Digital Divide Analysis
North County Broadband Strategic Plan 91
The survey reveals that most of the aging population (above 90%) can perform essential internet activities such as sending/receiving emails, finding places and directions, or doing electronic banking.
They start struggling with social media, messaging applications, streaming services, and (even more) eCommerce applications.
An increase in the adoption of e-commerce applications would represent not only an improvement in the economy of cities but it can also improve the lifestyle of the aging population.
During the public forum conversations in Paso Robles and Atascadero, digital skills, and training on how to use the internet was deemed to have primary importance when considering steps to take towards closing the digital divide. Panelists noted that while most of the community can access some internet services, there are many who need to access services that they don’t know how to use such as telehealth, banking, eGovernment and eCommerce. Based on interviews with Community Based Organizations (CBO) partners and County staff, of significant importance are digital training opportunities for senior populations and parents of the ELL students.
The Youth Works program, located within the Housing Authority, has a computer lab to support students with internet access for doing homework. In an interview with the Executive Director, he explained that all their residents would benefit from training to fully utilize the resource.
5.2 Priority Area Assessment
5.2.1 Education
School districts from Paso Robles and Atascadero have been working towards improving connectivity at schools and at student homes. For schools this has led to 100% of the schools in North County connected to the K-12 High Speed Network (K12HSN), 100% of them through fiber in Paso Robles, and
92.3% in Atascadero73.
Nevertheless, there are still important gaps regarding student connectivity. IT directors of both districts were asked what their top priority would be for their students if money was not a barrier. Atascadero's director would like to provide accessible high-speed Internet to every household. Paso Robles would like to deploy fiber to connect all their school sites and administrative buildings to provide wireless services to surrounding areas, specifically rural residents that lack reliable internet access.
This is consistent with the Needs Assessment Survey that shows that only 27% of remote learning students consider their home to have good internet service. In comparison, 34% would like to have better connectivity, 10% consider their home as having bad service which makes them struggle constantly, and 8% consider their service to be awful, which makes it impossible to work with.
5.2.2 Health Care
According to the Needs Assessment Survey, 57% of respondents rely on the internet for telehealth services, leaving 43% behind. Furthermore, of those doing telehealth only 25% are satisfied with their experience, with 19% of respondents referring that their doctors/nurses struggled to provide the service.
This indicates that faster, more reliable connections are required to fully leverage telehealth programs.
5.2.3 Economic and Workforce Development
73 K12HSN Data Portal
Exhibit A
Digital Divide Analysis
North County Broadband Strategic Plan 92
As demonstrated in Section 4.4, broadband has a significant impact on economic and workforce development. Importantly, this requires not only access to broadband but also the development of digital skills throughout.
Results from the Needs Assessment Survey provide relevant insights regarding the use of broadband for economic and workforce development:
• Only 27% of respondents are satisfied with their internet service regarding remote working, the rest said they would like their connection to be better (32%), they constantly struggle (11%) or consider it almost impossible to do any remote work (4%). • Almost all business owners that claimed an internet connection are satisfied with their internet service regarding remote working, the rest said they would like their connection to be better (32%), they constantly struggle (11%) or consider almost impossible to do any remote work (4%).
5.2.4 Civic Engagement and Access to Essential Services Both cites have accessible services via their websites that identify important resources as well as City council meeting agendas and other City processes and procedures. Most of the information is geared towards City operations and upcoming projects and priorities, paying bills, recreational opportunities, etc. The sites also include general information for special events and critical announcements for raising awareness during emergency events. Where applicable, the Cities have embedded external links to additional information regarding County social services and housing and other programs managed by and addressed at the County level.
A key challenge to accessible and affordable broadband are gaps in the multi-unit housing infrastructure. While some of the housing includes Wi-Fi for the residents, it may be difficult for those households that would qualify for the ACP to connect if individual lines are not accessible within each unit. Therefore, it is important for the Cities to ensure within their policies that multi-unit housing in development is wired for high-speed internet access.
5.3 Digital Inclusion Programs and Partners
Digital inclusion refers to the activities necessary to ensure that all individuals and communities, including the Covered Populations identified for the SDEP, have access to and use information and communication technologies. The five elements of digital inclusion are access to affordable and robust internet service, internet enabled devices, access to digital literacy training, quality technical support and applications and online content to enable and encourage self-sufficiency.
Meaningful digital inclusion work requires programs and policies that meet the needs of the community in culturally appropriate and language accessible materials. Recommended programs and partners are captured below:
Affordable Connectivity Program. Affordable access to
broadband services can be accomplished through the ACP74.
Furthermore, the ACP offers an opportunity to purchase a lowcost computing device for households who are enrolling in ACP for the first time.
74 Affordable Connectivity Program (accessed 2023)
Exhibit A
Digital Divide Analysis
North County Broadband Strategic Plan 93
It is recommended for North County to promote and support enrollment into the ACP by working with CBO partners, libraires and schools to facilitate registration events, and access to online resources within the City online websites.
The Northstar Online Learning (NSOL) program75 is available through the Public Library system of SLO. The NSOL was developed to help job seekers lacking digital literacy skills obtain and retain employment that require such skills. Furthermore, the NSOL is a nationally recognized program that provides a digital literacy certification once completed and that certificate can be turn in for a low-cost device.
Recommendation is to increase awareness and promotion of this program that would benefit the local community. While the NSOL program is only accessible via the Atascadero library, community members served by County programs can utilize the resource. All that is required is a library card number and a computer.
Paso Robles Library System
While the NSOL program is not currently available within the Paso Robles library system, the City’s Five Year Library Strategic Plan has four goals that align with digital inclusion strategies with one of these goals specifically targeting the implementation of technology and innovation platforms and staff support.
Community Learning Centers
A recommended initiative is to provide learning centers within already established community centers that families or seniors already utilize and could receive assistance with devices and training programs. Initiatives like this can already be found in some of the subsidized housing developments in Paso Robles and there is evidence that there is a greater need. Libraries are an important partner and already have some infrastructure and resources available to build upon and have access to unique grants, funding, and programs via the California State Library system.
Devices and digital navigator programs can be developed and deployed via funding through the CASF Adoption Funding Account described below and programs can be implemented through partnerships noted above. Key to success is identifying trusted and collaborative partners.
The Boys and Girls Club of Mid Central Coast reported that if they had 130 devices, they could set up computer labs in both Cities and serve all their school and club sites and support students with homework projects. Devices can be funded through the CASF Adoption Funding Account described below.
75 Northstar Digital Literacy (accessed March 2023)
Exhibit A
Digital Divide Analysis
North County Broadband Strategic Plan 94
In addition, they could also work with parents who need to learn how to use a computer to access the internet. Finally, partnerships to provide the support needed to overcome language barriers would need to be established.
CASF Adoption Funding Account
A program for the deployment of low-cost devices could be developed in partnership with the Cities and CBOs by utilizing the CASF Adoption funding account76. The bulk purchase of devices for training centers within housing developments, after-school programs, libraries and for workforce training centers, and to subsidize the purchase of home computers for individuals that participate in digital skills training would play a significant role in closing the digital divide in North County.
The Workforce Development Board of San Luis Obispo County (WDBSLO) is in the third year of its local plan to support employment and training services. The Workforce Innovation and Opportunity Act (WIOA) guides these efforts focusing on digital fluency, distance learning, and cultural competencies.
In North County, a partner for this work is Eckerd Connects77. The programs provided by Eckerd could play a role in supporting basic digital skills training to covered populations utilizing their resources.
Importantly, to ensure alignment with the SDEP and the California Broadband for All Action Plan, a similar type of online or in person training program would need to be accessible in other languages, primarily Spanish.
El Camino Homeless Organization (ECHO)78 operates two shelters in North County, one in each city. Through a conversation with their client services manager, it was identified that there are not enough computers available to support their client needs as they move into independence since most job and rental applications need to be completed online and ECHO has only one or two computers that clients can use with supervision, which is insufficient as they serve hundreds of individuals a year in the temporary shelter program and their transition to housing program.
A program to provide ECHO clients with a computer and to ensure they have access to the internet when they move out into housing should be considered. Collaborating on a CASF Adoption Funding Account application would prove to be beneficial.
76 CASF Adoption Account (accessed March 2023)
77 Eckerd Connects (accessed March 2023)
78 ECHO (accessed March 2023)
Exhibit A
Digital Divide Analysis
North County Broadband Strategic Plan 95
Regional Coordination and Awareness
The County of SLO, the County Office of Education, County and local library systems, local school districts, Cuesta Community College and the WDBSLO are all partners in determining the best path towards closing the digital divide. This is key as regional coordination will be the most effective approach to support digital inclusion and improve digital literacy. Through regional coordination, the task to identify gaps of services, identify needs and subsequent opportunities becomes a collaborative process with the potential for a higher rate of success.
Increased engagement with CBOs is critical to support digital equity programs as they tend to be the trusted partners with access to priority populations who will benefit the most from digital accessible training and services.
As the Cities continue to work towards prioritizing broadband for the community, special considerations should be given to synthesizing information and resources within their webpages, including library resource links, to support broadband access and adoption.
5.4 Alignment with California Broadband for All
The California Broadband for All Action Plan (CBA) was developed to provide access to affordable and reliable broadband to transform the lives of all Californians79. It has the following goals, with actions and partners identified at the state level to close the digital divide:
• All Californians have high-performance broadband available at home, schools, libraries, and businesses.
• All Californians have access to affordable broadband and the devices necessary to access the internet.
• All Californians can access training and support to enable digital inclusion.
The CBA, established in December 2020, covers access to affordable broadband, accessible broadband and access to equipment and training to close the digital divide as shown in Figure 57.
Figure 57. California Broadband For All Action Plan Elements. 79 Broadband for All (accessed March 2023)
Exhibit A
Digital Divide Analysis
North County Broadband Strategic Plan 96
Despite the analysis being framed in accordance with the SDEP development process, building on the partners and programs identified throughout this section, North County is well positioned to achieve Broadband for All’s initiative goals as well: affordability is addressed through the Affordable Connectivity Program and associated support and promotion programs, accessibility through the implementation of recommended Broadband scenarios in Section 4, and adoption through investments in developing digital inclusion projects and programs which ultimately benefit the entire community.
Exhibit A
North County Broadband Strategic Plan 97
6 Broadband Strategy
& Action Plan
The findings and recommendations captured throughout the analysis are synthesized into the Action Plan presented in this section.
Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 98
The action plan has been shaped by the following strategic pillars:
• Achieving the upgraded objective of 100% access to gigabit symmetrical service. The analysis of the broadband market in North County shows that both Paso Robles and Atascadero are reasonably well served according to FCC and CPUC standards with only 1.3% of households (159) in Paso Robles and 3.8% (470 households) in Atascadero being without access to services with speeds higher than 100/20 Mbps. That said, the results of the Needs Assessment Survey indicate that respondents are dissatisfied with the current ISP service offerings regarding cost (73%), speed (25%), or reliability (35%). Moreover, ambitious economic development plans and job growth will be restrained without best-in-class broadband infrastructure and services.
Becoming “gigabit symmetrical cities” is a highly desired feature needed to compete in the economic development arena.
Today’s ISP environment is a soft monopoly with Charter as the dominant provider. The Cities lack vibrant competition and virtually no ISP announced deployment of plans for FTTH technology which is becoming more commonplace across the US by the day.
City demographics and population density build a compelling case for the expanded objective of 100% availability of gigabit symmetrical service.
• Prioritization of ISP-led scenarios. The notion of the City running its own network is deemed not viable from an operational, financial, and risk perspective. Therefore, the pathway to realizing 100% access to gigabit symmetrical service lies with the incumbent ISPs or possibly new entrants willing to deploy FTTH service across the Cities.
The “broadband positive” conditions of the Cities, as seen through its income levels and attractive population density is sufficient to trigger broadband deployment, albeit with a level of support and financial inducements characterized by a light form PPP.
The request for concept proposals is a step in the direction of dialogue with the ISP community to encourage one or more ISPs to embrace the gigabit symmetrical objective and develop a financially positive business case. This may come out of necessity with a level of support from the Cities of Atascadero and Paso Robles.
• Digital inclusion through affordability, devices, and skill development programs. The Digital Divide analysis revealed that these are the areas where concrete actions from the Cities are needed to close the gap and achieve digital equity.
Based on these strategic pillars, the high-level plan captured in Figure 58 specifies tasks and timelines to advance broadband objectives of the Cities. Importantly the implementation of the action plan will be in an independent manner for each City.
As shown in Figure 58, the first step is presenting the action plan to each of the City Councils for the necessary acknowledgement and/or approval. Afterwards, the action plan is structured in three Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 99
workstreams: 1) Broadband Infrastructure, 2) Broadband Policies, 3) Digital Inclusion. Each of the workstreams is addressed in the following sections.
Figure 58. North County High-Level Action Plan
6.1 Broadband Infrastructure
This workstream captures the activities related to the deployment of broadband infrastructure.
Importantly, there are activities that are conditioned upon certain outcomes as explained below:
Presentation to City Council for
Approval
1.1. Incumbent ISP Concept Proposal
Discussions
1.2. Non-incumbent ISP Discussions
(conditional)
1.3. Atascadero CASF Broadband
Infrastructure Grant Application
1.4. ISP light-form PPP Negotiation
1.5. MoUs and/or Agreements
1.6. Non-incumbent Negotiations /
Agreements (conditional)
1.7. FFA Grant Application (if
appropriate)
1.8. BEAD Monitoring
1.9. ISP 1G Deployment
Commencement
2.1. Monitoring/challenging of FCC
and CPUC data
2.2. Permitting Process Upgrades
2.3. BB Policy Impl.
2.4. BB Constr. Standards Impl.
3.1. Regional Coordination
3.2. CASF Adoption Application
3.3. ACP Enrollment Program
3.4. NSOL Program Promotion
3.5. Paso Robles Library System
Q2 2024 Q3 2024
1. Broadband Infrastructure
2. Broadband
Policies &
Management
3. Digital
Inclusion
Q2 2023 Q3 2023 Q4 2023 Q1 2024
Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 100
1) Incumbent ISP Concept Proposal Discussions. The first step in the action plan, starting in April 2023 is to form a Broadband Advisory Committee to evaluate concept proposals from the ISPs and engage in discussions with them, in order to detail the contributions from each City and the specific commitments from the ISP. This Committee should include the City Manager, Economic Development Manager, IT, Planning, and Public Works Departments.
Importantly, these discussions should be conducted independently for each City and should follow the recommendations in Section 4.2.5. It is expected that these initial discussions will take two to three months from April to June 2023.
2) Non-incumbent ISP Discussions. In the case that the discussions with incumbent ISPs don’t result in a suitable scenario for one or both Cities, each City should reengage with the broader ISP community, leveraging City contributions to obtain commitment from an ISP to deploy gigabit symmetrical service across the City. This would require coordinating meetings with non-incumbent ISPs identified during the RFI process described in Section 3.1, and possibly issuing a second Request for Concept Proposals that clearly states City goals and contributions. 3) Atascadero CASF Broadband Infrastructure Grant Application. In parallel with ISP discussions, starting the week of April 17th, the City of Atascadero should consider applying or supporting an ISP to apply for the CASF Broadband Infrastructure Grant which is due on May 1 st. Eligible areas will be based on the latest CPUC map to be released on March 31st, but it is expected that this grant can fund fiber infrastructure to ~125 unserved households in the west of Atascadero. The City Manager and Finance Director will need to be involved. 4) ISP Light-form PPP Negotiation. Provided the discussions of ISP proposal(s) are successful, the Cities should enter into detailed negotiations for the light-form PPP. This task can start as early as June 2023 and will require the involvement of the City Manager, the Economic Development Manager, IT Department, Public Works Department, Finance Director and the Legal Team from each City. Preliminary terms and conditions negotiated may need to be presented to City Council for approval as appropriate, with a target date to close negotiations before the end of September 2023.
5) MoUs and/or Agreements. After negotiations are finalized, the City and the selected ISP partner should sign the necessary MoUs or agreements to implement the agreed plan. The main task here is to coordinate the Legal teams to prepare the necessary agreements, ensuring the agreements are in accordance with the negotiated terms and conditions. Once the agreements are accepted, an event for the signature and press releases can be prepared to announce the agreement. The estimated timeline for this activity is between September and November 2023. 6) Non-incumbent Negotiations / Agreements. In the non-incumbent track, which is contingent upon failure of negotiations with incumbent ISPs, negotiations and agreements with the non-incumbent ISPs should take place in the first half of 2024. Based on the responses to the Request for Concept Proposals, the Broadband Advisory Committee can recommend enter into negotiations with the selected non-incumbent ISP, resembling the process in activity #4 above. 7) FFA Grant Application. Starting in July 2023, each City along with a potential ISP partner should assess a potential application to the Federal Funding Account, based on area eligibility.
After the window for application is open in June 2023, a designate from each City will confirm eligible areas for this Grant and discuss the opportunity with the (potential) ISP partner. If the opportunity is attractive enough, and in the case of Atascadero, if the risk of not being funded Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 101
by CASF is considered medium or high, each City should organize to submit an application, involving the Broadband Advisory Committee and the Finance Director. The City Council should be engaged as required for approval. It is expected that the application window will be open for three months from June to September.
8) BEAD Monitoring. The Cities should keep aware of NTIA and CPUC announcements throughout 2024, in order to characterize the opportunity for additional funding and plan for applications as appropriate. For this task a designate should monitor CPUC and NTIA websites and subscribe to CPUC email lists80, and send an email to be added to the CASF Distribution List to [email protected].
9) ISP 1G Deployment Commencement. Provided negotiations and agreements are successful, the selected ISP partner should commence deployment either at the beginning of Q1 2024, for an incumbent ISP or Q3 2024 for a non-incumbent ISP. Throughout the process the Broadband Advisory Committee should keep in touch by monitoring progress, while various departments will be involved in the actual permitting and construction process such as Public Works, Planning, IT, providing support according to the terms and conditions of the light-form PPP.
6.2 Broadband Policies
Activities under this workstream are oriented toward creating a more broadband friendly environment that accelerates and attracts broadband infrastructure deployment projects. These activities are further described below:
1) Continuous monitoring and challenge of FCC and CPUC maps. The discrepancies identified in the analysis presented in Section 2.2 evidence the need to keep an active position in collecting accurate data through speed test tools and challenging the federal and state maps as they are updated. It may be necessary for the Cities to purchase a speed test service. This should be considered by the Broadband Advisory Committee and brought to Council for approval between May and July 2023. Importantly, a staff member would need to be designated to perform the monitoring and organize the challenges to the maps. 2) Permitting process documentation and update. This task applies to the City of Atascadero as their current permit process is not documented and has various issues that have been addressed in Section 2.5. Fixing these issues is also related to Workstream 1 as the optimized permitting process is part of the offering toward ISPs. In this case, the Public Works 80 https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/broadband-implementation-for-california Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 102
Department should analyze the recommendations in Section 2.5 and best practices from NTIA81 to develop a proposal to update the permitting process, document it and present it to the City Council for approval, as required. The estimated timeframe for this task is five months between May and September 2023.
3) Implementation of policy recommendations. Other policy recommendations captured in Section 2.5 should be implemented throughout the rest of 2023, including the assessment of micro-trenching, Dig-Once, and the update / implementation of the Cities’ GIS Portal. This will require the involvement of the Public Works and Planning Departments to analyze examples and considerations from the State of California Local Permitting Playbook82 and policies from other Cities83 to develop the policies for the Cities. Once the draft is ready, it should be presented to the City Manager and/or City Council for approval, as required. The estimated timeframe for this task is five months between May and September 2023. 4) Refinement of construction standards. Construction standards specific for broadband should be developed in coordination with ISPs. This is a secondary priority but should not be neglected. This task can start in Q3 2023 with a target for completion by the end of 2023 or early in 2024. First, the set of required construction standards should be identified, and based on that, ask ISPs to provide proposals. Then engineers from the Cities can assess and refine the proposals to specify the standards for each City.
6.3 Digital Inclusion
The plan for Digital Inclusion is centered around coordination and support of existing programs, prioritizing those that address devices and skills gaps. 1) Regional Coordination. First, regional coordination and engagement with libraries, school districts, higher education, and CBOs should be pursued to identify areas where the City can provide reasonable support to existing programs, including publishing materials to promote these programs and informational material for the community. This includes the partners identified in Section 5.3, in addition to other entities such as the Broadband Consortium of the Pacific Coast. Starting in May-June the Broadband Advisory Committee or a designate should reach out to these partners for initial discussions, considering the possibility to organize forums 81 https://broadbandusa.ntia.gov/sites/default/files/2023-03/Permitting_Best_Practices_Case_Studies.pdf 82 https://broadbandforall.cdt.ca.gov/wp-content/uploads/sites/19/2022/09/California-Local-JurisdictionPermitting-Playbook-1.pdf 83 https://calcog.org/wp-content/uploads/2020/10/CALSTA-DigOnceWhitePaper.pdf Exhibit A
Broadband Strategy & Action Plan
North County Broadband Strategic Plan 103
with the regional stakeholders, with two objectives: 1) Identifying programs and specific next steps that require City support, and 2) Inventory of devices needs to organize the CASF Adoption Funding Account Application.
2) CASF Adoption Funding Account Application. A program for the deployment of lowcost devices should be developed in partnership with the Cities and CBOs by utilizing the CASF Adoption funding account whose application is due July 1, 2023. Starting in May, a designate from each City must coordinate the needs for devices across various programs and CBOs, such as training centers within housing developments, after-school programs, libraries, workforce training centers, Boys and Girls Club of Mid Central Coast, and ECHO.
Then, in June a team for Grant writing must be organized. It can be led by the City or by one of the stakeholders. Partners will collaborate to provide the required information and organize the Application package before July 1, 2023. CPUC has developed a guide for applicants84. 3) ACP Enrollment Program. The Cities should actively promote and support enrollment into the ACP, supporting CBO partners, libraries, and schools to facilitate registration events, and enabling access to related online resources within the websites of the Cities. In addition, it is important that the Cities ensure through policies that multi-unit housing in development is wired for high-speed internet access so that these households can apply for the ACP. Subtasks related to this activity are listed below:
o Identify, request, and upload online resources to Cities’ websites. Starting in July 2023, a designate from each of the Cities from the IT or the Economic Development Department should start the research of materials related to ACP enrollment, and in parallel, request support from identified partners in task #1 above, selecting materials for publication in the Cities’ websites.
o Establish a channel for partners to send information regarding registration events that can be promoted through the Cities’ communication channels. During mid July and early August, the Cities should set up an inbox or point of contact to receive information and requests to support ACP enrollment events. A procedure to upload and publish content should also be established.
o Analyze with Public Works and Planning departments how to implement a policy for multi-unit housing wiring for high-speed internet access. The recommended timeframe for this is between September and December 2023.
4) NSOL Program Promotion. The Cities should promote the NSOL program through an online campaign and include the program in relevant newsletters and the Cities’ websites. This should start in July and continue throughout the end of the year. Over time, it would also be important to create a similar type of online or in person training program to be accessible in other languages, to achieve alignment with the California Broadband for All Action Plan. 5) Support Paso Robles Library System Plan. As the City of Paso Robles increases their available technology and innovation resources on their library site, the Broadband Advisory Committee should also provide ongoing and active promotion in alignment with their Library System 5-year strategic plan.
84 Overview of Steps for Applying for CASF Broadband Adoption Account Grant Exhibit A
North County Broadband Strategic Plan 104
Appendix I. Broadband Needs
Assessment Survey & Results
Question of the Needs Assessment survey and high-level statistics are documented below.
Exhibit A
North County Broadband Strategic Plan 105
Exhibit A
North County Broadband Strategic Plan 106
Exhibit A
North County Broadband Strategic Plan 107
Exhibit A
North County Broadband Strategic Plan 108
Exhibit A
North County Broadband Strategic Plan 109
Exhibit A
North County Broadband Strategic Plan 110
Exhibit A
North County Broadband Strategic Plan 111
Exhibit A
North County Broadband Strategic Plan 112
Exhibit A
North County Broadband Strategic Plan 113
Exhibit A
North County Broadband Strategic Plan 114
Exhibit A
North County Broadband Strategic Plan 115
Exhibit A
North County Broadband Strategic Plan 116
Exhibit A
North County Broadband Strategic Plan 117
Exhibit A
North County Broadband Strategic Plan 118
Exhibit A
North County Broadband Strategic Plan 119
Exhibit A
North County Broadband Strategic Plan 120
Exhibit A
North County Broadband Strategic Plan 121
Exhibit A
North County Broadband Strategic Plan 122
Exhibit A
North County Broadband Strategic Plan 123
Appendix II. ISP Engagement Package
The following captures compose the ISP Engagement Package.
Exhibit A
North County Broadband Strategic Plan 124
Exhibit A
North County Broadband Strategic Plan 125
Exhibit A
North County Broadband Strategic Plan 126
Exhibit A
North County Broadband Strategic Plan 127
Appendix III. Public Forum Summary
Forums Scope, Objective & Participants
The following are the s, objective & participants of the public forum:
• Scope:
o Why community participation is important to the development of a community broadband strategic plan.
o Share what data is being collected and why.
o How to access the data collection tools.
• Objective:
o Public forums’ objective was to bring community partners into the digital equity and inclusion conversation to determine how each organization directly works towards closing the digital divide.
• Participants
o School district IT
o People Self Help Housing
o Dignity Health
o San Luis Obispo County Behavioral Health
o Library staff
o Boys and Girls Club Staff
Key Findings
The most important aspects discussed during the Digital Equity Outreach Forums are summarized below:
1) Training
Public forums’ objective was to bring community partners into the digital equity and inclusion conversation to determine how each organization directly works towards closing the digital divide. 2) Digital Equity Coalitions and Peer Programs
Digital equity coalitions, navigator programs, and peer programs are potential solutions to address most of the use and adoption issues.
3) Trust in Digital Platforms
Exhibit A
North County Broadband Strategic Plan 128
People do not trust digital platforms due to privacy and security concerns but also due to negative experiences. It’s important to ensure good first-time experiences and provide support. 4) Affordability
Broadband service cost is perceived as a barrier. In addition, there is no awareness regarding subsidies such as the Affordable Connectivity Program.
5) Access to Devices
Many people don’t have access to computers, and they tend to rely on cell phones due to cost and lack of computing skills.
6) Access to Infrastructure
There are regions without access to adequate broadband infrastructure. Reliability is a common concern along with the need to speed up the deployment and access to fiber infrastructure.
Challenges in Broadband Access, Use and Adoption
Lack of digital skills and access to devices are the main challenges to access broadband services in both Cities.
Atascadero Paso Robles
Digital Skills
• Primary training needs are around
how to use a computer and digital
platforms.
• There is concerns regarding
privacy, and security due to the
lack of technical skills.
• Older generations are more
challenged
• Training is required at the basic
level (e.g., how to use a
computer), but also for specific
users such as teachers, parents,
and elders.
• Bi-lingual training education is
required.
• Motivation to use digital
services is lacking in some
sectors of the population. Inperson meeting might be
required
User Devices
Telehealth or digital education platforms are better suited for computers; however, it is not affordable to everyone to own a computer Quality of Service
• Online services not always work as
intended given the lack of
reliability of the broadband
service.
• Reliability of services is a
concern.
Exhibit A
North County Broadband Strategic Plan 129
• If the first experience is bad, it is
very unlikely that the user tries to
use the service again.
• Access to better, faster broadband
can improve quality of life.
• The acceptance of the
technology is complicated
when there is no
understanding about how to
use it and how it benefits the
community
Accessibility &
Affordability
• Cost of broadband services is
considered high.
• People’s Self-Help Housing (PSHH)
is able to serve but may not have
the capacity to assist with the ACP
sign-ups.
• There’s a need to simplify pole
access and permitting to facilitate
the access to fiber infrastructure.
• Cost of broadband services is
considered high.
• Cost of expanding
infrastructure.
• There have been issues getting
fiber from the East to the West
due to the crossing with HWY
101.
Closing the Digital Divide
Preliminary solutions and initiatives to close the digital divide were identified during the Outreach Forums:
Training:
• Training programs in partnerships with schools.
o Computer usage, digital navigation, cybersecurity, service platforms. o Provide the parents with guidelines about how to use education platforms for kids and manage online kids safety.
o Build trust around digital services.
• Development of contents considering language, and age. • Digital Equity Coalitions.
• Peer-support and family advocates.
Access & Affordability:
• Increase outreach and awareness regarding ACP and other subsidies for broadband service. • Support for sign-up to subsidy programs (e.g., through PSHH and other community anchor institutions)
• Priority attention to regions with no broadband access due to lack of infrastructure • Develop a plan for redundancy and resiliency of broadband infrastructure and online services.
Exhibit A
North County Broadband Strategic Plan 130
• Facilitate permitting process for telecoms.
Adoption:
• Platforms improvement by establishing requirements regarding ease to use and the community needs.
• Improve broadband service and reliability at community anchor institutions providing online services.
• Funding programs for devices
• Increase awareness regarding ACP and other programs that may fund devices. • Community Events and Incentives to use online services.
Exhibit A
North County Broadband Strategic Plan 131
Appendix IV. GIS Views
FCC Unserved / Underserved location clusters
Exhibit A
North County Broadband Strategic Plan 132
Exhibit A
North County Broadband Strategic Plan 133
Exhibit A
North County Broadband Strategic Plan 134
Exhibit A
North County Broadband Strategic Plan 135
Distribution on served and underserved census blocks according to CPUC
Exhibit A
North County Broadband Strategic Plan 136
Exhibit A
North County Broadband Strategic Plan 137
Served Status by Census block based on speed test data
Exhibit A
North County Broadband Strategic Plan 138
Exhibit A
North County Broadband Strategic Plan 139
Disadvantaged Communities (Socioeconomic Vulnerability Index (SEVI))
Exhibit A
North County Broadband Strategic Plan 140
Exhibit A
North County Broadband Strategic Plan 141
City buildings and anchor institutions
Exhibit A
North County Broadband Strategic Plan 142
Exhibit A
North County Broadband Strategic Plan 143
Exhibit A
North County Broadband Strategic Plan 144
Exhibit A
North County Broadband Strategic Plan 145
City conduit and dark fiber in Paso Robles
Exhibit A
North County Broadband Strategic Plan 146
California Middle Mile Broadband Initiative – Current Design for SLO County
Exhibit A
North County Broadband Strategic Plan 147
Exhibit A
North County Broadband Strategic Plan 148
Appendix V. Analysis of State and
Federal Funding Programs
Last Mile Federal Fund Account
The SB-156 established the Federal Fund Account (FFA)85 to fund last-mile projects to connect unserved and underserved Californians in coordination with federal and state universal service programs. The FFA consists of a total pool of $2 billion and is being managed by the California Advanced Services Fund (CASF), with money from the ARPA program. Key features are summarized in Figure 59.
Figure 59. Last-Mile Federal Funding Account summary.
The Last-Mile FFA will fund costs related to the deployment of broadband infrastructure, backhaul leasing (up to 5 years), and upgrade of existing facilities. Eligible projects must cover areas containing households and businesses lacking broadband services (which includes underserved areas) focusing on disadvantaged communities.
Note: CPUC will publish a new eligibility map on March 31st, 2023.
Eligible entities include local governments, Non-telephone corporations, and entities with a Certificate of Public Convenience and Necessity (CPCN). Each entity can apply for up to a $25 million grant to serve the program's purpose with a limit of $9,300 per home. Based on FCC and CPUC data the maximum amount of funding would be approximately $1.5M for Paso Robles and $4.4M for Atascadero.
The CASF will use a 130–point evaluation that considers network technology, participation in the ACP, broadband need in the area, and whether the project proposes to leverage the statewide middle mile network. Based on this evaluation, Atascadero and Paso Robles are expected to score between 110 and 120 points.
85 Last Mile Federal Funding Account
Exhibit A
North County Broadband Strategic Plan 149
The window to apply to the Last-Mile FFA grant will be open by mid-June following the launch of a grant application portal.
CASF Broadband Infrastructure Grant Account
The CASF Broadband Infrastructure Grant Account is a $150 million per-year grant authorized by the SB156 until 2032. This program intends to fund infrastructure projects to provide broadband access to unserved households. Figure 60 captures the key features of the program.
Figure 60. CASF Broadband Infrastructure Grant Account summary.
Eligible costs include those costs related to the deployment of broadband infrastructure, property or backhaul leasing (up to 5 years), and costs for upgrading existing facilities to provide interconnection.
Eligible projects must provide unserved locations with broadband service of at least 100 Mbps download and 20 Mbps upload. Eligibility will be determined based on the updated California Broadband Map to be published on March 31st.
Eligible entities are local governments, wireless carriers registered within CASF, non-telephone corporations, and entities with a CPCN.
The maximum cost per connected home is $24,700 for wireline technologies and $4,500 for wireless technologies. This translates into an estimated maximum grant amount of $3.9 million for Paso Robles and $11.6 million for Atascadero.
The funding criteria of the Broadband Infrastructure grant is based on funding all or a portion of the Broadband project. An applicant can get from 60% to 100% funding based on whether the project considers areas without connectivity, low-income areas, remote areas and whether existing infrastructure is leveraged for the project. On a first approximation, North County could anticipate receiving between 80% to 100% of the project submitted.
This grant accepts applications annually with a due date of April 1st. However, the application deadline has been extended to May 1st for 2023.
Exhibit A
North County Broadband Strategic Plan 150
Loan Loss Reserve Fund
The Loan Loss Reserve Fund is a $750 million fund created by the SB-156 and operated by the CPUC to serve as credit enhancement for local governments and nonprofits deploying broadband infrastructure to borrow from financial institutions at more favorable terms. Key features of this program are captured in Figure 61.
Figure 61. Loan Loss Reserve Fund summary.
Funds from the Loan Loss Reserve Fund can be used to pay debt issuance costs or the obtention of credit enhancements. The program includes coverage between 5-20% of the project loan amount in the event of default.
Eligible projects must be capable of offering at least 100 / 20 Mbps. Eligible entities must demonstrate financial, technical, and operational expertise.
Funds will be awarded on a rolling basis until prioritization starts. Prioritization will start when either 80% of the funding is encumbered or when the fund balance drops below 70% of the original funding.
After that, unserved areas will be prioritized.
The scoring criteria of the Loan Loss Reserve Fund is based on a 50–point evaluation that considers the use of matching funds, pricing commitments, and broadband service needs in the area. As a first approximation, North County is expected to obtain between 30 and 50 points, which positions the Cities of Atascadero and Paso Robles in a good spot to apply for this grant.
Application to the Loan Loss Reserve fund can be submitted any time before prioritization starts, after that, applications will be accepted and reviewed on a quarterly basis.
BEAD Program
The BEAD program is a significant federal initiative managed by the NTIA to provide broadband infrastructure and reduce the digital divide in all the states and US territories. It is composed of infrastructure and digital equity funds. The focus of this section is on the infrastructure program.
Exhibit A
North County Broadband Strategic Plan 151
The infrastructure program allocates $42.45 billion for broadband infrastructure planning and implementation. Each state will receive a minimum allocation of $100 million, and the NTIA will allocate the remaining funds based on the number of unserved locations and the ability of each state to provide broadband to unserved areas.
Therefore, the California Department of Technology (CDT) is conducting the development of the State Digital Equity Plan (SDEP) to detail how the BEAD funding would be used in the following 5 years. NTIA will distribute the funds to the states and US territories based on the submitted plans. Once the funds are assigned to California, the CPUC will manage BEAD funds through various programs, establishing the rules and guidelines for applications.
Figure 62 summarizes the estimated timeline for the BEAD infrastructure program. As shown, BEAD funding won’t be available until 2024. Therefore, it is possible that infrastructure deployment projects will be already in progress. However, it is recommended that the Cities keep up to date with the status of BEAD in case additional funding is required for remote unserved areas.
Figure 62. BEAD infrastructure estimated timeline86.
86 Internet for All: Working Planning Guide
Exhibit A
North County Broadband Strategic Plan 152
Acronyms
ACP Affordable Connectivity Program
AMI Area Median Income
ARPA American Rescue Plan Act
ASH Atascadero State Hospital
AUSD Atascadero Unified School District
BEAD Broadband Equity, Adoption, and Deployment
BIL Bipartisan Infrastructure Law
CAPEX Capital expenditure
CASF California Advanced Services Fund
CBA California Broadband for All Action Plan
CBRS Citizens Broadband Radio Service
CDCR California Department of Corrections and Rehabilitation CDT California Department of Technology
CETF California Emerging Technology Fund
CMTS Cable Modem Termination System
CPE Customer Premises Equipment
CPUC California Public Utilities Commission
CTCAC California Tax Credit Committee
DOCSIS Data Over Cable Service Interface Specifications DSL Digital Subscriber Line
DSLAM DSL Access Multiplexer
ECHO El Camino Homeless Organization
EDA Economic Development Administration
EIA Energy Information Administration
ELL English Language Learners
FAA Federal Aviation Administration
FCC Federal Communications Commission
FTTH Fiber-to-the-Home
FWA Fixed Wireless Access
Gbps Gigabits per second
GDP Gross domestic product
GIS Geographic Information System
HDPE High-density polyethylene
ICT Information and Communication Technology
IIJA Infrastructure Investment and Jobs Act
ISP Internet Service Provider
IT Information Technologies
K12HSN K-12 High Speed Network
LATA Local Agency Technical Assistance
LEO Low Earth Orbit
Mbps Megabits per second
MMBI Middle Mile Broadband Initiative
MNOs Mobile Network Operators
Exhibit A
North County Broadband Strategic Plan 153
MoU Memorandum of Understanding
NPV Net Present Value
NSLP National School Lunch Program
NSOL Northstar Online Learning
NTIA National Telecommunications and Information Administration OAN Open Access Network
OLT Optical Line Terminal
ONT Optical Network Terminal
PG&E Pacific Gas & Electric Company
PON Passive Optical Network
POP Point-of-Presence
PPP Public Private Partnership
PRHA Paso Robles Housing Authority
PSHH People’s Self-Help Housing
QOZ Qualified Opportunity Zone
RCRC Rural County Representatives of California
RFI Request for Information
RFP Request for Proposal
RFQ Request for Quotation
SDEP State Digital Equity Plan
SEVI Socioeconomic Vulnerability Index
SLA Service Level Agreement
TDMA Time-Division Multiple Access
VoIP Voice over Internet Protocol
VSAT Very Small Aperture Terminal
WDBSLO Workforce Development Board of San Luis Obispo County WIOA Workforce Innovation and Opportunity Act
Exhibit A
North County Broadband Strategic Plan 154
Definitions
Digital Equity – A condition in which all individuals and communities have the information technology capacity needed for full participation in our society, democracy, and economy.
Digital Divide – The gap between those with affordable access, skills, and support to effectively engage online activities and those without. As technology evolves, the digital divide prevents equal participation and opportunity in all parts of life, disproportionately affecting people of color, Indigenous peoples, households with low incomes, people with disabilities, people in rural areas, and older adults.
Digital Inclusion – Refers to the activities necessary to ensure that all individuals and communities, including the most disadvantaged, have access to and use ICTs. This includes five elements:
• Affordable, robust broadband internet service.
• Internet-enabled devices that meet the needs of the user. • Access to digital literacy training.
• Quality technical support; and
• Applications and online content are designed to enable and encourage self-sufficiency, participation, and collaboration.
• Digital Inclusion must evolve as technology advances. Digital Inclusion requires intentional strategies and investments to reduce and eliminate historical, institutional, and structural barriers to technology access.
Broadband Adoption – Is traditionally defined as residential subscribership to high-speed internet access. Adoption is connecting low-income residents to the internet at home with digital literacy proficiency. Adoption overcomes 3 barriers:
• Cost – for both the internet service and the appropriate computing device • Relevance – outreach in -language and in-culture by “trusted messengers” referred to as “Digital Navigators” is essential to explain to unconnected low-income households how they will benefit from being connected with at-home internet.
• Digital Literacy – targeted households will not subscribe to internet services or acquire a device they don’t know how to use it or the internet.
• Successful adoption involves:
o Understanding the benefits of being connected online at home. o Become aware of available, affordable internet service options. o Acquire an affordable device for connecting to the internet. o Learn foundational skills of digital literacy.
o Select and sign up for home internet service.
Exhibit A
North County Broadband Strategic Plan 155
Digital Navigators – Trusted guides who assist community members in internet adoption and the use of computing devices. Digital navigation services include ongoing assistance with affordable internet access, device acquisition, technical skills, and application support.
Digital Inclusion Ecosystem – A combination of programs and policies that meet a geographic community’s unique and diverse needs. Coordinating entities work together in an ecosystem to address all aspects of the digital divide, including affordable broadband, devices, and skills. Indicators of a robust Digital Inclusion Ecosystem:
• The existence of programs and policies addressing all aspects of the digital divide. • Affordable and subsidized broadband service options that meet the community’s needs. • Affordable and subsidized device ownership programs that meet the community’s needs. • Multilingual digital literacy and digital skill training that meet the community’s needs. • Hardware and software technical support.
• Digital navigation services to guide residents to the above services. • Collaboration: Entities providing local digital inclusion services, policymakers, advocates, social service providers, and community leaders co-create solutions in partnership with the community.
Unserved and Underserved – These terms relate to Deployment and describe the availability of broadband infrastructure. Unserved means there is no available Internet infrastructure. Underserved means that the available Internet infrastructure is inadequate (generally not reliable or fast enough to support prevalent consumer applications, especially remote learning and telehealth). • [Unserved is defined in State law and CPUC regulations as locations with less than 25 Mbps download and 3 Mbps upload (25/3 Mbps). Given that the State and CPUC standards for deployment are >100/20 Mbps, Underserved can be considered locations between 25/3 Mbps and 100/20 Mbps.]
Unconnected and Underconnected – These terms relate to adoption and describe the status of a home connection to the Internet. Unconnected means that a household has no home Internet connection (regardless of whether or not there is availability or access to broadband infrastructure).
Underconnected means that a household is connected to the Internet only by a smartphone. • 2021 Statewide Survey found that 15% of California households are digitally-disadvantaged — 9% are Unconnected (not online at home), and 6% are Underconnected (have only a smartphone); 29% of low-income households are disproportionately disadvantaged, with 18% Unconnected and 11% Underconnected. The 2023 Statewide Survey on Digital Equity will update these figures and measure progress over the last 2 years.] Bandwidth – Capacity of a broadband connection, often a synonym for data transfer speed.
Broadband Service – The term “broadband service” means any technology identified by the Secretary (Secretary of Agriculture) as having the capacity to transmit data to enable a subscriber to the service to originate and receive high-quality voice, data, graphics, and video87. 87 7 U.S. Code § 950bb
Exhibit A
North County Broadband Strategic Plan 156
Broadband over Powerlines (BPL) – Delivery of broadband over existing low and medium-voltage electric power distribution networks, with speeds comparable to DSL and cable modem.
Cable Modem – Provides broadband through some coaxial cables delivering television.
Community Anchor Institution – A public school, a public or multi-family housing authority, a library, a medial or healthcare provider, a community college or other institution of higher education, a State library agency, and any other nonprofit or governmental community support organization88.
Connection speeds:
• Kilobit/Kilobyte – Kilobits per second (Kbps) is a measure of dial-up speed, where one Kb = 125 bytes. Kilobyte (KB) means 1,000 bytes and measures storage capacity or data size. • Megabit/Megabyte – Megabits per sec (Mbps or Mb) is a measure of transmission speed, with a 1Mb connection able to transfer 1MB (megabyte/MB) of data in 8 seconds. A megabyte is a measure of the size of computer files or capacity. 1MB = 1,000 KB. • Gigabit/Gigabyte – Gigabit is a unit describing data transfer speed, usually per second (Gbps).
Gigabyte describes the size of computer files and capacity. 1GB = 1,000 MB (megabytes) Dark fiber – “Unlit” or unused optical fiber available in fiber optic communication.
Devices that Connect to the Internet:
• Computer
• Tablet
• Smart phone
• Gaming consoles
• Smart televisions and appliances, i.e., Alexa, Google Nest, Ring, etc. • Point of sale devices
• Smart City applications, i.e., water meters, traffic cameras, air quality sensors, etc.
Incumbent service provider – Entity that, as of the application's submission date, is providing broadband service to not less than 5 percent of the households in the service territory in the proposed application89.
Internet of Things – Network of objects, remotely controlled, with embedded electronics and sensors that share data. It can be anything from a smart thermostat to an internet-connected refrigerator. 88 47 U.S. Code § 1721
89 7 U.S. Code § 950bb
Exhibit A
November 2, 2022
Paul Sloan, City of Paso Robles Economic Development Manager [email protected]
North County Broadband Strategic Plan for the Cities of Paso Robles and Atascadero Dear Paul Sloan,
Congratulations! The California Public Utilities Commission is pleased to inform you that the City of Paso Robles’ application for Local Agency Technical Assistance grant funding for the North County Broadband Strategic Plan for the Cities of Paso Robles and Atascadero in the amount of up to $200,000 has been approved.
Pursuant to Decision (D.) 22-02-026, Staff is authorized to approve applications that meet all the criteria for Ministerial Review. Your application was received on September 30, 2022 and was posted on the CPUC’s Local Agency Technical Assistance webpage. Staff reviewed your application and determined that your application is eligible for a grant and meets eligibility criteria for Ministerial Review.
The award is predicated on the City of Paso Robles’ agreement to provide technical assistance as detailed in its application. In its application, the City of Paso Robles agreed to comply with the specified Ministerial Review criteria as well as to fulfill all requirements, guidelines, and conditions associated with a grant of Local Agency Technical Assistance funds as specified in D.22-02-026 including but not limited to execution and performance, payment, reporting and award acceptance requirements listed in Attachments 1 and 2 of this letter. Please sign and submit the following: 1. A Consent Form binding your organization to the terms of the grant and 2. A State of California Government Agency Tax Payer ID Form for tax reporting purposes. You must submit these documents within 30 days of the date of this letter. If you do not, this award is void.
Thank you for your application and please direct any questions to Michele King ([email protected]) and/or refer to the Grantee Administrative Manual, available at https://bit.ly/CPUCLATA.
We appreciate your efforts to provide service to our fellow Californians.
Sincerely,
Robert Osborn
Director
Communications Division
Attachment 2
Council Agenda Report
From: Mark Scandalis, Airport Manager
Subject: Airport Lease Policy Updates and Leasing Strategy CEQA Determination: The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.
Date: May 2, 2023
Facts
1. On June 6, 2017, the City Council adopted the Airport Leasing Policy, which provides guidance on new lease requests and the reversion and extension process for those that are expiring.
2. In order to comply with current FAA guidelines and market requests, modifications to the existing Lease Policy document are necessary.
3. In 2021, the Airport Commission appointed a sub-committee which drafted an amended lease policy document which was subsequently reviewed by the full Airport Commission. The proposed policy revisions are commensurate with increased FAA policy direction and California State Law pertaining to leasing at airports. The revisions emphasize existing City commitments and obligations through initial Airport property acquisition and the grant assurances associated with the FAA’s capital improvement grant funding program.
4. The essential elements of the revisions are as follows:
a.) In the case that existing lease agreements cannot be extended because their combined length would then exceed the 35-40 year limit per FAA guidance:
At expiration, with no development proposed, existing lessees may enter into a new shortterm agreement (5 years); At expiration, with commensurate capital investment, existing lessees may enter into a new long-term agreement.
b.) Clarifications were made to the City’s obligatory reversionary rights. The basic premise of reversion being that at the conclusion of the lease term all improvements revert to the Airport and allow its further occupancy as an Airport-owned facility. Rental rates for any new lease agreement will consider the Airport’s ownership of the improvements.
c.) Existing reversionary language will be honored upon expiration with any subsequent lease agreements including updated language.
d.) In accordance with FAA orders and guidelines, rental rates for leases on non-aeronautical sites will be based on Fair Market Value and rental rates for aeronautical sites based on fair and reasonable value as established for the site. FAA guidelines and periodic market analysis are the method in which market rates are determined.
4. After consideration of the above elements, the Airport Commission on April 22, 2021, voted unanimously to forward the proposed revised Airport Lease Policy document to the City Council for approval. Due to a change in Airport management and encumbrances that came with that change this revision was initially not brought to the City Council for consideration.
5. Associated with the policy updates is a leasing strategy developed to standardize and provide a framework to negotiate expiring leases and new development inquiries. The strategy promotes an equitable approach to leasing parcels at the Airport with the goal of financial self-sufficiency. Featured elements of the strategy
are the encouragement of aeronautical development through competitive lease rates, continued nonaeronautical development commensurate with Fair Market Value, and rate premiums included for the privilege of longer-term agreements.
6. Following FAA guidance, periodic market appraisals of Airport lands are used as the basis for the proposed lease rates associated with the leasing strategy. Market appraisals will continue as land values change with increased Airport development, lower parcel inventory, and changing market forces.
7. As an attachment to the Lease Policy, the Airports Standard Lease document was recently revised to reflect FAA policy guidance and industry trends. The essential elements of the revision are as follows:
a.) In addition to the yearly Consumer Price Index (CPI) adjustments, rent adjustments can be made every 5 years by representative appraisal. Increases are capped at 20% over a 5-year period. b.) A new monthly Base Rent shall be determined by representative appraisal at the expiration of the initial lease term and as a condition to exercise any renewal options. c.) An additional event of default is established to address the failure to complete proposed development within the agreed upon timeframe.
Options
1. Take no action;
2. Approve the proposed amended Airport Leasing Policy as presented; or
3. Provide alternative direction to staff.
Analysis and Conclusions
The Leasing Policy and Standard Lease document have been beneficial in assisting the management and development of Airport lease agreements since adoption in 2017. Recent California State Law, FAA policy changes, interpretations, and direction, as well as staff review of applicable leasing requirements have underscored the need for a detailed review of the adopted policy and standard lease document. Concepts outlined in this revision provide more direction to the existing lease tenants while also preserving the obligatory rights and powers as detailed in the FAA grant assurances, including reversion, a fee and rental structure that provides financial self-sufficiency to the Airport, and an equitable approach for all prospective lessees.
These policy documents cannot anticipate all conditions and circumstances encountered but serve as a more standardized path for leasing as interest in and development at the Airport continues. Periodic review of these policies and consideration of new leases by the Airport Commission, assisted by staff, and ultimate adoption by the City Council will remain a necessary element in the lease negotiation process.
Fiscal Impact
The policy updates do not immediately provide any fiscal impact to the Airport. As existing leases expire, reversionary interests are exercised, and as new lease agreements are entered into, Airport revenues are expected to increase. New development leases signed under this updated lease policy will provide for sustained Airport revenues over the term of the agreements, helping to provide long-term financial solvency for the Airport.
CEQA Determination
The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.
Recommendation
Approve Resolution 23-XXX, updating the leasing strategy, revised lease policy, and attached standard lease document as presented.
Attachments
1. Revised Airport Lease Policy document, clean version
2. Revised Airport Lease Policy document, redline version
3. Airport Market Analysis, 2015 and 2022
4. Resolution 23-XXX
82477.03000\41062611.1
PASO ROBLESMUNICIPAL AIRPORT
AIRPORT LEASING POLICY
CITY OF PASO ROBLES
A POLICY TO GOVERN THE DRAFTING
AND MANAGEMENT OF LEASES
AT THE
PASO ROBLES MUNICIPAL AIRPORT
Adopted June 6, 2017
Revised March 2023
Attachment 1
2023 Revision
ii
AIRPORT LEASING
POLICY
Contents
Section 1 General Statement of Policy .................................................................................3 Section 2 Definitions ........................................................................................................... 4 Section 3 Exclusive Rights...................................................................................................6 Section 4 Requests for Lease ................................................................................................ 6 Section 5 Application Process ............................................................................................. 6 Section 6 Action on Application.......................................................................................... 8 Section 7 Competitive Request for Proposal Process...........................................................9 Section 8 Standards for Leasing Airport Property.............................................................. 10 Section 9 Written Lease ....................................................................................................... 14 Section 10 FAA Required Lease Provisions.......................................................................... 15 Section 11 Rentals, Rates, Fees, and Charges ....................................................................... 15 Section 12 Construction of Leasehold Improvements........................................................... 16 Attachment 1
2023 Revision
3 Section 1 - General Statement of Policy
Airport Operated for Benefit of the Public. Through its Leases, and by other means, the City will ensure that the Airport is operated for the use and benefit of the public and is made available to all types, kinds and classes of aeronautical activities.
As an Airport Sponsor and recipient of Federal Aviation Administration (FAA) Airport Improvement Program (AIP) grants, the City of Paso Robles (hereinafter, City) is obligated to operate the Paso Robles Municipal Airport for the use and benefit of the public and to make it available to all types, kinds, and classes of aeronautical activities on fair and reasonable terms and conditions without unjust discrimination. Further, the City leases property at the Airport for certain non-aeronautic uses to provide revenue support to the airport. Per 49 USC 47107(b) and 47133(a), revenues generated by a public airport are required to be expended for the capital or operating costs of – (A) the airport, (B) the local airport system, (C) other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property.” Given these obligations, the City hereby establishes this policy to set forth a standardized system and process for leasing property at the Airport.
In furtherance of this objective, the City leases airport property based on the following principles:
• Promotion of aeronautic and aeronautic-compatible enterprise fund activities for the benefit of the Paso Robles-area community
• Preservation of the City’s investment in the Airport
• Facilitation of orderly management of the Airport
• Ensuring consistent quality of facilities at the Airport • Providing equitable and uniform treatment of all Lessees • Ensuring compliance with applicable laws, regulations, executive orders, policies, guidelines, and requirements as they relate to the application and acceptance of Federal Funds
• Enabling conformity with the FAA approved Airport Layout Plan and Exhibit ‘A’, Airport Property Map
• Making the Airport available for public use on reasonable terms without unjust discrimination
• Maintaining a fee and rental structure with the goal of financial self-sufficiency for the Airport
Persons seeking to provide a Commercial Aeronautical Activity at the Airport shall also be obligated to adhere to the requirements set forth in the Airport Minimum Standards, Airport Rules & Regulations, and current FAA Guidelines and Regulations.
In accordance with FAA Leasing Guidelines, Grant Assurances and general FAA policy statements, ownership of all lease site development and improvements shall revert to the Airport at no cost to the Airport at the conclusion of the lease. Lease length shall be established in order to allow tenants to recuperate their initial investment, long term leases beyond the life of the asset will not be entertained.
Attachment 1
2023 Revision
4 At the conclusion of the lease term, a new lease agreement may be entered into with the site occupants in accordance with the then-existing Airport Leasing Policy and then-existing Airport Layout Plan. The premises are considered to be owned by the Airport and the lease terms will reflect that condition accordingly. The rental rates charged and the lease term allowed will be based on airport ownership of the premises.
Section 2 - Definitions
For purposes of this Leasing Policy, the following definitions shall apply:
Aeronautical Activities or Services: any activity or service conducted at the Airport that involves, makes possible or is required for the operation of aircraft, or that contributes to or is required for the safety of such operations.
Airport: Paso Robles Municipal Airport and all of the area, buildings, facilities, and improvements within the exterior boundaries of such airport as it now exists, or as it may hereafter be extended or enlarged.
Airport Manager: the individual employed and authorized by the City Manager to oversee the operations, maintenance and finances of the Airport, or the person authorized by the Airport Manager to act for or on behalf of the Airport Manager, with respect to any particular matter.
The Airport Manager is the primary contact for the FAA.
Airport Leasing Policy: this document as established and amended from time to time by the City, to govern the safe, orderly, and efficient leasing of Airport property.
Airport Layout Plan (ALP): the FAA approved and Airport adopted drawing, as may be amended from time to time, which reflects an agreement between the FAA and Airport depicting the physical layout of the Airport. The ALP identifies the location and configuration of current and proposed runways, taxiways, buildings, roadways, utilities, navaids, etc. The ALP also includes the proposed allocation of Airport land and/or improvements to specific uses and/or development. The ALP reflects the existing and proposed allocation of areas of the Airport to specific operations and support functional usage.
Airport Minimum Standards: the “Airport Minimum Standards for Commercial Aeronautical Service Providers at the Paso Robles Municipal Airport” (http://www.prcity.com/government/departments/publicworks/airport/pdf/MinimumStandards. pdf) as adopted by the City, and amended from time to time.
Airport Sponsor: the City of Paso Robles under the FAA guidelines and requirements to operate a public use airport facility.
Applicant: a Person submitting an application to the City to Lease Airport property.
City: the City of Paso Robles, owner and operator of the Airport, acting by or through the Paso Robles City Council, the City Manager, the Public Works Director, the Airport Manager, or any duly authorized employee, agent, or instrumentality of the City of Paso Robles. Discretion, opinions and approvals of ‘City’ under this section refer to the responsibilities and authorities delegated to Attachment 1
2023 Revision
5 the City Council, the Airport Commission and designated City staff members as may be assigned these tasks through adopted policy.
City Council: the legislative body that governs the City of Paso Robles.
Commercial Aeronautical Activity: an Aeronautical Activity for commercial purposes as defined in the Minimum Standards.
FAA: Federal Aviation Administration.
General Aviation: all phases of aviation other than military aviation and scheduled or nonscheduled commercial air carrier operations.
Lease: a contract between the City and any Person wherein the City grants the use or occupancy of Airport property and certain leasehold interests for a specified period in exchange for a specified rent.
Lessee: any Person obtaining a Lease from the City to occupy space and hold certain leasehold interests at the Airport.
Person: and includes any individual, corporation, partnership, association, company, business, trust, joint venture or other legal entity.
Rules and Regulations: the policies, procedures, and regulations, established and amended from time to time by the City Council, to govern the safe, orderly, and efficient use of the Airport.
Shall: the word ‘shall’ is always mandatory and not merely directory.
State: the State of California.
Sublease: a written agreement, approved by the City, stating the terms and conditions under which a third party leases space from a Lessee for the purpose of providing aeronautical or non-aeronautical services or activities at the Airport.
Term: the total period of time in which that Lease may or might remain in effect. (For instance, a Lease for an initial period of 5 years, which may potentially be extended for an additional 5-year period, is a Lease for a term of 10 years).
Attachment 1
2023 Revision
6 Section 3 - Exclusive Rights
A. Federal law forbids the granting of an exclusive right to provide aeronautical services at an airport on which federal funds have been expended. An exclusive right is a power, privilege or other right excluding or debarring another from enjoying or exercising a like power, privilege or right. The City will not grant any such special privilege or monopoly in the use of public Airport facilities.
B. It is the policy of this City not to enter into or promote any understanding, commitment, or express agreement to exclude other reasonably qualified Lessees; the presence on the Airport of only one Lessee engaged in a particular aeronautical service(s) will not, in and of itself, indicate that an exclusive right has been granted. Accordingly, those who desire to enter into a Lease with the City to engage in an aeronautical activity should neither expect nor request the City to exclude others who desire to engage in the same or similar activities. The opportunity to engage in an aeronautical activity shall be made available to those meeting reasonable qualifications and standards relevant to such activity and as space may be available at the Airport for such an activity.
Section 4 – Requests for Leases
A. Written Application Required. Any Person desiring to enter into a Lease with the City for permission to occupy Airport property shall make written application to the City for such permission.
B. Applicant Must Demonstrate Qualifications. If an Applicant is seeking to engage in a Commercial Aeronautical Activity, he/she shall also provide all application information and materials required by the Airport Minimum Standards. Application materials shall consist of a fully executed Application Cover Sheet, all the information specified in this Leasing Policy, the Airport’s Minimum Standards, if applicable, and all documentation deemed necessary by the City for a full and complete analysis of the Applicant’s qualifications. The Cover Sheet shall include the benefit that will accrue to the aviation public, not-for-profit entities, and commercial activities, from the Applicant’s proposed use of Airport property.
C. Space Limited to Demonstrated Need. A single aeronautical activity, although meeting all reasonable standards and qualifications, shall be limited to a lease of such space as is needed for that activity. When an Applicant seeks to lease property from the City, he/she must provide evidence of demonstrated need for the Airport property in question. The City will only agree to lease the amount of land justifiably required for the specific use.
Additional land for unsubstantiated future expansions is not allowed.
Section 5 – Application Documents
Each application for Lease of Airport Property shall be in writing and in sufficient detail to discern the complete qualifications of the Applicant and shall include, as a minimum, the following:
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7 A Cover Sheet briefly describing the proposal, the offered lease rate, and other key summary information, accompanied by a Written Application including the details listed below.
A. The name, address, electronic mail address, and telephone number of the Applicant.
B. The amount, size, and location of the land and/or facilities desired to be leased.
C. Descriptions and cost estimates of any proposed capital improvements to be undertaken by the applicant, or proposed to be provided by another party. This specifically includes tenant improvements if the lease proposal is for an existing building.
D. The types and amounts of insurance coverage to be maintained for the proposed use of Airport property.
E. A current financial statement prepared or certified by an independent certified public accountant and certified by the Chief Financial Officer of the Applicant. The City shall consider financial statements in evaluating the Applicant's financial ability to construct capital improvements (see C above), occupy Airport property, and enter into a Lease of Airport property.
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8 • To the extent allowed by law (if any), proposed applications for Leases, and the financial terms thereof, shall initially be maintained as confidential, for discussion between staff and the Applicant, and for discussion among staff, the Applicant and the City Council and Airport Commission in executive session only.
F. Evidence, in a form acceptable to the City, of the Applicant’s financial ability to complete construction of proposed capital improvements (see C above) in one of the following forms:
1. A performance bond in the amount equal to the cost for constructing the proposed improvements.
2. An irrevocable letter of credit guaranteeing funds to complete the project
3. An escrow agreement administered by a title and escrow company; or
4. A trust administered by a commercial bank.
Section 6 - Action on Application
After an application has been completed and materials are submitted in accordance with Section 5, it will be reviewed by the City and a determination made regarding approval.
The City may deny any application if, in the City’s opinion, any one or more of the following:
A. The Applicant's proposed use of Airport property or construction of leasehold improvements will create a safety hazard on the Airport.
B. The granting of the application will require the City to spend funds, supply labor or materials in connection with the proposed activity, or the activity is expected to result in a financial loss to the City.
C. Inappropriate, inadequate, or insufficient space exists at the Airport to accommodate the proposed activity or business.
D. The development or construction on the Airport necessary to accommodate the proposed business does not conform to land uses specified on the FAA-approved ALP.
E. The development or use of the area requested by the Applicant will result in congestion of aircraft or buildings or will result in unduly interfering with other Airport operations.
F. The Applicant does not meet the requirements of the Airport Leasing Policy.
G. The Applicant has either intentionally or unintentionally misrepresented or omitted any pertinent information in the application or in supporting documents.
H. The Applicant has a record of violating the Rules and Regulations of the Airport or of any other airport, FAA regulations, or any other federal, State, or local statutes, laws, rules, or regulations.
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9 I. The Applicant has defaulted in the performance of any lease or any other agreement with the City or other airport(s).
J. The Applicant does not, in the opinion of the City, exhibit adequate financial responsibility to undertake the project based upon financial information provided.
K. The Applicant cannot provide acceptable surety in the amount required by the City.
L. The proposed activity or development is not in the best interest of the Airport or the public.
Section 7 – Competitive Request for Proposal Process
Upon receipt of an application determined by the City to be complete, the City may issue a public notice of its intent to consider awarding a lease to the Applicant. The purpose of such action, should the City in its sole discretion determine it to be appropriate, is to gauge the level of market demand and competitiveness for the proposed activity or use of the site at the Airport.
Among the factors that can help determine whether competitive bidding should be utilized are:
● the size and proposed use of the property.
● level of market demand for use of Airport property.
● whether the property is going to be used for aeronautical or non-aeronautical purposes. ● whether the property is developed or vacant. If it is vacant, what is the proposed use; what type of improvements will be developed; how many employees will be working there? Is there infrastructure (such as utility lines) already in place or will they need to be installed, and if so, by whom?
• the financial strength and experience of the proposed tenant • the economic impact that the proposed project will have on the Airport and/or the City.
Will it generate new revenue for the City or generate new activity at the Airport? If issued, the notice shall invite other qualified Applicants to submit written expressions of interest in the Airport property under consideration. The City’s review of the subject lease proposal and other written expressions of interest will be reviewed and evaluated by the Airport Commission and/or City Council as appropriate. The notice will also list the criteria to be utilized by the City in making its selection.
In the event the City receives no other expressions of interest in the Airport property in question, the City may proceed to grant or deny the Applicant’s request based on the merits of the application and without further advertisement. Should the City receive written expressions of interest from one or more other potential Applicants interested in obtaining a Lease for the property in question, the City shall postpone making its decision on the Applicant’s request for a Lease until such time as the City has had an opportunity to collect materials from the other potential Applicants and to negotiate with each interested party to ascertain which party is Attachment 1
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10 willing and able to enter into a Lease that will be most advantageous to the City and the public using the Airport. (To the extent allowed by law, all such applications shall be treated as confidential, for discussion between staff and Applicants, and among staff, the Applicants and the City’s Council and Commission in executive session only).
In making itsfinal decision regarding the use or disposition of the Airport premises and privileges in question, the City may reject a higher (financial) application and accept a lower one from a responsible Applicant, and award the lease in question to the lower bidder, if, in the City’s opinion, some reason affecting the interest of the City, or the public using the Airport, makes it advisable to do so. An objective of City policy is to attract interested potential lessees. Lease rates and specified lease terms are firm but may contain the ability for City to approve negotiation of such prices and terms if it is found to be in the best interest of the City and the airport.
Section 8 - Standards for Leasing Airport Property
A. Lease Classification. The City will address each airport lease and/or proposed airport lease for the purpose of definition and relevance to airport use according to the following classifications:
• Non-commercial Hangar – Primarily for private aircraft storage; The City will determine if smaller parcels or additional infrastructure provisions are necessary. • Non-commercial Multi-Tenant – A proposed development of a number of private hangars under one project which affords multiple tenants the benefits of larger economy of scale to offset the burdens of project development costs. • Commercial Aviation (FBO) – Any commercial service facility allowing single or multiple aviation service disciplines to be accommodated on one site. • Non-aviation Commercial/Industrial – Any entity that provides benefit to the airport, the community, or the local economic base through services or employment provided, which remains compatible with the Airport existence. This category could well include Hotels, Conference and Recreational uses.
• Public Facility – Government sponsored and publicly operated uses that provide benefits to the airport, aviation, and/or the local community are part of this category.
• Non-profit Entities – A number of uses qualify as non-profit organizations and valid services that benefit not only aviation, but also a variety of public causes and concerns. Rental agreements are therefore justified.
• Unimproved Land – The occasional need to enter into leases and use agreements for uses which utilize larger amounts of land but without specific definition or qualification. e.g. The farming contract maintains vast portions of airport property not otherwise utilized. Occasional airport/aircraft operations require large areas for specific short-term purposes.
B. Requests for Additional Space. If the need for additional space becomes apparent for or in connection with a new or expanded activity, or one not authorized by the Lessee’s existing Lease, the request for additional space may be treated as a new Lease request by the City.
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11 Otherwise, a simple amendment to the existing lease agreement may be appropriate.
C. Lease Term. The Term is categorized according to the following considerations:
1. Long-term development of unimproved land.
2. Occupancy of facilities owned by the Airport.
3. The designation of the facility or proposed property on the ALP.
4. The Lessee’s proposed use of the property.
5. The Lessee’s proposed capital investment in facilities and peripheral benefits to the airport.
While subject to specific negotiations between the City and each Lessee, the standard Lease Terms would be as follows:
1. Existing Facilities owned by the airport, Requiring No additional Capital Investment: 5 years.
2. Initial term of leases for construction on unimproved land: 20–30 years depending on level of the capital investment.
3. Options to Extend in 10-year increments may be negotiable with significant capital investment.
In responding to a request to exercise an Option to Extend, the City will consider whether the Lessee is or has been in default of any terms and conditions of its Lease as well as the structural integrity, safety, and appearance of the leasehold improvements. Upon receipt of the request, the City will inspect the leasehold improvements for condition, appearance and viability for continued occupancy. The actual lease agreement shall be reviewed for compliance with its terms and conditions.
D. Lease Expiration. In order to ensure compliance with this Policy and FAA Guidelines, it is not feasible to simply extend the term of existing leases, and thus, no time extensions will be allowed. Notwithstanding the foregoing, it is not the intent of the City to arbitrarily require the wholesale removal of existing tenants from their lease sites, so long as the occupancy remains viable and the basic provisions of this Policy and FAA Guidelines can be met.
1. As current leases reach a time where extension of term is essential to accommodate additional operations or development plans, the provisions of this policy may be implemented. The occupancies may be allowed to remain, but only under a new lease agreement, drafted and executed under the policies and standards currently outlined in this document and as may be amended in the future. As policies change, rental rates and escalations are adjusted, and new legal provisions evolve, new lease agreements will contain these necessary modifications. The provisions of Section D (Reversion) below will apply.
2. If a lease extension on an existing occupancy is requested, the terms for the new lease Attachment 1
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12 will remain relatively unchanged for that duration. Although the Lessee will be a new entity, no additional investment in the property is anticipated. No change in occupancy is intended. The ownership of site and building improvements as outlined in the lease will apply. With no Capital investment, the new term may be 5 years, so long as the lease remains in full compliance and the age and current condition of the leased premises and its improvements remain viable and useable. If significant investment and/or new development is requested or anticipated, then terms under the new lease would be extended commensurate with the amount of investment considered.
3. At the conclusion of the new lease, ownership of all site and building improvements revert to the Airport. Any subsequent occupancies are authorized under new lease agreements and shall be executed according to the adopted standard for new leases of City property. In accordance with FAA orders and guidelines, rental rates for leases on nonaeronautical sites will be based on the Fair Market Value as established for the premises.
Rental rates for lease on the aeronautical sites will be based on fair and reasonable value as established for the site.
E. Reversion. At the termination or conclusion of any lease agreement, the ownership of all site and building improvements shall revert to the Airport, except under the following conditions:
1. The occupancy is allowed to remain under the provisions of a new, short-term lease.
2. The preceding lease agreement specifically identifies the owner and states that he retains ownership and the right to remove the hangar from the airport.
3. The Airport, upon thorough inspection of the building, determines that it is not suitable or viable to remain as an operable and maintainable building. In which case the Tenant is required under the terms of the outgoing lease to remove the building at Tenant’s own cost and responsibility.
If the building improvements are allowed to remain, no further lease extensions are granted, and a new lease agreement is not entered into, the Lessee shall agree that all said improvements shall, become the property of the City. Under no circumstances shall the Tenant be entitled to any compensation for the value of its business, franchise, or improvements.
F. Leases for Private Aeronautical Uses. The City is required to operate the Airport for the maximum use and benefit of the public, and must retain the ability to make reasonable provision for essential support services for those who use the Airport; nevertheless, some private aeronautical uses may be beneficial to the City; for instance, a private flying club might be a desirable and compatible use. Proposed Leases for private aeronautical uses will be evaluated on a case-by-case basis, taking into account long-term plans for the development of the Airport, the benefits which may be derived from the proposed Lease, the potential costs of the proposed Lease to the City, the availability of suitable space, the potential for conflict or interference with the public uses of the Airport, and any other factors the City deems relevant.
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13 G. Adherence to Airport Layout Plan (ALP) Required. The ALP depicts the entire property of the Airport and identifies existing facilities and plans for future development. The ALP reflects the existing and proposed allocation of areas of the Airport to specific operations and land uses. No use, occupancy, construction, modification or improvement that is inconsistent with the Airport’s FAA-approved ALP shall be viewed as desirable by the City. The conversion of any area of the Airport to a substantially different use than that shown in the approved ALP could adversely affect the safety, utility or efficiency of the Airport. Only upon a determination by the City that a particular construction, modification or improvement would serve the needs of the Airport public for facilities or services, and that a change in circumstances is evident such that the need for space for such facilities or services was not anticipated at the time the most recent ALP was submitted to the FAA for approval, will the City consider making application to the FAA for approval of a revision of the ALP pursuant to the request of an Applicant or Lessee. Nothing contained in this policy shall require the City to make such application.
H. Development of Vacant Airport Property. Any application for permission to develop vacant airport properties shall include, in addition to all other required materials, a site plan depicting the nature and location of the proposed development. Before actual development, the site plan must be approved by the City.
I. Liens or Encumbrances to Airport Property. The tenant is given the right by the City to mortgage its interest in the Lease, under one or more leasehold Mortgage(s) and assign its interest in this Lease, as collateral security for such Mortgage(s) to secure any bona fide loan upon the condition that all rights acquired under such leasehold Mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in the Lease.
J. Financing Airport Development. The City is under no obligation to provide financing, or to make any improvements to Airport property to facilitate leasehold improvements proposed by an existing or prospective Lessee. If such a Lessee cannot demonstrate the financial means to implement and pay for such development that may be an indication that the proposed development would not be in the best interests of the City or the public using the Airport.
Nevertheless, once an Applicant or Lessee has demonstrated the requisite financial responsibility, the City may choose to pursue any federal, state or City funds to contribute to the leasehold improvements, if in doing so there would be no diversion of funds away from capital improvements or the Airport capital budget program planned by the City.
K. General Rights and Privileges Granted. Airport Leases are designed to accomplish one or more of three basic rights or privileges: the right for a Person to use the landing area and other public Airport facilities in common with others so authorized; the right to occupy Airport Property, and to use exclusively, certain designated premises; and/or the commercial privilege or the franchise right to offer goods and services to the public who use the Airport.
The City will not enter any Lease without receipt of adequate consideration for the rights granted therein.
L. Control Over Operations. Any Lease granting the right to serve the public on the premises of the Airport shall be subject to terms and conditions reserving to the City sufficient control Attachment 1
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14 over operations to ensure that the Lessee will treat patrons fairly. The Lessee must agree to make available its services and facilities on fair and reasonable terms, and without unjust discrimination.
M. Control over Aeronautical Activity and Development. The City will enter into no Lease that would require it to divest itself of the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, or the right to prevent any Lessee from erecting, or permitting to be erected, any building or other structures that might limit the usefulness of the Airport or constitute a hazard to aircraft. The City will enter into no Lease that would require it to divest itself of, or limit its right to develop or improve the Airport as it sees fit, regardless of the desires or views of any Lessee and without interference or hindrance from such a party.
N. Airport Minimum Standards. The Airport Minimum Standards set forth the qualifications which must be met by a Lessee conducting certain aeronautical activities at the Airport. They establish a basis for practical negotiations between the City and potential Lessees offering such activities; however, prospective Lessees should be aware that the City, if presented with a choice between multiple potential Lessees for a single space or facility, will give preference to Lessees who can offer the City and the public the highest standard of quality and service which may well exceed the Airport Minimum Standards for a proposed activity. Existing and prospective Lessees shall understand that the City may increase its Airport Minimum Standards from time to time, in order to ensure a higher quality of service to the public. Only in the rare circumstance, where the aviation community at the Airport has encountered difficulty in attracting a competent service entity, shall the City consider waiving an Airport Minimum Standard to allow a period of initial development. In all other circumstances, it is the policy of the City not to enter into Leases with Lessees who cannot meet the applicable Airport Minimum Standards.
O. Waivers of Immunity. The City will enter into no Leases that require it to waive any sovereign, governmental or other immunity to which it may be entitled, or that would require it to submit to the laws of any state other than those of the State of California.
P. Indemnification. Every Lessee desiring to Lease Airport property shall agree to indemnify and hold the City, its officers, officials, agents, representatives and employees from and against any and all injuries, damage or harm, or any nature whatsoever, which may result from its use or occupancy of Airport property.
Section 9 - Written Agreement
All Persons, prior to the commencement of construction of leasehold improvements or operation of an Aeronautical Activity as defined herein, shall enter into a Lease with the City setting forth the terms and conditions by which the Person shall occupy and use Airport property. Leases entered into by the City are designed to protect the public interest and may contain more restrictive clauses than private sector leases, are to be in a form approved by the City’s legal counsel and shall, at a minimum; conform to local/regional standards of tenant responsibility and liability.
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15 Each Lease shall include all provisions required by law and obligations placed upon the City by all federal and State agencies including, but not limited to, compliance with all federal, state and local laws and regulations pertaining to the use of the leased premises. Other Lease provisions contain standard language, developed through continuous review and revision of the document for conformance to FAA regulations, real estate law, changing economic conditions and other risks associated with land ownership. A sample of that document is available for review.
Section 10 - FAA Required Lease Provisions
In addition to the minimum terms and conditions listed in Section 9, each Lease shall contain provisions requiring the Lessee to furnish services on a reasonable basis to all users thereof, and charge reasonable and not unjustly discriminatory, prices for each unit or service, provided that the lessee may make reasonable and nondiscriminatory discounts, rebates or other similar types of price reductions to volume purchasers.
Section 11 – Rentals, Rates, Fees, and Charges
A. Financially Self-Sufficient. The City has an obligation to make the Airport as self- sufficient as possible under the circumstances existing at the Airport at any given point in time. Toward this end, the City, through its Leases, and by other means available to it, shall endeavor to recover the cost of providing its facilities, through rentals, fees or other charges. All Leases shall provide for adequate consideration to be received by the City in compensation for the rights and privileges therein granted. It shall be the policy of the City to seek Lease terms and conditions that, while fair and nondiscriminatory, provide the most advantageous returns to the City.
B. No Unjustifiably Discriminatory Rates. Each Lessee shall be subject to rates, fees, rentals and other charges (e.g., fuel flowage fees, hangar rentals, percentages of gross volume of business, etc.) as may be currently applicable to, or being received from others making the same or similar uses of the Airport, utilizing the same or similar facilities. Nevertheless, in respect to a contractual commitment from any Lessee, the City may charge different rates to similar users of the Airport if such rates are nondiscriminatory in purpose. Differences in values of properties involved, and the extent of use made of common use facilities may be factors to be considered. Seldom will each Airport user have properties of the same value nor will their use and impact upon common facilities be the same. If one Lessee is in what is considered a prime location, and another is in a less advantageous area, there could logically be a differential in the fees and charges, to reflect this advantage of location. This factor might also influence the rental value of the property. If one Lessee rents office and/or hangar space and another builds its own facilities, this would provide justification for different rental and fee structures; these two Lessees would not be considered essentially similar as to rates and charges even though they offer the same services to the public.
C. Rental Rate. The City pursues its objectives towards financial self-sufficiency through establishing fair and equitable rental rates to the greatest extent possible.
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16 Competition may determine applicable rates and charges. In situations where leases are awarded as the result of competition, said Leases shall be subject to the financial terms and conditions proposed therein. Leases obtained through this process may offer returns that are higher than those being received from existing leases at a given point in time.
The alternative in a rental process is to define a rental rate based on the current market value of the subject property and then negotiating within an adopted range of pricing, based on the relative merits and local benefits identified for the particular lease agreement.
D. Periodic Adjustment of Rates. Providing for adjustments to rental rates and Airport user fees facilitates parity of rates and charges between new and long-standing Lessees and enables the Airport to remain as self-sustaining as possible under the circumstances existing at any given point in time. Each lease shall be adjusted annually in accordance with the City’s adopted escalation policy and based on the Consumer Price Index for all Urban Consumers San Francisco-Oakland Metropolitan area published immediately before the Adjustment Date. All leases with a term of five years or more shall contain provisions subjecting the rental rates to a periodic adjustment of rent based on a determination of Fair Market Value of comparable properties within the airport area. The periodic adjustment shall not increase the rental rate more than 20% for each of these five-year adjustments. Periodic adjustments will be based on current FAA guidance for evaluating land value at airports.
E. “Pioneer” Periods Disfavored. In the case of a new general aviation Lessee, offering services not previously available to the public at this Airport, the City may choose to offer reduced rental rates or other inducements to obtain a Lessee, recognizing that it may well be a nonprofit venture during its pioneering period. In such circumstances, the “incentive rate” shall be offered only during a specific “pioneer” period, and shall be defined to end on a specified date. Future Lessees coming on the Airport following the pioneer period will be expected to pay the comparable standard rates and charges based on then-current values, rates and charges, and the City shall not be obligated to offer subsequent Lessees a pioneer period.
Norshall it generally be appropriate to offer an established Lessee the benefit of an additional period of reduced rates or other financial inducements, beyond the Lessee’s initial pioneer period.
F. Diligent Bookkeeping Required. Income from a Lessee’s Airport operations must be fully accounted for, and adequate records must be kept to evidence amounts due to the City for the various rentals, fees and charges applicable to the Lessee’s operations at the Airport. The City shall be entitled to have access to such records upon request.
Section 12 – Construction of Leasehold Improvements
Through its leasing activities, the City seeks to promote consistent, attractive, and compatible high quality development and facilities at the Airport. In addition, it desires to encourage private sector investment in Airport facilities, develop and maintain aesthetic excellence, and high standards of environmental protection. Finally, it desires to create standards of development that maintain the character of the Airport and ensure all construction meets and exceeds all applicable safety standards and requirements.
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17 Each Lease issued by the City shall include the specific development requirements for the construction of leasehold improvements on the Airport; however, following are general provisions and policies applicable to each Airport Lease:
A. No leasehold improvements shall be designed, planned, constructed, reconstructed, or remodeled without the prior written approval of the City.
B. Any structure or facility to be constructed or placed upon the Airport shall be constructed in a manner to conform to all safety and environmental regulations of the State of California and the City, and shall be in compliance with the City’s current site development requirements, building codes, zoning regulations, and fire regulations as well as FAA design standards.
C. Responsibility for obtaining appropriate approvals from government authorities and complying with their various regulations, policies and standards shall be that of the Lessee.
Potential tenants should be advised that any work done at the Airport may require compliance with not only state but also federal prevailing wage requirements.
D. Lessees shall obtain at their sole expense all permits required for their construction program and shall pay all taxes, permits, inspection fees, and licenses required for the construction and operation of their facilities and businesses.
E. The design of any leasehold improvement is to be carried out under the direction of a registered architect or engineer. All design drawings are to be prepared by a registered architect or engineer. Construction drawings are to be certified by their respective professional disciplines – architectural, structural, mechanical, electrical, and civil engineers.
F. The City may provide infrastructure for the proposed leasehold improvements. Absent the availability of City funding of such improvements, each Lessee may be responsible for and incur the expenses for connection to all leasehold improvements and facility requirements including public roadways, aprons, taxiways, electrical power, communications, water, sewer and natural gas.
At the City’s option, an agreement may be made whereby qualified infrastructure improvements to serve a specific lease site may be financed by the prospective tenant and then reimbursed by the City through a credit in monthly rents due to the City.
Infrastructure constructed to serve a specific lease site that also benefits neighboring lease sites, may be additionally financed by a Reimbursement Agreement, created and administered by the City and executed with the neighboring lease sites when they develop.
The final details of each reimbursement shall be determined through negotiation between the City and the prospective tenant at the time the lease agreement is developed. Lessees shall obtain the prior written approval from the City to modify, improve, add to or delete facilities from their leased area. If any structure is erected, placed, or altered upon in any other manner than in accordance with plans and specifications approved by the City, Attachment 1
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18 such construction will be considered to have been undertaken without approval. This restriction is applicable to landscaping plans as well as architectural plans.
G. Lessees shall suppress, at their own expense, and to the satisfaction of the FAA, all electromagnetic interference with radio guidance, safety devices or with any electric or electronic equipment or installations on or associated with the Airport.
H. The City assumes no responsibility with regard to the ability of the Lessee to complete construction or otherwise meet the Terms and Conditions of its Lease nor does it assume any responsibility for an error, fault or omission in the plans and specifications that have been approved. The City reserves the right to serve notice that action must be taken to remedy any improper situations.
I. Noise, dust, odors, storm water detention, water quality, and smoke generation are of particular concern in the design and operation of any facility on the Airport. Therefore, the design and construction of all facilities shall comply with all federal, state, and local environmental regulations applicable to the Airport.
J. The City or its representative(s) shall have the right at reasonable times to visit sites and enter buildings that are completed or in the process of being built, changed, repaired, moved or demolished.
Attachment 1
82477.03000\41062594.1
CITY OF PASO ROBLES
MUNICIPAL AIRPORT PROPERTY LEASE
Attachment 1
82477.03000\41062594.1
NONSUBORDINATED AIRPORT
PROPERTY LEASE
This Lease ("Lease") is made as of MONTH, DAY , 20XX between THE CITY OF EL PASO DE ROBLES ("Landlord") and XXX ("Tenant"). The parties agree as follows:
1. PREMISES
1.1. Leased Premises. Landlord leases to Tenant and Tenant leases from Landlord, Parcel XXXX of Parcel Map PRAL XXXX, as amended, located in the City of Paso Robles, County of San Luis Obispo, California, as more particularly described in Exhibit "A", which is attached hereto and made a part hereof. This vacant lot, as defined herein, is leased to Tenant and referred to in this Lease as the "Leased Premises" or the "Premises."
1.2. Airport. The Leased Premises are a part of the municipal Airport owned and operated by Landlord and known as the Paso Robles Municipal Airport (the "Airport").
1.3. Common Areas. This is a non-aeronautical OR Aeronautical lease. As such it is agreed that no direct OR does have access to the aircraft operating areas of the airport is possible or intended.
1.4. Acceptance of the Premises. Tenant hereby accepts the Premises in the condition existing as of the date hereof. Tenant hereby agrees that the Premises are in a good and tenantable condition and acknowledges that it has inspected the Premises and common areas of the Airport to its satisfaction and acknowledges that Landlord is not obligated to make any repairs or alterations to the Premises or common areas.
1.5. Reservations to Landlord. Tenant further accepts the Premises subject to any and all existing easements and encumbrances. Landlord reserves the right without obligation to install, lay, construct, maintain and repair utilities and appurtenances necessary or convenient in connection therewith in, over, upon, through, across, under and along the Premises or any part thereof, and to enter the Premises for any and all such purposes.
Landlord also reserves the right to grant franchises, easements, rights of-way and permits in, over, upon, through, across, under and along any and all portions of the Premises. No right reserved by Landlord in this clause shall be so exercised as to interfere unreasonably with Tenant's operations hereunder, and the rights granted to third parties by reason of this clause shall contain provisions that the surface of the land shall be restored as nearly as practicable to its condition prior to the construction upon completion of any construction.
2. TERM
2.1. Term. The lease term shall be XX Years, commencing on XXXX (“Commencement Date”), and expiring on XXXX ("Expiration Date").
2.2. Possession. The Tenant is granted full and complete access to the Leased Premises as of the Commencement Date of this lease and, so long as Tenant is not in default hereunder, the right to its possession for the duration of this Lease.
Option to Renew. (IF APPLICABLE) So long as Tenant is not then in default hereunder, Tenant shall have an option to renew this lease for X additional term of 10 years (“Renewal Terms”), each of which is exercisable by written notice to Landlord of Tenant’s intent to renew at least one hundred twenty (120) days and no more than one hundred eighty (180) days prior to the then expiration date of this lease.
3. RENT
3.1. Monthly Rent. The monthly base rent ("Base Rent") for the (XXXX acre) Premises shall be $XXXX for the Premises until the first Adjustment Date. Tenant shall pay Landlord the Base Rent on or before the first day of each calendar month during the term of this Lease, in advance. Base Rent and any other amounts that Attachment 1
82477.03000\41062594.1
are not received by Landlord within ten (10) days of the due date shall be subject to the late charge and interest provided for in Sections 21.18 and 21.19. A new Base Rent shall be determined at the expiration of the initial lease term and/or any Renewal Terms by appraisal. Tenant agrees that this Base Rent recalculation is a condition of exercising any of its options to extend the Term of this Agreement.
3.2. Rent Commencement. Rent payments shall commence on the commencement date of the lease.
A. Cost-of-Living Increase. On July 1, 20XX, and on July 1st of every year thereafter ("Adjustment Date") for the full term of this Lease, including any extensions, the Base Rent shall be increased by the same percentage increase as defined by the Consumer Price Index for the previous 12-month period.
The standard to be used shall be the Consumer Price Index for all Urban Consumers San Francisco-Oakland Metropolitan area, Bureau of Labor Statistics, United States Department of Labor, 1982 = 100 ("Index"). The index which is published most immediately before the Adjustment Date shall be used. If the Index shall no longer be published, another Index generally recognized as authoritative for purposes of this paragraph shall be substituted. In addition to annual Consumer Price Index adjustments, in order to keep lease rates in line with fair market values throughout the life of the lease; base rent adjustments, if necessary, can be made every five years with adjustments to be determined by an appraisal of real property. The annual increase in monthly rent shall increase no more than eight percent (8%) in any given year or twenty percent (20%) in any five-year period B. Costs of Appraisal. In the event that the Base Rent will be adjusted by appraisal, the City shall, at its own cost and expense, be responsible for selecting and hiring an appraiser.
3.4 Payments. All rent to be paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be paid without deduction or offset, prior notice or demand, and at such place or places as may be designated from time to time by Landlord.
4. CONDUCT OF BUSINESS BY TENANT
4.1. Use of the Premises and Conduct of Tenant's Business.
A. Tenant hereby acknowledges that the principal use of the Airport consists of the operation of a public airport and that all other operations and businesses which are now or hereafter permitted by Landlord, including the use hereunder, must be at all times be compatible with such principal use, as Landlord shall, in its sole discretion, determine.
B. The primary use of the Premises permitted under this Lease shall be a INSERT TYPE OF BUSINESS. Tenant shall, continuously and uninterruptedly during the term of this Lease, conduct its business activity, as permitted herein, upon the Premises unless prevented from so doing by strikes, fire, casualty or other causes beyond Tenant's control, except during reasonable periods for repairing, cleaning and decorating the Premises.
C. Tenant shall, at Tenant's own cost and expense, obtain and maintain all licenses, permits, certificates or other authorizations of any governmental authority having jurisdiction thereover, including, but not limited to, the FAA, which may be necessary for the conduct in the Premises of its business operations and activities. Without limiting the generality of the foregoing, Tenant shall comply with all applicable laws, resolutions, codes, rules, orders, directions, ordinances and regulations of any department, bureau or agency or any governmental authority having jurisdiction over the operations, occupancy, maintenance and use of the Premises for the purpose demised hereunder, except for those requiring major Alterations to the Premises as distinguished from those relating to furniture, fixtures or equipment of Tenant therein. Tenant shall indemnify and save Landlord harmless from and against any claims, penalties, losses, damages or expenses imposed by reason of Tenant's violation of any applicable law or the rules and regulations of governmental authorities having jurisdiction thereof.
D. Tenant acknowledges Landlord is entering into this Lease in its proprietary capacity and not in its regulatory or governmental capacity. Nothing in this Lease shall be construed as restraining, impairing or restricting the City of El Paso De Robles in its regulatory or governmental capacity (referred to herein when Attachment 1
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acting in such capacity as “City”), or granting any rights upon Tenant with respect to the use, occupancy, development, or operation of the Premises in a manner inconsistent with any laws or applicable requirements.
E. Nothing in the approval of this Lease by the Landlord shall be binding on the City Council, Planning Commission, or any other commission, committee, board or body of the City regarding any Approvals of the Proposed Development required by such bodies regarding Tenant’s use of the Premises. Nothing in this Lease, nor any action by Tenant with reference to this Lease or any related documents shall be deemed to constitute issuance or waiver of any required City approval regarding the Premises, or waiver or exercise of any legislative discretion of the City regarding any application, approval or other matter relating to Tenant’s intended use of the Premises.
F. The parties agree that nothing in this Lease is intended to commit the Tenant to completing a particular project or to commit the City to granting any approval for such proposed use. The City’s approval of this Lease does not constitute approval by the City of any proposed development on the Premises or of other activity on the Premises that would have a direct or reasonably foreseeable indirect environmental impact pursuant to the California Environmental Quality Act, Public Resources Code Section 21000 et seq. (“CEQA”). (See 14 C.C.R. §§ 15060(c); 15378(b).) Moreover, Tenant’s future use or development of the Premises is expressly conditioned on CEQA compliance. City shall conduct environmental review in accordance with CEQA prior to taking any discretionary action with regard to any proposed development or use of the Premises by Tenant. Nothing in this Lease shall be construed to limit the City’s discretion to consider and adopt any mitigation measure or project alternative, including the alternative of rejecting Tenant’s applications for the Entitlements or any proposed development or use of the Premises by Tenant, as provided in Public Resources Code Section 21002. Following completion of the City’s environmental review of any proposed development or use of the Premises by Tenant, the City shall file a notice of such approval as provided in Public Resources Code Section 21152.
G. Notwithstanding any other remedies of Landlord hereunder, in the event of a breach of this Section 4.1, Tenant, upon receipt of written notice from Landlord of said breach, shall cure said specified breach within five (5) business days. If cure is not performed within five (5) business days, Landlord, at its option, may terminate this Lease upon thirty (30) days' written notice. However, if Tenant has undertaken steps to cure within five (5) business days, then Landlord shall not terminate this Lease unless Tenant fails to diligently complete said cure. In such event, Landlord may terminate this Lease upon thirty (30) days written notice.
Notwithstanding the foregoing, if at any time Tenant's breach has a material adverse effect on the operations of the Airport or creates an emergency situation that, in City's reasonable estimation, presents a risk to public health or safety, Tenant shall immediately commence to cure such breach.
4.2. Restrictions on Use.
A. Tenant shall not use or permit the use of the Premises for any purpose other than that set forth in Section 4.1 above, and Tenant shall comply promptly with all applicable laws, rules and regulations regarding the use of the Premises, including, but not limited to all rules and regulations promulgated by the FAA.
B. Tenant shall not use or permit the use of the Premises in any manner that will (A) tend to create or permit any waste or nuisance, (B) tend to disturb other tenants or users of the Airport, (C) invalidate or cause cancellation or be in conflict with fire or other hazard insurance policies covering the Airport, or (D) increase the rate of fire insurance for the Airport or of property located therein, over that rate in effect on the Commencement Date hereof. Tenant, at its expense, shall comply with all rules, orders, regulations or requirements of the State and City Fire Code.
4.3. Airport Use. In connection with the ownership and use of the Airport by Landlord, Tenant hereby agrees as follows:
A. Landlord reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or views of Tenant, and without interference or hindrance. If the foregoing development or improvement shall have a material adverse effect on Tenant's use of the Premises, the parties hereto shall meet and confer prior to the commencement of such development or improvement.
Attachment 1
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B. Landlord reserves the right, but shall not be obligated to Tenant, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport to standards established by Landlord in Landlord’s sole discretion, together with the right to direct and control all activities of Tenant in this regard.
C. This Lease shall be subordinate to the provisions and requirements of any existing or future agreement between Landlord and agencies of the United States relative to the development, operation or maintenance of the Airport.
D. In the event any future structure or 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, Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations.
E. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of any exclusive right within the meaning of Section 308(a) of the Federal Aviation Act of 1958 (49 U.S.C. Section 1349).
F. There is hereby reserved to Landlord, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises. This public right of flight shall include the right to cause within the said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operating on the Airport.
G. Tenant, by accepting this Lease, expressly agrees for itself, its successors and assigns that it will not permit any natural growth or other obstruction on the land leased hereunder above a height as determined by the application of the requirements of Part 77 of the Federal Aviation Regulations. Tenant shall also not erect or permit the erection of any structure or building on the land leased hereunder above a height of thirtyfive (35) feet, as required by the City Fire Code. In the event the aforesaid covenants are breached, Landlord reserves the right to remove the offending structure or object, all of which shall be at the expense of Tenant.
H. Tenant shall not make use of the Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport, or which might otherwise constitute a hazard. In the event the aforesaid covenant is breached, Landlord reserves the right to enter upon the Premises and cause the abatement of such interference, at the expense of Tenant.
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 during the time of war or national emergency or otherwise.
J. Tenant shall conform to the Airport Rules and Regulations and FAA safety and security rules and regulations regarding use of the Airport operations area including runways, taxiways, aircraft aprons by vehicles, employees, customers, visitors, etc. in order to prevent security breaches and avoid aircraft incursions and vehicle/pedestrian deviations; will complete and pass an airfield safe driving instruction program when offered or required by the Airport, and will be subject to penalties as prescribed by the Airport for violations of the Airport safety and security requirements.
4.4. Airport Security. Tenant is responsible for maintaining security in and around the Premises or any other area adjacent to or upon the Airport which Tenant has an exclusive right to use or which Tenant otherwise controls. Tenant is further responsible for maintaining security with respect to access to and entry upon Airport operations areas, or other areas of the Airport designated by Landlord from time to time as security areas, by employees, subtenants, contractors, invitees or customers of Tenant or any other person who enters the Airport operations areas at Tenant’s invitation, direction, or authority, whether through or from the Premises or otherwise.
Attachment 1
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4.5. Hazardous Materials.
A. Restrictions. Landlord acknowledges receipt and consents to Tenant's list of the current hazardous materials or toxic substances, as more particularly described on Exhibit "B", attached hereto and made a part hereof, which are necessary or useful to Tenant's business and which are used, kept and stored in a manner that complies with all laws relating to such hazardous materials or toxic substances so brought upon or used or kept in or about the Premises or the Airport. Notwithstanding the foregoing, Tenant shall not cause or permit any hazardous materials or toxic substances which are not included on the foregoing approved list to be brought upon, kept or used in or about the Premises or the Airport by Tenant, its agents, employees, contractors or invitees, without the prior written consent of Landlord. Landlord's consent shall not be unreasonably withheld so long as Tenant demonstrates to Landlord's reasonable satisfaction and covenants to Landlord that such hazardous materials or toxic substances are necessary or useful to Tenant's business and will be used, kept and stored in a manner that complies with all laws relating to any such hazardous materials or toxic substances so brought upon or used or kept in or about the Premises or the Airport. If Tenant breaches the obligations stated in the preceding sentence, or if the presence of hazardous materials or toxic substances on the Premises or the Airport caused or permitted by Tenant results in contamination of the Premises or the Airport, or if contamination of the Premises or the Airport by hazardous materials or toxic substances otherwise occurs for which Tenant is legally liable to Landlord for damage resulting therefrom, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in value of the Premises or the Airport, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or the Airport, damages arising from any adverse impact on marketing of space in the Airport, and sums paid in settlement of claims, actual attorneys' fees, consultant fees and expert fees), which arise during or after the term of the Lease as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions, including regular inspections, or any clean up, remedial, removal or restoration work required or recommended by any federal, state or local governmental agency or political subdivision because of hazardous materials or toxic substances present in the soil or ground water on or under the Premises and/or the Airport. The indemnity, defense and hold harmless obligations of Tenant hereunder shall survive any termination of this Lease. Without limiting the foregoing, if the presence of any hazardous materials or toxic substances on the Premises or the Airport caused or permitted by Tenant results in any contamination of the Premises or the Airport, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises and the Airport to the condition existing prior to the introduction of any such hazardous materials or toxic substances; provided that, Landlord's approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions, in Landlord's sole and absolute discretion, would not potentially have any material adverse long-term or short-term effect on the Premises or the Airport.
B. Testing Wells. Landlord shall have the right, at any time, to cause testing wells to be installed on or about the Premises and/or the Airport, in a manner that will not unreasonably interfere with the Tenant's use of the Leased Premises, and may, at its option, cause the ground water, soil and air to be tested to detect the presence of hazardous materials or toxic substances at least once every twelve (12) months during the term of the Lease by the use of such tests as are then customarily used for such purposes. Landlord shall provide Tenant with thirty (30) days prior written notice if it determines such testing wells are to be installed in order to minimize disruption to Tenant's business operations. If Tenant so requests, Landlord shall supply Tenant with copies of such test results. Landlord shall bear the cost of such tests and of the maintenance, repair and replacement of such wells, unless such test indicates that the presence of hazardous materials or toxic substances are the result of Tenant's operations on the Premises. In that event, the cost of such tests and of the maintenance, repair and replacement of such wells shall be fully paid for by Tenant within ten (10) days after receiving a statement of charges from Landlord.
C. Access. Landlord and Landlord's agents shall have the right to inspect the Premises for the purposes of ascertaining Tenant's compliance with this Lease, Airport Minimum Standards, and Airport Rules and Regulations with notice at least five (5) days in advance of any inspection. The cost of such inspections shall be paid by Landlord, unless such inspection reveals the presence of hazardous materials or toxic substances are the result of Tenant's operations on the Premises. In the event of a release, spill or mishandling of hazardous Attachment 1
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materials or toxic substances, Tenant shall immediately inform Landlord verbally and in writing. Such notice shall identify the hazardous materials or toxic substances involved and the emergency procedures taken.
D. Assignment and Subletting. It shall not be unreasonable for Landlord to withhold its consent to any proposed assignment or sublease if: (A) the proposed assignee's or subtenant's anticipated use of the Premises or the Airport involves the generation, storage, use, treatment or disposal of hazardous materials or toxic substances; (B) the proposed assignee or subtenant has been required by any prior landlord, lender or governmental authority to take remedial action in connection with hazardous materials or toxic substances contaminating a property if the contamination resulted from such assignee's or subtenant's actions or use of the property in question; or (C) the proposed assignee or subtenant is subject to an enforcement order issued by any governmental authority in connection with the use, disposal or storage of any hazardous materials or toxic substances.
E. Definitions. As used herein, the terms "hazardous materials and/or toxic substances" mean (A) any hazardous or toxic substance, material or waste which is or becomes regulated by any local, state or federal government or special district, (B) designated as a "hazardous substance" pursuant to Section 1311 of the Federal Water Pollution Control Act (33 USC Section 1317), (C) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 USC Section 6901, et seq. (42 USC Section 6903), (D) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC Section 9601, et seq. (42 USC Section 9601), (E) defined as a "hazardous waste" or as a "hazardous substance" pursuant to Section 25117 or 25316 of the California Health and Safety Code, (F) substances defined as “hazardous materials” in the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., (G) any infectious wastes or substances, or (H) petroleum and any by-products thereof. References herein to specific statutes or laws shall also be references to any amendments of or applicable successor statutes or laws.
F. Delivery of Inventory and Plans. During the term of the Lease, Tenant shall immediately deliver to Landlord (A) a new list of all such hazardous materials and toxic substances, each time Tenant adds or changes the materials or substances it may use and each time a material or substance used by Tenant becomes included within the definition of hazardous materials or toxic substances under this Lease (due to new or revised laws or otherwise), and (B) copies of all reports required by any and all regulatory agencies governing the use, handling, storage and disposal of hazardous materials or toxic substances. Tenant shall obtain Landlord’s written consent prior to the use or storage of any such added or changed materials or substances.
G. Insurance. Any increase in the premium for insurance carried by Landlord or required of Tenant under this Lease on the Premises or the Airport which arises from Tenant's use and/or storage of these materials shall be solely at Tenant's expense. Tenant shall procure and maintain at its sole expense such additional insurance as may be necessary to comply with any requirement of any federal, state or local governmental agency or special district with jurisdiction.
H. Storage. It is the intent of the parties hereto that the provisions of this Section 4.5 regarding the use and handling of hazardous materials and toxic substances shall also apply to Tenant's storage upon the Premises of any substances, including, but not limited to, gasoline and diesel fuels, in above or below-ground storage tanks.
5. OPERATING EXPENSES
5.1. Taxes and Assessments. Tenant shall pay without abatement, deduction or offset all real and personal property taxes, general and special assessments, and other charges of every description levied on or assessed against the Leased Premises, improvements located on the Leased Premises, personal property located on or in the land or improvements, the leasehold estate, or any subleasehold estate, to the full extent of installments falling due during the term, whether belonging to or chargeable against Landlord or Tenant. Tenant shall make all such payments directly to the charging authority at least fifteen (15) days before delinquency and before any fine, interest or penalty shall become due or be imposed by operation of law for nonpayment. If, however, the law permits the payment of any or all of the above items in installments (whether or not interest accrues on the unpaid balance), Tenant may, at Tenant's election, utilize the permitted installment method, but shall pay each Attachment 1
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installment with any interest before delinquency. Tenant shall pay any charge or levy only upon the rent payable by the Tenant under this Lease to Landlord, and any tax in lieu of property tax, but shall not be required to pay any franchise, state inheritance, succession, capital levy or transfer tax of the Landlord, or any income, excess profits or revenue tax, or any other tax, assessments or charge attributable to Landlord. In addition, Landlord shall be solely responsible for any income taxes assessed against Landlord arising out of its operation of the Airport or related to the rents received from Tenant.
If at any time during the term of this Lease any tax, however described, is levied or assessed against Landlord as a substitute, in whole or in part, for any real property taxes, or in addition to such real property taxes, Tenant shall pay before delinquency the substitute or additional tax or excise. Such substitutes include, but are not limited to, any possessory interest tax imposed on Tenant by California Revenue and Taxation Code Sections 103 and 107.
Tenant recognizes and understands that this Lease may create a possessory interest subject to property taxes pursuant to Revenue & Taxation Code Section 107.6 and that, if a possessory interest is created, Tenant shall, in accordance with this Section 5, be responsible for payment of property taxes levied against such possessory interest. Any documentary transfer tax assessed upon the creation of a leasehold interest in the Premises under this Lease shall be paid by Tenant. Tenant hereby expressly acknowledges that Landlord has given Tenant notice that Tenant's possessory interest in the demised premises may be taxed.
Tenant’s initials
A. Proof of Compliance. Tenant shall furnish to Landlord at least fifteen (15) days before the date when any tax, assessment or charge would become delinquent, receipts or other appropriate evidence establishing their payment. Tenant may comply with this requirement by retaining a tax service to notify Landlord when the taxes have been paid.
B. Proration. Taxes and assessments determined from the latest information available for the first and, if Tenant is not in default under this Lease, the last year of this Lease shall be prorated between the Landlord and Tenant on the basis of a three hundred sixty-five (365) day year for any fractional portion of a tax fiscal year commencing July 1st and ending June 30th included within the term of this Lease.
C. Payment by Landlord. In the event Tenant fails to pay such taxes or assessments, Landlord may, at its option, after giving fifteen (15) days' notice to Tenant, pay any such taxes or assessments together with all penalties and interest which may have been added thereto by reason of any such delinquency or failure to pay, and may likewise redeem the Leased Premises or any part thereof, or the buildings or improvements located thereon, from any tax sale or sales. Any such amounts so paid by Landlord shall become immediately due and payable as additional rent by Tenant to Landlord, together with interest thereon at the maximum lawful rate from the date of payment by Landlord until paid by Tenant. Any such payment shall not be deemed to be a waiver of any other rights of Landlord hereunder. Tenant may, in good faith, contest any such tax or assessment at its expense. However, Tenant shall defend itself and Landlord against the same and shall pay and satisfy any judgment including all penalties and interest that may be rendered thereon. Landlord may require Tenant to furnish Landlord a surety bond or other security reasonably satisfactory to Landlord in an amount equal to such contested tax or assessment, indemnifying Landlord against liability for such tax or assessment and holding the Leased Premises free from the effect of such tax or assessment. Landlord shall cooperate with Tenant in any such contest and shall execute any necessary legal documents incident thereto, but shall be held harmless by Tenant against all costs or expenses incident to such cooperation.
5.2. Net Lease. This shall be a triple net Lease and Base Rent shall be paid to Landlord absolutely net of all costs and expenses, except as specifically provided to the contrary in this Lease. it being understood that Landlord will receive the rent set forth in Section 3 free and clear of any and all other impositions, taxes, liens, charges or expenses of any nature whatsoever in connection with the ownership and operation of the Premises.
In addition to the rent required by Section 3, and to the other amounts payable by Tenant pursuant to this Lease, Tenant shall pay to the parties respectively entitled thereto all other impositions, operating charges, maintenance Attachment 1
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charges, construction costs and any other charges, costs and expenses which arise or may be contemplated under any provision of this Lease during the term hereof. All of such charges, costs and expenses shall constitute additional rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by Tenant, and that Tenant shall in no event be entitled to any abatement of or reduction in rent payable under this Lease, except as herein expressly provided. Any present or future law to the contrary shall not alter this Lease.
6. UTILITIES AND SERVICES
6.1. Utilities. During the term of this Lease, Tenant agrees to pay all charges and expenses in connection with utility services furnished to the Leased Premises and to protect Landlord and the Leased Premises from all such charges and expenses. If any utilities are not separately metered for the Leased Premises, Tenant will arrange for separate meters at Tenant's expense and Tenant shall contract directly with utility providers. If separate meters are not possible, Tenant shall reimburse Landlord for Tenant's pro rata share, as reasonably determined by Landlord, of all shared utilities within ten (10) days after billing by Landlord.
6.2. Tenant acknowledges that Landlord has no obligation to provide utilities except those already furnished as of the date of this Lease to the Premises or additional utilities. Landlord shall not be liable to Tenant under any circumstances for damages or loss to Tenant's property, injury to person or property, or consequential damages, however occurring, through, in connection with, or incidental to failure to furnish or interruption of any utilities or services.
6.3. Tenant shall comply with all rules and regulations which Landlord, any governmental agencies or authorities, or any utility company may establish for the use, proper functioning and protection of any such utility.
7. IMPROVEMENTS, REPAIRS AND MAINTENANCE
7.1. Tenant's Obligations to Improve, Maintain and Repair. Tenant shall maintain, or cause to be maintained, the Premises and every part thereof in good order, condition and repair according to standards determined by Landlord (whether or not such part of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result of Tenant's use, any prior use, the elements or the age of such part of the Premises), including, without limiting the generality of the foregoing, (A) all buildings, structures or fixtures, including foundations, roofs, ceilings, floors, interior and exterior walls, (B) store fronts, windows, doors, hangar doors, plate glass, showcases, skylights, entrances and vestibules located within the Premises, (C) automobile and aircraft pavement, driveways, landscaping, parking lots, fences and signs, and (D) all sprinkler systems, plumbing, sewers, drainage devices, heating, air conditioning, electrical facilities, equipment and other utilities or facilities serving the Premises.
Tenant shall commence any repair within thirty (30) days after the receipt by Tenant of written notice of the need for such repair, including any notice from Landlord. Landlord shall not be liable to Tenant by reason of any injury to or interference with Tenant's business arising from or connected with the need for or the making of any repairs, alterations or improvements. All repairs, modifications or improvements to the Premises shall be performed in accordance with the building standards of the City of Paso Robles, and it shall be the responsibility of Tenant to secure appropriate permits from the City of Paso Robles. Tenant shall keep the exterior of the improvements on the Premises in a reasonably neat and attractive condition, free from waste or debris, and replace any trees, shrubs, plants, and ground cover as may be needed. Tenant shall screen and landscape all outside storage areas and service yards of the Premises with fencing and landscaping approved by Landlord, and shall not allow any temporary structures or facilities on the Premises, without Landlord's reasonable approval.
Tenant shall assure that only essential support vehicles, aircraft and equipment are parked or stored outside and adjacent to the hangar and that all are screened or located so as to remain out of sight of the public streets.
7.2. Landlord's Remedies. In the event Tenant fails to perform its obligations under Section 7.1 Landlord may, at its option, after fifteen (15) days' written notice to Tenant to cure such failure, enter upon the Premises Attachment 1
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and put the same in good order, condition and repair, and the cost thereof shall become due and payable, upon demand, by Tenant to Landlord as additional rent.
7.3. No Landlord Obligations. Landlord shall have no obligation to make any repairs to the Premises other than as expressly and specifically set forth in this Lease. Tenant hereby waives any and all rights provided in Sections 1941 through 1942, inclusive, of the Civil Code of California and hereby waives, to the extent permissible, any rights other than statutes or laws now or hereafter in effect which are contrary to the obligations of Tenant under this Lease, or which place obligations upon Landlord in addition to those provided in this Lease.
7.4. Landlord's Reservations of Rights. During the term of this Lease, Landlord reserves the right, in its sole discretion, to reconstruct, alter or improve the aircraft pavement areas of the Premises, to such standards as it shall determine; provided, however, if such reconstruction, alteration or improvement to the aircraft pavement areas would result in a material adverse effect on Tenant's use of the Premises, the parties hereto shall meet and confer prior to the commencement of such reconstruction, alteration or improvement. Tenant hereby acknowledges that Landlord has no obligation to make such alterations or improvements.
7.5. Indemnity. Tenant shall indemnify and save harmless Landlord against all actions, claims and damages by reason of (A) Tenant's failure to perform the terms of this Section 7, or (B) Tenant's nonobservance or nonperformance of any law, ordinance or regulation applicable to the Leased Premises, and any liability or duty to repair imposed by the laws of California.
8. PLANS AND SPECIFICATIONS; CONSTRUCTION; LIENS AND CLAIMS
8.1. Approval of Plans. No improvement shall be erected, placed, altered or maintained on the Premises unless plans and specifications have been approved in writing by Landlord, at Landlord’s sole discretion. Prior to commencing construction of any building, structure or improvement (not including the internal layout) on the Leased Premises, Tenant shall notify Landlord of the date of commencement and expected completion thereof and shall submit for approval plans and specifications in accordance with the City of El Paso de Robles Community Development Department Application Guide for Major Development, which can be found at:
http://www.prcity.com/government/departments/commdev/planning/pdf/formsapplications/MajorGuide.pdf:
8.2. Time for Approval. Tenant shall notify Landlord in writing when completed plans and specifications for improvements to be erected, placed or altered on the Premises have been submitted to Landlord ("Notice").
Such plans and specifications shall be processed in accordance with the normal procedures of the City of Paso Robles. If Landlord does not approve the plans and specifications, it shall notify Tenant of the reasons for its disapproval, and failure to so notify Tenant shall be deemed approval of the plans and specifications. By approving the plans and specifications, Landlord does not represent or warrant that such plans and specifications comply with Applicable Laws. Tenant shall be responsible, at Tenant's sole cost and expense, for securing all necessary governmental or quasi-governmental approvals of the plans and specifications and for securing all permits necessary to construct and operate any improvements or Approved Improvements.
8.25 Approval Delays. In the event the required approval process exceeds a period of one (1) year from the Commencement Date, or if Tenant is unable to obtain approvals necessary to use the Premises for the use set forth in Section 4.1.B, above, Tenant shall have the option to terminate this Lease in its entirety.
8.3. Commencement of Construction. Once Tenant has commenced construction, Tenant shall pursue the same with reasonable speed and dispatch in compliance with the approved plans and specifications. All construction shall be in accord with all applicable laws, ordinances and regulations. Tenant's construction shall not interfere with Landlord's operation of the Airport, and Tenant shall comply with all directives of Landlord related thereto. If Tenant is prevented from completing improvements on account of strikes, lockouts, failure of contractor or subcontractors, inability to procure material or labor in the free market, governmental restrictions, fire, earthquake, the elements, or other casualty or similar extraordinary conditions beyond Tenant's reasonable control (excluding financial difficulties, economic conditions or inability to obtain governmental Attachment 1
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approvals), then the Tenant shall thereafter proceed with all reasonable speed and dispatch to complete the improvements.
8.4. Liabilities. By approving plans and specifications, Landlord assumes no liability therefor, or for any defect resulting from the plans and specifications. Tenant indemnifies and shall hold Landlord harmless from any damage, loss or prejudice claimed, and from all expenses incurred arising out of approvals of plans and specifications or any improvement on the Premises. Tenant hereby assigns to Landlord all warranties and guarantees of all material suppliers, contractors and subcontractors furnishing material or labor or otherwise relating to any improvements or Approved Improvements.
8.5. Approved Buildings and Improvements. All of the improvements shown in the approved plans and specifications constitute the "Approved Improvements." Substantial modifications to Approved Improvements shall be made only with prior written approval of Landlord, except that Landlord's prior written approval shall not be required for changes to the interior of any building on the Premises. Notwithstanding the foregoing, nothing in this Section 8.5 shall limit, alter, or waive the building and permit requirements of the City of Paso Robles.
8.6. Notice of Work. Before commencement of any construction, alteration, addition, replacement or restoration of any building, structure or other improvement, Tenant shall (A) give to Landlord written notice of the work to be performed, specifying the nature and location of the intended work and the expected date of commencement and completion thereof; and (B) provide Landlord with written plans and specifications therefor, and shall have obtained the written approval thereof from the Landlord as required above. Landlord reserves the right at any time and from time to time to post and maintain on the Leased Premises such notices as may be necessary to protect Landlord against liability for all such liens and claims.
8.7. Covenant Against Liens and Claims. Tenant shall not allow or permit to be enforced against the Leased Premises or any part thereof, any mechanic's, materialmen's, contractor's or subcontractor's liens arising from any claim growing out of work of any construction, repair, restoration, replacement or improvement, or any other claim or demand no matter how the same may arise. Tenant shall pay or cause to be paid all of said liens, claims or demands before any lawsuit is brought to enforce them against the Leased Premises. Tenant agrees to indemnify and hold the Landlord and the Leased Premises free and harmless from all liability for any and all such liens, claims and demands, together with reasonable attorneys' fees and all costs and expenses incurred by Landlord in connection therewith.
8.8. Tenant's Right to Contest Liens. Notwithstanding anything to the contrary set forth above, if Tenant shall in good faith contest the validity of any such lien, claim or demand, then Tenant shall, at its expense, defend itself and Landlord against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the enforcement thereof against Landlord or the Leased Premises. A condition to Tenant's right to contest the validity of any lien, claim or demand shall be that if Landlord shall require, Tenant shall furnish to Landlord evidence of a surety bond satisfactory to Landlord in an amount at least equal to the contested lien, claim or demand, the effect of which is to indemnify Landlord against liability for the same, and to hold the Leased Premises free from the effect of such lien or claim.
8.9. Landlord Paying Claims. In the event Tenant shall fail to pay and discharge or cause to be paid and discharged, when due and payable, any tax, assessment or other charge upon or in connection with the Leased Premises, or any lien or claim for labor or material employed or used or any claim for damages arising out of the construction, repair, restoration, replacement, maintenance and use of the Leased Premises and any improvements thereon, or any judgment on any contested lien or claim, or any insurance premium or expense in connection with the Leased Premises and improvements, or any other claim, charge or demand which Tenant has agreed to pay or cause to be paid under the terms of this Lease, and if Tenant, after fifteen (15) days' written notice from Landlord to do so shall fail to pay and discharge the same, or in the event Tenant contests such tax, assessment, claim or charge and fails to post security as provided elsewhere in this Lease, then Landlord may, at his option, pay any such tax, assessment, insurance expense, lien, claim, charge or demand, or settle or discharge any action therefor, or judgment thereon, and all costs, expenses and other sums incurred or paid by Landlord in connection with any of the foregoing shall be paid by Tenant to Landlord upon demand, together with interest Attachment 1
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thereon at Bank of America's prime rate from the date incurred or paid. Any default in such repayment by Tenant shall constitute a breach of the covenants and conditions of this Lease.
8.10. Prevailing Wage. Tenant acknowledges that any improvements, alterations or repairs on the Premises, may be subject to the payment of prevailing wage under the provisions of the California Labor Code. To the extent any such improvements, alterations, or repairs are subject to prevailing wage requirements, the following shall apply:
A. Tenant shall and shall cause its contractors and subcontractors to: pay prevailing wages in the construction of any improvements, or alterations on the Premises, or any other work as those wages are determined pursuant to Labor Code Sections 1720 et seq.; to employ apprentices as required by Labor Code Sections 1777.5 et seq.; and comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and the implementing regulations of the Department of Industrial Relations (the “DIR”) for all such Labor Code sections.
B. Tenant shall indemnify, hold harmless and defend (with counsel selected by the Landlord), to the extent permitted by applicable law, Landlord, its councilmembers, commissioners, officials, employees and agents, against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Tenant, or its contractors or subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq., to hire apprentices in accordance with Labor Code Sections 1777.5 et seq., or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and the implementing regulations of the DIR in connection with the work performed pursuant to this Lease. The provisions of this Section shall survive expiration or earlier termination of this Lease.
9. INSURANCE AND INDEMNITY
9.1. Landlord's Non-liability. Landlord shall not be liable for any loss, damage or injury of any kind to any person or property arising from any use of the Leased Premises, or any part thereof, or caused by any defect in any building, structure or other improvement thereon or in any equipment or other facility therein, or caused by or arising from any act or omission of Tenant or any of its agents, employees, licensees or invitees, or by or from any accident on the Leased Premises or any fire or other casualty thereon, or occasioned by the failure of Tenant to maintain the Leased Premises and all improvements thereto in a safe condition, or arising from any other cause except where caused by the sole negligence of Landlord, its agents or employees.
9.2. Indemnification of Landlord.
A. To the fullest extent permitted by law, Tenant shall, at Tenant's sole expense and with counsel reasonably acceptable to Landlord, defend, indemnify, and hold harmless Landlord and Landlord's officers, officials, employees and agents from and against all claims, (including demands, losses, actions, causes of action, damages, liabilities, expenses, charges, assessments, fines or penalties of any kind, and costs including consultant and expert fees, costs of investigation, court costs and attorney’s fees) from any cause, arising out of or relating (directly or indirectly) to this Lease, the tenancy created under this Lease, or the Premises, including without limitation:
i. The use or occupancy, or manner of use or occupancy, of the Premises or buildings by Tenant;
ii. Any act, error or omission, or negligence of Tenant or of any subtenant, invitee, guest, contractor or licensee or Tenant or any subtenant in, on, or about the Premises; iii. Tenant’s conducting or managing of its business;
iv. Any alterations, activities, work, or things done, omitted, permitted, allowed, or suffered by Tenant in, at, or about the Premises or buildings, including the violation of or failure to comply with any insurance requirements or any applicable laws, Attachment 1
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statues, ordinances, standards, rules, regulations, orders, decrees, or judgments in existence on the Commencement Date or enacted, promulgated, or issued after the date of this Lease, and;
v. Any breach or default in performance of any obligation on Tenant’s part to be performed under this Lease, whether before or during the term of this Lease or after its expiration or earliest termination.
B. This indemnification extends to and includes, without limitation, claims for:
i. Injury to any persons (including death at any time resulting from that injury); ii. Loss of, injury or damage to, or destruction of property (including loss of use at any time resulting from that loss, injury, damage, or destruction); and iii. All economic losses and consequential or resulting damage of any kind.
C. Tenant’s indemnification obligation hereunder shall survive the expiration or earlier termination of this Lease until all claims against Landlord involving any of the indemnified matters are fully, finally, and absolutely barred by the applicable statutes of limitations.
9.3. Liability Insurance. Tenant shall procure and maintain at all times during the term of this Lease, at its sole cost and expense, a policy or policies of comprehensive public liability insurance by the terms of which Landlord and Tenant are named as insured and are indemnified against liability for damage or injury to property or person, including death, of any person entering upon or using the Leased Premises or any improvements thereon or any part thereof, with a combined single limit coverage in an amount of not less than Two Million Dollars ($2,000,000.00) and annual aggregate coverage in an amount of not less than Two Million Dollars ($2,000,000.00) applying to injury to or death of any one or more persons arising from the same occurrence and for damage or injury to property. If Landlord's reasonably exercised judgment determines that the liability insurance amounts set forth herein become inadequate, then Landlord may, by written notice, require an increase in coverage commencing with the next policy anniversary date. Such public liability insurance policy or policies shall be stated to be primary and noncontributing with any insurance which may be carried by Landlord and shall contain a provision (provided such provisions are available without increased premium) that the Landlord, although named as an insured shall nevertheless be entitled to recover under that policy for any loss, injury or damage to the Landlord, its agents and employees or the property of such persons by reason of the negligence of Tenant. Worker's compensation insurance shall be in the amounts required by law.
9.4. Endorsements. The following endorsements shall be attached to the liability insurance policy:
A. If the insurance policy insures on an "accident" basis, it shall be changed to an "occurrence" basis.
B. The policy must cover personal injury, as well as bodily injury.
C. The coverage shall be at least as broad as comprehensive liability and broad form comprehensive general liability or "commercial" general liability.
D. The Landlord, its officers, agents, employees, and volunteers shall be named as insured under the coverage afforded with respect to liability arising out of activities performed by or on behalf of Tenant under this contract. The coverage shall contain no special limitations on the scope of protection afforded to Landlord, its officers, agents, employees and volunteers.
E. An endorsement shall be attached which states that the coverage is primary insurance and that any insurance or self-insurance fund maintained by or available to Landlord or any of its officers, agents, employees or volunteers shall be in excess of Tenant's insurance and shall not be called upon to contribute to a loss covered by the policy.
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F. The policy must provide that it shall not be canceled or changed or made the "retroactive date" of the policy or any renewal or replacement policy be changed without thirty (30) days' prior written notice to Landlord.
G. A cross-liability endorsement must be included to the effect that each insured is covered as if separate policies had been issued to each insured.
H. The liability coverage may be either on a blanket basis or a policy which specifically identifies this Lease with a contractual liability endorsement.
I. Any deductibles or self-insured retention must be declared to and approved by Landlord. At the option of Landlord, the insurer shall reduce or eliminate such deductibles or self-insured retention as respects the Landlord, its officers, agents, employees and volunteers or the Tenant shall procure a bond guaranteeing payment of losses and related investigation, claims administration and defense expenses.
J. If the policy or policies are written on a "claims made" basis, the retroactive date of such policies shall be maintained as the date this Lease was executed or earlier in time notwithstanding any renewals of such policies or changes in insurance carriers. Further, the reporting period for claims made under such policy or policies shall, at a minimum, continue through sixty (60) days after termination of this Lease.
9.5. Additional Requirements - Claims Made Policies.
A. Statement of Coverage. If the policy or policies are written on a "claims made" basis, the insurer shall provide Landlord with a statement specifically describing (A) the date coverage began under the policy and the retroactive date for claims received, (B) the reporting period(s) applicable to the policy, and (C) the incident, event and claims notice procedures applicable to the policy and the name and address of the person to whom notice of incidents, events and claims may be given.
B. Notice of Events and Claims. If the policy or policies are written on a "claims made" basis, Tenant shall give its insurance carrier and Landlord written notice of each and every event or incident occurring during the term of this Lease that may ripen into a claim. Notice shall be given no later than ten (10) days after such event or incident.
9.6. Fire Insurance. Tenant shall at all times during the term of this Lease and at its sole expense, procure and maintain in full force a policy or policies of standard fire and extended coverage insurance insuring all improvements on the Leased Premises in an amount equal to not less than the full replacement costs. Tenant agrees to reevaluate insurance coverage at three (3)-year intervals and to increase said coverage if it shall be less than the then full replacement cost of the improvements on the Leased Premises. The amount of the full replacement cost shall be determined in writing by the carrier of insurance then in force and shall be binding on the parties for the purpose of this paragraph. The insurance policies insuring against fire or other casualty shall include a "Loss Payee" endorsement issued in favor of Landlord and the interest of the holder of any "mortgage" executed by Tenant in connection with obtaining of any interim or permanent financing with respect to the Leased Premises, and said policies shall provide that any loss is payable jointly to Landlord, Tenant and the holder, if any, of a "mortgage" in the Tenant's interest under this Lease. Proceeds from any insurance policy shall be used in accordance with the provisions of this Lease dealing with use of insurance funds for repair and restoration.
9.7. Certificates or Policies of Insurance. All policies of insurance procured and maintained by Tenant hereunder shall be issued by companies authorized to do business in California having not less than Best's A rating and shall be issued in the name of the Landlord and Tenant for the mutual and joint benefit and protection of the parties. Executed copies of all insurance policies or a certificate thereof shall be delivered to Landlord on the Commencement Date and shall contain a provision that not less than thirty (30) days' written notice shall be Attachment 1
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given to Landlord prior to the cancellation, reduction of coverage, expiration or any material change in any such policy.
9.8. Use of Insurance Funds for Repair and Restoration. In the event any buildings, structures or improvements located on the Leased Premises are damaged by fire or other casualty, any such sums as are received from or on account of any policy of insurance covering the same shall, except as provided in Section 10 below, be expended for the restoration, repair or replacement of said buildings, structures or improvements.
9.9. Failure to Provide Insurance. If Tenant fails or refuses to procure or to maintain insurance as required by this Lease or fails or refuses to furnish Landlord with required proof that the insurance has been procured and is in force and paid for, Landlord shall have the right at Landlord's election, without notice, to procure and maintain such insurance. The premiums paid by Landlord shall be treated as added rent due from Tenant with interest at the Bank of America prime rate, to be paid within thirty (30) days of demand. Landlord shall give prompt notice of the payment of such premiums, stating the amounts paid and the names of the insurer or insurers.
9.10. Waiver of Subrogation. The parties hereby release each other, and their respective representatives, from any claims for damage to any person or to the Premises and the improvements which may be located upon the Premises and to the fixtures, personal property, Tenant's improvements and alterations of Tenant in or on the Premises and the improvements which may be located upon the Premises that are caused by or result from risks insured against under any insurance policies carried by the parties hereto and in force at the time of any such damage. Each party hereto shall cause each insurance policy obtained by it to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any policy, provided obtaining such a waiver in each such policy is then available at a reasonable charge.
10. REPAIR AND RESTORATION
If during the term of this Lease any building or improvement on the Leased Premises or any part thereof shall be damaged or destroyed by fire or other casualty, Tenant shall, at its sole cost and expense, repair or restore the same according to the original plans thereof or to such modified plans as shall be previously approved in writing by Landlord pursuant to Section 8. If such damage or destruction occurs during the last eighteen (18) months of the Lease term Tenant shall have no duty to repair or restore, and if Tenant elects not to repair or restore, this Lease shall terminate and Landlord shall receive all insurance proceeds that are attributable to those improvements that would become the property of the Landlord pursuant to Section 17. Such work of repair or restoration shall be commenced within one hundred twenty (120) days after the damage or loss occurs and shall be completed with diligence but not longer than one (1) year after such work is commenced, provided, however, that the time for completion of such repair and restoration shall be extended as appropriate in accordance with the provisions of Section 21.15 below. If insurance proceeds provided for above shall be insufficient for the purpose of such restoration and repair, or if the casualty is one not required to be insured against, then Tenant shall make up the deficiency out of its own funds. Tenant waives the provisions of Civil Code Sections 1932(2) and 1933(4) with respect to any destruction of the Premises.
11. ASSIGNMENT AND SUBLETTING
11.1. Restriction of Assignment. Except as provided in Section 19 of this Lease entitled "Hypothecation of Leasehold Interest," Tenant shall not encumber, assign or otherwise transfer this Lease, or any right or interest hereunder, or in or to any of the improvements constructed or installed on the Leased Premises, in whole or in part, without the prior written consent of Landlord. Landlord's consent will not be unreasonably withheld. If Tenant is a corporation or a partnership, any change in Tenant which would be a "change in ownership" pursuant to California Revenue and Taxation Code Sections 60 et seq. shall be deemed an assignment subject to Landlord's consent. It shall not be unreasonable for Landlord to withhold or condition its consent based on the prospective assignee's financial strength, credit history or any other factor which Landlord reasonably believes germane to a tenant's ability and willingness to perform the obligations of this Lease. No such assignment shall release Tenant of further liability under this Lease unless express written approval is signed by Landlord.
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11.2. Restriction on Subleasing. Tenant may not sublease all or any portion of the Leased Premises or the improvements constructed or installed on the Leased Premises without the prior written consent of Landlord.
Landlord's consent shall not be unreasonably withheld.
Any such sublease shall provide: (A) such subleasing shall be subject to the terms of this Lease; (B) such subleasing shall comply with all applicable statutes and regulations, including, without limitation, the California Subdivision Map Act and the provisions of Section 20 hereof; (C) all building improvements and alterations constructed on the Leased Premises shall have been approved by Landlord pursuant to Section 8 of this Lease; (D) Tenant shall remain liable under this Lease; (E) subtenant shall not be permitted to further assign or sublet the Leased Premises to any person or entity, including the affiliated entities stated above; and (F) each sublease shall contain a provision satisfactory to Landlord requiring the subtenant, if Landlord shall so demand as provided below, to attorn to Landlord if Tenant defaults under this Lease, and if the subtenant is notified of Tenant's default and instructed to make subtenant's rental payments to Landlord, but Landlord shall have no obligation to recognize the subtenant or to allow any subtenant to remain in possession upon the default of Tenant. Tenant's failure to comply with any of the foregoing requirements shall render any such sublease void.
11.3. Effect of Failure to Comply. Except as provided above, no encumbrance, assignment or other transfer, whether voluntary, involuntary, by operation of law, under legal process, through a receivership, bankruptcy or otherwise, shall be valid or effective without the prior written consent and approval of Landlord. Except as provided in Section 11.1 and 11.2, if Tenant attempts to make or allow to be made any subleasing, encumbrance, assignment or other transfer except in accordance with the provisions of this Section 11, then any of the foregoing events shall be deemed a breach of the conditions and restrictions of this Lease, and upon such breach, Landlord may, at its option, terminate this Lease at once by written notice, and upon such termination this Lease shall end and be of no further force.
12. CONDEMNATION
If, during the term of this Lease there is a taking, or transfer of, or damage to all or any part of the Leased Premises (Leased Premises as used herein shall include all appurtenant interests such as access rights) for a public use by any individual or entity, public or private, possessing the power of eminent domain, whether by condemnation proceedings or otherwise (hereinafter referred to as "appropriation"), the rights and obligations of Landlord and Tenant with regard to such appropriation shall be governed by the provisions of this Section.
12.1. Date of Taking. The date of taking, as used in this Section, is defined as the earliest of the following dates: (A) the date legal possession is taken, which is defined as the date, if any is established, after which the condemnor may take possession of the property as stated in an order authorizing the condemnor to take possession; (B) the date a final order of condemnation or final judgment is filed or recorded or the date a deed is recorded in the event of a voluntary sale; and (C) the date physical possession of the property is taken.
12.2. Total Taking. Total taking means an appropriation of the entire Leased Premises or so much thereof as to prevent or substantially impair the conduct of Tenant's business unless Tenant elects to continue the Lease in effect. If during the term of this Lease there is an appropriation of the Leased Premises which amounts to a total taking as herein defined, then the leasehold estate of Tenant in and to the Leased Premises shall cease and terminate as of the date of such taking, and all rentals and other charges payable by Tenant to Landlord hereunder and attributable to the Leased Premises shall be paid up to the date of such taking.
12.3. Partial Taking. The term "partial taking" shall mean the taking of a portion only of the Leased Premises which does not constitute a total taking as defined above. If during the term of this Lease there shall be a partial taking of the Leased Premises, this Lease shall terminate as to the portion of the Leased Premises so taken at the date of taking as herein defined, but said Lease shall continue in force and effect as to the remainder of the Leased Premises. The rental payable hereunder by Tenant shall, as of the date of taking, be adjusted so that Tenant shall be required to pay for the remainder of the term only such portion of such rent as the value of the part of the Leased Premises remaining after the taking bears to the value of the entire Leased Premises at the date of taking.
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12.4. Abandonment of Proceedings. In the event the condemning agency shall abandon an eminent domain proceeding, either party hereto shall have the right to contest the condemnor's abandonment and a right to its respective costs and disbursements as defined and provided for in California law. If after the condemnor takes possession or the Tenant moves from the property sought to be condemned in compliance with an order of possession, the condemnor abandons the proceeding as to such property or a portion thereof, or if it is determined that the condemnor does not have authority to take such property or portion thereof by eminent domain and the condemnor is required by law to deliver possession of such property or such portion thereof to the party entitled to the possession thereof and pay damages as provided for in California law, then Tenant shall receive the award for costs and damages incurred by reason of Tenant being removed from possession of the Premises, but Tenant shall be entitled to retake possession of the Premises and, in the event of such repossession by Tenant, all of the terms of this Lease shall remain in operation and effect.
12.5. Allocation of Award. All compensation and damages awarded for the taking of the Leased Premises or any portion thereof shall, except as otherwise herein provided, belong to and be the sole property of Landlord.
However, any award that may be made for the taking of or injury to the Approved Improvements, and all other improvements constructed by Tenant on the Leased Premises shall belong to Tenant. Tenant shall be entitled to any award for damage to Tenant's business or on account of any cost or loss Tenant may sustain in the removal of Tenant's fixtures, equipment and furnishings, or as a result of any alterations, modifications or repairs which may be reasonably required by Tenant in order to place the remaining portion of the Leased Premises not so condemned in a suitable condition for the continuance of Tenant's tenancy. Tenant shall also be entitled to that portion of any award that may be attributable to any severance damages to the remaining leasehold interest, to any improvements constructed by Tenant, and to good will.
12.6. Cost. Each party shall bear his own costs, attorneys' fees, appraiser's fees and all other costs in connection with any matter contained in this Section, except as may be otherwise provided.
12.7. Right of Entry. Neither party hereto shall grant a right of entry to any condemnor without the written consent of the other party hereto.
13. DEFAULT
The occurrence of any one or more of the following events shall constitute a default under this Lease by Tenant:
13.1. Events of Default. The occurrence of any of the following shall constitute an event of default on the part of the Tenant:
A. Tenant fails to make the payment of any installment of rent or other sum when due hereunder (“Monetary Default”) within ten (10) days from when due.
B. Failure to perform any obligation, agreement or covenant under this Lease (“Non-Monetary Default”) and such failure continues for fifteen (15) days after written notice of such failure, or if such Non-Monetary Default cannot be cured within fifteen (15) days, Tenant has not commenced corrective action and prosecuted the same to completion with due diligence, or the Non-Monetary Default is of such a nature that it cannot be cured by any action of Tenant.
C. Failure to pay any insurance premium, lien, claim, demand, judgment or other charge provided for in this Lease to be paid or caused to be paid by Tenant at the time and in the manner as provided for in this Lease.
D. Failure to maintain the Premises or cause the same to be maintained as provided for in this Lease.
E. Abandonment or vacation of the Premises for a continuous period in excess of thirty (30) days without payment of rent. Tenant waives any right to notice Tenant may have under Section 1951.3 of the Civil Code of the State of California, the terms of this Section 13.1 being deemed such notice to Tenant as required by said Section 1951.3.
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F. Default by Tenant under the terms of any mortgage on the estate of Tenant.
G. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of thirty (30) days. If under applicable law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease.
H. The attachment, execution or other judicial seizure of all or substantially all of Tenant's assets or Tenant's leasehold of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of fifteen (15) days after the levy thereof.
I. The admission by Tenant in writing of its inability to pay its debts as they become due; J. A general assignment by Tenant for the benefit of creditors.
K. Failure to maintain compliance with Economic Development Administration Civil Rights Provisions and Certificate on Non-relocation.
L. Failure to complete construction of proposed development outlined in Exhibit C, which is attached hereto and made a part hereof, within 5 years.
14. REMEDIES IN EVENT OF DEFAULT
14.1. Termination. In the event of the occurrence of any event of default, Landlord shall have the right to give a written termination notice to Tenant, and on the date specified in such notice, Tenant's right to possession shall terminate, and this Lease shall terminate unless on or before such date all Rent in arrears and all costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other events of default of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord.
At any time after such termination, Landlord may recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, including any subtenant or subtenants notwithstanding Landlord's consent to any sublease, by any lawful means, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at law or equity by any reason of Tenant's default or of such termination. Landlord hereby reserves the right, but shall not have the obligation, to recognize the continued possession of any subtenant. The delivery or surrender to Landlord by or on behalf of Tenant of keys, entry codes, or other means to bypass security at the Premises shall not terminate this Lease.
14.2. Continuation after Default. Even though an event of default may have occurred, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession under Section 14.1 hereof. Landlord shall have the remedy described in California Civil Code Section 1951.4 ("Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations"), or any successor code section.
Accordingly, if Landlord does not elect to terminate this Lease on account of any event of default by Tenant, Landlord may enforce all of Landlord's rights and remedies under this Lease, including the right to recover Rent as it becomes due. Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver under application of Landlord to protect Landlord's interest under this Lease or other entry by Landlord upon the Premises shall not constitute an election to terminate Tenant's right to possession.
14.3. Damages After Default. Should Landlord terminate this Lease pursuant to the provisions of Section 14.1 hereof, Landlord shall have the rights and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor code sections. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under applicable law or at equity, Landlord Attachment 1
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shall be entitled to recover from Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination, (2) the worth at the time of award of the amount by which the unpaid Rent and other amounts that would have been earned after the date of termination until the time of award exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided; (3) the worth at the time of award of the amount by which the unpaid Rent and other amounts for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided; and (4) any other amount and court costs necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The "worth at the time of award" as used in (1) and (2) above shall be computed at the Applicable Interest Rate (defined below). The "worth at the time of award" as used in (3) above shall be computed by discounting such amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). If this Lease provides for any periods during the Term during which Tenant is not required to pay Base Rent or if Tenant otherwise receives a Rent concession, then upon the occurrence of an event of default, Tenant shall owe to Landlord the full amount of such Base Rent or value of such Rent concession, plus interest at the Applicable Interest Rate, calculated from the date that such Base Rent or Rent concession would have been payable.
14.4. Landlord’s Option to Cure. Notwithstanding the foregoing, if Tenant fails to provide necessary repair and maintenance of the Premises and all improvements thereon, Landlord shall have the right but not the obligation, after notice provided for above, and failure of Tenant to cure or commence and diligently pursue a cure to such default, to enter the Premises and take all corrective action necessary in the sole judgment of Landlord. Any such entry shall be at the sole risk and expense of Tenant. Tenant shall immediately, upon presentation of a statement therefor, reimburse Landlord for all costs incurred by Landlord in taking such corrective action with interest on said sums from the date of payment by Landlord at the lower of: (A) the highest rate allowed by law; or (B) two points over the prime rate charged from time to time by the Bank of America, or if the Bank of America no longer exists, an equivalent institution. Nothing in this Section shall: (i) require Landlord to take any corrective action on the Premises; (ii) diminish the rights and remedies of Landlord under this Lease, whether or not Landlord elects to take such corrective action; and (iii) cause a waiver by Landlord of any of its rights and remedies under this Lease. Any such reentry shall be allowed by Tenant without hindrance, and Landlord shall not be liable in damages for any such reentry, or be guilty of trespass or forcible entry.
14.5. Remedies Cumulative. All of Landlord’s rights, privileges and elections or remedies are cumulative and not alternative, to the extent permitted by law and except as otherwise provided herein.
14.6. Replacement of Statutory Notice Requirements. When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notice required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by this Section 14.6 shall replace and satisfy the statutory service-of-notice procedures, including those required by California Code of Civil Procedure Section 1162 or any similar or successor statute.
15. LANDLORD'S RIGHT TO SELL ITS INTEREST
15.1. Landlord's Right to Sell. Landlord shall have the right to sell all of its interest in the Leased Premises and any lease with respect thereto. If Landlord chooses to exercise such right to sell, and whether such sale is to a public entity or non-public entity, Landlord shall conduct the sale in accordance with the legal requirements imposed upon a municipality by law.
15.2. Landlord's Release from Liability Upon Sale. In the event of any such sale by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability under all of its covenants and unaccrued obligations contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale.
Attachment 1
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16. ESTOPPEL CERTIFICATES
Landlord and Tenant shall, respectively, at any time and from time to time upon not less than ten (10) days' prior written request by the other, deliver to the requesting party an executed and acknowledged statement in writing certifying:
16.1. That this Lease is unmodified and in full force and effect (or if there has been any modification(s) thereof that the same is in full force and effect as modified, and stating the nature of the modification or modifications);
16.2. That to its knowledge the requesting party is not in default under this Lease (or if any such default exists, the specific nature and extent thereof),
16.3. The date to which rent and other charges have been paid in advance, if any; and
16.4. Such other statements as Landlord or Tenant reasonably requests.
Each certificate delivered pursuant to this Section may be relied on by any prospective purchaser or transferee of the Leased Premises or of Landlord's or Tenant's interest hereunder or by any fee mortgagee of the Leased Premises or of Landlord's or Tenant's interest hereunder or by any assignee of any such mortgagee. Tenant shall be liable to Landlord for all damages suffered by Landlord attributable to Tenant's failure to timely deliver an accurate estoppel, including loss or renegotiation of a sale, financing or bond financing.
17. OWNERSHIP OF IMPROVEMENTS
At the expiration or sooner termination of the term of this Lease, all improvements pertaining to the real property shall become the property of Landlord.
18. SUBORDINATION FOR BENEFIT OF LANDLORD
If Landlord desires this Lease to be subordinated to any mortgage, deed of trust or other encumbrance ("Fee Mortgage") now or hereafter placed upon the Leased Premises by Landlord, and all advances, whether obligatory or optional made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof, this Lease, at Landlord's election, shall be subordinate to any such Fee Mortgage provided Landlord first obtains from the lender a written agreement that provides substantially as follows: As long as Tenant performs its obligations under this Lease, no foreclosure of, deed given in lieu of foreclosure of, or sale under the encumbrance, and no steps or procedures taken under the encumbrance, shall affect Tenant's rights under this Lease.
Subject to the foregoing, Tenant agrees to execute any documents required to effectuate such subordination, and failing to do so within ten (10) days after Landlord's written request to Tenant therefore, does hereby irrevocably appoint Landlord as Tenant's attorney-in-fact in Tenant's name to do so.
19. HYPOTHECATION OF LEASEHOLD INTEREST
Tenant is hereby given the right by Landlord, in addition to any other rights herein granted, without Landlord's prior written consent, to mortgage its interest in this Lease, under one or more leasehold Mortgage(s) and assign its interest in this Lease, as collateral security for such Mortgage(s) to secure any bona fide loan upon the condition that all rights acquired under such leasehold Mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights and interest of Landlord herein, none of which covenants, conditions or restrictions is or shall be deemed waived by Landlord by reason of the right given so to mortgage such interest in this Lease, except as expressly provided herein. If Tenant shall mortgage this leasehold, and if the holder(s) of such Mortgage(s) shall, within thirty (30) days of execution, send to Landlord a true copy thereof, together with written notice specifying the name and address of the Mortgagee(s) and the pertinent recording data with respect to such Mortgage(s), Landlord agrees that (effective upon receipt of such notice) so long as any such leasehold Mortgage(s) shall remain unsatisfied of record or until written notice of satisfaction is given by the holder(s) to Landlord, the following provisions shall apply:
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19.1. Except for the natural expiration of the term of this Lease, there shall be no cancellation, surrender or material modification of this Lease by joint action of Landlord and Tenant without the prior consent in writing of the leasehold Mortgagee(s);
19.2. Landlord shall, upon serving Tenant with any notice of default, simultaneously serve a copy of such notice upon the holder(s) of record of such leasehold Mortgage(s). The leasehold Mortgagee(s) shall thereupon have sixty (60) days, after service on it of such a notice, either to cure such default or breach, if the same can be cured by the payment of money, or if such default or breach is not so curable or cannot be remedied within said sixty (60) day period, if such holder, within said period, shall (A) commence in good faith to cure such default or breach if curable and thereafter diligently prosecute the same to completion, or (B) institute proceedings for the foreclosure of such mortgage and thereafter diligently prosecute the same to completion; provided such holder keeps and performs all of the covenants and conditions of this Lease herein provided to be kept and performed by Tenant, and capable of being performed by such holder, until such time as Tenant or such holder shall cure any defaults hereunder (if curable) or until the leasehold hereunder shall be either sold upon foreclosure pursuant to any such mortgage or shall be released from said mortgage or reconveyed thereunder.
The time periods set forth immediately above shall be extended for delays occasioned by the application of any law, rule, court order or court decree restraining or prohibiting such leasehold Mortgagee(s) from taking any such action. If such leasehold Mortgagee(s) undertakes to so cure any such default by Tenant in accordance with the terms and conditions set forth in this subsection 19.2, Landlord shall not terminate this Lease. If the leasehold Mortgagee(s) has fully complied with the foregoing provisions of this subsection 19.2 but all such defaults of Tenant have not been cured by the time that Tenant's interest under this Lease is sold by a judicial or nonjudicial foreclosure sale or by deed in lieu of foreclosure, the party who acquires such leasehold estate and interest through such foreclosure sale or deed in lieu of foreclosure shall not be in default hereunder by reason of such uncured defaults, provided such party diligently prosecutes to completion the curing of all such defaults which are curable by such party.
19.3. Notwithstanding anything contained herein to the contrary, if Landlord shall elect to terminate this Lease by reason of any default of Tenant, the leasehold Mortgagee(s) shall have the right to postpone and extend the specified date for termination of this Lease as fixed by Landlord in its notice of termination, for a period of six (6) months, provided that such leasehold Mortgagee(s) shall cure or cause to be cured any then existing money defaults and meanwhile pay the rent and comply with and perform all of the other terms, conditions and provisions of this Lease on Tenant's part to be complied with and performed, and capable of being performed by such holder, other than past nonmonetary defaults, and provided further that the leasehold Mortgagee(s) shall forthwith take steps to acquire or sell Tenant's interest in this Lease by foreclosure of the Mortgage(s) or otherwise and shall prosecute the same to completion with all due diligence. If at the end of said six (6) month period the leasehold Mortgagee(s) shall be actively engaged in steps to acquire or sell Tenant's interest herein, the time of said Mortgagee(s) to comply with the provisions of this Section 19.3 shall be extended for such period as shall be reasonably necessary to complete such steps with reasonable diligence, but in no event shall such extension exceed an additional twelve (12) months.
19.4. Landlord agrees that the name of the leasehold Mortgagee(s) may be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant hereunder on condition that the insurance proceeds are to be applied in the manner specified in this Lease and that the leasehold Mortgagee(s) or collateral document shall so provide.
19.5. Nothing contained herein shall require the leasehold Mortgagee(s) to cure any default of Tenant hereunder, but such failure to cure and proceed in accordance with this Section 19 shall leave Landlord free to terminate this Lease and to pursue all of its rights against Tenant.
19.6. Any act required to be performed by Tenant pursuant to the terms of this Lease may be performed by any leasehold mortgagee on Tenant's behalf and the performance of such act shall be deemed to be performance by Tenant and shall be acceptable as Tenant's act by Landlord.
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20. COMPLIANCE WITH FEDERAL REQUIREMENTS
20.1. Tenant, for itself, its heirs, personal representatives, successors in interest, sub-lessees 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, Tenant shall maintain and operate such facilities and services in compliance with all other requirements imposed 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, or as said Regulations may be amended.
20.2. Tenant, 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:
(A) 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; (B) 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 (C) that Tenant 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 FederallyAssisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and assaid Regulations may be amended.
20.3. Tenant agrees that it shall insert Sections 20.1 and 20.2 in any lease agreement by which said Tenant 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.
21. MISCELLANEOUS
21.1. Attorneys' Fees. In the event any action is brought by Landlord to recover any rent due and unpaid hereunder or to recover possession of the Leased Premises, or in the event any action is brought by Landlord or Tenant against the other to enforce or for the breach of any of the terms, covenants or conditions contained in this Lease, the prevailing party shall be entitled to recover reasonable attorneys' fees to be fixed by the Court, together with costs of suit therein incurred.
21.2. Waiver. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions and conditions hereof. No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of any such right or remedy or of any default by Tenant under this Lease. The various rights and remedies reserved to Landlord herein including those not specifically described in this Lease shall be cumulative and, except as otherwise provided by California statutory law in force at the time of execution of this Lease, Landlord may pursue any or all of such rights and remedies whether at the same time or otherwise.
21.3. Holding Over. If Tenant shall hold over the Leased Premises after the expiration of the term hereof with the consent of Landlord, either express or implied, such holding over shall be construed to be only a tenancy from month to month, subject to all the covenants, conditions and obligations hereof, except that Tenant shall pay to Landlord 200% of Base Rent due as of the expiration of the term; terminable on thirty (30) days written notice given at any time by either party; provided, however, that nothing herein contained shall be construed to give Tenant any rights to so hold over and to continue in possession of the Leased Premises after the expiration of the term hereof.
Attachment 1
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21.4. Surrender at End of Term. Upon the end of the term of this Lease, as provided herein, or any extension thereof, or sooner termination of this Lease, Tenant shall surrender to Landlord all and singular the Leased Premises, together with all improvements, except as hereinabove provided, and all fixtures appurtenant to the real estate in broom-clean, good condition, reasonable wear and tear excepted.
21.5. Lease Binding Upon Successors and Assigns. Subject to the limitations on assignment and subleasing, each of the terms, covenants and conditions of this Lease shall extend to and be binding on and inure to the benefit of not only Landlord and Tenant, but each of their successors and assigns. Whenever in this Lease reference is made to either Landlord or Tenant, the reference shall be deemed to include, wherever applicable, the successors and assigns and such parties the same as if in every case expressed.
21.6. Inspection. Landlord reserves the right for Landlord and Landlord's agents and representatives to enter upon the Leased Premises at any reasonable time upon five (5) days prior written notification for the purpose of attending to Landlord's interest hereunder, and to inspect the Leased Premises.
21.7. Relationship of Parties. The relationship of the parties hereto is that of Landlord and Tenant, and it is expressly understood and agreed that Landlord does not in any way nor for any purpose become a partner of Tenant or a joint venturer with Tenant in the conduct of Tenant's business or otherwise.
21.8. Time of the Essence. Time is expressly declared to be of the essence of this Lease.
21.9. Memorandum of Lease. This Lease shall not be recorded, but the parties agree to execute and deliver a Memorandum of this Lease in recordable form.
21.10. Quitclaim. At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord within five (5) days after written demand from Landlord to Tenant any quitclaim deed or other document required by any reputable title company to remove the cloud of this Lease from the real property subject to this Lease.
21.11. Number and Gender. Whenever the singular number is used in this Lease and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and the word "person" shall include corporation, firm or association. If there is more than one Tenant, the obligations imposed under this Lease upon Tenant shall be joint and several.
21.12. Headings and Titles. The marginal headings or titles to the Sections of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part of this Lease.
21.13. Compliance with Governmental Regulations. Tenant shall, at its own cost and expense, promptly and properly, comply with and execute, including the making of any alteration to the Leased Premises, all orders, regulations, laws and requirements of all governmental authorities arising from the use or occupancy of, or applicable to, the Leased Premises ("Applicable Laws").
21.14. Entire Agreement; Amendments. This Lease, including the exhibits attached hereto and all documents referenced herein, all of which are incorporated herein by reference, contain the entire agreement of the parties hereto with respect to the matters covered hereby, and no other previous agreement, statement or promise made by any party hereto which is not contained herein shall be binding or valid. No amendment or modification to this Lease shall be effective unless in writing and signed by both Landlord and Tenant.
21.15. Force Majeure. Except as to the payment of rent, neither of the parties hereto shall be chargeable with, liable for, or responsible to, the other for anything or in any amount for any delay caused by fire, earthquake, explosion, flood, hurricane, the elements, acts of God, or the public enemy, action or interference of governmental authorities or agents, war, invasion, insurrection, rebellion, riots, strikes, or lockouts or any other Attachment 1
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cause whether similar or dissimilar to the foregoing, which is beyond the control of such parties and any delay due to said causes or any of them shall not be deemed a breach of or default in the performances of this Lease.
21.16. Disclaimer of Representation. Except as otherwise specifically provided herein, Landlord has made no representations or warranties to the Tenant concerning the Leased Premises, the present use thereof or the suitability for Tenant's intended use of the property. The foregoing disclaimer includes, without limitation, topography, climate, air, water, water rights, utilities, present and future zoning, soil, subsoil, drainage, access to public roads, proposed routes of roads, or extension thereof, or effect of any state or federal environmental protection laws or regulations. Tenant represents and warrants to Landlord that he and his representatives have made or will make their own independent inspection and investigation of the Leased Premises and Tenant, in entering into this Lease, is relying solely on such inspection and investigation. No patent or latent physical condition of Leased Premises, whether or not known or discovered, shall affect the rights of either party hereto.
Any agreement, warranties or representations not expressly contained herein shall in no way bind either Tenant or Landlord. Landlord and Tenant waive any right of rescission and all claims for damages by reason of any statement, representations, warranty, promise and agreement, if any, not contained in this Lease.
21.17. Priority of Lease. This Lease is subject and junior to all existing easements, covenants, conditions and restrictions and other matters and encumbrances of record.
21.18. Late Charge. Both Landlord and Tenant acknowledge and agree that Landlord is dependent on the revenue from Tenant for Airport operations and that it would be extremely difficult to estimate the damages to Landlord from late payment by Tenant. If any installment of Base Rent or other payment due from Tenant is not received by Landlord within ten (10) days of the date upon which it is due, Tenant shall pay to Landlord an additional charge of ten percent (10%) of the overdue payment as a late charge.
21.19. Interest on Past Due Obligations. Any amount due from Tenant to Landlord which is not paid when due shall bear interest at an annual rate equal to the higher of (A) ten percent (10%) per annum, or (B) five percent (5%) per annum in excess of the prevailing rate established by the Federal Reserve Bank at San Francisco on advances to member banks on the twenty-fifth (25th) day of the month preceding the Commencement Date (but not more than the maximum rate permissible by law), from the due date until paid, but the payment of such interest shall not excuse or cure any default by Tenant. Said interest is in addition to the late charge due pursuant to Section 21.18.
21.20. Rules and Regulations. Tenant shall comply, and shall ensure that its employees, visitors and guests comply, with the Rules and Regulations established by Landlord for use of the Airport or the Premises, as the same may be amended from time to time by Landlord (“Airport Rules and Regulations”). Landlord has provided Tenant with a copy of the Airport Rules and Regulations in effect as of the Commencement Date, and shall provide Tenant with a copy of any and all rules and regulations and any amendments thereto that may be established by Landlord during the term hereof. As required by the Airport Rules and Regulations, Tenant shall maintain on the Premises a copy of the Airport Rules and Regulations and make it available to all persons upon request. Landlord shall not be responsible to Tenant for the nonperformance of any other tenant or occupant of the Airport of any of said Airport Rules and Regulations.
21.21. Airport Operation. It is understood and agreed that general control over said Airport and all flying activities in connection therewith are vested by law in the City acting by and through its City Council, Committees and Officers appointed by such City Council. In the general operation of any activities conducted under the terms of this Lease, Tenant agrees to comply with the Airport Rules and Regulations and all other reasonable rules and regulations adopted by the City for the use and operation of the Airport which are not in conflict with the terms of this Lease.
21.22. Continued Operation. Save and except as to acts beyond its control, the City does hereby obligate itself during the Term hereof to continue the operation of said Airport as a public airport, consistent with public regulations.
21.23. Payments and Notices. Any notice to be given or other document to be delivered by either party to the other party may be given by personal delivery, generally recognized overnight courier, prepaid, or may be Attachment 1
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deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed to the party for whom intended as follows:
To Landlord: City of Paso Robles
Municipal Airport
1000 Spring Street
Paso Robles, CA 93446
To Tenant: XXXX
Either party hereto may from time to time by written notice to the other party designate a different address which shall be substituted for the one specified above. Notices and documents shall be served upon receipt or, if any notice or other document is sent by registered or certified mail, as provided above, the same shall be deemed served or delivered seventy-two (72) hours after the mailing thereof.
This Municipal Airport Property Lease / Nonsubordinated Airport Property Lease has been executed on this ______________ day of _________________, XXXX
Landlord: Tenant:
CITY OF PASO ROBLES XXXX
____________________________________ _____________________________________ Ty Lewis, City Manager XXXX
Attest:
_____________________________________
Melissa Boyer, City Clerk
Approved as to Form:
______________________________________
Elizabeth Hull, City Attorney
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EXHIBIT ‘A’
Legal Description of Leased Premises
A leasehold estate described as follows:
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EXHIBIT B
HAZARDOUS MATERIALS LIST
None Submitted.
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EXHIBIT C
Building/Development Plans
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PASO ROBLESMUNICIPAL AIRPORT
AIRPORT LEASING POLICY
CITY OF PASO ROBLES
A POLICY TO GOVERN THE DRAFTING
AND MANAGEMENT OF LEASES
AT THE
PASO ROBLES MUNICIPAL AIRPORT
Adopted June 6, 2017
REVISED MAY 2021
Re-Revised February 2023
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AIRPORT LEASING
POLICY
Contents
Section 1 General Statement of Policy .................................................................................1 Section 2 Definitions ........................................................................................................... 1 Section 3 Exclusive Rights................................................................................................... 3 Section 4 Requests for Lease ................................................................................................ 3 Section 5 Application Process ............................................................................................. 3 Section 6 Action on Application. ......................................................................................... 4 Section 7 Competitive Request for Proposal Process........................................................... 5 Section 8 Standards for Leasing Airport Property................................................................ 6 Section 9 Written Lease ....................................................................................................... 11 Section 10 FAA Required Lease Provisions.......................................................................... 12 Section 11 Rentals, Rates, Fees, and Charges ....................................................................... 13 Section 12 Construction of Leasehold Improvements...........................................................14 Attachment 2
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Section 1 - General Statement of Policy
Airport Operated for Benefit of the Public. Through its Leases, and by other means, the City will ensure that the Airport is operated for the use and benefit of the public and is made available to all types, kinds and classes of aeronautical activities.
As an Airport Sponsor and recipient of Federal Aviation Administration (FAA) Airport Improvement Program (AIP) grants, the City of Paso Robles (hereinafter, City) is obligated to operate the Paso Robles Municipal Airport for the use and benefit of the public and to make it available to all types, kinds, and classes of aeronautical activities on fair and reasonable terms and conditions without unjust discrimination. Further, the City leases property at the Airport for certain non-aeronautic uses to provide additional revenue support to the airport. Per 49 USC 47107(b) and 47133(a), Grant Assurances “rRevenues generated by a public airport will beare required to be expended for the capital or operating costs of – (A) the airport, (B) the local airport system, (C) other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property.” economic development to the community, and funding for the aeronautic activities at the Airport. Given these obligations, the City hereby establishes this policy to set forth a standardized system and process for leasing property at the Airport.
In furtherance of this objective, the City leases airport property based on the following principles:
• Promotion of aeronautic and aeronautic-compatible enterprise fund activities for the benefit of the Paso Robles-area community
• Preservation of the City’s investment in the Airport
• Facilitation of orderly management of the Airport
• Ensuring consistent quality of facilities at the Airport • Providing equitable and uniform treatment of all Lessees • Ensuring compliance with applicable laws, regulations, executive orders, policies, guidelines, and requirements as they relate to the application and acceptance of Federal Funds
• Enabling conformity with the FAA approved Airport Layout Plan and Exhibit ‘A’, Airport Property Map
• Making the Airport available for public use on reasonable terms without unjust discrimination
• Maintaining a fee and rental structure with the goal of financial self-sufficiency for the Airport
Persons seeking to provide a Commercial Aeronautical Activity at the Airport shall also be obligated to adhere to the requirements set forth in the Airport Minimum Standards, Airport Rules & Regulations, and current FAA Guidelines and Regulations.
In accordance with FAA Leasing Guidelines, Grant Assurances and general FAA policy statements, ownership of all lease site development and improvements shall revert to the Airport at no cost to the Airport at the conclusion of the lease. Lease length shall be established in order to allow tenants Attachment 2
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to recuperate their initial investment, long term leases beyond the life of the asset will not be entertained.
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At the conclusion of the lease term, a new lease agreement may be entered into with the site occupants. The premises are considered to be owned by the Airport and the lease terms will reflect that condition accordingly. The rental rates charged and the lease term allowed will be based on airport ownership of the premises.
Section 2 - Definitions
For purposes of this Leasing Policy, the following definitions shall apply:
Aeronautical Activities or Services: means any activity or service conducted at the Airport that involves, makes possible or is required for the operation of aircraft, or that contributes to or is required for the safety of such operations.
Airport: means Paso Robles Municipal Airport and all of the area, buildings, facilities, and improvements within the exterior boundaries of such airport as it now exists, or as it may hereafter be extended or enlarged.
Airport Manager: means the individual employed and authorized by the City Manager to oversee the operations, maintenance and finances of the Airport, or the person authorized by the Airport Manager to act for or on behalf of the Airport Manager, with respect to any particular matter.
The Airport Manager is the primary contact for the FAA.
Airport Leasing Policy: means this document as established and amended from time to time by the City, to govern the safe, orderly, and efficient leasing of Airport property.
Airport Layout Plan (ALP): means the FAA approved and Airport adopted drawing, as may be amended from time to time, which reflects an agreement between the FAA and Airport depicting the physical layout of the Airport. The ALP identifies the location and configuration of current and proposed runways, taxiways, buildings, roadways, utilities, navaids, etc. The ALP also includes the proposed allocation of Airport land and/or improvements to specific uses and/or development. The ALP reflects the existing and proposed allocation of areas of the Airport to specific operations and support functional usage.
Airport Minimum Standards: means the “Airport Minimum Standards for Commercial Aeronautical Service Providers at the Paso Robles Municipal Airport” (http://www.prcity.com/government/departments/publicworks/airport/pdf/MinimumStandards. pdf) as adopted by the City, and amended from time to time.
Airport Sponsor: means the City of Paso Robles under the FAA guidelines and requirements to operate a public use airport facility.
Applicant: means a Person submitting an application to the City to Lease Airport property.
City: means the City of Paso Robles, owner and operator of the Airport, acting by or through the Paso Robles City Council, the City Manager, the Public Works Director, the Airport Manager, Attachment 2
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or any duly authorized employee, agent, or instrumentality of the City of Paso Robles.
Discretion, opinions and approvals of ‘City’ under this section refer to the responsibilities and authorities delegated to the City Council, the Airport Commission and designated City staff members as may be assigned these tasks through adopted policy.
City Council: means the legislative body that governs the City of Paso Robles.
Commercial Aeronautical Activity: means an Aeronautical Activity for commercial purposes as defined in the Minimum Standards.
FAA: means Federal Aviation Administration.
General Aviation: means all phases of aviation other than military aviation and scheduled or nonscheduled commercial air carrier operations.
Lease: means a contract between the City and any Person wherein the City grants the use or occupancy of Airport property and certain leasehold interests for a specified period in exchange for a specified rent.
Lessee: means any Person obtaining a Lease from the City to occupy space and hold certain leasehold interests at the Airport.
Person: means and includes any individual, corporation, partnership, association, company, business, trust, joint venture or other legal entity.
Rules and Regulations: means the policies, procedures, and regulations, established and amended from time to time by the City Council, to govern the safe, orderly, and efficient use of the Airport.
Shall: the word ‘shall’ is always mandatory and not merely directory.
State: means the State of California.
Sublease: means a written agreement, approved by the City, stating the terms and conditions under which a third party leases space from a Lessee for the purpose of providing aeronautical or non-aeronautical services or activities at the Airport.
Term: means the total period of time in which that Lease may or might remain in effect. (For instance, a Lease for an initial period of 5 years, which may potentially be extended for an additional 5-year period, is a Lease for a term of 10 years).
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Section 3 - Exclusive Rights
A. Federal law forbids the granting of an exclusive right to provide aeronautical services at an airport on which federal funds have been expended. An exclusive right is a power, privilege or other right excluding or debarring another from enjoying or exercising a like power, privilege or right. The City will not grant any such special privilege or monopoly in the use of public Airport facilities.
B. It is the policy of this City not to enter into or promote any understanding, commitment, or express agreement to exclude other reasonably qualified Lessees; the presence on the Airport of only one Lessee engaged in a particular aeronautical service(s) will not, in and of itself, indicate that an exclusive right has been granted. Accordingly, those who desire to enter into a Lease with the City to engage in an aeronautical activity should neither expect nor request the City to exclude others who desire to engage in the same or similar activities. The opportunity to engage in an aeronautical activity shall be made available to those meeting reasonable qualifications and standards relevant to such activity and as space may be available at the Airport for such an activity.
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Section 4 – Requests for Leases
A. Written Application Required. Any Person desiring to enter into a Lease with the City for permission to occupy Airport property shall make written application to the City for such permission
B. Applicant Must Demonstrate Qualifications. If an Applicant is seeking to engage in a Commercial Aeronautical Activity, he/she shall also provide all application information and materials required by the Airport Minimum Standards. Application materials shall consist of a fully executed Application Cover Sheet, all the information specified in this Leasing Policy, the Airport’s Minimum Standards, if applicable, and all documentation deemed necessary by the City for a full and complete analysis of the Applicant’s qualifications. The Cover Sheet shall include the benefit that will accrue to the aviation public, not-for-profit entities, and commercial activities, from the Applicant’s proposed use of Airport property.
C. Space Limited to Demonstrated Need. A single aeronautical activity, although meeting all reasonable standards and qualifications, shall be limited to a lease of such space as is needed for that activity. When an Applicant seeks to lease property from the City, he/she must provide evidence of demonstrated need for the Airport property in question. The City will only agree to lease the amount of land justifiably required for the specific use.
Additional land for unsubstantiated future expansions is not allowed.
Section 5 – Application Documents
Each application for Lease of Airport Property shall be in writing and in sufficient detail to discern the complete qualifications of the Applicant and shall include, as a minimum, the following:
A Cover Sheet briefly describing the proposal, the offered lease rate, and other key summary information, accompanied by a Written Application including the details listed below.
A. The name, address, electronic mail address, and telephone number of the Applicant.
B. The amount, size, and location of the land and/or facilities desired to be leased.
C. Descriptions and cost estimates of any proposed capital improvements to be undertaken by the applicant, or proposed to be provided by another party. This specifically includes tenant improvements if the lease proposal is for an existing building.
D. The types and amounts of insurance coverage to be maintained for the proposed use of Airport property.
E. A current financial statement prepared or certified by an independent certified public accountant and certified by the Chief Financial Officer of the Applicant. The City shall consider financial statements in evaluating the Applicant's financial ability to construct capital improvements (see C above), occupy Airport property, and enter into a Lease of Airport property.
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• To the extent allowed by law (if any), proposed applications for Leases, and the financial terms thereof, shall initially be maintained as confidential, for discussion between staff and the Applicant, and for discussion among staff, the Applicant and the City Council and Airport Commission in executive session only.
F. Evidence, in a form acceptable to the City, of the Applicant’s financial ability to complete construction of proposed capital improvements (see C above) in one of the following forms:
1. A performance bond in the amount equal to the cost for constructing the proposed improvements.
2. An irrevocable letter of credit guaranteeing funds to complete the project
3. An escrow agreement administered by a title and escrow company; or
4. A trust administered by a commercial bank.
Section 6 - Action on Application
After an application has been completed and materials are submitted in accordance with Section 5, it will be reviewed by the City and a determination made regarding approval.
The City may deny any application if, in the City’s opinion, any one or more of the following:
A. The Applicant's proposed use of Airport property or construction of leasehold improvements will create a safety hazard on the Airport.
B. The granting of the application will require the City to spend funds, supply labor or materials in connection with the proposed activity, or the activity is expected to result in a financial loss to the City.
C. Inappropriate, inadequate, or insufficient space exists at the Airport to accommodate the proposed activity or business.
D. The development or construction on the Airport necessary to accommodate the proposed business does not conform to land uses specified on the FAA-approved ALP.
E. The development or use of the area requested by the Applicant will result in congestion of aircraft or buildings or will result in unduly interfering with other Airport operations.
F. The Applicant does not meet the requirements of the Airport Leasing Policy.
G. The Applicant has either intentionally or unintentionally misrepresented or omitted any pertinent information in the application or in supporting documents.
H. The Applicant has a record of violating the Rules and Regulations of the Airport or of any other airport, FAA regulations, or any other federal, State, or local statutes, laws, rules, or regulations.
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I. The Applicant has defaulted in the performance of any lease or any other agreement with the City or other airport(s).
J. The Applicant does not, in the opinion of the City, exhibit adequate financial responsibility to undertake the project based upon financial information provided.
K. The Applicant cannot provide acceptable surety in the amount required by the City.
L. The proposed activity or development is not in the best interest of the Airport or the public.
Section 7 – Competitive Request for Proposal Process
Upon receipt of an application determined by the City to be complete, the City may issue a public notice of its intent to consider awarding a lease to the Applicant. The purpose of such action, should the City in its sole discretion determine it to be appropriate, is to gauge the level of market demand and competitiveness for the proposed activity or use of the site at the Airport.
Among the factors that can help determine whether competitive bidding should be utilized are:
● the size and proposed use of the property.
● level of market demand for use of Airport property.
● whether the property is going to be used for aeronautical or non-aeronautical purposes. ● whether the property is developed or vacant. If it is vacant, what is the proposed use; what type of improvements will be developed; how many employees will be working there? Is there infrastructure (such as utility lines) already in place or will they need to be installed, and if so, by whom?
• the financial strength and experience of the proposed tenant • the economic impact that the proposed project will have on the Airport and/or the City.
Will it generate new revenue for the City or generate new activity at the Airport? If issued, the notice shall invite other interested and qualified Applicants interested in the space to be occupied by the Applicant to submit written expressions of interest in the Airport property under consideration. The City’s review of the subject lease proposal and other written expressions of interest will be reviewed and evaluated by the Airport Commission and/or the City Council as appropriate., on or before the date on which the City will consider approving the Applicant’s Lease at an Airport Commission City Council meeting. The notice will also list the criteria to be utilized by the City in making its selection.
In the event the City receives no other expressions of interest in the Airport property in question, the City may proceed to grant or deny the Applicant’s request based on the merits of the application and without further advertisement. Should the City receive written expressions of interest from one or more other potential Applicants interested in obtaining a Lease for the property in question, the City shall postpone making its decision on the Applicant’s request for a Lease until such time as the City has had an opportunity to collect materials from the other potential Applicants and to negotiate with each interested party to ascertain which party is Attachment 2
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willing and able to enter into a Lease that will be most advantageous to the City and the public using the Airport. (To the extent allowed by law, all such applications shall be treated as confidential, for discussion between staff and Applicants, and among staff, the Applicants and the City’s Council and Commission in executive session only).
In making itsfinal decision regarding the use or disposition of the Airport premises and privileges in question, the City may reject a higher (financial) application and accept a lower one from a responsible Applicant, and award the lease in question to the lower bidder, if, in the City’s opinion, some reason affecting the interest of the City, or the public using the Airport, makes it advisable to do so. An objective of City policy is to attract interested potential lessees. Lease rates and specified lease terms are firm but may contain the ability for City to approve negotiation of such prices and terms if it is found to be in the best interest of the City and the airport.
Section 8 - Standards for Leasing Airport Property
A. Lease Classification. The City will address each airport lease and/or proposed airport lease for the purpose of definition and relevance to airport use according to the following classifications:
• Non-commercial Hangar – Primarily for private aircraft storage; The City will determine if smaller parcels or additional infrastructure provisions are necessary. • Non-commercial Multi-Tenant – A proposed development of a number of private hangars under one project which affords multiple tenants the benefits of larger economy of scale to offset the burdens of project development costs. • Commercial Aviation (FBO) – Any commercial service facility allowing single or multiple aviation service disciplines to be accommodated on one site. • Non-aviation Commercial/Industrial – Any entity that provides benefit to the airport, the community, or the local economic base through services or employment provided, which remains compatible with the Airport existence. This category could well include Hotels, Conference and Recreational uses.
• Public Facility – Government sponsored and publicly operated uses that provide benefits to the airport, aviation, or and/or the local community are part of this category.
• Non-profit Entities – A number of uses qualify as non-profit organizations and valid services that benefit not only aviation, but also a variety of public causes and concerns. Rental agreements are therefore justified.
• Unimproved Land – The occasional need to enter into leases and use agreements for uses which utilize larger amounts of land but without specific definition or qualification. e.g. The farming contract maintains vast portions of airport property not otherwise utilized. Occasional airport/aircraft operations require large areas for specific short-term purposes.
B. Requests for Additional Space. If the need for additional space becomes apparent for or in connection with a new or expanded activity, or one not authorized by the Lessee’s existing Lease, the request for additional space may be treated as a new Lease request by the City.
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Otherwise, a simple amendment to the existing lease agreement may be appropriate.
C. Lease Term. The Term is categorized according to the following considerations:
1. Operating space within an existing (City-owned) building where minimal initial investment is required to start up the operation.
2. Long-term development of unimproved land.
3. Occupancy of facilities owned by the Airport.
4. The designation of the facility or proposed property on the ALP.
5. The Lessee’s proposed use of the property.
6. The Lessee’s proposed capital investment in facilities and peripheral benefits to the airport.
While subject to specific negotiations between the City and each Lessee, the City would generally offer standard Lease Terms would be as follows:
1. Existing Facilities owned by the airport, Requiring No additional Capital Investment: 5 years
2. Initial term of leases for construction on unimproved land: 20-30 years depending on level of capitol investment.
3. Leases for construction of facilities requiring greater investment or providing greater benefit to the airport and the community: Options to Extend in 10-year increments, may be negotiable with significant capitol investment.
In considering responding to a request for to exercise an Option to Extend, the City will consider whether the Lessee is or has been in default of any terms and conditions of its Lease as well as the structural integrity, safety, and appearance of the leasehold improvements.
Upon receipt of a the request to exercise an Option to Extend, the City shall will inspect the leasehold improvements for condition, appearance and viability for continued occupancy.
The actual lease agreement shall be reviewed for compliance with its terms and conditions.
D. Lease Expiration. At least one year prior to the expiration of the lease agreement, the City shall contact the Lessee to advise the Lessee of the upcoming termination and the alternatives available to the Lessee as part of the termination process. The City shall also inspect the building and site improvements to determine their condition and suitability for the safe and legal occupancy for the remaining option period and other future uses. The following options are available:
1. So long as the lease remains in good standing at its conclusion, the lessee may request an extension of the lease term. The City’s approval, while not automatic, shall not be unreasonably withheld.
2. If, after City inspection, it is determined that the building improvements are not suitable to remain on site, or to be released, the City has the right to require Lessee to remove the building improvements and return the lease site to a bare and clean condition. Site improvements (Curb, gutter, utilities, etc.) may remain.
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3. If favorable, the Lessee is allowed, under the lease, to sell his leasehold interest and improvements, whereupon the City agrees to enter into a lease agreement with the new leasehold owner, if the leasehold owner meets the required qualifications as specified herein. If the buyer qualifies to obtain a Lease with the City, the City shall offer such Lease in accordance with the terms, conditions and rates then in effect. The term of the new Lease will be determined by the City consistent with the policies in
8.C (Lease Term). The original Lease will remain in full force and effect until the City and the buyer of the improvements have entered into a new Lease. The original Lessee must comply with all terms and conditions of the Lease until a new one is executed and in effect. At that point, the original Lease is automatically terminated by mutual agreement of the parties.
4. The Lessee has the right to remove all building improvements and relocate elsewhere, off the lease site, prior to the termination of the lease term.
Given an opportunity to review all available options, the Lessee shall, at least six months prior to the expiration of the lease agreement, notify the City of any intentions to exercise the rights contained herein. In the event of D.4. above, the Lessee shall work with the City to agree on a process and timeline to remove the building improvements and restore the site.
The City shall, at least three months prior to the expiration of the lease agreement, provide draft documents of any agreements required to effect the transition at the lease conclusion.
In order to ensure compliance with this Policy and FAA Guidelines, it is not feasible to simply extend the term of existing leases, and thus, no time extensions will be allowed.
Notwithstanding the foregoing, it is not the intent of the City to arbitrarily require the wholesale removal of existing tenants from their lease sites, so long as the occupancy remains viable and the basic provisions of this Policy and FAA Guidelines can be met.Given the broad variety of lease agreements that have been developed over many years, it is expected that any lease now nearing expiration will have a term that exceeds that 35-40 year guideline mandated by this policy and the FAA. It is therefore not feasible to allow any further extension of an existing lease, and thus, no time extensions will be allowed. It is NOT the intent of the City to arbitrarily require the wholesale removal of existing tenants from their lease sites, so long as the occupancy remains viable and the basic provisions of this policy can be met.
1. Upon expiration of As current leases reach a time where extension of term is essential to accommodate additional operations or development plans, the provisions of this policy may be implemented. The occupancies may be allowed to remain, but Attachment 2
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only under a new lease agreement, drafted and executed under the policies and standards currently outlined in this document and as may be amended in the future. in effect at the time. As policies change, rental rates and escalations are adjusted, and new legal provisions evolve, these modifications may be included in new lease agreements will contain these necessary modifications. The provisions of the Section Attachment 2
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E. (Reversion) below will apply.
1. If a lease extension on an existing occupancy is requested, the terms for the new lease on an existing occupancy are will intended to remain relatively unchanged for that duration. Although the Lessee is will be a new entity, no additional investment in the property is anticipated. No change in occupancy is intended. The ownership of site and building improvements remains unchanged as outlined in the lease will apply.
With no Capital investment, the new term may be 5 years, so long as the lease remains in full compliance and the age and current condition of the leased premises and its improvements remain viable and useable. If significant investment and/or new development is requested or anticipated, then terms under the new lease would be extended commensurate with the amount of investment considered.
2. At the conclusion of the new lease on the occupancy, ownership of all site and building improvements revert to the Airport. Any subsequent occupancies are authorized under NEW lease agreements and shall be executed according to the adopted standard for new leases of City property. In accordance with FAA orders and guidelines, Rental rates for leases on land sidenon-aeronautical sites will be based on the Fair Market Value of as established for the premises. Rental rates for lease on the Air side aeronautical sites will be based on values that are Fair and Reasonable for the market area.Fair Market Value as established for the site.
E. Reversion. Upon termination of a Lease whereby improvements to Airport property were made by the Lessee. If no other arrangement for sale or transfer of improvements has taken place as specified in the sections above, At the termination or conclusion of any lease agreement, the ownership of all site and building improvements shall revert to the Airport, except under the following conditions:
1. The occupancy is allowed to remain under the provisions of a new, short-term lease.
2. The preceding lease agreement specifically identifies the owner and states that he retains ownership and the right to remove the hangar from the airport.
3. The Airport, upon thorough inspection of the building, determines that it is not Attachment 2
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suitable or viable to remain as an operable and maintainable building. In which case the Tenant is required under the terms of the outgoing lease to remove the building at Tenant’s own cost and responsibility.
If the building improvements are allowed to remain, no further lease extensions are granted and a new lease agreement is not entered into, the Lessee shall agree that all said improvements as well as the property leased to it, shall, without compensation from the City, become the property of the City. Under no circumstances shall the Lessee Tenant be entitled to any compensation for payment by reason of the value of its business, franchise, or improvements.
F. Leases for Private Aeronautical Uses. The City is required to operate the Airport for the maximum use and benefit of the public, and must retain the ability to make reasonable provision for essential support services for those who use the Airport; nevertheless, some private aeronautical uses may be beneficial to the City; for instance, a private flying club might be a desirable and compatible use. Proposed Leases for private aeronautical uses will be evaluated on a case-by-case basis, taking into account long-term plans for the development of the Airport, the benefits which may be derived from the proposed Lease, the potential costs of the proposed Lease to the City, the availability of suitable space, the potential for conflict or interference with the public uses of the Airport, and any other factors the City deems relevant.
G. Adherence to Airport Layout Plan (ALP) Required. The ALP depicts the entire property of the Airport and identifies existing facilities and plans for future development. The ALP reflects the existing and proposed allocation of areas of the Airport to specific operations and support functional usage land uses. No use, occupancy, construction, modification or improvement that is inconsistent with the Airport’s FAA-approved ALP shall be viewed as desirable by the City. The conversion of any area of the Airport to a substantially different use than that shown in the approved ALP could adversely affect the safety, utility or efficiency of the Airport. Only upon a determination by the City that a particular construction, modification or improvement would serve the needs of the Airport public for facilities or services, and that a change in circumstances is evident such that the need for space for such facilities or services was not anticipated at the time the most recent ALP was submitted to the FAA for approval, will the City consider making application to the FAA for approval of a revision of the ALP pursuant to the request of an Applicant or Lessee. Nothing contained in this policy shall require the City to make such application.
H. Development of Vacant Airport Property. Any application for permission to develop vacant airport properties shall include, in addition to all other required materials, a site plan depicting the nature and location of the proposed development. Before actual development, the site plan must be approved by the City.
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I. Liens or Encumbrances to Airport Property. The tenant is given the right by the City to Attachment 2
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mortgage its interest in the Lease, under one or more leasehold Mortgage(s) and assign its interest in this Lease, as collateral security for such Mortgage(s) to secure any bona fide loan upon the condition that all rights acquired under such leasehold Mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in the Lease.
J. Financing Airport Development. The City is under no obligation to provide financing, or to make any improvements to Airport property to facilitate leasehold improvements proposed by an existing or prospective Lessee. If such a Lessee cannot demonstrate the financial means to implement and pay for such development that may be an indication that the proposed development would not be in the best interests of the City or the public using the Airport.
Nevertheless, once an Applicant or Lessee has demonstrated the requisite financial responsibility, the City may choose to pursue any federal, state or City funds to contribute to the leasehold improvements, if in doing so there would be no diversion of funds away from capital improvements or the Airport capital budget program planned by the City.
K. General Rights and Privileges Granted. Airport Leases are designed to accomplish one or more of three basic rights or privileges: the right for a Person to use the landing area and other public Airport facilities in common with others so authorized; the right to occupy Airport Property, and to use exclusively, certain designated premises; and/or the commercial privilege or the franchise right to offer goods and services to the public who use the Airport.
The City will not enter any Lease without receipt of adequate consideration for the rights granted therein.
L. Control Over Operations. Any Lease granting the right to serve the public on the premises of the Airport shall be subject to terms and conditions reserving to the City sufficient control over operations to ensure that the Lessee will treat patrons fairly. The Lessee must agree to make available its services and facilities on fair and reasonable terms, and without unjust discrimination.
M. Control over Aeronautical Activity and Development. The City will enter into no Lease that would require it to divest itself of the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, or the right to prevent any Lessee from erecting, or permitting to be erected, any building or other structures that might limit the usefulness of the Airport or constitute a hazard to aircraft. The City will enter into no Lease that would require it to divest itself of, or limit its right to develop or improve the Airport as it sees fit, regardless of the desires or views of any Lessee and without interference or hindrance from such a party.
N. Airport Minimum Standards. The Airport Minimum Standards set forth the qualifications which must be met by a Lessee conducting certain aeronautical activities at the Airport. They establish a basis for practical negotiations between the City and potential Lessees offering such activities; however, prospective Lessees should be aware that the City, if presented with a choice between multiple potential Lessees for a single space or facility, will give preference to Lessees who can offer the City and the public the highest standard of quality and service Attachment 2
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which may well exceed the Airport Minimum Standards for a proposed activity. Existing and prospective Lessees shall understand that the City may increase its Airport Minimum Standards from time to time, in order to ensure a higher quality of service to the public. Only in the rare circumstance, where the aviation community at the Airport has encountered difficulty in attracting a competent service entity, shall the City consider waiving an Airport Minimum Standard to allow a period of initial development. In all other circumstances, it is the policy of the City not to enter into Leases with Lessees who cannot meet the applicable Airport Minimum Standards.
O. Off-Premises Access. The City will not enter into Leases which grant access to public landing areas by aircraft normally stored and serviced on land adjacent to, but not a part of the Airport.
P.O. Waivers of Immunity. The City will enter into no Leases that require it to waive any sovereign, governmental or other immunity to which it may be entitled, or that would require it to submit to the laws of any state other than those of the State of California.
Q.P. Indemnification. Every Lessee desiring to Lease Airport property shall agree to indemnify and hold the City, its officers, officials, agents, representatives and employees from and against any and all injuries, damage or harm, or any nature whatsoever, which may result from its use or occupancy of Airport property.
Section 9 - Written Agreement
All Persons, prior to the commencement of construction of leasehold improvements or operation of an Aeronautical Activity as defined herein, shall enter into a Lease with the City setting forth the terms and conditions by which the Person shall occupy and use Airport property. Leases entered into by the City are designed to protect the public interest and may contain more restrictive clauses than private sector leases, are to be in a form approved by the City’s legal counsel and shall, at a minimum; conform to local/regional standards of tenant responsibility and liability.
Each Lease shall include all provisions required by law and obligations placed upon the City by all federal and State agencies including, but not limited to, compliance with all federal, state and local laws and regulations pertaining to the use of the leased premises. Other Lease provisions contain standard language, developed through continuous review and revision of the document for conformance to FAA regulations, real estate law, changing economic conditions and other risks associated with land ownership. A sample of that document is available for review.
Section 10 - FAA Required Lease Provisions
In addition to the minimum terms and conditions listed in Section 9, each Lease shall contain provisions requiring the Lessee to furnish services on a reasonable basis to all users thereof, and charge reasonable and not unjustly discriminatory, prices for each unit or service, provided that the lessee may make reasonable and nondiscriminatory discounts, rebates or other similar types of price reductions to volume purchasers.
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Section 11 – Rentals, Rates, Fees, and Charges
A. Financially Self-Sufficient. The City has an obligation to make the Airport as self- sufficient as possible under the circumstances existing at the Airport at any given point in time. Toward this end, the City, through its Leases, and by other means available to it, shall endeavor to recover the cost of providing its facilities, through rentals, fees or other charges. All Leases shall provide for adequate consideration to be received by the City in compensation for the rights and privileges therein granted. It shall be the policy of the City to seek Lease terms and conditions that, while fair and nondiscriminatory, provide the most advantageous returns to the City.
B. No Unjustifiably Discriminatory Rates. Each Lessee shall be subject to rates, fees, rentals and other charges (e.g., fuel flowage fees, hangar rentals, percentages of gross volume of business, etc.) as may be currently applicable to, or being received from others making the same or similar uses of the Airport, utilizing the same or similar facilities. Nevertheless, in respect to a contractual commitment from any Lessee, the City may charge different rates to similar users of the Airport if such rates are nondiscriminatory in purpose. Differences in values of properties involved, and the extent of use made of common use facilities may be factors to be considered. Seldom will each Airport user have properties of the same value nor will their use and impact upon common facilities be the same. If one Lessee is in what is considered a prime location, and another is in a less advantageous area, there could logically be a differential in the fees and charges, to reflect this advantage of location. This factor might also influence the rental value of the property. If one Lessee rents office and/or hangar space and another builds its own facilities, this would provide justification for different rental and fee structures; these two Lessees would not be considered essentially similar as to rates and charges even though they offer the same services to the public.
C. Rental Rate. The City has an obligation to make the Airport as self-sufficient as possible under the circumstances existing at the Airport at any given point in time. Toward this end, the City, through its Leases, and by other means available to it, shall endeavor to recover the cost of providing its facilities, through rentals, fees and other charges, All leases shall provide for adequate consideration to be received by the City in compensation for the rights and privileges therein granted. Itshall be the policy of the City to seek Lease terms and conditions that, while fair and nondiscriminatory, provide the most advantageous returns to the City. pursues its objectives towards financial self-sufficiency through establishing fair and equitable rental rates to the greatest extent possible.
Competition may determine applicable rates and charges. In situations where leases are awarded as the result of competition, said Leases shall be subject to the financial terms and conditions proposed therein. Leases obtained through this process may offer returns that are higher than those being received from existing leases at a given point in time.
The alternative in a rental process is to define a rental rate based on the current market value of the subject property and then negotiating within an adopted range of pricing, based on the relative merits and local benefits identified for the particular lease agreement.
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The range of rental price negotiation currently allowed to the City under this policy is no more than ¾ of a cent per square foot of raw land Below the market price and no more than 1 (One) cent Above the market price of the land.
D. Periodic Adjustment of Rates. Providing for adjustments to rental rates and Airport user fees facilitates parity of rates and charges between new and long-standing Lessees and enables the Airport to remain as self-sustaining as possible under the circumstances existing at any given point in time. Each lease shall be adjusted annually in accordance with the City’s adopted escalation policy and based on the Consumer Price Index for all Urban Consumers San Francisco-Oakland Metropolitan area published immediately before the Adjustment Date. All leases with a term of five years or more shall contain provisions subjecting the rental rates to a periodic adjustment of rent based on a determination of Fair Market Value current appraisal of comparable properties within the airport area. The periodic adjustment shall not increase the rental rate more than 20% for each of these fiveyear adjustments. Periodic Adjustments are based on current FAA guidance for evaluating land values at airports.
Under no circumstances will the rental rates be adjusted to amounts less than the current rate in effect at the time of the review. Under no circumstance will any single adjustment exceed 5% of the current rental rate in effect at the time of the review.
E. “Pioneer” Periods Disfavored. In the case of a new general aviation Lessee, offering services not previously available to the public at this Airport, the City may choose to offer reduced rental rates or other inducements to obtain a Lessee, recognizing that it may well be a nonprofit venture during its pioneering period. In such circumstances, the “incentive rate” shall be offered only during a specific “pioneer” period, and shall be defined to end on a specified date. Future Lessees coming on the Airport following the pioneer period will be expected to pay the comparable standard rates and charges based on then-current values, rates and charges, and the City shall not be obligated to offer subsequent Lessees a pioneer period.
Norshall it generally be appropriate to offer an established Lessee the benefit of an additional period of reduced rates or other financial inducements, beyond the Lessee’s initial pioneer period.
F. Diligent Bookkeeping Required. Income from a Lessee’s Airport operations must be fully accounted for, and adequate records must be kept to evidence amounts due to the City for the various rentals, fees and charges applicable to the Lessee’s operations at the Airport. The City shall be entitled to have access to such records upon request.
Section 12 – Construction of Leasehold Improvements
Through its leasing activities, the City seeks to promote consistent, attractive, and compatible high quality development and facilities at the Airport. In addition, it desires to encourage private sector investment in Airport facilities, develop and maintain aesthetic excellence, and high standards of environmental protection. Finally, it desires to create standards of development that maintain the character of the Airport and ensure all construction meets and exceeds all Attachment 2
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applicable safety standards and requirements.
Each Lease issued by the City shall include the specific development requirements for the construction of leasehold improvements on the Airport; however, following are general provisions and policies applicable to each Airport Lease:
A. No leasehold improvements shall be designed, planned, constructed, reconstructed, or remodeled without the prior written approval of the City.
B. Any structure or facility to be constructed or placed upon the Airport shall be constructed in a manner to conform to all safety and environmental regulations of the State of California and the City, and shall be in compliance with the City’s current site development requirements, building codes, zoning regulations, and fire regulations as well as FAA design standards.
C. Responsibility for obtaining appropriate approvals from government authorities and complying with their various regulations, policies and standards shall be that of the Lessee.
Potential tenants should be advised that any work done at the Airport may require compliance with not only state by but also federal prevailing wage requirements.
D. Lessees shall obtain at their sole expense all permits required for their construction program and shall pay all taxes, permits, inspection fees, and licenses required for the construction and operation of their facilities and businesses.
E. The design of any leasehold improvement is to be carried out under the direction of a registered architect or engineer. All design drawings are to be prepared by a registered architect or engineer. Construction drawings are to be certified by their respective professional disciplines – architectural, structural, mechanical, electrical, and civil engineers.
F. The City may provide infrastructure for the proposed leasehold improvements. Absent the availability of City funding of such improvements, each Lessee may be responsible for and incur the expenses for connection to all leasehold improvements and facility requirements including public roadways, aprons, taxiways, electrical power, communications, water, sewer and natural gas.
At the City’s option, an agreement may be made whereby qualified infrastructure improvements to serve a specific lease site may be financed by the prospective tenant and then reimbursed by the City through a credit in monthly rents due to the City.
Infrastructure constructed to serve a specific lease site that also benefits neighboring lease sites, may be additionally financed by a Reimbursement Agreement, created and administered by the City and executed with the neighboring lease sites when they develop.
The final details of each reimbursement shall be determined through negotiation between the City and the prospective tenant at the time the lease agreement is developed.
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G. Lessees shall obtain the prior written approval from the City to modify, improve, add to or delete facilities from their leased area. If any structure is erected, placed, or altered upon in any other manner than in accordance with plans and specifications approved by the City, such construction will be considered to have been undertaken without approval. This restriction is applicable to landscaping plans as well as architectural plans.
H. Lessees shall suppress, at their own expense, and to the satisfaction of the FAA, all electromagnetic interference with radio guidance, safety devices or with any electric or electronic equipment or installations on or associated with the Airport.
I. The City assumes no responsibility with regard to the ability of the Lessee to complete construction or otherwise meet the Terms and Conditions of its Lease nor does it assume any responsibility for an error, fault or omission in the plans and specifications that have been approved. The City reserves the right to serve notice that action must be taken to remedy any improper situations.
J. Noise, dust, odors, storm water detention, water quality, and smoke generation are of particular concern in the design and operation of any facility on the Airport. Therefore, the design and construction of all facilities shall comply with all federal, state, and local environmental regulations applicable to the Airport.
K. The City or its representative(s) shall have the right at reasonable times to visit sites and enter buildings that are completed or in the process of being built, changed, repaired, moved or demolished.
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K.
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Attachment 2
82477.03000\41062594.1
CITY OF PASO ROBLES
MUNICIPAL AIRPORT PROPERTY LEASE
Attachment 2
82477.03000\41062594.1
NONSUBORDINATED AIRPORT
PROPERTY LEASE
This Lease ("Lease") is made as of MONTH, DAY , 20XX between THE CITY OF EL PASO DE ROBLES ("Landlord") and XXX ("Tenant"). The parties agree as follows:
1. PREMISES
1.1. Leased Premises. Landlord leases to Tenant and Tenant leases from Landlord, Parcel XXX of Parcel Map PRAL XXX, as amended, located in the City of Paso Robles, County of San Luis Obispo, California, as more particularly described in Exhibit "A", which is attached hereto and made a part hereof. This vacant lot, as defined herein, is leased to Tenant and referred to in this Lease as the "Leased Premises" or the "Premises."
1.2. Airport. The Leased Premises are a part of the municipal Airport owned and operated by Landlord and known as the Paso Robles Municipal Airport (the "Airport").
1.3. Common Areas. This is a non-aeronautical OR Aeronautical lease. As such it is agreed that no direct OR does have access to the aircraft operating areas of the airport is possible or intended.
1.4. Acceptance of the Premises. Tenant hereby accepts the Premises in the condition existing as of the date hereof. Tenant hereby agrees that the Premises are in a good and tenantable condition and acknowledges that it has inspected the Premises and common areas of the Airport to its satisfaction and acknowledges that Landlord is not obligated to make any repairs or alterations to the Premises or common areas.
1.5. Reservations to Landlord. Tenant further accepts the Premises subject to any and all existing easements and encumbrances. Landlord reserves the right without obligation to install, lay, construct, maintain and repair utilities and appurtenances necessary or convenient in connection therewith in, over, upon, through, across, under and along the Premises or any part thereof, and to enter the Premises for any and all such purposes.
Landlord also reserves the right to grant franchises, easements, rights of-way and permits in, over, upon, through, across, under and along any and all portions of the Premises. No right reserved by Landlord in this clause shall be so exercised as to interfere unreasonably with Tenant's operations hereunder, and the rights granted to third parties by reason of this clause shall contain provisions that the surface of the land shall be restored as nearly as practicable to its condition prior to the construction upon completion of any construction.
2. TERM
2.1. Term. The lease term shall be 20 Years, commencing on XXX (“Commencement Date”), and expiring on XXX ("Expiration Date").
2.2. Possession. The Tenant is granted full and complete access to the Leased Premises as of the Commencement Date of this lease and, so long as Tenant is not in default hereunder, the right to its possession for the duration of this Lease.
Option to Renew. So long as Tenant is not then in default hereunder, Tenant shall have an option to renew this lease for 2 additional terms of 5 years (“Renewal Terms”), each of which is exercisable by written notice to Landlord of Tenant’s intent to renew at least one hundred twenty (120) days and no more than one hundred eighty (180) days prior to the then expiration date of this lease.
3. RENT
3.1. Monthly Rent. The monthly base rent ("Base Rent") for the (XXX acre) Premises shall be $XXX for the Premises until the first Adjustment Date. Tenant shall pay Landlord the Base Rent on or before the first day of each calendar month during the term of this Lease, in advance. Base Rent and any other amounts that are Attachment 2
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not received by Landlord within ten (10) days of the due date shall be subject to the late charge and interest provided for in Sections 21.18 and 21.19. A new monthly rentBase Rent shall be determined at the expiration of the initial lease term and/or any Renewal Terms by appraisal. Tenant agrees that this Base Rent recalculation is a condition of exercising any of its options to extend the Term of this Agreement. and in order to exercise any extension of term. The City shall select the appraiser. The City shall pay the cost and expense of the appraisal.
3.2. Rent Commencement. Rent payments shall commence on the commencement date of the lease.
A. Cost-of-Living Increase. On July 1, 2025, and on July 1st of every year thereafter ("Adjustment Date") for the full term of this Lease, including any extensions, the Monthly Base Rent shall be increased by the same percentage increase as defined by the Consumer Price Index for the previous 12-month period. The standard to be used shall be the Consumer Price Index for all Urban Consumers San Francisco-Oakland Metropolitan area, Bureau of Labor Statistics, United States Department of Labor, 1982 = 100 ("Index"). The index which is published most immediately before the Adjustment Date shall be used. If the Index shall no longer be published, another Index generally recognized as authoritative for purposes of this paragraph shall be substituted. In addition to annual Consumer Price Index adjustments, in order to keep lease rates in line with fair market values throughout the life of the lease; base rent adjustments, if necessary, can be made every five years with adjustments to be determined by an appraisal of real property. The City shall select the appraiser. The City shall pay the cost and expense of the appraisal. The annual increase in monthly rent shall increase no more than eight percent (8%) in any given year or twenty percent (20%) in any five-year period B. Costs of Appraisal. In the event that the Base Rent will be adjusted by appraisal, the City shall, at its own cost and expense, be responsible for selecting and hiring an appraiser.
3.4 Payments. All rent to be paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be paid without deduction or offset, prior notice or demand, and at such place or places as may be designated from time to time by Landlord.
4. CONDUCT OF BUSINESS BY TENANT
4.1. Use of the Premises and Conduct of Tenant's Business.
A. Tenant hereby acknowledges that the principal use of the Airport consists of the operation of a public airport and that all other operations and businesses which are now or hereafter permitted by Landlord, including the use hereunder, must be at all times be compatible with such principal use, as Landlord shall, in its sole discretion, determine.
B. The primary use of the Premises permitted under this Lease shall be a INSERT TYPE OF BUSINESS. Tenant shall, continuously and uninterruptedly during the term of this Lease, conduct its business activity, as permitted herein, upon the Premises unless prevented from so doing by strikes, fire, casualty or other causes beyond Tenant's control, except during reasonable periods for repairing, cleaning and decorating the Premises.
C. Tenant shall, at Tenant's own cost and expense, obtain and maintain all licenses, permits, certificates or other authorizations of any governmental authority having jurisdiction thereover, including, but not limited to, the FAA, which may be necessary for the conduct in the Premises of its business operations and activities. Without limiting the generality of the foregoing, Tenant shall comply with all applicable laws, resolutions, codes, rules, orders, directions, ordinances and regulations of any department, bureau or agency or any governmental authority having jurisdiction over the operations, occupancy, maintenance and use of the Premises for the purpose demised hereunder, except for those requiring major Alterations to the Premises as distinguished from those relating to furniture, fixtures or equipment of Tenant therein. Tenant shall indemnify and save Landlord harmless from and against any claims, penalties, losses, damages or expenses imposed by reason of Tenant's violation of any applicable law or the rules and regulations of governmental authorities having jurisdiction thereof.
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D. Tenant acknowledges Landlord is entering into this Lease in its proprietary capacity and not in its regulatory or governmental capacity. Nothing in this Lease shall be construed as restraining, impairing or restricting the City of El Paso De Robles in its regulatory or governmental capacity (referred to herein when acting in such capacity as “City”), or granting any rights upon Tenant with respect to the use, occupancy, development, or operation of the Premises in a manner inconsistent with any laws or applicable requirements.
E. Nothing in the approval of this Lease by the Landlord shall be binding on the City Council, Planning Commission, or any other commission, committee, board or body of the City regarding any Approvals of the Proposed Development required by such bodies regarding Tenant’s use of the Premises. Nothing in this Lease, nor any action by Tenant with reference to this Lease or any related documents shall be deemed to constitute issuance or waiver of any required City approval regarding the Premises, or waiver or exercise of any legislative discretion of the City regarding any application, approval or other matter relating to Tenant’s intended use of the Premises.
F. The parties agree that nothing in this Lease is intended to commit the Tenant to completing a particular project or to commit the City to granting any approval for such proposed use. The City’s approval of this Lease does not constitute approval by the City of any proposed development on the Premises or of other activity on the Premises that would have a direct or reasonably foreseeable indirect environmental impact pursuant to the California Environmental Quality Act, Public Resources Code Section 21000 et seq. (“CEQA”). (See 14 C.C.R. §§ 15060(c); 15378(b).) Moreover, Tenant’s future use or development of the Premises is expressly conditioned on CEQA compliance. City shall conduct environmental review in accordance with CEQA prior to taking any discretionary action with regard to any proposed development or use of the Premises by Tenant. Nothing in this Lease shall be construed to limit the City’s discretion to consider and adopt any mitigation measure or project alternative, including the alternative of rejecting Tenant’s applications for the Entitlements or any proposed development or use of the Premises by Tenant, as provided in Public Resources Code Section 21002. Following completion of the City’s environmental review of any proposed development or use of the Premises by Tenant, the City shall file a notice of such approval as provided in Public Resources Code Section 21152.
G. Notwithstanding any other remedies of Landlord hereunder, in the event of a breach of this Section 4.1, Tenant, upon receipt of written notice from Landlord of said breach, shall cure said specified breach within five (5) business days. If cure is not performed within five (5) business days, Landlord, at its option, may terminate this Lease upon thirty (30) days' written notice. However, if Tenant has undertaken steps to cure within five (5) business days, then Landlord shall not terminate this Lease unless Tenant fails to diligently complete said cure. In such event, Landlord may terminate this Lease upon thirty (30) days written notice.
Notwithstanding the foregoing, if at any time Tenant's breach has a material adverse effect on the operations of the Airport or creates an emergency situation that, in City's reasonable estimation, presents a risk to public health or safety, Tenant shall immediately commence to cure such breach.
4.2. Restrictions on Use.
A. Tenant shall not use or permit the use of the Premises for any purpose other than that set forth in Section 4.1 above, and Tenant shall comply promptly with all applicable laws, rules and regulations regarding the use of the Premises, including, but not limited to all rules and regulations promulgated by the FAA.
B. Tenant shall not use or permit the use of the Premises in any manner that will (A) tend to create or permit any waste or nuisance, (B) tend to disturb other tenants or users of the Airport, (C) invalidate or cause cancellation or be in conflict with fire or other hazard insurance policies covering the Airport, or (D) increase the rate of fire insurance for the Airport or of property located therein, over that rate in effect on the Commencement Date hereof. Tenant, at its expense, shall comply with all rules, orders, regulations or requirements of the State and City Fire Code.
4.3. Airport Use. In connection with the ownership and use of the Airport by Landlord, Tenant hereby agrees as follows:
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