DATE: OCTOBER 8, 2024
DEPARTMENT: PUBLIC WORKS, AIRPORT DIVISION
FROM: DAVID JACOBS, PE, LS, DIRECTOR
TITLE: LEASE AGREEMENT WITH ADVANCETECH AIRCRAFT
MAINTENANCE, INC.
RECOMMENDED MOTION:
A motion to approve a resolution approving a new Lease Agreement with Advancetech Aircraft Maintenance, Inc. and authorizing the Mayor to enter into the Lease Agreement on behalf of the City.
EXECUTIVE SUMMARY:
Advancetech is requesting to extend the lease terms of the property located at 1605 Moffett Street. The term of this Lease shall be for a period of 26 years, commencing on October 1, 2024 (“Commencement Date”) and ending September 30, 2050.
The City reserves the right to update the rate and fees structure to market adjustment through an appraisal process no earlier than August 1, 2038. The appraisal process shall require The City to obtain a ground lease appraisal from a certified appraiser and provide a copy of the appraisal to Lessee for review.
BACKGROUND:
Advancetech Aircraft Maintenance, Inc. (Advancetech), is an aircraft inspection and maintenance facility based at the Salinas Municipal Airport. The City and Advancetech entered into a 30-year lease agreement on February 1, 2000. On September 16, 2003, the First Amendment was signed expanding the demised premises.
Advancetech approached the City to extend the lease past 2030. The best way to accomplish this request was to enter into a new lease. The City of Salinas Staff and Advancetech negotiated a new lease agreement of approximately 26 years for the Lessee’s use. The first-year rental amount will positively benefit the Airport Enterprise Fund by $677.67 for year 1. The proposed annual lease amounts are shown in the table below. 3% CPI
Amount
Year 1 – 2025
Year 2 – 2026
Year 3 – 2027
Year 4 – 2028
Year 5 – 2029
$22,589.04
$23,266.71
$23.964.71
$24,683.65
25,424.16
$26,186.89
CEQA CONSIDERATION:
The City of Salinas has determined that the proposed action is not a project and, therefore, exempt as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
CALIFORNIA GOVERNMENT CODE §84308 APPLIES:
The City of Salinas has determined that Government Code §84308 does not apply.
STRATEGIC PLAN INITIATIVE:
This action supports the City Council’s Goals of Effective and Culturally Responsive Government.
DEPARTMENTAL COORDINATION:
The process of administering these projects involve the following departments: City Council, Public Works, Finance, and Legal. City Council will approve the lease. Public Works Department oversees the development of the project’s plans, specifications, and estimates. The Finance Department administers the proper appropriation of funds. The Legal Department reviews pertinent documents/contracts to ensure the City is in compliance with applicable laws and regulations.
FISCAL AND SUSTAINABILITY IMPACT:
During the Original Term, rent shall be payable, at the option of the Lessee, in either annual or equal monthly installments, at the annual rate of $0.45 per square foot, which equals $1,882.42 per month, or $22,589.04 per annum.
Fund
Appropriation
Appropriation
Name
Total Appropriation
Amount for recommendation
FY 24-25 Operating Budget Page
Last Budget Action (Date, Resolution)
6100
50.5340-54.5030
Building Rental
$123,369.14
$22,589.04
n/a
n/a
ATTACHMENTS:
Resolution
Advancetech Lease
2000(original) Advancetech Lease
Amendment #1
Exhibit A- Depiction of the Premises
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