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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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County Manager's Office
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DATE:
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June 21, 2004
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BOARD MEETING DATE:
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July 6, 2004
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TO:
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Honorable Board of Supervisors
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FROM:
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Steve Alms, Manager, Real Property Services
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SUBJECT:
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Lease/Concession Agreement with SUNBOW, INC, a California corporation, dba Air West Aircraft Engines, for premises at San Carlos Airport. (Lease No. 5047)
(4/5 vote required)
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Recommendation
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Adopt a Resolution authorizing the President of the Board of Supervisors to execute a Lease/Concession Agreement ("Lease") with SUNBOW, INC, a California corporation, dba Air West Aircraft Engines ("Air West"), for premises at San Carlos Airport, and authorizing the County Manager or his designee to accept, execute and/or agree to on behalf of the County, any and all amendments, options, notices, consents, approvals, and documents in connection with the Lease/Concession Agreement.
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Background
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On December 7, 1999, this Board adopted Resolution No. 63240 authorizing the lease of a portion of the San Carlos Airport to Air West for use in providing aircraft-related maintenance services at the Airport. Air West has requested a five-year extension. The Airports Manager and Real Property Services Manager have cooperated in negotiating a new agreement.
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Discussion
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Since completion of the 1999 agreement, new standard agreements have been adopted for use at the Airport. Air West has agreed to enter a new five-year Lease/Concession Agreement commencing July 1, 2004.
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Real Property Services has completed an appraisal of the fair rental value of the premises. Based on that appraisal, the initial Base Rent for the new agreement will be $6,000.00 per month, a 28% increase from the current rate of $4,671.12. As in the past, Air West will pay a monthly concession fee equal to 1% of gross revenues. In 2003, Air West paid $16,303 in concession fees to San Carlos Airport. Concession fees are expected to increase gradually over the term of the agreement.
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Since negotiating the Lease/Concession Agreement, Air West has entered a tentative agreement to sell its business. Airport staff have reviewed the qualifications of the potential buyer, Pars, Inc. Included in the Agreement now submitted for Board consideration is the County's consent for Air West to assign the Lease/Concession Agreement to Pars, Inc, provided the sale is consummated before June 30, 2005. If that transaction is not completed, Air West will continue to operate the concession, and assignment to any other entity would require a further action of your Board.
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The Public Works Director concurs in this recommendation. County Counsel has reviewed and approved the agreement as to form.
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Vision Alignment
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The proposed lease agreement keeps the commitment of responsive, effective and collaborative government and goal number 20: Government decisions are based on careful consideration of future impact, rather than immediate gain. The lease contributes to this commitment and goal by ensuring revenue to the Airport at the current market rate while maintaining the continuity of quality aircraft maintenance for the aviation community.
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Fiscal Impact
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There is no net County cost. Annual rent of $72,000 and estimated concession fees of $16,000 are included in the Airport Enterprise Fund budget for fiscal year 2004-2005.
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