DATE: April 27, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT: 21015 Skywest Drive: Assignment/Assumption of Ground Lease with Hayward FBO, LLC.
RECOMMENDATION
That the Council Airport Committee (CAC) reviews this report and recommends approval to Council.
SUMMARY
On February 27, 2018, Council approved an agreement with Briggs Resources for the leasehold previously held by American Aircraft Sales. This lease was assigned to GBHWD, LLC, (a subsidiary of Briggs Resources) in February 2019. Earlier this year, GBHWD, LLC agreed to assign the interest in this leasehold to Hayward FBO, LLC. DBA: APP Jet Center (APP). APP will develop a new hangar and office space similar to that proposed by GBHWD, LLC.
If this assignment is approved by the Committee, the item will be forwarded onto Council in late May 2023 for consideration.
BACKGROUND
American Aircraft Sales (AAS), which was an Airport commercial tenant since 1958, entered into a new ground lease on December 10, 2010 for “Plot G” at 21015 Skywest Drive. This parcel consists of approximately 119,159 square feet of improved land. Despite best efforts, the lease ended in default and AAS vacated the premises on December 31, 2015. During the latter part of 2016, Briggs Resources, Inc., notified the City of their interest in acquiring the leasehold. Subsequent discussions culminated in an agreement that was approved by Council on February 27, 2018. On February 19, 2019, Council approved a subsequent assignment of the lease from Briggs Resources, Inc. to GBHWD, LLC, which was a new California LLC that had been set up for this development.
DISCUSSION
APP is planning to construct a 40,000 square foot hangar on the parcel as well as build a 6,000 square foot office area. The initial lease term is thirty-five years, with two options of seven and one-half years each after the end of the initial term. In addition to the lease term, all other conditions associated with the existing lease remain unchanged and are unaffected.
ECONOMIC IMPACT
The office and hangar construction will generate work for skilled and unskilled tradespeople. Post-construction, the City’s General Fund will benefit from any additional sales tax generated from the new hangar tenants. Furthermore, this project will benefit the local economy by providing job opportunities and generating sales tax from aircraft sales.
FISCAL IMPACT
Annual rent will be $41,706, which reflects the current rate for aviation-related uses of $0.35 per square foot, per year. Per Attachment C to the lease, rent will be adjusted every five years, first by a market rate study and then by the Consumer Price Index (CPI) for the previous five years, not-to-exceed a maximum of 7%.
STRATEGIC ROADMAP
This agenda item pertains to development at the Airport and does not directly relate to any of the six priorities outlined in the Council’s Strategic Roadmap.
SUSTAINABILITY FEATURES
The Airport is strongly committed to developing projects that are environmentally responsible. Therefore, staff will ensure that all plans proposed by the developer incorporate features that are commensurate with the City’s sustainability guidelines.
PUBLIC CONTACT
The original lease was presented to and approved by the CAC on February 1, 2018 and approved by Council on February 27, 2018. The assignment was approved by Council on February 19, 2019. The agenda and staff report for this item have been posted on the City’s website and distributed to interested parties.
NEXT STEPS
If approved by the CAC, staff will submit this item for Council approval in late May 2023.
Prepared by: Doug McNeeley, Airport Manager
Recommended by: Alex Ameri, Director of Public Works
Approved by:
Kelly McAdoo, City Manager
CITY OF HAYWARD - File #: CONS 18-106 (legistar.com)
CITY OF HAYWARD - File #: CONS 19-079 (legistar.com)
CITY OF HAYWARD - File #: RPT 18-008 (legistar.com)