not be reasonably withheld, if Lessor determines that Lessee’s performance working toward completion has been satisfactory and that market or other conditions prevented Lessee from strict adherence thereto.

44. At all times during construction of the Lessee Improvements, Lessee and Lessee’s contractors and sub-contractors shall comply with the licensing and permit requirements of any and all federal, state, municipal or local authorities, and shall at all times comply with all federal, state, municipal or local statues, ordinances, laws, rules, regulations and guidelines. Lessee shall comply with all FAA requirements as more specifically set forth in Exhibit “C” (FAA Requirements), attached hereto and incorporated herein by reference.

45. In the event of Lessee’s default during the construction of the Lessee Improvements, City shall have the right, but not the obligation, to assume Lessee's obligations and rights under any contract related thereto in whole or in part.

46. Lessee will defend and indemnify City against all loss, claims, costs, damage, expense, and liability, arising out of, or connected with the Lessee Improvements. Lessee will be responsible for paying any and all costs of damage, caused by Lessee’s activities in constructing the Lessee Improvements, to third parties, City property (such as roads), or any other property at the Airport.

47. At all times during the construction of the Lessee Improvements, Lessee shall defend, indemnify and hold harmless Lessor from any injury to persons, including death, or from any damage to property, arising out of construction activities undertaken by Lessee pursuant to this Lease. The scope of Lessee’s obligations under this paragraph shall be co-extensive with the obligations set forth in paragraphs 72 and 73 and the text thereof is incorporated herein by this reference.

48. Consistent with the strictures of paragraph 6 above, all improvements constructed on the Premises by Lessee shall be owned by Lessee until expiration of the term of this Lease or earlier termination hereof. Except as otherwise provided in this Lease, all improvements made by or for Lessee, whether temporary or permanent in character, shall automatically at the end of the term(s) hereof, whether by expiration or by earlier termination, become the property of Lessor, and shall be surrendered to Lessor in good condition, reasonable use, wear and tear excepted, without compensation to Lessee and without further instrument of transfer. Upon such expiration or termination, and upon written request by Lessor, Lessee shall deliver to Lessor a quit claim deed or such other instrument of transfer which shall be duly and properly executed and acknowledged, and which shall be adequate for the intended purpose.
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49. Once construction of the Lessee Improvements is completed, Lessee shall not remove, dismantle, demolish or otherwise destroy said improvements without Lessor’s prior written consent. If Lessee shall so remove, dismantle, demolish or otherwise destroy said improvements without Lessor’s prior written consent, Lessee shall be obligated to Lessor for the full cost of reconstruction, which cost shall include site restoration cost.

50. Lessee shall be wholly responsible for the removal, amelioration and/or remediation of any and all latent contamination, toxic substances, or hazardous materials (as that term is defined by the Placer County Department of Public Works) previously existing or newly discovered on the Premises during the course of Lessee's installation of the Lessee Improvements.

51. Lessee shall be wholly responsible for the removal, amelioration and/or remediation of any and all contamination, toxic substances, or hazardous materials which have been deposited upon the Premises during the course of Lessee's installation of the Lessee improvements, or otherwise as a result of Lessee's activities on or in relation to the Premises.

XII. Mandatory Improvements

52. All improvements, additions, changes or alterations of the Premises mandated or otherwise, required by federal, state or local law, rule, regulation or ordinance, that apply solely to the Premises or to activities on or in relation to the Premises, which shall be imposed after the Commencement Date, shall be the sole responsibility of Lessee.

53. All improvements, additions, changes or alterations of the Premises mandated or otherwise, required by federal, state or local law, rule, regulation or ordinance, that apply solely to the Airport other than the Premises or to Lessor’s activities on or in relation to the Premises, which shall be imposed after the Commencement Date, shall be the sole responsibility of the Lessor.

54. All improvements, additions, changes or alterations of the Premises mandated or otherwise, required by federal, state or local law, rule, regulation or ordinance, that do not apply solely to either party as set forth directly above, which shall be imposed after the Commencement Date, shall be the responsibility of both parties hereto on an equal basis.

XIII. Utilities

55. Except as provided in Paragraph 56, within one hundred eighty (180) days from the Commencement Date, the Lessor shall cause the water infrastructure necessary for fire protection and domestic use by Lessee to be installed and stubbed out to the Premises of each Hangar building row. Also within one hundred eighty (180 days from the Commencement Date, the Lessor will work with Lessee cooperatively to develop electrical infrastructure to the Premises as requested by Lessee. The Rent Abatement Period provided in Chapter IV shall be extended to the date Lessor has completed the 23 16
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water infrastructure and electrical infrastructure has been activated only if completion/activation thereof occurrs after the 180-day development period and only to the extent that said delay resulted in a stay of occupancy. For an extension of the Rent Abatement Period to be authorized under this paragraph, either party, their contractors or agents must not have willfully caused the delay.

56. Subject to applicable ordinances and regulations, Lessee may, at Lessee's expense, connect to sewer, water and electrical facilities and Lessee shall thereafter maintain said facilities within the boundaries of the Premises. In the event Lessee desires to construct new sewer facilities and infrastructure to service the Lessee Improvements, Lessee acknowledges that Lessor is under no obligation to pay for any such sewer related facilities and infrastructure.

57. Lessor will use $500,000 from the Airport Reserve Fund in its budget to develop water necessary for fire protection and domestic water (herein “Water Infrastructure”) and electrical infrastructure consisting of the necessary overhead pole drop, 600A pad mounted transformer, switchgear, meters, and underground works to provide a 200A services stub to each Hangar building (herein “Electrical Infrastructure”) to provide service to the Lessee Improvements.

58. Lessee shall prevent the entrance of objectionable quantities of petroleum products and other deleterious wastes into the sewage (if developed) and storm water drainage systems serving the Airport. Discharge of industrial waste and hazardous materials is prohibited. For discharge of anything other than domestic waste into sanitary sewage systems, Lessee must obtain permission or permits from Placer County Department of Public Works, or any other governmental unit or agency having jurisdiction over the discharge of wastes other than domestic waste, including, without limitation, hazardous materials. The parties hereto shall be responsible for and pay all utilities separately metered or according to their respective usage. If a common service is utilized, the parties shall pay according to their respective usage.

59. Lessor is entitled to reimbursement for its actual costs of designing and installing the Water Infrastructure and the Electrical Infrastructure. For each completed Hangar building row, Lessee will reimburse Lessor 1/6 of the Lessor’s total costs of the Water Infrastructure and the Electrical Infrastructure within one hundred eighty (180) days after the issuance of the certificate of occupancy for any given Hangar building row.

XIV. Maintenance and Repairs

60. Lessee shall be responsible for all maintenance and repairs to the Premises including, but not limited to, all maintenance and repairs to the Lessee Improvements. a. Lessee accepts the Premises on an “as is” basis. It is the intention of the parties hereto that the Rent for the term of the Lease shall constitute a net return to City free of any expense, charge or other deduction whatsoever with respect to the 24 17
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Premises or any improvements, fixtures and equipment which may now or hereafter exist thereon. Lessee shall keep the Premises and any improvements or equipment thereon in good and sanitary order and repair and in a good, safe and presentable condition consistent with the highest of business practices. If, after 30 days' written notice from City, Lessee fails to maintain or repair any part of the Premises or any improvements or equipment thereon, City may, but shall not be obligated to, enter upon the Premises and perform such maintenance or repair, and Lessee agrees to pay the costs thereof to City upon demand plus a percentage of costs incurred to sufficiently reimburse City for all overhead, fees and other costs and expenses, including attorneys' fees, arising from City's involvement with such maintenance and/or repairs, and interest at the legal rate until paid in full. b. Lessee shall be solely responsible for all actions, costs and expenses incurred to comply with any and all structural requirements, abatement ordinances, zoning requirements, statutes, rules and regulations imposed by any governmental authority with jurisdiction relating to safety or the abatement of hazardous materials found in the Premises or any buildings or facilities constructed thereon, including, without limitation, compliance with requirements, laws or orders for asbestos abatement, lead abatement and seismic retrofit.
c. Lessee shall be solely responsible for compliance with any requirements or obligations imposed or arising from the use of the Premises, or buildings or facilities constructed thereon, relating to the Americans with Disabilities Act (“ADA”).
d. City shall have no obligation to perform maintenance or make any repairs to the Premises or Lessee Improvements other than as expressly and specifically set forth in this Lease. Lessee hereby waives any and all rights provided in Sections 1941 through 1942, inclusive, of the California Civil Code and hereby waives, to the extent permissible, any rights now or hereafter in effect which are contrary to the obligations of Lessee under this Lease, or which place obligations upon City in addition to those provided in this Lease.

XV. Taxes

61. Lessee shall be responsible for and shall promptly pay all property taxes assessed against or otherwise attributable to any assets of Lessee that are attached to the realty herein or used in conjunction therewith. In accordance with California Revenue and Taxation Code Section 107.6(a), City states that entering into this Lease may create a possessory interest subject to property taxes. During the original term and any additional term of this Lease, Lessee or any other party in whom the possessory interest is vested shall pay prior to delinquency any taxes upon the assessed value of the entire Premises, not merely the assessed value of Lessee's estate. Notwithstanding the foregoing, and insofar as state law allows, it is agreed that Lessee does not have a possessory interest in any land associated with each of the Hanger building rows until Lessee has been issued 25 18
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a building permit. Lessor will make a reasonable effort to provide whatever documentation necessary to the Placer County Assessor’s office to assist Lessee in ensuring that ground taxes are not due until the date a possessory interest is acquired.

XVI. Lessee Insurance

62. Lessee shall carry and maintain, during the entire term hereof, at Lessee's sole cost and expense, the following types of insurance, in the amounts and with the endorsements as herein specified:
a. General Liability Insurance: Broad form comprehensive general liability insurance with combined single limits of not less than Two Million Dollars ($2,000,000) insuring against any and all liability of Lessee with respect to the Premises, or grounds, or arising out of the maintenance, use or occupancy thereof, naming Lessor, its officials, employees, agents, and independent contractors as an additional insured, and providing ten (10) days’ written notice to Lessor of any cancellation or change in coverage protection.
b. Fire Insurance (Contents): Fire insurance with all risk type standard form extended coverage endorsement, for the full insurable value of Lessee's fixtures, which may from time to time be located within the Hangar or upon the Premises, and the fixtures of others which are in Lessee's possession and which are located within the Hangar or upon the Premises. The proceeds from any such policy shall be used for the repair or replacement of such fixtures. Lessor shall have no interest in the insurance on Lessee's or others' aircraft fixtures, equipment and merchandise and will sign all documents necessary or proper in connection with the settlement of any claims or loss by Lessee or others. Lessee shall be solely liable for its airplanes, fixtures, equipment, and merchandise and all of the contents located within the Hangar or upon the Premises, and further understands and agrees that Lessor will not carry personal property insurance to cover same.
c. Fire Insurance (Structures): Fire insurance with all risk type standard form extended coverage endorsement, for the full insurable value of the Lessee Improvements and all other related improvements located on the Premises, including vandalism and malicious mischief endorsements. The proceeds from any such policy shall be used by Lessee for the repair and replacement of the Premises. Lessee shall cooperate with Lessor to maximum extent possible to assure said proceeds are so utilized.

63. In relation to the foregoing insurance, Lessee shall furnish proper endorsements thereto (i) evidencing the aforesaid coverages, (ii) naming Lessor as an additional insured, and (iii) providing for thirty (30) days’ written notice to Lessor of any termination 26 19
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or change in coverage protection, or reduction in coverage limits (except ten (10) days’ written notice shall be required for non-payment of premium).

64. At all times, Lessee shall keep and maintain in full force and effect, throughout the term of this Lease, policies of insurance required by this Lease, which policies shall be issued by companies with a Best’s Rating of A: VII or higher, or shall be issued by companies approved by City’s Risk Manager.

65. Provided however, that said insurance may be subject to standard policy exclusions, which exclusions shall be approved by Lessor, and provided further, that said exclusions shall not serve to reduce or otherwise limit the liability of Lessee as set forth herein. Said insurance shall be primary and not abated by any coverage maintained by Lessor.

66. Lessee's obligation to insure under the foregoing provisionsmay be provided by appropriate amendment, rider, or endorsement on any blanket policy or policies carried by Lessee.

67. Lessee shall be solely liable for any loss to its aircraft, fixtures and equipment occasioned by any occurrence not the sole negligence of the Lessor, its officials, employees, or agents.

68. Failure by Lessee to provide and maintain the insurance policies (including Best’s ratings) required by this Lease shall constitute, and for all purposes be, a default hereunder and a material breach hereof, and shall be cause for termination of this lease and forfeiture of all right, title and interest hereunder or otherwise, if not cured within thirty (30) days of written notice thereof to Lessee.

XVII. Lessor Insurance

69. Lessor shall carry and maintain, during the term hereof, at Lessor's sole cost and expense, broad form comprehensive general liability insurance with combined single limits of not less than Two Million Dollars ($2,000,000), insuring against any and all liability of Lessor with respect to the Premises or arising out of the use and enjoyment thereof, and upon request shall furnish to Lessee an endorsement evidencing the aforesaid coverage.

70. Lessor shall be solely liable for any loss to its fixtures and equipment occasioned by any occurrence not caused by the negligence of Lessee or any sub-tenant, or their officers, agents and employees.

71. Lessor, at its option, may provide the required limits of liability insurance under a program of self insurance.
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XVIII. Indemnity

72. Nothing herein shall be construed as a limitation of Lessee's liability, and Lessee shall indemnify, defend and hold Lessor harmless from any and all liabilities, claims, demands, damages, losses and expense which Lessor may incur by reason of the willful misconduct, or negligent actions or omissions of Lessee, or the agents, servants, and employees of Lessee, or which may arise out of the use, occupation, and enjoyment of the Premises by Lessee or the agents, servants, and employees of Lessee, or by any person or entity holding under Lessee, or by any of Lessee’s invitees or agents.

73. Nothing herein shall be construed as a limitation of Lessor's liability, and Lessor shall indemnify, defend and hold Lessee harmless from any and all liabilities, claims, demands, damages, losses and expense which Lessee may incur by reason of the willful misconduct, or negligent actions or omissions of Lessor, or the agents, servants, and employees of Lessor, or which may arise out of the use, occupation, and enjoyment of the Premises by Lessor or the agents, servants, and employees of Lessor, or by any person or entity holding under Lessor, or by any of Lessor’s invitees or agents.

XIX. Default

74. The parties hereto agree that the unlawful detainer provisions of the California Civil Code and the California Code of Procedure apply. The occurrence of any one or more of the following events is a default hereunder and constitutes a material breach of this Lease by Lessee:
a. The abandonment of the Lease by Lessee.
b. The failure by Lessee to make any payment of the Annual Rent required to be made by Lessee hereunder, as and when due, where the failure continues for a period of thirty (30) days after notice thereof from Lessor to Lessee. c. The failure by Lessee to carry and maintain, or to require each sub-lessee to carry and maintain, any policy of insurance as required hereunder. d. The failure by Lessee to make any other payment as required hereunder, as and when due, where the failure continues for a period of thirty (30) days after notice thereof from Lessor to Lessee.
e. The failure by Lessee to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Lessee, where the failure continues for a period of thirty (30) days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commences such cure within the thirty (30) day period and thereafter diligently completes the cure. 28 21
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f. The failure by Lessee to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Lessee, where such failure may not be cured.

75. In the event of any such default or other material breach of this Lease by Lessee, Lessor may, after giving notice as provided above, or if not provided, as required by law, pursue those remedies set forth in California Civil Code sections 1951.2 and/or 1951.4, which by this reference are made a part of this Lease.

76. Lessor shall not be in default unless Lessor fails to perform obligations required of it within a reasonable time, but in no event later than sixty (60) days after written notice of the nature of the problem and request to cure by Lessee to Lessor; provided that if the nature of Lessor's obligation is such that more than sixty (60) days are reasonably required for performance, then Lessor shall not be in default if Lessor commences performance within sixty (60) days and thereafter diligently completes performance.

77. In addition and without limitation of any other remedy, in the event of any such default or other material breach of this Lease by Lessee or by a sub-lessee, and after giving notice as provided above, or if not provided, as required by law, Lessor may declare such default or other material breach of this Lease to be a nuisance, and may give notice of the imposition of liquidated damages of one hundred dollars per day ($100.00 / day) which shall be paid by Lessee within thirty (30) days of receiving notice thereof.

78. If Lessor defaults in the performance of any of the obligations or conditions required to be performed by Lessor under this Lease, Lessee may in no event withhold payment of the Annual Rent, or apply said Annual rent to cure the alleged default.

79. Lessor’s waiver of a default shall not be deemed a waiver of any term, condition or covenant hereunder, and shall not be deemed a waiver of Lessor’s right to enforce any remedy upon any future default.

80. Subject to the cure period in paragraph 76, if Lessee fails to adhere to the schedule of construction in paragraph 43 and any extensions thereto, Lessee shall vacate any portion of the Premises for which construction has not been completed, this Lease shall be automatically amended to exclude such portions of the Premises, and any improvements thereon shall become the property of Lessor without payment, offset, or reimbursement to Lessee.

XX. Termination of Lease

81. If this Lease shall terminate for any reason, or otherwise expire, then in that event, Lessor shall not be obligated to return, reimburse, compensate or pay to Lessee for the cost or value of the Hangars or any portion thereof, for the cost or value of any 29 22
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improvements whatsoever, or for the costs and expenses attendant to the obligations assumed by Lessee hereunder, or otherwise.

82. If this Lease shall terminate for any reason, or otherwise expire, then in that event, and upon written request by Lessor, Lessee shall promptly deliver to Lessor a quit claim deed or such other instrument of transfer which shall be duly and properly executed and acknowledged, re-conveying to Lessor all of Lessee’s right, title and interest in and to the Premises.

83. During the term of this Lease, title to any and all improvements placed on the Premises by Lessee shall be vested in Lessee. At the end of the Lease term, title to all such improvements shall revert to City. The improvements shall be transferred to City in good merchantable condition, including all fixtures, reasonable wear and tear excepted; provided that Lessee shall be under no obligation to retrofit the improvements to comply with building code standards effective as of the termination of this Lease. Lessee shall be responsible for any and all costs, expenses and compliance activities relating to the improvements which will revert to City concerning the removal, amelioration and/or remediation of any and all contamination, toxic substances, or hazardous materials which have been deposited upon the Premises as a result of Lessee's activities on or in relation to the Premises. If City discovers, after title has been transferred to it pursuant to this reversion provision, that Lessee has failed to comply with the requirements set forth in this paragraph, Lessee shall indemnify and hold harmless City from and against all costs, expenses, damages, losses and claims, including reasonable attorneys' fees, arising from or related to compliance with such provisions by City. As used in this paragraph, “contamination, toxic substances, or hazardous materials” do not include building materials that were code compliant at the time of installation.

XXI. Notices

84. All acceptances, approvals, consents, notices, demands or other communications required or permitted to be given or sent by either party to the other shall be deemed to have been fully given when made in writing and delivered in person or deposited in the United States mail, certified and postage prepaid, addressed to:

Lessee

AUBURN EAST HANGARS

PHASE II OWNERS,

AN UNINCORPORATED

ASSOCIATION
20475 Natures Way
Colfax, CA 95713
Attn: Steven Hogge
City / Lessor
City of Auburn
Office of the City Manager
1225 Lincoln Way
Auburn, CA 95603
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85. The address to which any such written communication may be given or sent to either party may be changed by written notice given by such party as above provided.

XXII. Miscellaneous

86. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. This Lease shall be governed by the laws of the State of California. Venue for purposes of litigation shall be in the Superior Court of California for the County of Placer. The language in all parts of this Lease shall be construed as a whole according to the fair meaning, and not strictly for or against either Lessor or Lessee.

87. All preliminary and contemporaneous agreements and understandings are merged and incorporated into this Lease, which contains the entire agreement between the parties. This Lease may not be modified or amended in any manner except by an instrument in writing executed by the parties hereto.

88. Should Lessor at any time during the term of this Lease or any extension hereof, decide to sell all or any part of the Premises to a purchaser other than Lessee, such sale shall be under and subject to this Lease and Lessee's rights hereunder, and any sale by Lessor of the Premises or any part thereof shall be under and subject to the rights of Lessee hereunder.

89. Lessor warrants there are no liens, judgments or impediments of title on the subject property or affecting Lessee's interest in same, and there are no covenants, easements or restrictions that prevent the use of the Premises as contemplated herein by Lessee.

90. This Lease does not create a relationship of principal and agent, or partnership, or joint venture, or any association other than that of Lessor and Lessee.

91. This Lease shall extend to and bind the parties hereto, their representatives, successors and assigns.

92. [Reserved]

93. The parties hereto have specifically bargained for the timely performance of each and every obligation hereunder to be performed. Accordingly, time is of the essence in this Lease.

XXIII. Warranty

94. Each individual executing this Lease on behalf of each respective principal represents and warrants that he or she is duly authorized to execute this Lease on behalf of said principal in accordance with the bylaws, articles, resolutions and ordinances as shall apply, and that this Lease is binding upon each such principal. 31 24
East Area Hangar Lease Phase II
278740.1
XXIV. Mediation

95. All claims, disputes and controversies arising out of or in relation to the performance, interpretation, application or enforcement of this Lease, including, but not limited to, breach thereof ("Mediation Dispute"), except (a) the payment of Rent, which Lessee acknowledges is an independent covenant not subject to offset or deduction, and (b) the matters described in Article VI (regarding the determination of fair market rental value), shall be subject to mediation before any court action is filed. If Lessee defaults in the payment of Rent, this Article XXIV shall not apply and Lessor may immediately pursue any and all legal and equitable remedies provided by law, including, without limitation, an unlawful detainer action, writ of possession, and a money judgment for unpaid rent.

A. Mediation.
(1) Any Mediation Dispute shall be referred to mediation before, and as a condition precedent to, the initiation of any court proceeding. (2) The parties shall submit any Mediation Dispute to an impartial neutral mediator selected by mutual consent of the parties. In the event the parties cannot agree on the selection of a mediator, the Mediation Dispute shall be referred to JAMS, a professional mediation service. The parties shall equally bear the cost of mediation fees, subject only to the exception set forth in the next paragraph.

B. Court Action.
(1) If the parties cannot resolve the Mediation Dispute through mediation, a court action may be filed in accordance with this Lease. (signature page follows)
32 25
East Area Hangar Lease Phase II
278740.1
IN WITNESS WHEREOF, the parties have executed this Lease effective upon the complete execution hereof by the parties hereto.
“CITY” or “LESSOR”
CITY OF AUBURN, CALIFORNIA, a
Municipal Corporation
By: ___________________________
John W. Donlevy, Jr.

City Manager
“LESSEE”
Auburn East Hangars Phase II
Owners, an Unincorporated
Association
By:

Its: Sectretary-Treasurer
Name: Steven Hogge
By:

Its:

Name:

APPROVED AS TO FORM:
_________________________
Gary B. Bell, City Attorney
33 March 28, 2022
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘G’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 48°38'09" East, a distance of 1446.06 feet, and also from which the northwest corner of said Section 27 bears North 61°36'15" West, a distance of 1791.70 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 189.00 feet; thence South 84°03'31" West, a distance of 51.00 feet; thence North 05°56'29" West, a distance of 189.00 feet; thence North 84°03'31" East, a distance of 51.00 feet to the Point of Beginning.

Containing 9,639 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
34 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'G'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27
27 POB

HANGAR BUILDING 'G'
9,639 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
35 March 28, 2022
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘H’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 45°26'40" East, a distance of 1343.02 feet, and also from which the northwest corner of said Section 27 bears North 63°47'58" West, a distance of 1899.62 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 240.00 feet; thence South 84°03'31" West, a distance of 60.00 feet; thence North 05°56'29" West, a distance of 240.00 feet; thence North 84°03'31" East, a distance of 60.00 feet to the Point of Beginning.

Containing 14,400 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
36 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'H'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27

HANGAR BUILDING 'H' POB
14,400 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
27 37
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘I’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 43°52'31" East, a distance of 1298.97 feet, and also from which the northwest corner of said Section 27 bears North 64°41'29" West, a distance of 1948.11 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 252.00 feet; thence South 84°03'31" West, a distance of 42.00 feet; thence North 05°56'29" West, a distance of 252.00 feet; thence North 84°03'31" East, a distance of 42.00 feet to the Point of Beginning.

Containing 10,584 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
38 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'I'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27

POB HANGAR BUILDING 'I'
10,584 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
27 39
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘J’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 40°15'47" East, a distance of 1211.04 feet, and also from which the northwest corner of said Section 27 bears North 66°24'22" West, a distance of 2050.13 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 232.00 feet; thence South 84°03'31" West, a distance of 51.00 feet; thence North 05°56'29" West, a distance of 232.00 feet; thence North 84°03'31" East, a distance of 51.00 feet to the Point of Beginning.

Containing 11,832 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
40 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'J'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27

HANGAR BUILDING 'J' POB
11,832 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
27 41
March 28, 2022
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘K’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 36°02'54" East, a distance of 1127.65 feet, and also from which the northwest corner of said Section 27 bears North 67°58'33" West, a distance of 2155.12 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 232.00 feet; thence South 84°03'31" West, a distance of 51.00 feet; thence North 05°56'29" West, a distance of 232.00 feet; thence North 84°03'31" East, a distance of 51.00 feet to the Point of Beginning.

Containing 11,832 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
42 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'K'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27

POB HANGAR BUILDING 'K'
11,832 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
27 43
March 28, 2022
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EXHIBIT ‘A’

AUBURN MUNICIPAL AIRPORT

HANGAR LEASE PARCEL
BUILDING ‘L’:

A portion of that real property situated in the City of Auburn, County of Placer, State of California, being a portion of Section 27, Township 13 North, Range 8 East, Mount Diablo Meridian, and a portion of the lands of the City of Auburn described as PARCEL 1 in that certain Final Judgement of Condemnation No. 29000 recorded on April 11, 1978 in Book 1995, at Page 198, Official Records of Placer County and being further described as follows:

BEGINNING at a point from which the north one-quarter corner of said Section 27 bears North 30°47'55" East, a distance of 1045.90 feet, and also from which the northwest corner of said Section 27 bears North 69°30'00" West, a distance of 2269.64 feet; thence from said POINT OF BEGINNING South 05°56'29" East, a distance of 240.00 feet; thence South 84°03'31" West, a distance of 60.00 feet; thence North 05°56'29" West, a distance of 240.00 feet; thence North 84°03'31" East, a distance of 60.00 feet to the Point of Beginning.

Containing 14,400 square feet of land, more or less.

See Exhibit ‘B’, plat to accompany description, attached hereto and made a part hereof.

The Basis of Bearings of this description is identical to that shown on that certain Record of Survey entitled “Record of Survey No. ESD16-00376 Auburn Airport” recorded on April 12, 2017 in Book 23 of Surveys, at Page 86, Placer County Records.

End of Description
44 CITY OF AUBURN

CITY OF AUBURN

PLACER COUNTY

EXHIBIT 'B'

AUBURN AIRPORT

HANGAR BUILDING 'L'

A PORTION OF
SECTION 27, T.13 N., R.8 E., M.D.B.M.

CITY OF AUBURN

PLACER COUNTY, CALIFORNIA
SCALE: 1"=200' MARCH 28, 2022

LINE TABLE
22 21 22
28 27
POB

HANGAR BUILDING 'L'
14,400 SQUARE FEET
LEGEND
1 4 CORNER
PER (1)

SECTION CORNER
PER (1)
27 45

EXHIBIT B
East Area Hangar Lease Phase II
278740.1

EXHIBIT B
MAP
46 AUBURN AIRPORT

HANGER EXHIBIT

PLACER COUNTY, CALIFORNIA
SCALE: 1"=30' MARCH, 2022
47 EXHIBIT C
1 East Area Hangar Lease Phase II
278740.1

EXHIBIT C

FAA REQUIREMENTS
A. Lessee, for itself, its heirs, personal representatives, successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that in the event facilities are constructed, maintained or otherwise operated on the said property described in this Lease for a purpose for which a Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, Lessee shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to (i) Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, or as said Regulations may be amended; (ii) Title 14, Code of Federal Regulations, Part 152, Subpart E, or as said Regulations may be amended; (iii) Part 77 of the Federal Aviation Regulations, or as said Regulations may be amended; and (iv) any and all federal laws, rules or regulations relating to the operations of Lessee on the Premises.

B. Lessee, for itself, its personal representatives, successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land: (i) that no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of or be otherwise subjected to discrimination in the use of said facilities; (ii) that in the construction of any improvements on, over or under such land and the furnishing of services thereon, no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of or otherwise be subject to discrimination; and (iii) that Lessee shall use the Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and as said Regulations may be amended.

C. That in the event of breach of any of the above nondiscrimination covenants, City shall have the right to terminate the Lease and to reenter and repossess said land and the facilities thereon, and hold the same as if said Lease had never been made or issued.

This provision does not become effective until the procedures of Title 49, Code of Federal Regulations, Part 21, are followed and completed, including expiration of appeal rights.

D. Lessee shall furnish its accommodations and/or services on a fair, equal and not unjustly discriminatory basis to all users thereof and it shall charge fair, reasonable and not unjustly discriminatory prices for each unit or service; provided, that Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates or other similar 48 EXHIBIT C
2 East Area Hangar Lease Phase II
278740.1
type of price reductions to volume purchasers.

E. Noncompliance with paragraph D. above shall constitute a material breach thereof and, in the event of such noncompliance, City shall have the right to terminate this Lease and the estate hereby created without liability therefor or at the election of City or the United States either or both said Governments shall have the right to judicially enforce provisions.

F. Lessee agrees that it shall insert paragraphs A through E in any lease agreement by which said Lessee grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises herein leased.

G. Lessee agrees to comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations in the event future construction of a building is planned for the Premises, or in the event of any planned modification or alteration of any present or future building or structure situated on the Premises.

H. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Section 308a of the Federal Aviation Act of 1958 (49 U.S.C. Section 1349a).

I. This Lease and all the provisions hereof shall be subject to whatever right the United States Government now has or in the future may have or acquire, affecting the control, operation, regulation and taking over of said Airport or the exclusive or nonexclusive use of the Airport by the United States of America during the time of war or national emergency.

J. Lessee, in the operations and use of the Auburn Municipal Airport, will not on the grounds of race, color or national origin discriminate or permit discrimination against any person or group of persons in any manner prohibited by Part 15 of the Federal Regulations. The City of Auburn is granted the right to take such action as the United 49 EXHIBIT C
3 East Area Hangar Lease Phase II
278740.1
States government may direct to enforce such covenant.
50 Auburn Airport East End
Phase II Hangar Project
Jonathan Wright
Economic and Planning Manager
Response to Auburn Airport Association(AAA)
Notification
Chris and Jonathan,
Thank you for the update, I appreciate being kept in the loop. Hopefully with the East end finally being built out the airport will be able to tap into the momentum and continue with many of the other much needed improvements.

Regards,
Greg Anderson
Location
Lease
Location
East End Hangar Section
History
• On June 11, 2001 Council authorized staff
to proceed with a design contract for
improvements to the Auburn Municipal
Airport East Hangar Development Area
Project.
• Between 2003-2008 infrastructure was
developed for Phase 1 and Phase 2.
• “B” Bravo Hangar was land leased by the
City and constructed in 2008.
• “D” Delta Hangar was the last row
developed in Phase 1 and it was complete
in 2017.
• Staff was contacted about the
development of Phase II October of 2021.

East End Phase 1
East End Phase 2
Phase II
• This area was developed to keep up with
demand for a 20-year growth cycle
• Was developed to accommodate 6
hangar rows
• Will contain a mix of hangar types to
provide storage for different budget types
• Comprises over 74,000 sq ft of hangar
area
• Will require water and electric to be
developed to each hangar row
• Hangars will look like the other hangars in
Phase 1
• No sewer is planned at this time
The Lease
• 80. Subject to the cure period in
paragraph 76, if Lessee fails to
adhere to the schedule of
construction in paragraph 43 and any
extensions thereto, Lessee shall
vacate any portion of the Premises
for which construction has not been
completed, this Lease shall be
automatically amended to exclude
such portions of the Premises, and
any improvements thereon shall
become the property of Lessor
without payment, offset, or
reimbursement to Lessee.
• Term – 40 years with one option.
• Rent – Market rate based off the recent
rate study with CIP increases. Once
construction is complete annual rent will
be $52,334.64.
• Phased – This lease anticipates a 5-year
development period.
• Reimbursement- Provides for
reimbursement of City costs for developing
the waterline.
• Performance – Requires development to
occur within a reasonable timeframe.
• Default – Includes provisions to amend the
lease to recapture land and/or structures
that the Lessee fails to complete.

Project Summary
• Airport will get much needed additional hangar storage • There will be more than one hangar type
• Lessee has pledged a minimum 5.5-million-dollar investment • Lease will generate over 2 million dollars in revenue for the airport • Lessee is a member of the Auburn Airport with experience in hangar development
• Rising costs have necessitated that City move swift on this opportunity
Questions?