City Council
Report
City Council Meeting: April 25, 2023
Agenda Item: 5.A
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Airport Subject: Award RFP to Aeroplex Group Partners, LLC for Airport Commercial Real Estate Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP #340 to Aeroplex Group Partners, LLC., a California-based corporation, to provide commercial real estate brokerage, aviation property management and related consulting services to the Santa Monica Airport;
2. Authorize the City Manager to negotiate and execute an agreement with Aeroplex Group Partners, LLC. in an amount not to exceed $1,453,183 for three years, with two additional one-year renewal options of $483,987 for renewal option Year One and $468,922 for renewal option Year Two, for a total amount not to exceed $2,406,092 (including a 10% contingency), with future year funding contingent on Council budget approval; and
3. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
The City of Santa Monica contracts with a professional aviation property management firm that specializes in airports to assist staff by providing aviation property management, broker, and consulting services for City-owned properties at the Santa Monica Airport. Professional commercial real estate services ensure that the Airport provides on-site professional standards of customer services to tenants and secures fair market leasing rates as required by the Santa Monica Leasing Policy and Guidelines adopted in 2018 (Attachment A). Based on the results of a competitive Request for Proposal (RFP) process, staff recommends that a new professional services agreement be awarded to Aeroplex Group Partners, LLC (AGP) to continue providing these 2 of 6
services to the City for an amount not to exceed $2,406,092 (including a 10% contingency) for a term of up to five years.
Discussion
The City is the owner and operator of the Santa Monica Airport. The Airport includes aviation and non-aviation facilities with various uses that include aeronautical service providers, commercial office space, creative space, educational use space, artist studios, land, hangars, tie-downs, and a museum. Approximately 92% of Airport revenues are derived from leasing these properties. The ability to optimize revenues from the Airport’s leasable space and maintain good tenant relations helps ensure the Airport Fund’s financial self-sufficiency and aligns with the City’s priority of Economic Recovery.
There are currently 409 leases at the Airport, of which 110 leases are full-service gross aviation hangar lease agreements that require management by full-time on-site dedicated staff. Airport staff does not have the capacity to provide the necessary property management services to these aviation leaseholds at the level of service required for full-service lease agreements. The Airport currently contracts with AGP for aviation consulting services and professional commercial real estate property management and brokerage services for the 110 aviation-related properties, representing approximately 300,000 square feet of aviation uses and commercial real estate offices.
The City’s contract with AGP will expire on June 30, 2023. To ensure the continuity of such services, the City issued an RFP for the selection of a vendor to provide commercial real estate property management, brokerage, and consulting services at the Airport. Following a competitive Request for Proposals process, staff recommends Aeroplex Group Partners, LLC as the best firm to provide these services. The Agreement would become effective on July 1, 2023.
Scope of Services and Pricing
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Brokerage and Aviation Property Management Services
Brokerage services include facilitating, negotiating, and completing new and renewal lease agreements with the City of Santa Monica for properties assigned, including hangar, office, shop, and/or tarmac/ramp space. Aviation property management services include administering lease agreements, marketing, advertising, and responding to tenant inquiries.
Consulting Services
AGP will provide aviation consulting services in matters relating to property management, operational needs, and lease negotiations.
Legal Services
AGP will provide outside counsel services to address tenant issues including evictions.
The outside counsel will work in collaboration with the City Attorney when the need arises to process and oversee unlawful detainer litigation (evictions) as it relates to City properties at the Santa Monica Airport.
Pricing
Property Management Fees will be based on 5% of monthly gross rents collected for the properties that AGP is managing. In addition to the property management fees, AGP’s brokerage fees will be commission based. AGP would be eligible to earn commissions for completing any new or renewal lease agreements at the Airport during the contract period. The pricing schedule is at market price for similar services.
Commissions would be based on the following terms:
Table 2. AGP Brokerage Commission Breakdown
New Term Leases 2.5% New Term lease
New Month-to-Month Leases Equal to one month’s rent, but no more than $15,000
Term Lease Renewals 1.5% Term/Month to Month
Term Lease Expansions 1.5%
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Additional Terms
As part of their property management fee, AGP would provide a dedicated on-site employee to oversee the facilities they manage during normal business hours. All property management services would be conducted consistent with the City’s Leasing and Licensing Policy and the City of Santa Monica Minimum Standards for Commercial Aeronautical Services at Santa Monica Airport (Attachment B).
The real estate brokerage and aviation property management services agreement is non-exclusive therefore the City has the option to select more than one firm to perform these services and to reduce the number of properties that the property management firm will manage. Non-exclusivity allows the City to be flexible in how it manages its properties, and to select a discrete real estate broker for non-aviation City properties at the Airport. The City reserves the right to terminate the property management service contract with a six-month written notice.
Consultant Selection
Bidder Recommendation
Best Qualified Firm Aeroplex Group Partners, LLC
Evaluation Criteria Experience and technical competence; quality control; conceptual plan and approach; stability and references, and cost of services based on fair and cost-effective work pricing.
Municipal Code SMMC 2.24.190
RFPs Received
Aeroplex Group Partners, LLC Bell Properties, Inc.
RFP Data
Posted On Posted On
Advertised In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
12/05/2022 City’s Online
Bidding Site Santa Monica Daily Press 12 01/16/2023
Justification to Award
Based on the criteria in SMMC 2.24.190, staff recommends Aeroplex Group Partners, LLC as the best-qualified firm to provide commercial real estate brokerage, property 5 of 6
management, and related consulting services to the Santa Monica Airport based on the firm’s documented expertise in commercial real estate and property management, experience with similar projects at both the City and other general aviation airports; conceptual plan for staffing and undertaking the work; positive reports from reference checks, and fair and cost-effective pricing of services.
Environmental Review
The award of an agreement for commercial real estate services would have no possibility of significant effect on the environment, and therefore, is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Past Council Actions
Meeting Date Description
8/14/2018
(Attachment A)
Santa Monica Airport Leasing and Licensing Policy
8/14/2018
(Attachment B)
City of Santa Monica Minimum Standards for Commercial Aviation Services at the Santa Monica Airport
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Airport Fund to award an agreement with Aeroplex Group Partners, LLC. To provide commercial real estate brokerage, property management and related consulting services for the Santa Monica Airport. Future year funding is contingent on Council budget approval.
Agreement Request
FY 2023-24
Request Amount Future Years Department # Total Contract Amount $472,188 $1,933,904 57500001.552010 $2,406,092
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Prepared By: Kate Schlesinger, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. AIRPORT LEASING AND LICENSING POLICY 2018-08 (1)
B. Santa Monica Minimum Standards for Commercial Aviation Services at SMO Adopted 8-14-2018 (1)
C. Aeroplex Group Partners, LLC OAKS_20230206