Item Number: 16
City Council / Board of Directors
Written Communications
Meeting of: April 15, 2025
Submitted By:
James Murawski, Airport Director
Subject:
Standard Sublease Agreement for Buildings 717B, 671, 675 and Lot 20 by and between the Southern California Logistics Airport Authority and The Boeing Company Recommendation:
That the Southern California Logistics Airport Authority (“SCLAA”) Board of Directors:
(1) Approve entering into a Standard Sublease Agreement for Buildings 717B, 671, 675 and Lot 20 (“Agreement”), by and between the SCLAA and The Boeing Company, (“Boeing”); and
(2) Authorize the Executive Director to execute said Agreement; and (3) Adopt Resolution No. SCLAA 25-008 amending the 2024/2025 budget increasing revenue in account 4500125-44605 by $179,514.12.
Fiscal Impact:
The Agreement presented herein will generate approximately $737,146.68 in gross lease and parking revenue over the initial term (May 01, 2025 – December 31, 2027). The table below outlines the fiscal impact of the initial 2 years and 8 months of the Agreement.
FY 2024-25
May 25 – June 25
FY 2025-26
July 25 – June 26
FY 2026-27
July 26 – June 27
FY 2027-28
July 27 – December 27
$44,883.38 $270,646.78 $278,766.18 $142,850.33
The sublease revenue generated by this Agreement that is associated with Buildings 717B, 671, and 675 is in line with the current budget and does not require a budget Amendment. However, the parking revenue associated with this Agreement exceeds the budgeted revenue established in Airport account 4500125-44605 for fiscal year 2024-25 by $25,740. Additionally, other parking revenues recorded in account 4500125-44605 have exceeded expectations for fiscal year 2024-25. Resolution No. SCLAA 25-008 is presented herein for the purpose of requesting approval of the required budget 5 7
0 Amendment in the amount of $179,514.12 as outlined below. Future appropriations for the subject Agreement will be considered at the time the annual budget is approved.
Original FY24/25 Budget
Revenue
4500125-44605 Parking Revenue $800,000
Proposed FY24/25 Budget
Revenue
4500125-44605 Parking Revenue $979,514.12
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:
Boeing is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide. Boeing also provides leasing and product support services. Boeing is among the largest global aerospace manufacturers; it is the fourth-largest defense contractor in the world based on 2022 revenue and is the largest exporter in the United States by dollar value. Boeing stock is included in the Dow Jones Industrial Average and Boeing is ranked 54th on the Fortune 500 list.
Since 2003, Boeing has been one of the largest companies to maintain operations at the Southern California Logistics Airport (“SCLA”). Given a number of positive attributes associated with the SCLA and the surrounding airspace, Boeing started performing aircraft flight tests at the SCLA in 2010. Boeing has steadily expanded operations at the SCLA to include aircraft financing via the Boeing Capital Corporation, flight test operations, and Maintenance Repair and Overhaul (“MRO”) services for its Aircraft on Ground (“AOG”) and Fleet Care divisions.
With approximately 790 employees, Boeing is the largest employer at the SCLA. Since executing their first lease agreement in 2003, Boeing has grown to its current leasehold estate that includes seven SCLA owned buildings and a ground leasehold interest, including Building 717B which Boeing has leased since August 2021.
Discussion:
Boeing continues to thrive at the SCLA and desires to renew and combine their agreements for office, storage and ramp space. The proposed Agreement for Buildings 717B, 671, 675 and Lot 20 entails an initial term of two-years and eight-months with a commencement date of May 1, 2025. The Agreement also contemplates one, three-year, option term. The Subleased Premises consist of Building 717B which is comprised of 5 7
0 approximately 9,803 square feet of office space, Buildings 671 and 675 which are comprised of 6,240 square feet of storage space, and Lot 20 which is comprised of 330,000 square feet of ramp space. Boeing has agreed to pay $22,441.69 per month with an annual 3% inflator. This amounts to $.83 per square foot per month for Building 717B, $.23 per square foot per month for Buildings 671 and 675, and $.04 per square foot per month for Lot 20, which is comparable with similar SCLA buildings and ramp space.
Because the Standard Sublease Agreement will maintain local employment, produce a steady revenue stream, and will maintain airport operations, staff recommends that the Southern California Logistics Airport Authority Board approve the Standard Sublease Agreement with The Boeing Company Buildings 717B, 671, 675 and Lot 20 and authorize the Executive Director to execute said agreement and adopt Resolution No. SCLAA 25- 008 amending the 2024/2025 budget increasing revenue in Airport account 4500125- 44605 by $179,514.12. 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 Authority Executive Director.
Staff remains available for any questions or comments you may have.
JM/lf
Attachments: A. General Site Map
B. Standard Sublease Agreement for Buildings 717B, 671, 675 and Lot 20
C. Resolution No. SCLAA 25-008