MEETING DATE: JULY 21, 2026
TO: ALDO E. SCHINDLER, CITY MANAGER
FROM: BRIAN MONCRIEF, DEPUTY CITY MANAGER – REAL PROPERTY SUBJECT: CITY COUNCIL CONSIDERATION AND APPROVAL TO RELEASE
A COMPETITIVE OFFERING FOR THE SOUTH HANGAR
SUMMARY:
City Council consideration and approval to prepare and release a competitive offering for the South Hangar pursuant to the procedures established by the City Council in Resolution No. 25-10.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Authorize staff to prepare and release a competitive offering for the South Hangar and portions of the surrounding leased property pursuant Resolution No. 25-10.
FISCAL IMPACT:
There is no fiscal impact associated with this item.
CORRELATION TO THE STRATEGIC PLAN:
The consideration and approval to prepare and release a competitive offering for the South Hangar contributes to the fulfillment of the City's Strategic Plan Goal A: Economic and Neighborhood Development. Specifically, this item implements Strategy 1, which is to develop critical phases of Tustin Legacy.
BACKGROUND AND DISCUSSION:
The South Hangar remains one of the most recognizable and historically significant structures within Tustin Legacy. Constructed in 1942 as part of the Navy's lighter-than-air program during World War II, the structure continues to serve as an iconic symbol of the area's military heritage. The South Hangar structure stands at approximately 180 feet tall by 300 feet wide by 1,000 feet long, and is currently owned by the United States Navy. Pursuant
AGENDA REPORT
Agenda Item _______
Reviewed:
City Manager _______
Finance Director _______
4 N/A
Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report
Tustin Legacy South Hangar Offering Approval
July 21, 2026
to a long-term lease agreement, the City leases and manages the structure and portions of the surrounding property pending completion of environmental remediation activities.
The South Hangar and surrounding property (Site) under lease totals approximately 32 acres and is currently identified as Assessor's Parcel Number 430-371-32, as shown on Attachment
1. The Site is generally bounded by: Moffett Drive to the north, Warner Avenue to the south, Armstrong Avenue to the east, and Tustin Ranch Road to the west.
Existing Site Conditions
The South Hangar is currently utilized on a limited basis for airship storage and maintenance operations. A previous evaluation by Page & Turnbull, a historic architecture and preservation consultant, identified a need for life-safety repairs, including potential hazards such as debris falling from the ceiling, as well as a range of conceptual improvement scenarios for the structure. Those scenarios currently range from approximately $22.6 million for baseline structural stabilization necessary to support continued airship maintenance operations, to approximately $203 million and $271 million for rehabilitation and broader adaptive reuse opportunities, respectively.
As a separate initiative to document the iconic structure, the South Hangar has been comprehensively digitally preserved using a variety of advanced documentation methods.
Access to these digital assets, including 3D models, virtual access, and other supporting documentation, will be provided through the secure document center made available to prospective proposers during the offering process.
Following the November 2023 Navy North Hangar fire, the City implemented significant security and fire prevention measures, including 24-hour security personnel, security perimeter fencing, lighting, surveillance cameras, and improved emergency access intended to reduce risk to the remaining structure and protect the surrounding community. Although these measures have substantially improved site security, the existing structural and lifesafety conditions continue to limit the South Hangar's operational capability. The ongoing cost of operations and security measures currently exceeds approximately $1 million annually, and absent significant investment or a viable reuse strategy, opportunities to expand use of the hangar will remain limited while the cost of maintaining the status quo is expected to continue rising.
On June 2, 2026, the City Council received the Tustin Legacy Outreach and Engagement Report and, as recommended by staff, the City Council directed staff to initiate a competitive offering process for the South Hangar to solicit prospective users and investment interest while also developing contingency options should no viable reuse proposal ultimately be identified. The competitive offering is intended to provide the development community with information regarding the South Hangar's historic significance, long-term operational costs, current structural and utility limitations, and unique ownership considerations to facilitate an informed evaluation of the Site and gauge market interest. Responses to the offering will assist the City in evaluating opportunities to:
Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report
Tustin Legacy South Hangar Offering Approval
July 21, 2026
• Identify qualified organizations interested in preserving, operating, or adaptively reusing the South Hangar;
• Evaluate potential public-private investment opportunities; • Determine the financial and operational feasibility of proposed concepts; • Identify opportunities to reduce long-term public maintenance and operational costs; • Support future historic preservation efforts where feasible; and • Inform future City Council consideration regarding the long-term future of the South Hangar.
The Site is located within Neighborhood D (Planning Area 8, 13 & 14) of the Tustin Legacy Specific Plan (TLSP) and is designated as Mixed-Use Urban. Current allowable land uses include but are not limited to: commercial retail, commercial entertainment, residential, hotel, and public recreation.
The applicable land use plan is included as Attachment 2. If a proposal for the Site includes land uses not currently permitted under the applicable Specific Plan or zoning designation, it would be subject to future City Council consideration and approval of the necessary land use entitlements, including any applicable Specific Plan amendment. Proposals may be limited to the South Hangar structure only or may also include additional adjacent land to optimize future development, operational access, infrastructure improvements, or other planning considerations.
Additionally, under the long-term lease agreement with the Navy, the Surplus Land Act (SLA) does not currently apply to the Site. Pursuant to Government Code section 54221(b)(1) the SLA only applies to land owned in fee simple by the local agency. Here, the City is the lessee of the land and would be looking at a potential sublease relationship. Consequently, the SLA does not apply to this proposed transaction. If, however, in the future the City becomes the fee simple owner of the Site and the City wanted to enter into a new lease, extend the term of an existing lease or sell the Site, the City will need to comply with the SLA at that time.
Offering Authorization
On February 4, 2025, the City Council adopted Resolution No. 25-10 establishing a policy requiring City Council consideration and approval prior to the release of future competitive offerings involving the disposition of the City’s real property. Pursuant to Resolution No. 25- 10, staff is requesting authorization to prepare and release a competitive offering for the South Hangar. Following City Council approval of the offering authorization, key milestones are listed below:
• September 2026: return to the City Council with recommendations to select a qualified real estate brokerage firm to market the competitive offering; Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC City Council Agenda Report
Tustin Legacy South Hangar Offering Approval
July 21, 2026
• November 2026–December 2026: finalize and release the competitive offering; • First Quarter 2027: evaluate submitted proposals; and • Second Quarter 2027: return to the City Council with recommendations regarding potential next steps.
___________________________
Jason Loya
Senior Management Analyst
Attachments:
1. Parcel Map 430-37
2. Tustin Legacy Specific Plan land use plan
3. Aerial Exhibit (LIFOC)
Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC South Hangar Site
Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC Docusign Envelope ID: 68013373-2B74-888B-80F9-9AF2D97D1518 Docusign Envelope ID: 925292DA-3C22-836C-81C8-1E9AE2ED9AFC