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HomeMy WebLinkAbout079-26 RESOLUTIONPage 1 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 79-26 File Number: 2026-473 A RESOLUTION TO APPROVE A FIVE-YEAR LEASE AGREEMENT WITH OSM AVIATION ACADEMY ARK LLC FOR THE HANGAR LOCATED AT 4578 SOUTH SCHOOL AVENUE FOR RENT IN THE AMOUNT OF $1,900.00 PER MONTH AND 3,026 SQUARE FEET OF OFFICE SPACE IN THE AIRPORT TERMINAL BUILDING LOCATED AT 4500 SOUTH SCHOOL AVENUE FOR RENT IN THE AMOUNT OF $3,782.50 PER MONTH, WITH AN OPTION TO RENEW FOR AN ADDITIONAL FIVE YEAR TERM WHEREAS, OSM Aviation Academy is one of the largest flight training providers in Europe and has been producing professionally trained pilots since 1963 on campuses across the globe; and WHEREAS, OSM Aviation Academy seeks to establish a new commercial airline pilot training base at Drake Field Airport; and WHEREAS, this project repositions Drake Field Airport as one of the City’s primary economic development assets, rather than solely a general aviation facility; and WHEREAS, the proposed five-year term balances operational certainty with strategic flexibility and allows sufficient time for OSM Aviation Academy to establish and scale operations while ensuring the City retains the ability to reassess facility use, market conditions, and long-term airport strategy as Drake Field’s role continues to expand. NOW, THEREFORE, 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 Rawn to sign a five- year lease agreement with OSM Aviation Academy Ark LLC for the hangar located at 4578 South School Avenue for rent in the amount of $1,900.00 per month and approximately 3,026 square feet of office space in the Airport Terminal building at 4500 South School Avenue for rent in the amount of $3,782.50 per month, and further authorizes an office space rent offset until OSM recovers the cost of improvements to the office space as approved by the Airport Director. PASSED and APPROVED on March 17, 2026 Approved: _______________________________ Molly Rawn, Mayor Attest: _______________________________ Kara Paxton, City Clerk Treasurer Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov CITY COUNCIL MEMO 2026-473 MEETING OF MARCH 17, 2026 TO: Mayor Rawn and City Council THROUGH: Chris Brown, Public Works Director Terry Gulley, Asst Public Works Director - Ops Blake Rutherford FROM: Jared Rabren, Airport Director Devin Howland, Director of Economic Development SUBJECT: OSM Aviation Academy Lease Agreement RECOMMENDATION: Staff is recommending approval of a lease agreement between the City of Fayetteville and OSM Aviation Academy for facilities at Drake Field Airport. BACKGROUND: Project Background: Drake Field Airport and the City of Fayetteville’s Economic Development Department began discussions with OSM Aviation Academy regarding a potential commercial airline pilot training base at Drake Field in late fourth quarter of 2025. OSM Aviation Academy conducted a formal site visit to Fayetteville from January 25 through January 27 to evaluate potential facilities, meet with key stakeholders, and gain a deeper understanding of the Fayetteville community. At the conclusion of the visit, both parties agreed to move forward with coordinated efforts across a range of areas necessary to support OSM’s establishment of a training base in Fayetteville. About OSM Aviation Academy: OSM Aviation Academy is one of the largest flight training providers in Europe and has been producing professionally trained pilots since 1963, headquartered in Arendal, Norway. The Academy operates campuses across the globe, including locations in Arendal, Norway, and Fort Lauderdale, Florida, and maintains a broad network of strategic partnerships with aviation employers worldwide. Graduates of OSM Aviation Academy achieve an 89 percent employment placement rate within one year of completing their training in relevant aviation roles. DISCUSSION: Economic Development Project Information: OSM Aviation Academy seeks to establish a new commercial airline pilot training base at Drake Field Airport in Fayetteville. This initiative would transition a significant portion of the company’s global commercial pilot training operations to the United States, driven by favorable climate conditions, operational efficiencies, and the ability to scale training capacity. From an economic development perspective, an operator and training center of this scale would substantially position Fayetteville as a prospective national hub for aviation Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov education and workforce development. Why this opportunity is unique: Large-scale commercial airline pilot training academies select locations based on a narrow set of criteria, including airfield capacity, climate, operational flexibility, community support, and long-term partnership with airport ownership. OSM Aviation Academy’s decision to pursue Drake Field as a U.S. training base reflects a convergence of present-day factors including available facilities, operational capacity, and the City’s willingness to promote Drake Field Airport as a major economic development driver for Fayetteville. Fleet Ramp Up and Student Enrollment Plan: OSM Aviation Academy intends to launch operations at Drake Field Airport with an initial fleet of 2 to 4 aircraft and 18 students, with training scheduled to begin during early Q2 of 2026. By the end of 2026, operations are expected to scale to 10 training aircraft and approximately 90 enrolled students. By the end of 2027, OSM Aviation Academy plans to expand to 25 operating aircraft, with the potential for up to 192 enrolled students. Domestic training for Arkansas-based students would begin in June 2027. Over the next five years, OSM Aviation Academy’s Fayetteville commercial airline training base has the potential to scale to a fleet of up to 100 aircraft and 700 annual graduates. Regional Economic Impact: OSM Aviation Academy commissioned a strategic economic impact report evaluating the establishment of a major flight training base in Northwest Arkansas. The report, which is attached to this packet, estimates that at a scale of 25 aircraft, the training operation would generate between $25 million and $40 million in annual regional economic impact. At full buildout of 100 aircraft, the report projects annual regional economic impact of approximately $90 million to $140 million. These impacts are driven by a combination of direct effects, including employment and value creation associated with the flight training operation; indirect effects, such as supplier purchases, housing, logistics, and aircraft maintenance; and induced effects resulting from the local spending of students and staff affiliated with the training academy. Drake Field Airport Revenue Estimates: Revenue from Fuel: Staff estimates that at an operational level of 25 aircraft, annual fuel sales would total approximately 103,000 gallons, generating an estimated $103,000 per year in direct profit, or $515,000 over the initial five-year lease term. This estimate is intentionally conservative, as it assumes OSM Aviation Academy’s operations do not scale beyond 25 aircraft over the lease period. Should OSM reach their full scalable capacity of 100 aircraft, annual direct profit from fuel sales could generate $412,000 annually. Revenue from Corporate Hangar Rental: Rental revenue from the Corporate Hangar located at 4578 S. School Avenue begins at $1,900 per month, with a 3 percent annual escalation. Total rental revenue over the five-year lease term is estimated at $121,048. Revenue from Office Space within Terminal Building Located at 4500 S School Avenue: The Terminal Building at 4500 S. School Avenue includes approximately 3,026 square feet of office space, which is being offered at a rate of $15 per square foot, resulting in annual rental revenue of $45,390. Assuming a 3% annual escalation, total potential rental revenue over the five-year period would equal $240,981.67. Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov Rental payments for this facility would not commence until OSM Aviation Academy has fully recaptured its tenant improvement costs within the office space, the final amount of which is not yet known. While this results in a temporary zero-dollar rent structure, there is still a direct and meaningful economic benefit to the City. OSM Aviation Academy is making substantial private investment into a publicly owned facility that has seen minimal City capital investment for decades. These improvements reposition the space for long-term productive use, enhance the overall value of the asset, and reduce future capital obligations for the City, all while supporting new economic activity at Drake Field Airport. Beyond the Numbers, the significance of this project for Drake Field and South Fayetteville: This project repositions Drake Field Airport as one of the City’s primary economic development assets, rather than solely a general aviation facility. The investment and the presence of a globally recognized operator fundamentally changes the trajectory of the airport for the better. It anchors a major commercial aerospace and aviation employer in South Fayetteville and provides a foundation upon which an emerging aviation cluster can continue to grow. The project creates sustained daytime activity at Drake Field and across South Fayetteville, supported by an institutionally stable operator that brings students from around the world to Fayetteville. It also establishes a new workforce development pathway that local residents will be able to access beginning in mid-2027. OSM Aviation Academy’s interest in locating a commercial airline pilot training base in Fayetteville elevates the City’s role in national and global aviation workforce discussions. It also positions OSM to expand beyond pilot training into airplane maintenance, an employment sector that is already in high demand regionally. Ultimately, this project is about more than increased aircraft activity, fuel sales, job creation, training capacity, or economic impact figures. It is about unlocking the full economic development potential of Drake Field Airport, strengthening South Fayetteville, and reinforcing that the City of Fayetteville is open for business and prepared to compete for transformative opportunities. Drake Field Facilities Lease Terms: Staff is proposing a five-year lease agreement with OSM Aviation Academy for the hangar at 4578 S. School Avenue and 3,026 square feet of office space in the Airport Terminal Building located at 4500 S. School Avenue. The proposed five-year term balances operational certainty with strategic flexibility. It allows sufficient time for OSM Aviation Academy to establish and scale operations while ensuring the City retains the ability to reassess facility use, market conditions, and long-term airport strategy as Drake Field’s role continues to expand. Utilities: OSM will pay for all utilities associated with Corporate Hangar 4578. The City provides electric, water/sewer, and gas utility services in the Airport Terminal. Any other utility costs including but not limited to, internet service, will be paid by OSM. Parking: Parking for each facility shall be conveyed as part of the lease and shall be provided at no additional charge to the tenant. Tenant Improvements outside of the existing footprint of the Corporate Hangar: Any tenant improvements outside of the existing footprint of the Corporate Hangar including but not limited to building expansions or additions, shall be subject to separate negotiation and shall not be included within the scope of this lease agreement. Tenant Improvements within the existing footprint of the Corporate Hanger located at 4478 S School Avenue: Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov All tenant improvements within the hangar shall be at the sole cost of the tenant and shall not be eligible to offset or reduce the rental rate for this facility. Lease Renewal: OSM will have the option to renew this agreement for an additional five (5) year term. This option may be exercised upon written notice from OSM to the City at least ninety (90) days before the end of the initial term. BUDGET/STAFF IMPACT: The budgetary impact of this project is outlined in the Discussion section of this memo. ATTACHMENTS: 3. Staff Review Form, 4. OSM Aviation Academy Lease Agreement, 5. OSM NW Arkansas - Aviation Training HUB Impact Report, 6. Additional Information - Economic Development Briefing Page 1 City of Fayetteville, Arkansas Legislation Text 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 File #: 2026-473 A RESOLUTION TO APPROVE A FIVE-YEAR LEASE AGREEMENT WITH OSM AVIATION ACADEMY ARK LLC FOR THE HANGAR LOCATED AT 4578 SOUTH SCHOOL AVENUE FOR RENT IN THE AMOUNT OF $1,900.00 PER MONTH AND 3,026 SQUARE FEET OF OFFICE SPACE IN THE AIRPORT TERMINAL BUILDING LOCATED AT 4500 SOUTH SCHOOL AVENUE FOR RENT IN THE AMOUNT OF $3,782.50 PER MONTH, WITH AN OPTION TO RENEW FOR AN ADDITIONAL FIVE YEAR TERM WHEREAS, OSM Aviation Academy is one of the largest flight training providers in Europe and has been producing professionally trained pilots since 1963 on campuses across the globe; and WHEREAS, OSM Aviation Academy seeks to establish a new commercial airline pilot training base at Drake Field Airport; and WHEREAS, this project repositions Drake Field Airport as one of the City’s primary economic development assets, rather than solely a general aviation facility; and WHEREAS, the proposed five-year term balances operational certainty with strategic flexibility and allows sufficient time for OSM Aviation Academy to establish and scale operations while ensuring the City retains the ability to reassess facility use, market conditions, and long-term airport strategy as Drake Field’s role continues to expand. NOW, THEREFORE, 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 Rawn to sign a five-year lease agreement with OSM Aviation Academy Ark LLC for the hangar located at 4578 South School Avenue for rent in the amount of $1,900.00 per month and approximately 3,026 square feet of office space in the Airport Terminal building at 4500 South School Avenue for rent in the amount of $3,782.50 per month, and further authorizes an office space rent offset until OSM recovers the cost of improvements to the office space as approved by the Airport Director. Comments: Purchase Order Number: Change Order Number: Previous Ordinance or Resolution # Approval Date: Original Contract Number: Project Number Budget Impact: FundAccount Number Project Title City of Fayetteville Staff Review Form 2026-473 Item ID 3/17/2026 City Council Meeting Date - Agenda Item Only Staff is recommending approval of a lease agreement between the City of Fayetteville and OSM Aviation Academy for facilities at Drake Field Airport. N/A for Non-Agenda Item Action Recommendation: Submitted By Jared Rabren AIRPORT SERVICES (760) Division / Department 2/23/2026 Submitted Date No -$ -$ V20221130 Budgeted Item? Does item have a direct cost? Is a Budget Adjustment attached? Total Amended Budget Expenses (Actual+Encum) Available Budget Item Cost Budget Adjustment Remaining Budget -$ -$ No No -$ -$ 1 FAYETTEVILLE – DRAKE FIELD LEASE AGREEMENT This LEASE AGREEMENT made this ______ day of ___________________, 2026, by and between the City of Fayetteville, Arkansas, hereinafter called “City”, and OSM Aviation Academy Ark LLC, an Arkansas limited liability company, hereinafter called “Lessee.” WHEREAS, City is the owner of an airport known as the Fayetteville Airport, Drake Field, herein referred to as the “Airport”; and WHEREAS, City is the owner of office and hangar space at the Airport and Lessee desires to lease said office and hangar space. NOW, THEREFORE, the parties, in consideration of the mutual covenants contained herein, hereby agree as follows: 1.Leased Premises: City leases to Lessee, and Lessee leases from City the following buildings or portions of buildings (collectively the “Leased Premises”) described as: •Corporate Hangar 4578 located at 4578 S. School Ave., Fayetteville, AR 72701. •Approximately 3,026 square feet of office space in the Airport Terminal building at 4500 S. School Ave., Fayetteville, AR 72701. o Right of first refusal: Lessee shall also have the right of first refusal to lease any additional office space in the Airport Terminal building that directly abuts this space. Parking adjacent to each facility shall be conveyed as part of the Agreement at no additional cost to Lessee. The Leased Premises are also shown and further described in the Leased Premises diagram attached to this Agreement as Exhibit A. 2.Use of Common Airport Facilities: Lessee is granted the use, in common 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 from time to time including, but not limited to, the landing field, and any extensions hereof or additions thereto, roadways, runways, ramps, aprons, taxiways, flood lights, landing lights, beacons, control tower, signals, radio aids, and all other conveniences for flying, landings and take-offs. 3.Ingress and Egress: Lessee shall have at all times the full and free right in ingress to and egress from the Leased Premises and facilities referred to herein for Lessee, its employees, customers, passengers, guests, and other invitees. Such rights shall also extend to persons or organizations supplying materials or furnishing services to Lessee. 17 March 2 4.Term: Subject to earlier termination as hereinafter provided, the initial term of this agreement shall be for five (5) years commencing on the _______ day of ________________, 2026 and ending on the _____day of ___________, 2031. Lessee shall have the option to renew this agreement for one additional five (5) year term. This option may be exercised upon written notice from Lessee to the City at least ninety (90) days before the end of the initial term. This Lease Agreement may be terminated by Lessee with a six (6) month written notice during either the initial term or renewal term. The City may terminate this agreement for convenience with a six (6) month written notice only during the renewal term. Lessee shall, at the termination, surrender or forfeiture of this lease or any portion of this lease, return said Leased Premises in the same or better condition as they were at the beginning of the lease, normal wear and tear excepted. 5.Rent: Lessee agrees to pay the City for the use of the premises, facilities, rights, and privileges granted hereunder the following amounts: •Corporate Hangar 4578: Base Rate of $1,900.00 per month, increased by 3% per year on the anniversary date of this Agreement. •Airport Terminal Building 4500: Base Rent of $3,782.50 per month, adjusted 3% per year on the anniversary date of this Agreement, subject to the offset provisions below. o This Base Rent is calculated as $15 per sq. ft. per year, applied to 3,026 sq. ft and divided equally across 12 calendar months. o Rent Offsets: City agrees to credit Lessee for the actual cost of the Lessee- installed improvements within the existing space's footprint approved by the Airport Director in accordance with Section 9 below (the “Approved Improvement Cost”). Beginning on the commencement date of this Agreement, Lessee’s obligation to pay Base Rent shall be $0.00 until the total rent offsets applied equals the Approved Improvement Cost. After the Approved Improvement Cost has been fully credited, Lessee shall pay Base Rent in the full amount set forth in this Lease. The Rent Offset applies only to Base Rent for the Airport Terminal building and shall not apply to additional rent, operating expenses, taxes, insurance, utilities, late fees, or other amounts due under this Lease. The Base Rent will then increase by 3% on the anniversary date. 6.City Responsibilities: City shall maintain and keep in good repair so much of the Airport premises as are not under the exclusive control of Lessee. 1717 March March 3 7. Cleaning: Lessee shall provide for and supply at its expense all janitor service with respect to the Leased Premises. 8. Utilities: Lessee shall pay for all utilities associated with Corporate Hangar 4578. City provides electric, water/sewer, and gas utility services in the Airport Terminal. Any other utility costs including, but not limited to, internet service shall be paid by the Lessee. 9. Improvements: Lessee shall bear the cost of all improvements or additions made to the interior or exterior of the building(s) on the Leased Premises. No improvements or additions to any part of the Leased Premises shall be made by Lessee without the prior written approval of the Airport Director, whose consent will not be unreasonably withheld. Any signs or antennas to be erected on or attached to the Leased Premises must have the prior written approval of the Airport Director and shall conform to all City Ordinances. Improvements outside of the existing footprint of Corporate Hangar 4578 including, but not limited to, building expansions or additions, shall be approved only by separate written agreement between Lessee and the City, which may take the form of an amendment to this Lease Agreement. 10. Maintenance of the Leased Premises: Lessee shall maintain the Leased Premises in a clean and orderly fashion at all times. The City shall be responsible only for major maintenance of the existing equipment, i.e. replacement of heating unit and other equipment in place in the facility which includes: roof, hangar door motors, exterior walls, exterior plumbing, paved ramp and paved parking lot. The City agrees that if the roof or any part of the exterior walls or exterior plumbing of said building thereof shall become defective or damaged at any time during the term due to ordinary wear and tear and not due to negligence of Lessee, or Lessee’s agents or invites, upon notice from Lessee, the City will immediately cause repairs to be made and restore the defective portions to good condition. If the damage is so extensive as to render such building untenantable, the rent payable hereunder shall be proportionally paid up to the time of such damage and shall thenceforth cease until such time as the premises shall be fully restored. 11. Applicable Laws and Regulations: Lessee agrees to observe and obey City’s Ordinances and Regulations with respect to use of the Leased Premises and Airport; provided, however, such Ordinances and Regulations shall be consistent with safety and with all city, county, and state rules, regulations, including all current fire codes, and orders of the Federal Aviation Administration with respect to aircraft operations at the Airport, and provided further, such Ordinances and Regulations shall be consistent with the provisions of this agreement or the procedures prescribed or approved from time to time by the Federal Aviation Administration with respect to the operation of Lessee’s aircraft at the Airport. “The Minimum Standards for Fayetteville Executive Airport, Drake Field” herein referred to as 4 Airport Minimum Standards are made part of this lease by reference as if included word for word. 12. Lessee’s Use of Leased Premises: Lessee agrees that it shall use the Leased Premises for the implementation and conducting of an aeronautical business activity. Lessee agrees that it shall use the Leased Premises only for the storage of aeronautic materials and equipment necessarily related to the operation of said aeronautical business activity and that no other vehicles, equipment or supplies shall be stored on the Leased Premises unless expressly agreed to by the City. Lessee further agrees not to store any flammable material on the Leased Premises, other than a limited supply of oils and agents necessary for current aircraft maintenance and repair, or in any way endanger or violate the provisions of the City’s standard commercially available property insurance policy or the requirements of same. Such violations shall constitute a material breach of this Agreement. Lessee agrees that habitation of the hangar building or offices or any portion of the Leased Premises as a residence is prohibited. 13. Hazardous Substance: Lessee shall not cause or permit any Hazardous Substance to be used or stored on or in the Leased Premises without first obtaining the 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 becomes contaminated in any manner for which Lessee is responsible or legally liable, Lessee shall indemnify and hold harmless the City, its officers, directors, agents, servants, and employees from any and all claims, damages, fines, judgments, penalties, costs, liabilities, or losses including all reasonable costs for investigation and defense thereof, (including but not limited to attorney’s fees, court costs, and expert fees, and without limitation, decrease in value of the Leased Premises, damages caused by loss or restriction of rentable or usable space as a part of the Leased Premises arising during or after the term hereof and arising as a result of that contamination by Lessee, Lessee agents, employees, and invitees. This indemnification includes, without limitation, all costs incurred because of any investigation of the Airport or any cleanup, removal, or restoration mandated by a federal, state, local agency or political subdivision. 14. Insurance Requirements: Lessee shall maintain in force during the Term and any extended term public liability and property damage insurance in comprehensive form as reasonably may be required by the City in this Agreement or the Airport Minimum Standards, or as required by the Airport Director. The insurance shall be issued by an insurer licensed to do business in the State of Arkansas. Concurrent with the execution of this Agreement, Lessee shall provide proof of insurance coverage by providing a Certificate of Lessee’s Insurance coverage, a copy of the declarations page on the insurance policy, and a copy of all endorsements. The Certificates of Insurance, or endorsements attached thereto, shall provide that; (a) insurance coverage shall not be canceled, changed in coverage, or reduced in limits without at least thirty (30) days prior written notice to the City: (b) 5 the City and the Airport and their trustees, agents, officers, servants, and employees are named as additional insured: (c) the policy shall be considered primary as regards to any other insurance coverage the City may possess, including any self-insured retention or deductible the City may have, and any other insurance coverage the City may possess shall be considered excess insurance only; (d) the limits of liability required therein are on an occurrence basis. 15. Indemnification: Lessee agrees to indemnify City against any and all liabilities, losses, suits, claims, judgments, fines, penalties, demands or expenses, including all reasonable costs for investigation and defense thereof, (including but not limited to attorney’s fees, court costs, and expert fees, for injuries to persons or damage to property caused by Lessee use or occupancy of the Leased Premises; provided, however, that Lessee shall not be liable for any injury, damage or loss arising from the negligence of 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 in any way directly or indirectly affects or might affect either party, and 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 as set forth under Arkansas Law. 16. Nondiscrimination: Lessee agrees that it will not discriminate by segregation or otherwise against any person or persons because of race, creed, color, religion, national origin, sex, marital status, or handicap in the furnishing, or by refusing to furnish, to such persons the use of any facility, including any and all services, privileges, accommodations, and activities provided thereby. Nothing herein shall require the furnishing to the general public of the use of any facility customarily furnished by the City solely to tenants, their employees, customers, patients, clients, guests, and invites. 17. Assigning, Subletting and Encumbering: Lessee shall not assign this Agreement in whole or in part, nor sublease all or any part of the Leased Premises, nor permit other persons to occupy said Leased Premises or any part thereof, not grant any license or concession for all or any part of said Leased Premises, without the prior written consent of the City, which consent shall not be unreasonably withheld. Any consent by the City to an assignment or subletting of this Agreement shall not constitute a waiver of the necessity of obtaining that consent as to any subsequent assignment. Any assignment for the benefit of Lessee’s creditors or otherwise by operation of law shall not be effective to transfer or assign Lessee’s interest under this Agreement unless the City shall have first consented thereto in writing. Neither Lessee’s interest in this Agreement, not any estate created hereby in Lessee nor any interest herein or therein, shall pass to any trustee or receiver or assignee for the benefit of creditors or otherwise by operation of law except as may specifically be provided in the Bankruptcy Code. If any of the corporate shares of stock of Lessee are transferred, or if any partnership interests of Lessee are transferred, by sale, assignment, bequest, inheritance, operation of law, or otherwise, so as to result in a change of the control, assets, value, ownership, or structure of Lessee, same shall be deemed an assignment for the purposes of this Section 16 and shall require the City’s prior consent, and Lessee shall notify the 6 City of any such change or proposed change. 18.Removal of Property Upon Expiration of Lease: On the expiration or other termination of this lease Lessee’s right to use the Leased Premises shall cease, and Lessee shall vacate the Leased Premises without unreasonable delay. All property installed, erected, or placed by Lessee in, on, or about the Leased Premises, Lessee shall have the right at any time during the term of this agreement, or any renewal or extension hereof, and for an additional period of fourteen (14) days after the expiration or other termination of this agreement, to remove any or all of such property, subject, however, to Lessee’s obligation to repair all damage, if any, resulting from such removal. Any and all property not removed by Lessee prior to the expiration of the aforesaid fourteen (14) day period shall thereupon become a part of the land on which it is located, and title hereto shall thereupon vest in City. 19.City Entry Into Leased Premises: City may enter the Leased Premises to Lessee at any reasonable time for any purpose necessary or incidental to the performance of its obligations or Lessee’s obligations hereunder. 20.Non-Waiver: It is agreed that the failure of the 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. 21.Notice: Any notice or consent required by this Agreement shall be sufficient if sent by mail or commercial delivery with proof of delivery to the following address: CITY OF FAYETTEVILLE Airport Administration Office 4500 S. School Avenue, Suite F Fayetteville, Arkansas 72701 Phone: (479) 718-7642 LESSEE OSM Aviation Academy ATTN: Martin Floor Peder Thomassons gate 12 4836 Arendal, Norway +47 41 77 00 07 Notice may also be given by the City to OSM by mail or commercial delivery with proof of delivery to OSM’s registered agent in the State of Arkansas, or by hand delivery to any employee on the Leased Premises. 22.Choice of Law; Venue: This agreement shall be construed under the laws of the State of Arkansas. Venue for any legal action shall be in Washington County, Arkansas. 23. All the covenants, conditions, and provisions under this agreement shall extend to and bind the legal representative, successors, and assigns of the respective parties hereof. 24.Severability: Each paragraph of this lease agreement is severable from all other paragraphs. 7 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. 25.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 IN WITNESS WHEREOF, the parties have executed this Lease on the day and year written below. CITY OF FAYETTEVILLE, ARKANSAS By: __________________________________ Molly Rawn, Mayor Date: _________________________________ ATTEST By: __________________________________ Kara Paxton, City Clerk Treasurer OSM AVIATION ACADEMY ARK LLC By: _________________________________ Printed Name: _________________________ Title: ________________________________ Date: ________________________________ 03/17/2026 Exhibit A Leased Premises 3,026 sq. ft. of Office Space in Airport Terminal Building 4500 Physical Address: 4500 S School Avenue, Fayetteville, AR, 72701 Corporate Hangar 4578 Physical Address: 4578 S School Avenue, Fayetteville, AR, 72701 Ramp Space for OSM Use Note: Drive lane must be maintained. Strategic Impact Report: Establishing a Major Flight Training Base in Northwest Arkansas Prepared by Martin Floor, CEO, OSM Aviation Academy Date 11/18/2025 Executive Summary OSM Aviation Academy (OSMAA) is a leading global flight training organization with established operations in Europe and a growing presence in the United States. OSMAA trains Airline Ready® pilots through structured, high-quality professional training programs, developing graduates who go directly into the commercial aviation workforce. OSMAA is preparing to establish a major new training base in Northwest Arkansas (NWA). This initiative will transition the bulk of global training production to the United States due to fair climate, operational efficiency, and long-term scalability. The NWA base will become the primary global center for OSMAA’s training activities. This development is strategically important for several reasons: • It positions Northwest Arkansas as a national hub for aviation education and workforce development. • It brings high-skill technical employment and long-term career pathways to the region. • It strengthens Arkansas’ role in transportation, mobility, logistics, and aerospace. • It aligns with state economic goals for talent attraction and diversification beyond legacy sectors. Following this strategic significance, the project also carries major economic value for the region. Financial Highlights • The Northwest Arkansas flight training base is projected to generate substantial annual economic value. • 25-aircraft scale: $25–$40 million annual regional impact. • 100-aircraft scale: $90–$140 million annual regional impact. • Strong job creation, workforce development, and aviation cluster growth potential. This report analyzes the projected economic, educational, and industrial impacts of establishing a major flight training base in Northwest Arkansas (NWA). This report quantifies how the establishment of a large-scale aviation training ecosystem will affect jobs, value creation, educational pathways, and long -term regional competitiveness. NWA is one of the fastest-growing regions in the United States, anchored by Fortune 500 companies, a strong logistics cluster, and rapidly developing infrastructure. The region lacks a large-scale aviation training hub—positioning this project as a catalytic opportunity to diversify the region’s economy, strengthen transportation readiness, and attract high - skill talent. With staged fleet growth toward 25 aircraft by 2027 and long-term capacity planning for up to 100 aircraft, NWA has the potential to become one of the nation’s most efficient centers for commercial pilot training. 1. Introduction & Regional Context Northwest Arkansas is strategically positioned for growth in aviation and aerospace -related sectors. Its unique advantages include: - A rapidly expanding population and workforce - Large corporate presence (Walmart, Tyson, J.B. Hunt) - Strong logistics and transportation ecosystem - Growing university and technical education capacity - Favorable year-round weather for flight training - Significant availability of developable land and airport -adjacent parcels The establishment of a major flight training base aligns with the region’s established focus areas: workforce development, innovation, mobility, and transportation capacity. 2. Current Operational Baseline (2025) Although current US training operations remain limited in scale, European training is established and provides a strong foundation for transitioning activity into the United States. 2.1 Student & Graduate Numbers (Current) • Active students: 300 • Graduates per year: ~150 The US operation is expected to become the primary production base, enabling increased annual output and lower operating costs. 3. Expansion Plan for Northwest Arkansas This project proposes the establishment of a single major training base in NWA capable of producing: - 200 graduates annually with a fleet of 25 aircraft - Up to 700 graduates annually in a future stage with 100 aircraft (timeline flexible) 3.1 Fleet Ramp-Up Timeline • Mid-2026: 2–4 aircraft (10–15 FTEs) • End of 2026: 10 aircraft (30–40 FTEs) • End of 2027: 25 aircraft • Long-term potential: 100 aircraft 4. Economic Impact (NWA Region) The economic analysis incorporates: • Direct effects: jobs and value creation within the flight school • Indirect effects: supplier purchases (maintenance, fuel, logistics, food, housing) • Induced effects: spending by students and staff in the region Using a conservative modeling, outcomes are as follows: 4.1 Direct Employment Impact Initial FTEs in the region will include: • Flight instructors • Operations and dispatch • Maintenance and technical personnel • Administrative and management roles • Student support and services Estimated direct jobs (using proxy values from OSMAA European operations): Stage Aircraft Direct FTEs No. of Students #1 (2026) 4-10 20 - 30 60-100 #2 (2027-2028) 10-25 40 - 50 150-200 #3 (Long-term) 100 250 - 300 750-1000 4.2 Indirect & Induced Impacts Using conservative economic multipliers: • Every 1 direct aviation job typically supports 1,5 – 2,3 additional jobs in the region. • Students relocating to NWA contribute substantially to rental markets, transportation demand, and local commerce. Approximate job impacts: Stage Direct Indirect Induced Total 25-aircraft scale 100 120–150 80–100 300–350 100-aircraft scale 275 350–400 250–300 850–1,000 These estimates place the facility among the largest aviation-related job engines in the NWA region. 5. Economic Impact (Expanded Modeling) 5.1 Economic Value Creation Model The model incorporates direct, indirect, and induced effects. Table 1: Student Throughput Scenarios Scale Aircraft Annual Students Baseline 4 40–60 Growth Phase 10 120–150 Primary Model 25 200-250 Long‑Term Potential 100 700-1000 Table 2: Estimated Annual Economic Impact Scale Impact Conservative Scenario (USD) Impact High-Localization Scenario (USD) 25 aircraft $25–$40 million $40–$65 million 100 aircraft $90–$140 million $130–$180+ million Table 3: Job Impact Scale Direct FTE Indirect FTE Induced FTE Total 4 aircraft 10–15 10–20 6–12 26–47 10 aircraft 30–40 35–45 25–35 90–120 25 aircraft 80–100 70–90 40–60 210–250 100 aircraft 250–300 250–300 150–200 650–775 5.2 Additional Regional Effects • Significant housing, services, and transportation demand uplift. • Strengthening of aviation suppliers: MRO, avionics, fueling, logistics. • Strong alignment with University of Arkansas and NWACC. 5.3 Relevance to AEDC This project supports Arkansas’ core economic priorities: • High-value workforce development • Diversification beyond retail/logistics • International talent attraction • Increased statewide transportation capacity Regional Economic Value Creation 5.4 Long-Term Aviation Cluster Development The NWA training base creates the foundation for a broader aviation and aerospace cluster, including: • Technician and A&P training pathways • Avionics and engineering support functions • Simulator centers • Drone and advanced air mobility programs • University partnerships (University of Arkansas, NWACC) The potential parallels the Walton -backed development of the cycling and outdoor recreation industry—but applied to aviation. 6. Educational & Workforce Effects 6.1 Creation of a Regional Aviation Education Pipeline NWA lacks a major aviation training institution today. The proposed base creates: • Direct pathways into high -demand pilot careers • Opportunities for local youth to pursue aviation without leaving the region • Collaboration with local colleges for theory instruction • STEM and technical enrichment for high schools 6.2 Attraction of Highly Skilled Talent Training centers attract flight instructors, pilots, technicians, and aviation professionals — many of whom choose to settle long-term. 7. Infrastructure Needs & Timeline Key infrastructure elements required: • Hangars (scaled over time) • Simulator facilities • Student housing (public-private partnerships supportive) • Fueling and maintenance support • Efficient permitting and construction timeline Planned build-out: Phase 1 (2026): temporary maintenance facility and operations building, 2–4, growing to 10 aircraft Phase 2 (2027-2028): full academic facility and maintenance hangars, growing to 25 aircraft Phase 3 (long-term): expansion to up to 100 aircraft 8. Risks and Mitigations 8.1 Cash Flow & Investment Timing • Aircraft purchases require consistent student inflow • Mitigation: phased scaling, leasing options, diversified markets 8.2 Construction & Regional Permitting • Timelines must align with fleet expansion • Mitigation: early local engagement, EDA funding, workforce and training grants 9. Conclusions: Why Northwest Arkansas Wins The NWA region offers a powerful combination of logistical excellence, growth momentum, and educational expansion potential. A large-scale flight training base becomes a catalytic project for regional development by: • Anchoring high-skilled local workforce and technical employment • Creating an educational pathway for local youth • Strengthening the region’s role in national mobility and transportation • Attracting international and out -of-state talent • Diversifying the economic base beyond retail/logistics With a long-term capacity toward 100 aircraft and 1,000 annual graduates, this project has the potential to become one of the most significant aviation training hubs in the United States and a defining addition to the Northwest Arkansas economic landscape. Appendices (To be expanded based on stakeholder feedback) A. Detailed economic multipliers B. Land and airport parcel analysis (NWA airports) C. Long-term student housing demand modeling D. Infrastructure layout concepts E. Workforce pipeline planning Additional Information Received Date Received: MM/DD/YYYY 03/10/2026 Time: 00:00 (AM/PM) 4:27PM From: Name & Title Devin Howland, Director of Economic Development To: Name & Title City Council Agenda Meeting Date: MM/DD/YYYY 03/10/2026 Civic Clerk Number: Ex. 2025-994 2026-473 Forwarded to City Attorney’s Office and Department Head N/A Aft C", OF City Council Briefing: OSM Aviation Academy Lease Agreement ARKANS EVILLE HKANAS Economic Development Project Information: This lease supports the establishment of a commercial airline pilot training school at Drake Field Airport, transitioning a significant portion of OSM Aviation Academy's global training operations to the United States. OSM Aviation Academy is a globally recognized provider, founded in 1963 and headquartered in Arendal, Norway, with international operations and an 89 percent graduate job placement rate aligned with global airline demand. The operation is designed to scale through a phased growth model beginning in Q2 2026. Why This is a Strategic Economic Development Win for Fayetteville: This project elevates Drake Field Airport into a primary economic development asset while anchoring a globally recognized commercial aviation operator in South Fayetteville. It creates sustained daytime activity and international visibility, establishes new high -skill workforce pathways for local residents, and lays the foundation for future commercial aviation sectors, including aircraft maintenance and technical training. Collectively, the project reinforces that Fayetteville is open for business and competitive in securing transformational economic development opportunities. Phased Growth and Economic Impact: Q4 2026 Q4 2027 Long -Term Potential Number of Commercial Training 10 25 100 Aircraft Number of Annual Students 90 192 700 Estimated Annual Economic $25 million- $40 million $90 million- $140 million Impact* Estimated Employee Counts* j 30-40 j 80-100 250-300 *Third -Party Economic Modeling provided by OSM Aviation Academy. Direct Revenue to Drake Field: Direct Revenue Estimates Across a Five -Year Term Net Revenue from Fuel Sales Hangar Facilities Terminal Office Facilities $515,000 at 25 aircraft $121,048 $240,981.67 *Assumes no growth in fleet $1,900 per month, 3% annual Rent payments on the 3,026 sq. above 25 aircraft increase ft. of space will not begin until OSM has recaptured their Airport Director approved tenant improvements in this space. 3% annual increase. Lease Terms: Term Facilities Rent Private Investment City Protections Five-year lease Corporate Hangar: $1,900 with All tenant Standard lease with one five- Hangar 4578 annual escalation. improvements provisions, insurance, year renewal 3,026 sq. ft. of Office: $15 per sq ft, are fully maintenance option. office in Drake temporary rent offset funded by responsibilities, FAA Field Terminal. during tenant funded OSM. compliance. improvements.