HomeMy WebLinkAbout229-24 RESOLUTION113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Resolution: 229-24
File Number: 2024-469
N79TW, LLC. (GROUND LEASE):
A RESOLUTION TO APPROVE A THIRTY YEAR GROUND LEASE AGREEMENT WITH N79TW, LLC, FOR
AIRPORT PROPERTY LOCATED IMMEDIATELY NORTH OF THE TERMINAL BUILDING FOR THE
CONSTRUCTION OF A 10OX180 HANGAR AND ATTACHED OFFICE SPACE, WITH AN OPTION TO
EXTEND THE GROUND LEASE FOR AN ADDITIONAL TEN YEAR TERM
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a thirty
year ground lease agreement, a copy of which is attached to this Resolution, with N79TW, LLC for airport property
located immediately North of the terminal for the construction of a 100' x 180' hangar and attached office space, along
with an option to extend the ground lease for an additional ten year term at a rental rate of $4,005.00 per year for the
discount period and $7,787.50 upon expiration of the discount period, with an adjustment every five years.
PASSED and APPROVED on September 17, 2024
Page 1
Attest:
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CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF SEPTEMBER 17, 2024
TO: Mayor Jordan and City Council
THRU: Susan Norton, Chief of Staff
FROM: Jared Rabren, Airport Director
SUBJECT: Ground Lease for N79TW, LLC
CITY COUNCIL MEMO
2024-469
RECOMMENDATION:
The Aviation Division requests approval and signature of the Mayor on a ground lease with N79TW, LLC, for
land located immediately north of the Terminal to construct a 100 x 180 hangar with attached office space.
BACKGROUND:
The designated area was improved via grant funds from the FAA and Arkansas Department of Aeronautics in
2007 to provide infrastructure for four corporate style hangars.
DISCUSSION:
N79TW, LLC, currently leases hangar space from a tenant on the field. The company is looking to expand their
aircraft fleet and needs more hangar space.
BUDGET/STAFF IMPACT:
N79TW, LLC will pay $4,005 per year during the 18-month discount period, and $7,787.50 per year after the
discount period is expired.
ATTACHMENTS: SRF (#3), N79TW, LLC. - Signed Lease (#4)
Mailing address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
== City of Fayetteville, Arkansas
y 113 West Mountain Street
Fayetteville, AR 72701
(479)575-8323
- Legislation Text
File #: 2024-469
Ground Lease for N79TW, LLC
A RESOLUTION TO APPROVE A THIRTY YEAR GROUND LEASE AGREEMENT WITH
N79TW, LLC, FOR AIRPORT PROPERTY LOCATED IMMEDIATELY NORTH OF THE
TERMINAL BUILDING FOR THE CONSTRUCTION OF A 10OX180 HANGAR AND ATTACHED
OFFICE SPACE, WITH AN OPTION TO EXTEND THE GROUND LEASE FOR AN ADDITIONAL
TEN YEAR TERM
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE.)
ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan
to sign a thirty year ground lease agreement, a copy of which is attached to this Resolution, with
N79TW, LLC for airport property located immediately North of the terminal for the construction of a
100' x 180' hangar and attached office space, along with an option to extend the ground lease for an
additional ten year term at a rental rate of $4,005.00 per year for the discount period and $7,787.50 upon
expiration of the discount period, with an adjustment every five years.
Page 1
Jared Rabren
Submitted By
City of Fayetteville Staff Review Form
2024-469
Item ID
9/17/2024
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
8/20/2024 AIRPORT SERVICES (760)
Submitted Date Division / Department
Action Recommendation:
The Aviation Division requests approval and signature of the Mayor on a ground lease with N79TW, LLC, for land
located immediately north of the Terminal to construct a 100 x 180 hangar with attached office space.
Account Number
Project Number
Budgeted Item? No
Budget Impact:
Fund
Project Title
Total Amended Budget
Expenses (Actual+Encum)
Available Budget
Does item have a direct cost? No Item Cost
Is a Budget Adjustment attached? No Budget Adjustment
Remaining Budget
V20221130
Purchase Order Number: Previous Ordinance or Resolution #
Change Order Number: Approval Date:
Original Contract Number:
Comments:
Docusign Envelope ID:E5FF6388-1F7F-4D9B-9180-5F704BD193AD
Ground Lease Agreement
between The City of Fayetteville,Arkansas
And
N79TW, LLC
The purpose of this Lease Agreement is to establish an agreement between the City of
Fayetteville, Arkansas ("CITY") and N79TW, LLC ("LESSEE") for the use of space for the
construction of an aircraft hangar and associated aprons and taxilanes as described below.
1. Leased Premises. For and in consideration of the rents, covenants and agreements
herein entered into and agreed upon by LESSEE as obligations to the CITY, the CITY lets, leases
and demises unto LESSEE, subject to the terms and conditions contained herein, the following
described property situated in Washington, County, Arkansas:
A certain tract of land located immediately north of the Drake Field Terminal building as
depicted on Exhibit "A" attached hereto for construction of a 100' x 180' (18,000 sq.ft.)
hangar and attached 50' x 85' (4250 sq.ft.) office space. The leased premises shall be
further legally described in a survey to be obtained by LESSEE within sixty (60) days of
the execution of this Agreement.
2. Term. The initial term is for thirty (30) years beginning on /7 , 2024
(the "Effective Date"), and shall end on ,6 ego J/ , 2054 unless otherwise terminated,
canceled or extended as set forth hereinbelow:
a. LESSEE shall have eighteen (18) months from the Effective Date (the "Discount
Period")to begin construction of the hangar. The Discount Period may be extended
by up to an additional eighteen (18) months upon written agreement of CITY and
LESSEE. Failure to begin construction before expiration of the Discount Period
(or the expiration of any extended period agreed upon by the parties pursuant to
this subsection) shall be an automatic cancellation of this ground lease.
b. Option to Extend. LESSEE shall have the option to extend the lease term of this
lease for one (1) period of ten (10) years if LESSEE has satisfied the following
conditions:
i. LESSEE has complied with and performed all conditions, covenants, and
terms of the Agreement without any defaults known to LESSEE, or any
defaults that are not otherwise in the process of being resolved in the manner
provided in this Agreement.
ii. Notice of LESSEE's request to renew has been made and presented in
writing to the City at least one hundred twenty (120) days prior to the
expiration of the initial term.
iii. The amount of rental fees shall have been successfully negotiated and
agreed to by the parties for the extended lease term.
Docusign Envelope ID: E5FF6388-1F7F-4D9B-9180-5F704BD193AD
3. Rent. LESSEE agrees to pay to CITY for the Discount Period set forth in paragraph
2.A above a discounted annual ground rental fee of eighteen cents ($0.18) per square foot of total
leased ground space. Annual rental due for this Discount Period is FOUR THOUSAND, AND
FIVE DOLLARS ($4,005). The discounted rate shall expire at the end of Discount Period
(including any extension agreed upon by the parties pursuant to paragraph 2.A above) or upon the
issuance of a Final Certificate of Occupancy, whichever shall occur first.
Upon the expiration of the Discount Period, LESSEE agrees to pay to CITY an annual ground
rental rate of thirty-five cents ($0.35) per square foot of total leased ground space. Annual rental
due for this period of time is SEVEN THOUSAND, SEVEN HUNDRED AND EIGHTY-SEVEN
DOLLARS AND FIFTY CENTS. ($7,787.50).
Rental payments during the Discount Period shall be paid in advance on the first day of each month
beginning with the first full calendar month after the month of the Effective Date. Rental payments
after the Discount Period shall be paid in advance in yearly installments on the first day following
the issuance of a final certificate of occupancy and on the same annual anniversary thereof. Rental
charges shall be reviewed every five (5) years and the rental charges for the next five (5) years of
the lease term will be adjusted up to reflect the Consumer Price Index (CPI) plus one (1) percent.
A delinquency charge shall be imposed on payments not received by the close of business on the
tenth (IOth) day after the due date. Such delinquency charge shall be the maximum amount
allowable under Arkansas law. Payments shall be delivered or mailed to: City of Fayetteville,
4500 S School Ave Ste. F, Fayetteville, Arkansas 72701.
4. Use. LESSEE agrees to use the leased premises only as an aircraft hangar and any
other related lawful purposes.
a. Flammable Material: LESSEE agree not to store any flammable material on the
leased premises other than a limited supply of oils and agents necessary for the
operation of an aircraft hangar.
b. Hazardous Substances. LESSEE shall not cause or permit any hazardous
substances to be used or stored on or in the leased premises without first obtaining
CITY's written consent. If hazardous substances are used, stored, generated, or
disposed of on or in the leased premises or if the leased premises or any other airport
property become contaminated in any manner for which LESSEE is responsible or
legally liable, LESSEE shall indemnify and hold harmless CITY from any and all
claims, damages, fines, judgments, penalties, costs, liabilities or losses (including,
without limitation, a decrease in value of the leased premises or damages caused by
loss or restriction of rentable or usable space as part of the leased premises) arising
during or after the term hereof and arising as a result of that contamination by
LESSEE, LESSEE'S agents, employees or invitees. This indemnification includes,
without limitation, any costs incurred because of any investigation of airport or
any cleanup removal or restoration mandated by a federal, state, or local agency or
political subdivision.
Docusign Envelope ID: E5FF6388-1 F7F-4D9B-9180-5F704BD1 93AD
c. LESSEE shall not start or operate aircraft engines within the facility to be
constructed on the leased premises and shall not allow such operations by any other
person.
5. Use of the Airport. LESSEE is granted the use, in common, without charge, with
others similarly authorized, of the airport, together with all facilities, equipment, improvements,
and services which have been or may hereafter be provided at or in connection with the airport
form time to time including, but not limited to, the landing field and any extensions hereof or
additions thereto, roadways, runways, ramps, aprons, taxiways, floodlights, landing lights,
beacons, control tower, signals, radio aids, and all other conveniences for flying, landings and
takeoffs.
LESSEE agrees to observe and obey the CITY's ordinances and regulations with respect to use of
the leased premises and airport as well as all applicable county, state or federal regulations or laws.
LESSEE agrees to abide by "The Minimum Standards for the Fayetteville Municipal Airport
Drake Field".
6. Repairs, Maintenance and Appearance. LESSEE shall at all times during the
term of this agreement, it their expense, keep and maintain in good repair and safe condition the
leased premises and the equipment and appurtenances, both inside and outside, structural and non-
structural, extraordinary and ordinary, whether or not due to wear, tear, obsolescence or defects,
latent or otherwise. When used herein, the term "repairs" shall include all necessary replacements,
renewals, alterations, additions and betterments. LESSEE acknowledges that it is responsible for
the repairs and maintenance necessary to maintain the structural integrity of the hangar. LESSEE
shall at all times maintain the leased premises in a clean, orderly, and attractive condition and will
not allow the accumulation of rubbish, trash, refuse or any other unsightly condition or fire hazard
on the leased premises. LESSEE shall be responsible for all janitorial services and trash removal
from the leased premises.
In the event LESSEE fails to repair or maintain the leased premises as required, CITY may enter
the leased premises for the purpose of making such repairs necessary to maintain the structural
integrity of the hangar or to perform any maintenance required to keep the leased premises in a
clean, orderly and attractive condition. LESSEE shall be liable for any costs incurred by the CITY
in the event CITY exercises its authority due to LESSEE'S Failure to make necessary repairs or
perform other required maintenance work.
7. Alterations and Improvements. Following issuance of a final certificate of
occupancy for the hangar and office space to be constructed on the leased premises, LESSEE shall
have prior written consent from the CITY, meeting all CITY requirements, to make any major or
material alterations, additions and improvements LESSEE deems necessary and desirable to the
interior of the leased premises, which will not be unreasonably withheld. LESSEE shall not be
entitled to make any major or material alterations, additions or changes to the exterior of the leased
premises without the CITY's written consent, which will not be unreasonably withheld. LESSEE
acknowledges and agrees that all such alterations, additions, attachments and improvements
Docusign Envelope ID: E5FF6388-1 F7F-4D9B-9180-5F704BD193AD
including, but not limited to, paneling, partitions, railings, floors, ceilings and the like, shall
become the property of the CITY upon the termination of this agreement.
8. Insurance. LESSEE shall obtain and maintain sufficient insurance coverage for the
repair or replacement of the leased premises and any adjacent improvements, with an insurance
company licensed to do business in the State of Arkansas, naming the CITY as an Additional
Insured on the policy. LESSEE shall provide the Airport Director with a valid certificate of
insurance at all times during the term of this agreement. LESSEE acknowledges that it is its
responsibility to maintain insurance on any personal property on the leased premises.
9. Sub -Leasing and Assignment. LESSEE may lease the building/improvements
constructed on Leased Premises to another party, but shall not assign this lease or sublet the
underlying Leased Premises without prior written consent of the CITY of Fayetteville, which will
not be unreasonably withheld. LESSEE shall notify the CITY if it leases any portion of the
building/improvements on the Leased Premises and provide the name and contact information of
any other person or entity occupying the building/improvements on the Leased Premises. Consent
for any assignment or subletting shall only be considered at the same rates as established in
Paragraph 3 above. Any such assignment or subletting shall in no way relieve LESSEE from
liability for the obligations imposed by this lease. LESSEE may only be released from liability by
a specific written release executed by the CITY.
10. Events of Default. The following shall be Events of Default under this agreement:
a. LESSEE shall fail to pay when due and owing any rent and such nonpayment
continues for twenty days after written notice by the CITY;
b. LESSEE voluntarily abandons, deserts or vacates the leased premises;
c. LESSEE fails to comply with the insurance requirements set forth above;
d. LESSEE fails to observe or perform any other obligation under the terms of this
agreement and such failure is unremedied for twenty (20) days after the CITY has
provided written notice specifying such default. CITY may, but is not required to,
grant LESSEE such additional time as is reasonably required to correct any such
default if LESSEE has instituted corrective action and is diligently pursuing the
same; or
e. LESSEE fails to provide and maintain any security assurances required under the
terms of this agreement.
11. Remedies Upon Default. Whenever an Event of Default shall occur, and at its
exclusive option, CITY may deliver to LESSEE written notice of termination specifying the date
upon which the agreement shall terminate. In the event of termination, LESSEE's rights to
possession of the leased premises shall immediately cease. CITY may reenter and take possession
of the leased premises and LESSEE shall surrender possession. Upon termination, LESSEE shall
be liable to CITY for payment of:
Docusign Envelope ID: E5FF6388-1 F7F-4D9B-9180-5F704BD1 93AD
a. All rents and sums accrued through the date of termination but not thereafter;
b. The reasonable costs incurred by CITY to re -let the leased premises, or any portion
thereof, but not any special, indirect, or consequential damages or further rent;
c. The reasonable cost incurred by CITY to restore the leased premises or any portion
thereof to the condition in which they were originally leased, ordinary wear and
tear excepted; and
d. Reasonable attorney's fees and costs related to the termination of the lease
agreement including those incurred through the judicial process if LESSEE fails to
vacate.
The acceptance by CITY of any rent payments by LESSEE after termination of this agreement
shall not be considered a reinstatement or waiver of any other remedies available to CITY.
CITY may also pursue any other available right or remedy available to it in the event of default.
LESSEE may pursue any remedies at law against CITY for breach of this lease, including specific
performance.
12. Expiration or Termination. LESSEE hereby agrees that upon termination of this
lease by expiration or by earlier termination for any reason whatsoever, it will remove its property
from the leased premises immediately. All buildings installed, erected or placed by LESSEE in,
on, or about the leased premises shall be deemed to remain the property of CITY. Notwithstanding
anything herein to the contrary, LESSEE shall have the right to terminate this agreement at any
time upon giving sixty (60) days written notice to CITY and by paying CITY a termination fee in
the amount of one (1) year additional rent.
13. Closure of Airport. In the event that the Fayetteville Municipal Airport facility
and property are no longer used by the CITY for aviation purposes, LESSEE may remain in
possession of the premises until the end of the lease term with the right to use the premises for any
use allowable under Arkansas law.
14. Taxes. LESSEE shall pay all ad valorem taxes and assessments upon the leased
premises and upon all personal property located upon the leased premises which are assessed
during the lease term.
15. Indemnity. LESSEE agrees to indemnify the CITY against any liability for
injuries to persons or damage to property caused by LESSEE's gross negligent use or occupancy
of the leased premises; provided, however, that LESSEE shall not be liable for any personal injury,
damage or loss occasioned by the negligence of the CITY or its agents or employees, and provided
further that each party shall give prompt and timely notice of any claim made or suit instituted
which may in any way directly or indirectly affect either party. Each party shall have the right to
compromise and defend the same to the extent of its own interest. This clause shall not be
construed to waive that tort immunity granted to the CITY under Arkansas law.
Docusign Envelope ID: E5FF6388-1F7F-4D9B-9180-5F704BD193AD
16. Non -Waiver. It is agreed that the failure of CITY to invoke any of the available
remedies under this lease or under law in the event of one or more breaches or defaults by LESSEE
under the lease shall not be construed as a waiver of such provisions and conditions and shall not
prevent the CITY from invoking such remedies in the event of any future breach or default.
17. Notices. Any notice or consent required by this agreement shall be sufficient if
sent by Certified Mail, return receipt requested, postage paid, to the following addresses:
LESSEE
N79TW, LLC
4058 North College, Suite 300
Fayetteville, AR 72703
[a a614
City of Fayetteville
ATTN: Airport Director
4500 S School Ave. Ste. F
Fayetteville, Arkansas 72701
18. Succession. This lease agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, successors and assigns.
19. Severability. Each paragraph of this lease agreement is severable from all other
paragraphs. In the event any court of competent jurisdiction determines that any paragraph or
subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and
subparagraphs will remain in full force and effect.
20. Interpretation. This lease agreement shall be interpreted according to and
enforced under the laws of the State of Arkansas.
21. Entire Agreement. This lease agreement contains the entire agreement of both
parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This
lease agreement supersedes all prior agreements, contracts and understandings of any kind between
the parties relating to the subject matter hereof. This agreement may be executed in all or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. LESSEE'S First Right of Refusal (Sale or Lease). Commencing on the date
hereof and during the term, LESSEE shall have the right of first refusal to purchase the Leased
Premises and CITY shall not sell, contract to sell, transfer, Lease or otherwise dispose of or convey
all or any part of CITY' S interest in the Leased Premises without complying with the terms hereof.
If and when CITY receives a bona fide offer for the Leased (or any part thereof), whether through
public bidding processes or otherwise, the Fayetteville City Council passes a resolution of intent
to sell the Leased Premises, and the Federal Aviation Administration has authorized the sale, CITY
shall provide written notice thereof (with a copy of the offer) to LESSEE. LESSEE shall have
twenty (20) days after receipt of CITY's notice and offer to provide CITY with a written response
and notice that LESSEE elects to exercise its first right to purchase the Property from CITY on the
same terms offered or awarded via public bidding or otherwise, in which case the parties hereto
Docusign Envelope ID: E5FF6388-1F7F-4D9B-9180-5F704BD193AD
will proceed to consummate the sale of the Leased Premises on those terms. Otherwise, if LESSEE
declines or fails to exercise its right within this time period, then CITY may proceed to sell the
Leased Premises to the third -party offeror on the tenns offered. These terms and this right shall
apply to all subsequent and additional offers received by CITY, including a change in the terms of
sale previously disclosed to LESSEE. The terms and rights herein shall also apply to any lease of
the Leased Premises after the term hereof and LESSEE shall have the first right to re -lease the
Leased Premises after the tern as provided above.
CITY OF FA ETTEV E:
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TENANT
By: N79TW, LLC
By
ATTEST: V `j%j11R vUd Name: Scott A. Peters
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By: rAY,
KARA PAXTO CITY Clerk--'Aasure�rT-:;iLe ;��
—Doe "Signed by: