Item Number: 29
City Council / Board of Directors
Written Communications
Meeting of: August 18, 2026
Submitted By:
James Murawski, Airport Director
Subject:
Standard Sublease Agreement for Buildings 787 and 788 by and between the Southern California Logistics Airport Authority and Exquadrum, LLC Recommendation:
That the Southern California Logistics Airport Authority (“SCLAA”) Board of Directors:
(1) Approve entering into a Standard Sublease Agreement for Buildings 787 and 788 (“Agreement”), by and between the SCLAA and Exquadrum, LLC; and (2) Authorize the Executive Director to execute said Agreement; and (3) Adopt Resolution No. SCLAA 26-005 amending the 2026-2027 budget increasing revenue in Airport account 4501172A-45200 by $61,938.48 and Airport account 4500125-45220 by $40,045.56.
Fiscal Impact:
Approval of the Agreement presented herein will generate approximately $1,896,792.38 in gross revenue over the initial term of the Agreement from July 1, 2026, through June 30, 2041. A maximum rent credit of $100,000 is contained in the Agreement for specific tenant improvements, which if fully realized will reduce the net revenue generated by this Agreement to approximately $1,796,792.38. The first four fiscal years summarized in the table below.
Fiscal
Year
FY 2026 - 2027
July - June
FY 2027 - 2028
July – June
FY 2028 - 2029
July – June
FY 2029 - 2030
July – June
Gross
Revenue $101,984.04 $105,043.56 $108,194.87 $111,440.71 Rent
Credit $0 $0 ($80,000) ($20,000)
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Net
Revenue $101,984.04 $105,043.56 $28,194.87 $91,440.71
The revenue associated with this Agreement increases the budgeted revenue established in Airport account 4501172A-45200 by $61,938.48 and 4500125-45220 by $40,045.56 for fiscal year 2026-2027 and thereby requires an additional revenue appropriation as displayed in the following table.
Current Budget Fiscal Year 2026-2027
Building 787 & 788 Revenue 4501172A-45200 $0
Ground Sublease Revenue 4500125-45220 $393,338
Proposed Budget Fiscal Year 2026-2027
Building 787 & 788 Revenue 4501172A-45200 $61,938.48
Ground Sublease Revenue 4500125-45220 $433,383.56
Resolution No. SCLAA 26-005
Building 787 & 788 Revenue 4501172A-45200 $61,938.48
Ground Sublease Revenue 4500125-45220 $40,045.56
Future appropriations for the subject Agreement will be considered at the time the annual budget is approved.
This Agreement contains provisions for tenant improvements and rent credits. The agreed upon tenant improvements include the repair and replacement of multiple roll-up doors, painting, repairing walls and flooring, roof repairs, site grading, fencing and gate installation, and other general repairs as approved. Given that the buildings were constructed circa 1957 and that there has been no significant use of the facilities since the early 1990’s, these repairs are essential and will extend the life of the building and add long term value.
Rent credits are issued in accordance with the terms of the Agreement following substantial completion of the Tenant Improvements, after a thorough review of all cost documentation, including proof of payment, and documented pre and post tenant improvement inspections by SCLAA staff. In the case of this Agreement, the tenant has until June 30, 2028, to substantially complete the contemplated improvements.
The rent credits for the anticipated tenant improvements are scheduled to begin in September of 2028, and will be budgeted for in the appropriate fiscal years. The maximum amount of rent credits allowed in this Agreement is fixed at a not-to-exceed amount of $100,000, which shall be applied over 13 consecutive months in an amount not to exceed $8,000 per month. Actual rent credits could be substantially lower, depending on what work is completed.
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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:
Exquadrum Inc. (“Exquadrum”), founded in 2002 by Eric Schmidt and Kevin E. Mahaffy, is a rocket and space flight research and development engineering company that has been a tenant at the Southern California Logistics Airport (“SCLA”) since 2011.
Exquadrum Inc. leases 8.8 acres of land located on the north end of the SCLA, commonly referred to as the FORGE testing site (“FORGE”). Exquadrum Inc. has worked on several rocket motors that have been tested at the FORGE site, including the Tactical Air-to-Air Solid Rocket Motor, the Hypersonic Rocket, which was successfully tested in late 2024, and GRIFFIN-1 which was successfully tested in December of 2025.
Mach Industries Inc. (“Mach”), founded in February 2024, is a U.S.-based defense technology company, with a valuation of approximately $480 million as of June 2025.
Mach specializes in next generation unmanned aerial vehicles (“UAVs”) and hydrogen powered defense technologies. Mach utilizes a vertically integrated manufacturing strategy, allowing the company to maintain control over multiple stages of its supply chain rather than relying on outsourced components. As such, they are seeking to expand their manufacturing capabilities to support the production needs of its defense projects. Mach recently acquired Exquadrum Inc., and under the umbrella of Mach, will become Exquadrum, LLC, maintaining the current corporate officers of Exquadrum Inc.
Buildings 787 and 788 at the SCLA were built in 1957 for missile storage and light manufacturing. The buildings are comprised of thick poured in place concrete walls and heavy steel doors and were built to securely store military ordnance and contain and reduce the impact of a potential explosion. Both buildings have been predominantly vacant since the early 1990’s, with some occasional use by Airport and City departments for secure storage of bulky materials.
Discussion:
Exquadrum, LLC, requests to enter into a fifteen-year sublease agreement (“Agreement”) for Buildings 787 and 788. The Agreement also contemplates three additional, five-year option terms. Buildings 787 and 788 will be for the use of storage, handling, assembly, mixing and controlled processing of rocket motors and related components. The Subleased Premises consist of Building 787 and 788, which are both comprised of approximately 5,491 square feet for a total of 10,982 square feet of storage space and Additional Yard Space comprised of approximately 60,675 square feet. Exquadrum, LLC, has agreed to pay $8,498.67 per month with an annual 3% inflator. This amounts to approximately $0.47 per square foot for Buildings 787 and 788 and approximately $.05 per square foot for the Additional Yard Space which is comparable to similar SCLA buildings and Yard Space.
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The annual revenue generated during the first seven years of the Agreement is within the annual authority of the Executive Director. However, because an annual rental inflator of 3% is included in the Agreement, the annual revenue generated in years eight through fifteen exceeds the Executive Director’s annual authority. Therefore, the Agreement is being presented to the SCLAA Board of Directors.
Because the Standard Sublease Agreement will maintain local employment, Exquadrum, LLC, currently has 85 employees, and produces a steady revenue stream, staff recommends that the Southern California Logistics Airport Authority Board of Directors:
(1) approve the Standard Sublease Agreement with Exquadrum, LLC, for Buildings 787 and 788 and (2) authorize the Executive Director to execute said Agreement and (3) adopt Resolution No. SCLAA 26-005 increasing revenues in account 4501172A-45200 by $61,938.48 and 4500125-45220 by $40,045.56. 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.
Prepared By:
Jacob Kern, Airport Leasing Technician
Attachments: A. General Site Map
B. Standard Sublease Agreement for Buildings 787 and 788 C. Resolution No. SCLAA 26-005