City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JULY 19, 2022 FROM: GENERAL SERVICES DEPARTMENT WARD: 3 SUBJECT: APPROVE AN UPDATE TO THE AIRPORT LEASING PROGRAM FOR CITY-OWNED PROPERTY AT THE RIVERSIDE MUNICIPAL AIRPORT - RESOLUTION ISSUE:
Approve an update to the Airport Leasing Program for City-owned property at the Riverside Municipal Airport.
RECOMMENDATIONS:
That the City Council:
Approve an update to the Airport Leasing Program for City-owned property at the Riverside Municipal Airport; Authorize the City Manager, or designee to make minor and non-substantive changes to the Airport Leasing Program; and Adopt the attached Resolution authorizing the General Services Director and Airport Manager to negotiate all leases and authorizing the General Services Director, Deputy General Services Director or Airport Manager to execute month-to-month leases on behalf of the City of Riverside.
COMMISSION RECOMMENDATION:
On June 9, 2022, the Airport Commission unanimously recommended that the City Council approve an update to the Airport Leasing Program for City-owned property at the Riverside Municipal Airport.
The update to the Airport Leasing Program will adjust current lease rates to ensure the Airport remains competitive with surrounding airports, clarify leased property maintenance responsibilities for the City and the tenant, and clarify the requirement for a tenant to obtain written consent from the City before subletting.
BACKGROUND
The Riverside Municipal Airport (Airport) routinely solicits for and negotiates new leases and agreements in order to ensure new and continuous revenue sources for the Airport. In order to attract new business and remain competitive, City Council approved Resolution 18919 on May 28, 1996, authorizing the Airport to negotiate certain incentives into short-term (one year or less) leases.
On January 6, 2015, City Council repealed Resolution 18919 and approved Resolution 22788, a new leasing program that established pre-defined parameters that allow the Airport Manager to negotiate rent, terms, incentives, maintenance responsibilities, and other lease parameters to streamline the lease execution process.
On January 8, 2019, City Council approved an update to the Riverside Municipal Airport Master Lease Program and adopted Resolution 23403.
DISCUSSION
The Airport currently has 160 existing leases. These leases consist of 17 aircraft tie-downs, 97 hangars, 24 commercial office/hangar agreements and 22 commercial ground leases. Historically, the Airport has had the ability to negotiate leases in order to attract new business and remain competitive.
Subject to City Council approval, this updated leasing program continues the authority for the Airport Manager to negotiate rent, terms, incentives (such as rent concessions in exchange for tenant improvements), maintenance responsibilities and other factors with prospective tenants. City Council approval delegates authority for the General Services Director, the Deputy General Services Director and the Airport Manager to execute month-to-month agreements. All leases and other agreements with terms beyond a month-to-month period (i.e. all long-term agreements), or outside of the approved leasing program thresholds will continue to be subject to City Council review and approval.
Establishing Airport Lease Rates
Staff conducts routine surveys of 15 surrounding general aviation airport lease rates. This survey forms the foundation to set the Airport rates at a very competitive level. It should be noted the Airport currently enjoys a 100% occupancy rate for aircraft hangars and a 99% occupancy rate for office space.
Lease rates approved by this action will apply only to new tenants.
A brief summary of updates to the Master Lease Program include:
Hangar rental rates have increased approximately 8% in the last two years due to authorized annual CPI(U) increases.
Expansion of sub-letting restrictions: not permitted in long-term agreements; permitted under development agreements.
Clarification of non-aviation businesses leasing property: month-to-month agreement only.
City offer of one year warranty for dedicated leased space HVAC system. After one year, tenant is responsible for maintenance, repair or replacement of the HVAC system.
Requirement for tenant to obtain Special Event Permit from the City.
STRATEGIC PLAN ALIGNMENT:
This Master Lease Program update contributes to the Envision Riverside 2025 Strategic Priority No. 3 Economic Opportunity and Goal No. 3.1 to facilitate partnerships and programs to develop, attract and retain innovative business sectors.
The Airport Leasing Program aligns with each of the five Cross-Cutting Threads as follows:
Community Trust - The Airport builds community trust by regularly conducting bi-annual surveys of surrounding airports’ lease rates. The survey includes rental rates for land, office space, aircraft hangars, etc. To further transparency, the Airport will share the approved rates with the survey respondents.
Equity - The Airport ensures equitable access to leasing opportunities.
Fiscal Responsibility - The Airport Leasing Program rate structures are based on bi-annual surveys of fourteen general aviation airports in the Riverside and San Bernardino counties. Some of the airports are smaller than the Airport and some are larger. Since each of these airports serve privately owned aircraft, the survey provides direct correlations to the aviation activity at the Airport.
Innovation - The Airport Leasing Program invests in the City’s future by ensuring competitive leasing rates will continue to attract new business to the Airport and the City.
Sustainability and Resiliency - The flexibility inherent in the Airport Leasing Program ensures the Airport’s ability to adapt to changing economic conditions.
FISCAL IMPACT:
There is no direct fiscal impact related to this report. Revenues received from negotiated leases will be deposited into the appropriate Airport Fund revenue accounts and used for on-going maintenance and other improvements at the Airport.
Prepared by: Carl Carey, General Services Director Certified as to
Availability of funds: Edward Enriquez, Interim Assistant City Manager/Chief Financial Officer/Treasurer Approved by: Kris Martinez, Assistant City Manager Approved as to form: Phaedra A. Norton, City Attorney Attachment: Resolution
Airport Leasing Program Page 2