Item Number: 20
City Council / Board of Directors
Written Communications
Meeting of: February 18, 2025
Submitted By:
C. Eric Ray, Airport Director
Subject:
Standard Sublease Agreement for Buildings 868, 868A, 869 and 835 by and between the Southern California Logistics Airport Authority and Anduril Industries, Inc.
Recommendation:
That the Southern California Logistics Airport Authority (“SCLAA”) Board of Directors:
(1) Approve entering into a Standard Sublease Agreement for Building 868, 868A, 869 and 835 (“Agreement”), by and between the SCLAA and Anduril Industries, Inc., (“Anduril”); and
(2) Authorize the Executive Director to execute said Agreement; and (3) Adopt Resolution No. SCLAA 25-004 amending the 2024/2025 budget decreasing revenue in Airport account 4501175A-45200 by $101,155.71.
Fiscal Impact:
The Agreement presented herein will generate approximately $567,778.12 in gross lease revenue over the initial term (March 01, 2025 – February 29, 2028). The table below outlines the fiscal impact of the initial 3 years of the Agreement.
FY 2024-25
March 25 – June 25
FY 2025-26
July 25 – June 26
FY 2026-27
July 26 – June 27
FY 2027-28
July 27 – February 28
$401.24 $128,640.28 $261,173.27 $177,563.34
The revenue associated with this Agreement decreases the budgeted revenue established in Airport account 4501175A-45200 for fiscal year 2024-25 by $101,155.71.
Resolution No. SCLAA 25-004 is presented herein for the purpose of requesting approval of the required budget adjustment as outlined below.
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Original FY24/25 Budget
Revenue
4501175A-45200 Building 868 $241,754
Proposed FY24/25 Budget
Revenue
4501175A-45200 Building 868 $140,598.29
Strategic Plan Goal:
The City of Victorville Strategic Plan 2023-2026 identifies multi-year strategic goals and various strategies to work toward achieving those goals. Goal A fosters fiscal health through disciplined long-term planning, cost control, increased revenues, and cost recovery.
Background:
Anduril Industries, Inc., is an American defense company that specializes in autonomous systems. It was founded in 2017 by inventor Palmer Luckey and a team of founders formerly with Palantir and SpaceX. Anduril raised $1.5 billion in their latest funding round, six months ago, from some of the most renowned investors in the global technology landscape, including: Andreessen Horowitz; Founders Fund; General Catalyst; Lux Capital; Thrive Capital; Valor Equity Partners; and Elad Gil, among others. As of February 2025, the company has a valuation of $14 billion. Moreover, the company is in discussions to raise additional capital that is expected to bring its market valuation to $28 billion.
Anduril states that at its core, it is a defense products company. Unlike most defense companies, Anduril does not sit idly waiting for its customers to tell them what they need.
Anduril identifies problems, and privately funds research and development while working to break into large programs of record and sells finished products off the shelf in order to get relevant technologies into the hands of war fighters as quickly and effectively as possible. Ideas are turned into deployed capabilities in months, not years, saving the government and taxpayers money along the way. Military veterans make up more than 20% of Anduril’s team and their defense experience is leveraged to ensure that the company’s products meet the needs of servicemen and women in the battlefield.
Anduril’s family of systems is powered by the proprietary Lattice OS, an artificial intelligence powered open operating system that brings autonomy to the Defense Department’s toughest missions. Lattice OS connects autonomous sensemaking and command and control capabilities with open, modular, and scalable hardware components for a layered family of systems approach. Some of the major systems that Anduril has deployed or publicly acknowledged to be developing are the Sentry Towers, Roadrunner, Ghost Shark XLAUV, Dive LDAUV, Altius and Fury.
Anduril announced plans to build a massive, 5 million square foot manufacturing facility called "Arsenal-1" in Pickaway County, Ohio, with a projected investment of nearly $1 billion, creating over 4,000 jobs by 2035. This project is considered one of the largest 4 0
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single job creation initiatives in Ohio history, with the state offering significant tax incentives to attract Anduril to the area, aiming to bolster the state's defense manufacturing capabilities.
When production begins next year, the company will start manufacturing three of its autonomous air systems products, Fury, Roadrunner and Barracuda, Anduril said in an email to Manufacturing Dive, a periodical. The company has plans to expand into other products as it builds out the plant and new facilities come online.
The facility at the Southern California Logistics Airport (“SCLA”) will support Anduril’s Group 5 autonomous air vehicle program, called Fury, a single engine jet drone.
Additionally, Andril will perform related independent research and development, including certain contracted efforts with other defense contractors.
Discussion:
Buildings 868, 868A, 869 and 835 were previously subleased by Overair. Due to economic conditions beyond the control of Overair, its business operations went into liquidation, and it executed an Assignment for the Benefit of Creditors in favor of Insolvency Services Group, a California corporation (“ISG”). A termination agreement was approved by the SCLAA Board of Directors on February 4, 2025, for the Overair sublease. Staff has negotiated terms for Anduril to lease these buildings at a 3% increase in the monthly base rent previously collected. Moreover, Anduril agreed to construct at least $400,000 of tenant improvements to the facility, which will likely result in a significantly greater investment for the benefit of the SCLA.
Anduril currently leases Building 685C and has constructed tenant improvements to that facility that far exceeded that which was contractually required. The SCLAA anticipates the same outcome with this Agreement as Anduril’s reputation calls for upscale facilities.
The Agreement will allow Anduril to grow its footprint at the SCLA to perform aircraft assembly, maintenance, calibration, storage, and preparation for testing in support of Anduril’s Group 5 autonomous air vehicle program, an autonomous jet powered aircraft.
The proposed Agreement for the Buildings 868, 868A, 869 and 835 entails an initial term of three-years with a commencement date of March 1, 2025. The Agreement also contemplates one, three-year, option term. The Subleased Premises consist of Buildings 868, 868A, 869, and 835, which are comprised of hangar, office and maintenance space.
Anduril has agreed to pay $20,921.31 per month with an annual 3% inflator. This amounts to the summation of Building 868 rent in the amount of $7,581.55 which is $.94 per square foot; Building 868A rent in the amount of Three Thousand Three Hundred Fifty-Four Dollars and Forty-One Cents ($3,354.41) which is $1.16 per square foot; Building 869 rent in the amount of Nine Thousand Fifty-One Dollars and Forty-Eight Cents ($9,051.48) which is $.94 per square foot; and Building 835 rent in the amount of Nine Hundred Thirty- Three Dollars and Eighty-Seven Cents ($933.87) which is $.55 per square foot, which is comparable with similar SCLA buildings.
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Because the Standard Sublease Agreement will increase local employment, increase aircraft activity, and produce a steady revenue stream, staff recommends that the Southern California Logistics Airport Authority Board approve the Standard Sublease Agreement with Anduril Industries, Inc., for the Building 868, 868A, 869 and 835 and authorize the Executive Director to execute said agreement and adopt Resolution No.
SCLAA 25-004 amending the 2024/2025 budget decreasing revenue in account 4501175A-45200 by $101,155.71. Such approval is being requested, subject to any minor, non-substantive modifications to the Sublease Agreement as approved by the Southern California Logistics Airport Authority Legal Counsel and the Southern California Logistics Airport Director.
Staff remains available for any questions or comments you may have.
CER/lf
Attachments: A. General Site Map
B. Standard Sublease Agreement for the Buildings 868, 868A, 869 and 835
C. Resolution No. SCLAA 25-004