DATE: April 27, 2023
TO: Council Airport Committee
FROM: Director of Public Works
SUBJECT: 20995 Skywest Drive: First Amendment to Ground Lease with Hayward Hangars, LLC
RECOMMENDATION
That the Council Airport Committee (CAC) reviews this report and recommends approval to Council.
SUMMARY
Hayward Hangars has been a commercial tenant at Hayward Executive Airport (HWD) since 2006 and provides storage space for general aviation aircraft. They plan to construct new box hangars on their leasehold. In order to comply with the conditions put forth by an investor who will be financing the construction of Hangar Building “A,” as well as to standardize the language associated with term length, an amendment is required at this time.
Changes to the agreement are outlined in the staff report and all other terms and conditions contained within the lease remain unchanged.
If approved by the CAC, staff will submit this item for Council approval in late May 2023.
BACKGROUND
Hayward Hangars has operated at HWD since 2006 at 20995 Skywest Drive (Attachment II). They provide storage space for general aviation aircraft. Currently, two hangar buildings are active, while a third hangar is in the planning stage.
On September 21, 2021, Council approved a new lease with Hayward Hangars, with the terms and conditions consistent with their previous lease.
Recently, the president of Hayward Hangars approached the airport staff about amending the lease related to the notification process in the event of lease cancellation.
DISCUSSION
Hayward Hangars is preparing to construct the third hangar. However, the lender is requiring Hayward Hangars to revise Section 8.02 of the lease in order to secure the necessary financing. In brief, the revision requires the consent of the trustee for the bonds prior to Hayward Hangars terminating the lease due to substantial changes in laws that would affect their ability to operate.
The other change covered by this amendment standardizes and clarifies term language between Sections 1.01 and 1.07 by noting in Section 1.01 that the initial term is thirty-two years, which is automatically extended by eight years if a certificate of occupancy is issued for Hangar Building “A”, and not an initial term of forty years. For Section 1.07, it is noted that the initial term expires on December 13, 2054, but is automatically extended to December 13, 2062 if a certificate of occupancy is issued for Hanger Building “A”.
All other terms and conditions contained within the lease remain unchanged.
Development cannot proceed until the project is approved by the FAA. As originally conceived, the proposed hangar obstructed the view of an adjacent taxiway from the FAA air traffic control tower. However, the project proponent has spent many years working with the FAA and City staff to resolve this conflict.
ECONOMIC IMPACT
Hayward Hangars will provide employment opportunities for skilled workers in the immediate area during the construction of Hangar Building “A.”
FISCAL IMPACT
No fiscal impact is directly associated with this amendment to the agreement with Hayward Hangars.
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 action taken for this report will not result in physical development, purchase, or service, or a new policy/legislation.
PUBLIC CONTACT
Airport staff have held numerous meetings with Hayward Hangars, including this lease amendment.
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