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HomeMy WebLinkAbout109-06 RESOLUTIONRESOLUTIONNO. 109-06 A RESOLUTION AUTHORIZING AIRPORT STAFF TO APPLY FOR AND ACCEPT TWO (2) SAAG GRANTS IN THE AMOUNT OF $250,000.00 EACH FROM THE ARKANSAS DEPARTMENT OF AERONAUTICS TO FUND A PORTION OF THE COST TO CONSTRUCT TWO (2) CORPORATE HANGARS AT THE FAYETTEVILLE MUNICIPAL AIRPORT; APPROVING THE FINANCING PLAN TO COVER THE CITY'S MATCH OF $700,000.00; AND AUTHORIZING THE MAYOR TO IMPLEMENT THE NECESSARY BUDGET ADJUSTMENTS TO EFFECTUATE THIS RESOLUTION. 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 Airport staff to apply for and accept Two (2) SAAG grants in the amount of $250,000.00 each from the Arkansas Department of Aeronautics to fund a portion of the cost to construct two (2) corporate hangars at the Fayetteville Municipal Airport. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby approves the Financing Plan to cover the City's match of $700,000.00, with repayment over 15 years at a 5% annual interest rate on the declining balance. Section 3. That. the City Council of the City of Fayetteville, Arkansas hereby authorizes the Mayor to implement the necessary budget adjustments to���� ��, ��..��RKI effectuate this Resolution. TREys.,, • PASSED and APPROVED this 6th day of June, 2006. APPROVED: By DAN COODY, Mayor ATTEST. O. •%U= •FAYETTEVILLE• 3 S. �=zs'�RKA*,•(J?' WING. ds Go.. By: M S NDRA SMITH,�Clerk Y ''iiuJ J t)%' `" 4 1 Ray M. Boudreaux Submitted By City of Fayetteville Staff Review Form City Council Agenda Items Contracts 6 -Jun City Council Meeting Date Aviation & Economic Development Division Action Required: n 611/ 6/66 /0? 506 CtranntS/ Oorp tV N aittr5 General Government Department Approve two applications to the Arkansas Department of Aeronautics for Grants in the amount of $500,000. Approv grant acceptance contingent on Dept Aeronautics Commission approval. Approve the financing plan for the City of Fayetteville to provide $700,000 match to construct two (2) hangars at the West -side General Aviation Apron. Approve Budget Adjustments. REVENUE $500,000.00 Cost of this request 5550.0955.6805.00 Account Number 06023 Project Number Budgeted Item 128,437.00 Category/Project Budget Funds Used to Date 128,437.00 Remaining Balance Budget Adjustment Attached West GA Hangars Program Category / Project Name Airport Revenue Program / Project Category Name General Fund / Airport Fund Name Being developed Departmen lirector ate sizzio6 City Attorney l Finance and Internal Service Director Mayor Comments: cs-x.3.06 Date Date Previous Ordinance or Resolution # 6 3 a Oh' -Lb .014 to tovi Z.£ - Original Contract Date: Original Contract Number: Received i Received in Mayor's Office City Council Meeting of: June 6, 2006 Agenda Item Number: CITY COUNCIL AGENDA MEMO/STAFF CONTRACT REVIEW MEMO TO: Mayor and City Council THRU: Staff/Contract Review Committee FROM: Ray M. Boudreaux, Director, Aviation and Economic De elopment DATE: May 17, 2006 SUBJECT: Approve application and acceptance of two (2) $250,000.00 Arkansas Department of Aeronautics, State Airport Aid Grant (SAAG) grants for a total amount of $500,000.00 and approve the financing plan for the City of Fayetteville $700,000.00 match to construct two (2) Corporate Hangars on the new West Side General Aviation Apron. RECOMMENDATION: Approve application and acceptance of two (2) SAAG Grants totaling $500,000.00 and the financing plan to cover the $700,000.00 City of Fayetteville match for the construction of two Corporate Hangars adjacent to the new West Side General Aviation Apron. Signature of the Mayor. BACKGROUND* All Airport hangars are full. Our Airport continues to grow at an unprecedented rate, mirroring the entire region. One recently vacated 9,000 square foot hangar garnered three potential tenants. We have signed leases for the two new hangars we want to build. Recently, we were able to convince the FAA Contract Tower Department to lower our cost share for the Air Traffic Control Tower (ATCT) due to the unprecedented growth In April, the airport was selected Arkansas. Airport of the Year by the FAA District Office in Ft. Worth, TX for management of the growth and successful rebirth as a General Aviation Airport. We need to continue this momentum. While we have successfully changed from commercial to general aviation, the fact that we were primarily a commercial airport means that we need to play catch up development to build the general aviation infrastructure needed to support the citizen and transient aviation customer. We need the buildings to continue to grow activity and based aircraft. A secondary purpose, but equally important, is to take advantage of the economic growth of the region today to contribute to the cash flow needed to sustain the airport financially. More facilities for aircraft --more cash flow to the airport. The Mayor, the City Council, the Airport Board and the Airport staff are committed to redevelop our airport into the first class general aviation airport that it is capable of becoming. With continued development like these new hangars, it is eventually possible to make the airport self sustaining in terms of cash flow. We have an opportunity now to leverage State grant dollars and need additional capital investment to help. Aviation and Economic Development Department Fayetteville Municipal Airport, Drake Field 4500 South School Avenue, Suite F Fayetteville, Arkansas 72701 Ray M. Boudreaux, Director Our investments thus far have purposefully been tied to future growth and revenue development. A ground lease to construct a hangar is possible but most investors are unwilling to build a building on property they do not own. While ground leases produce activity and based aircraft, they produce very little revenue At $.07 per square foot per year for a long term ground lease, each building would contribute $950.00 a year. There is additional revenue with each additional aircraft based at the airport in the terms of fuel flowage fees and reductions to the Tower cost share, but the budget impact of ground leases is minimal. A financing package that includes State Grant funds and City of Fayetteville General Fund or Economic Development Project financing would result in acquisition of the buildings providing additional aircraft on the field consuming fuel and contributing to the tower count and substantial cash flow to the Airport Fund. The Airport staff recommends developing a loan from City of Fayetteville resources for the remaining $700,000 to construct these two hangers. The loan is proposed to be amortized over fifteen years at a fixed rate of 5%. Airport staff has commitments for these two hangers that will generate approximately $7,600 monthly. This rent revenue is sufficient to fund the loan amortization and provide an additional $2,000 monthly for Airport operations. The situation in a list: • All hangars are full and we have a waiting list • Future growth is predicted @ approximately 10% a year • We have momentum • There are local competitors who will fill the void if we don't • We need additional cash flow to pay our cost allocation • The opportunity exists now for $500,000.00 in SAAG money • Several aviation businesses are interested in leasing the hangars • The airport must prepare for future growth needs • As a former commercial airline facility, the airport has minimum GA infrastructure, and thus, must play "catch-up" development. • Hangar development is costly and is not Federally funded DISCUSSION: Over the last four years Fayetteville Municipal Airport, Drake Field has successfully developed into a first class General Aviation Airport. We have increased activity, based aircraft, fuel sales, employees on the field, hangars, ramp space, taxiways and significantly improved our reputation in the industry. We have created an environment where everyone wants to be part of the success. In every step, we have considered the impact of our actions on the budget and our ability to fully fund the 0 & M Budget. Last year Million Air became the Fixed Base Operator for Drake Field to provide services for fuel, customer and line service. They are in the process of investing in the remodeling effort currently underway at the Terminal. The contract with Million Air allowed us to eliminate three staff and the budget that supported the City managed FBO operations. It also reduced the revenue from sales to a flowage fee and rent but we anticipate that this change will result in a net positive to the Aviation and Economic Development Department Fayetteville Municipal Airport, Drake Field 4500 South School Avenue, Suite F Fayetteville, Arkansas 72701 Ray M. Boudreaux, Director budget. The attached chart reflects the steady decline in budget deficit over the last four years. We have projected 2006 where you will note the reduction in revenues and expenses due to the new FBO arrangement. The Hangar Construction Project will increase Airport Fund revenues by $24,000.00 a year in rent and depending on the aircraft that finally locate in the buildings, an additional $2,500.00 to $5,000.00 annually in fuel flowage fees. BUDGET IMPACT: We have the opportunity to leverage $500,000 00 in State 50/50 SAAG grant funds. We need to finance $700,000.00 in grant matching funds at 5% for 15 years. Funding for the Engineering and Construction management, Task Order #14, with MCE for $105,450.00 will be paid out of the Airport Fund. The lease revenue from the hangars will pay the debt service and provide approximately $24,000.00 cash flow to the airport fund. With this project and other actions being considered by the Airport Board in Strategic Planning sessions, Airport Staff projects significant reduction in the projected deficit for FY 2007. Attachments: Staff Contract Review Form Budget Chart 2001-2006 Grant Applications Aviation and Economic Development Department Fayeneville Municipal Airport, Drake Field 4500 South School Avenue, Suite F Fayetteville, Arkansas 72701 • Ray M. Boudreaux, Director FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE TO: THROUGH: FROM: • DATE: SUBJECT: Mayor and City Council Stephen Davis, Finance & Internal Services Directo Marsha Farthing, Interim Finance & Intern*Services Director Kevin Springer, Budget Manager? May 23, 2006 Financing options for two Corporate Hangars Background Airport staff has submitted an agenda item requesting approval of two Arkansas Department of Aeronautics State Airport Aid Grants for a total of $500,000, with a $700,000 cost share loan from other funds of the City, to build two corporate hangars at the Fayetteville Municipal Airport. The proposal from Airport staff recommends a 15 year loan at 5% annual interest. This memo addresses the vanous financing options available to fund the $700,000 loan requested from other City funds. Options 1) One option is to allocate resources from General Fund using current available fund balance. The monthly payback for a $700,000 loan @ 5% would be $5,535.56 ($66,426.72 annually). 2) A second option is to use a portion of the remaining $2,364,327 in Wilson Springs funds designated for economic development to fund the loan. These finds could also be used to finance the total $700,000 cost match for the hangars without using a loan. 3) The Sales Tax Capital Improvements Fund can be used for financing the project using a loan or to pay for the total cost share. Since all Sales Tax Capital Improvement funds have been identified for specific projects, a decision will need to be made on which project or projects would be delayed or removed from the CIP to fund the loan or payment for airport hangars. 4) A final option would be to issue Amendment 65 revenue bonds in the Airport Fund to finance the project. 1:\Dcbt Financing\AirportLoan2006.doc • RESOLUTION NO. A RESOLUTION AUTHORIZING AIRPORT STAFF TO APPLY FOR AND ACCEPT TWO (2) SAAG GRANTS IN THE AMOUNT OF $250,000.00 EACH FROM THE ARKANSAS DEPARTMENT OF AERONAUTICS TO FUND A PORTION OF THE COST TO CONSTRUCT TWO (2) CORPORATE HANGARS AT THE FAYETTEVILLE MUNICIPAL AIRPORT; APPROVING THE FINANCING PLAN TO COVER THE CITY'S MATCH OF $700,000.00; %AND APPROVING BUDGET ADJUSTMENTS RECOGNIZING THE GRANT REVENUES 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 Airport staff to apply for and accept Two (2) SAAG grants in the amount of $250,000.00 each from the Arkansas Department of Aeronautics to fund a portion of the cost to construct two (2) corporate hangars at the Fayetteville Municipal Airport. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby approves the Financing Plan to cover the City's match of $700,000.00. Section 3. That the City Council of the City of FayettevilleArkansas hereby approves Budget Adjustments recognizing the Grant ReV utsY PASSED and APPROVED this 6th day of June; 2006. ATTES APPRO Al C'O'ODY, Mayor By (city Cterk CITY OF FAYETTEVILLE FAYETTEVILLE MUNICIPAL AIRPORT AIRPORT OPERATING DEFICIT 2001-2005 Operating Revenue Rents & Leases Aviation Fuel Contract FBO FEMA Reimburse Miscellaneous Total Operating Revenue: Operating E,enses Personnel Materials & Supplies Aviation Fuel Purchases Services & Charges Cost Allocation to General Fund Maintenance Operating Capital / Equipment ATC Tower Costs Total Operating Epense Change to Fund Balance from Operations Annual Percentage Change Cumulative Reduction of Ops Deficit Since 2001 2001 Actual 2002 Actual 2003 Actual 2004 Actual 285,146 287 035 319135 374,643 162 489 499,471 713,711 802,711 15,110 3,466 16,481 28,411 33,398 2005 Actual 407,191 753.846 15,204 42,707 431,101 802,967 1,061, 257 1,225862 1,218,948 276,468 3,929 115,390 167,072 137,724 49,401 10,784 312,807 12,464 320,641 179,982 144,612 48,874 25,206 360,960 34,777 464,840 239,191 144,612 55,833 385,841 335,755 27,416 29,141 585,989 571,919 246,273 200,980 151,800 132,684 78,171 56,195 22,654 760,770 1,044,588 1,300213 1,475,490 1,349,329 (329,669) (241,619) (238,956) (249,628) (130,381) 0.0% -26.7% 4.5% 0.0% -26.7% -27.5% -24.3% -47.8% -60.5% 2006 Projected YE 491,056 193,550 53,125 4,888 742,599 297 286 17,334 126,890 155,794 132,684 61 391 23,337 814,716 (72,117) -44.69% -78.12% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% -70.0% -80.0% -90.0% Airport Operating Deficit Reduction 200 2002 2003 2004 2005 2006 % Deficit Reduction - Trend 2001-2006 % Deficit Reduction - Trend 2001-2006 ARKANSAS DEPARTMENT OF AERONAUTICS • APPLICATION FOR STATE AIRPORT AID The City/County of Fayetteville , herein called "Sponsor", hereby makes application to the. Arkansas Department of Aeronautics for State funds pursuant to Act 733 of 1977, for the purpose of aiding in financing a project for the development of a municipal airport located in the City of Fayetteville , Arkansas, Washington County. Date of Request: May 19, 2006 Name of Airport: Fayetteville Municipal Airport / Drake Field (FYV) Name and address of City/County Commission sponsoring request: City of Fayetteville Person to contact about project: 113 West Mountain St. Ray M. Boudreaux, Director Fayetteville, AR 72701 4500 S School Ave, Suite F Phone/Fax Number: 479-718-7642 Ph no/Fax Number: 479-718-7646 Name and address of Engineering Firm (If Applicable): McClelland Consulting Engineers Contact Person: Wayne Jones Phone/Fax Number. 479.443.2377 / 479.443.9241 Describe the work to be accomplished: Construct 80' X 120' corporate hangar. State and Local Project Costs: Please indicate: x 50-50% Match 75-25% Match 90-10% Match Federal AIP Projects: Total Cost of Project $ 652,725.00 Total Cost of Project $ Local Share/Funds 402,725.00 Federal Share (90%) $ Local Share/In-Kind Local Share (5%) $ State Share 250,000.00 State Share (5%) $ State Airport Aid Application Page Two Provide the information listed below as it applies to your project: FUNDS: Source of Funds: State Funding: Arkansas State Department of Aeronautics Local Funding: Fayetteville Municipal Funds, Airport Div, City of Fayetteville debt financing.. Source of In -Kind Services N/A Estimate starting date of project: July 2006 1 Estimate completion date of project: April 2007 Project will be for: New Airport Existing Airport XX Is land to be leased or purchased? NO Description of land and cost per acre: Provide the Federal AIP Grant Number (AIP Projects Only) State Representatives for your area: State Senator Sue Madison State Representative Bill Pritchard Dist 89 • State Airport Aid Application Page Three The Sponsor agrees to furnish the Arkansas Department of Aeronautics a copy of the legal instrument affecting use of the property for an airport. In application for a new landing site or expansion of existing facility, the. FAA Form 7480.1, Notice of Landing Area Proposal, must be approved by FAA before review for grant can be made by the state. No land purchased with State Grant Funds may be sold or disposed of without State Commission approval. All requests for sale or disposal of property will be considered on an individual case basis. No airport accepting State Grant funding may issue an Exclusive Rights Lease. 4 All applications for navigational aids (such as NDB or ILS) must have FAA site approval before a state grant can be approved. All Grant applications involving Federal Airport Improvement Program (AIP) funding must be accompanied by the approved FAA application. If this project is approved by the Arkansas Department of Aeronautics, and is accepted by the sponsor, it is agreed that all developments and construction shall meet standard FAA construction practices as outlined in the specifications of this agreement. Runways, Taxiways, Parking Ramps, etc., shall have a base and a thickness that will accommodate the weight of aircraft expected to operate at this airport. All grant applicants (City and/or County) are totally responsible for compliance with all Federal, State, County and City Laws, Statutes, Ordinances, Rules, Regulations, and Executive Orders concerning contracts and purchases for which this grant is approved and issued. All grant applicants must submit with their applications a completed Contract and Grant Disclosure and Certification Form. (Form F -1 -Pages 1&2). It is understood and agreed that should the sponsor fail to start this project within three (3) months of the Arkansas Department of Aeronautics' date of acceptance, that this grant is null and void. It is also agreed that this project, except FAA funded projects, shall be completed within one year from the date of acceptance of this grant by the Arkansas Department of Aeronautics. Applications for extension will be entertained if circumstances beyond the sponsor's control occur. Funds will be disbursed according to Department procedures and final inspection of completed project. (See Instruction Page). IN WITNESS WHEREOF, the sponsor has caused this Application for State Airport Aid to be duly executed in its name, this 19th day of May, 2006. etteville or Authori.-d Signature a M. Boudreau:, Director Tit ARKANSAS DEPARTMENT OF AERONAUTICS APPLICATION FOR STATE AIRPORT AID The City/County of Fayetteville , herein called "Sponsor", hereby makes application to the Arkansas Department of Aeronautics for ' State'funds pursuant to Act 733 of 1977, for the purpose of aiding in financing a project for the development of a municipal airport located in the City of Fayetteville , Arkansas, Washington County. Date of Request: May 19, 2006 Name of Airport: Fayetteville Municipal Airport / Drake Field (FYV) Name and address of City/County Commission sponsoring request: City of Fayetteville Person to contact about project: 113 West Mountain St. Ray M. Boudreaux, Director Fayetteville, AR 72701 4500 S School Ave, Suite F Phone/Fax Number: 479-718-7642 Ph no/Fax Number: 479-718-7646 Name and address of Engineering Firm (If Applicable): McClelland Consulting Engineers Contact Person: Wayne Jones Phone/Fax Number: 479.443.2377 / 479.443.9241 Describe the work to be accomplished: hangar. State and Local Project Costs: Please indicate: x 50-50% Match 75-25% Match 90-10% Match Total Local Local State Cost of Project Share/Funds Share/In-Kind Share $ 652,725.00 402,725.00 250,000.00 Construct 80' X 120' corporate Federal AIP Projects: Total Cost of Project Federal Share (90%) Local Share (5%) State Share (5%) State Airport Aid Application Page Two Provide the information listed below as it applies to your project: FUNDS: Source of Funds: State Funding: Arkansas State Department of Aeronautics Local Funding: Fayetteville Municipal Funds, Airport Div, City of Fayetteville debt financing. Source of In -Kind Services N/A Estimate starting date of project: July 2006 Estimate completion date of project: April 2007 Project will be for: New Airport Existing Airport XX Is land to be leased or purchased? NO Description of land and cost per acre: Provide the Federal AIP Grant Number (AIP Projects Only) State Representatives for your area: State Senator Sue Madison State Representative Sill Pritchard Dist 89 State Airport Aid Application Page Three The Sponsor agrees to furnish the Arkansas Department of Aeronautics a copy of the legal instrument affecting use of the property for an airport. In application for a new landing site or expansion of existing facility, the FAA Form 7480.1, Notice of Landing Area Proposal, must be approved by FAA before review for'grant can be made by the state. No land purchased with State Grant Funds may be sold or disposed of without State Commission approval. All requests for sale or disposal of property will be considered on an individual case basis. No airport accepting State Grant funding may issue an Exclusive Rights Lease. All applications for navigational aids (such as NDB or ILS) must have FAA site approval before a state grant can be approved. • All Grant applications involving Federal Airport Improvement Program (AIP) funding must be accompanied by the approved FAA application. If this project is approved by the Arkansas Department of Aeronautics, and is accepted by the sponsor, it is agreed that all developments and construction shall meet standard FAA construction practices as outlined in the specifications of this agreement. Runways, Taxiways, Parking Ramps, etc., shall have a base and a thickness that will accommodate the weight of aircraft expected to operate at this airport. All grant applicants (City and/or County) are totally responsible for compliance with all Federal, State, County and City Laws, Statutes, Ordinances, Rules, Regulations, and Executive Orders concerning contracts and purchases for which this grant is approved and issued. All grant applicants must submit with their applications a completed Contract and Grant Disclosure and Certification Form. (Form F -1 -Pages 1&2). It is understood and agreed that should the sponsor fail to start this project within three'(3) months of the Arkansas Department of Aeronautics' date of acceptance, that this grant is null and void. It is also agreed that this project, except FAA funded projects, shall be completed within one year from the date of acceptance of this grant by the Arkansas Department of Aeronautics. Applications for extension will be entertained if circumstances beyond the sponsor's control occur. Funds will be disbursed according to Department procedures and final inspection of completed project. (See Instruction Page). IN WITNESS WHEREOF, the sponsor has caused this Application for State Airport Aid to be duly executed in its name, this 19th day of May, 2006. ayetteville ame •f Spons Authoriz Signature Ray M. Boudreaux, Director Title pnAttici kiIQ(o(0I Al .e,J eeatiAtti,si RESOLUTION NO. A RESOLUTION AUTHORIZING AIRPORT STAFF TO APPLY FOR AND ACCEPT TWO (2) SAAG GRANTS IN THE AMOUNT OF $250,000.00 EACH FROM THE ARKANSAS DEPARTMENT OF AERONAUTICS TO FUND A PORTION OF THE COST TO CONSTRUCT TWO (2) CORPORATE HANGARS AT THE FAYETTEVILLE MUNICIPAL AIRPORT; APPROVING THE FINANCING PLAN TO COVER THE CITY'S MATCH OF $700,000.00; AND AUTHORIZING THE MAYOR TO IMPLEMENT THE NECESSARY BUDGET ADJUSTMENTS TO EFFECTUATE THIS RESOLUTION. 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 Airport staff to apply for and accept Two (2) SAAG grants in the amount of $250,000.00 each from the Arkansas Department of Aeronautics to fund a portion of the cost to construct two (2) corporate hangars at the Fayetteville Municipal Airport. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby approves the Financing Plan to cover the City's match of $700,000.00, with repayment over 15 years at a 5% annual interest rate on the declining balance. Section 3. That the City Council of the City of Fayette�,M,ie, kansas hereby authorizes the Mayor to implement the necessssaryibudWadlustments to effectuate this Resolution. PASSED and APPROVED this 6th da'y of June, 2006: ATTEST: By ONDM SMITH, City Clerk AN COODY, Mayor rClarice Pearman - Res. 109-06 Page 1 • From: To: Date: Subject: Clarice Pearman Boudreaux, Ray 6.15.06 6:20PM Res. 109-06 1 Ray, Attached is a copy of the above resolution regarding the SAAG Grant. Have a good day. Thanks. Clarice CC: Audit • • • Ray M. Boudreaux Submitted By City of Fayetteville Staff Review Form City Council Agenda Items Contracts NA City Council Meeting Date Aviation & Economic Development Division Action Required: General Government Department Mayor's signature on two (2) leases for future hangars. Note: Revenue will riot be collected in 2006. Hangar construction will not be completed until 2007. Revenue Cost of this request 5550.0955.4450.00 Account Number Project Number Budgeted Item Category/Project Budget Funds Used to Date Remaining Balance Budget Adjustment Attached West GA Hangars Program Category / Project Name Chrgs-Sry Program / Project Category Name General / Airport Fund Name c L Department • i 4/ 'rector 7(20(00 City Attorney Mayor Comments: � ce and Interna Service o gad 6 r 72Q Date Date Previous Ordinance or Resolution # Original Contract Date: Original Contract Number 109-06 • • i City Council Meeting of: N/A Agenda Item Number: CITY COUNCIL AGENDA MEMO/STAFF CONTRACT REVIEW MEMO TO: Mayor THRU: Staff/Contract Review Committee FROM: Ray M. Boudreaux, Director, Aviation and E %mom Development DATE: July 18, 2006 SUBJECT: Signature of the Mayor on the two attache . leases at Fayetteville Municipal Airport, Drake Field. RECOMMENDATION: Signature of the Mayor on the two attached leases. BACKGROUND: The West Side General Aviation Apron Project is currently underway and scheduled for completion mid September 2006. The two leases attached are for hangars to be constructed on the new apron. In previous action, the City Council approved a financing package to construct the hangars. General Revenue Funds used for construction will be paid back through the revenue generated through the leases for the buildings. Airport Staff, presented Department of Aeronautics State Airport Aid Grant (SAAG) applications to the Arkansas Airport Commission for $600,000.00 total ($300,000.00 for each building). Criterion for award of the grants is that the buildings be used for aviation related business/industry. The Commission has requested that the leases be signed by both parties. The attached leases have been signed by aviation related businesses that qualify for the SAAG grant award, Million Air Fayetteville and SkyVenture Aviation. DISCUSSION: Airport Staff requests that the leases be signed by the Mayor. Staff is not aware of any conflict which would prevent the City from entering into a lease prior to the construction of the building. We will not be able to construct the buildings without State support. Signature of the Mayor is needed to demonstrate the City's resolve and commitment to gain support of the State Aeronautics Commission. )3UDGET IMPACT: The grant revenue represents a significant reduction to the cost of the building for the City of Fayetteville. The cost reduction allows for a marketable rental rate which will return General Fund monies used to construct the buildings and generate long term revenue to the airport. Attachments: Leases w/ SkyVenture Aviation and Million Air Fayetteville Staff Review Form Letter from State of Arkansas Department of Aeronautics Aviation and Economic Development Department Fayetteville Municipal Ahpott, Drake Field 4500 South School Avenue, Suitc F Fayetteville, Arkansas 72701 Ray M. Boudreaux, Director II � I � i } III ' I. t II H I II' Ali STATE OF ARKANSAS ,oF ♦!t'F �y„• .. '°"' DEPARTMENT OF AERONAUTICS . Little Rock National Airport • One Airport Drive • 3rd Floor Little Rock, Arkansas 72202-4402 Telephone: (501) 376-6781 • Fax: (501) 378-0820 MIKE HUCKABEE JOHN K. KNIGHT GOVERNOR July 13, 2006 DIRECTOR Commissioners RECEIVED Darryl Riddell West Helena J U L 72006 Mr Ray M. Boudreaux, Director 1 Marion Burton Aviation & Economic Development Ahr. uKl Little Rock Fayetteville Municipal Airport Dr. Gene lines 4500 South School Avenue, Suite F Little Rock Fayetteville, Arkansas 72701 Gary Jackson Rogers Dear Mr. Boudreaux: Don Ruggles Texarkana The Arkansas Aeronautics Commission in their meeting of July 12, 2006 voted to defer Lindley Smith Jonesboro your request for construction of a hangar for aviation business until a completed lease is o provided by the City of Fayetteville. Hangar projects funded by the Commission Ken Pine Bluff Johnson require a lease signed by both parties as a requirement of the grant award. Upon receipt of the requested information the Commission will review your application for action. Please feel free to contact our office if you have questions concerning this matter. Sincerely, John K. Knight Director LEASE AGREEMENT This LEASE AGREEMENT made this 41 day of J ti 1,�, X0O6 , by and between the City of Fayetteville, Arkansas, hereinafter called the City, and SkyVenture Aviation Inc., Attn: Mark Frankum or Kathy Moore. 4500 S. School Avenue. Suite C. of Fayetteville. Arkansas 72701 Ph. 479-521-9400/cell 870-219-9907 or 870-219-6656, herein after called SkyVenture Aviation. WHEREAS, the City is the owner of an airport known as the Fayetteville Municipal Airport, Drake Field, herein after referred to as the Airport; and WHEREAS, the Airport has contracted to construct a hangar at adjacent to the new West Side General Aviation Apron with an address of South School Avenue, Fayetteville, Arkansas 72701 at the Fayetteville Municipal Airport, Drake Field (the Airport); and WHEREAS, the City will be the owner of the aircraft hangar at the Airport; and WHEREAS, SkyVenture Aviation desires to lease said aircraft hangar at the airport; NOW, THEREFORE, the parties, in consideration of the mutual covenants contained herein, hereby agree as follows: 1. The City leases to SkyVenture Aviation, and SkyVenture Aviation leases from the City, the aircraft hangar at the airport located at South School Avenue, Fayetteville, Arkansas 72701, as reflected on Exhibit "A" attached hereto and made a part hereof. 2. SkyVenture Aviation is granted the use, without charge, 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. SkyVenture Aviation shall have at all times the full and free right to ingress to and egress from the demised premises and facilities referred to herein for SkyVenture Aviation, its employees, customers, passengers, guests, and other invitees. Such rights shall also extend to persons or organizations supplying materials or furnishing services to SkyVenture Aviation. 4. Subject to earlier termination as hereinafter provided, the initial term of this agreement shall be for five (5) years commencing on the I st day of the month following the receipt of a Certificate of Occupancy issued by the City of Fayetteville and ending five years from the beginning of the initial term. At least 60 days prior to the yearly termination date, SkyVenture Aviation shall give the Airport written notice if SkyVenture Aviation would like to continue leasing the subject aircraft hangar at the airport. Renewals shall be four (4) options of five (5) years each, with an increase in the lease rate at the time of the renewal in accordance with the formula located at Attachment One and based on the growth in the CPI plus 1% of the current lease rate. 5. Rent: SkvVenture Aviation shall pay rent per month at the rate determined from the final construction cost of the building, including engineering as amortized over a twenty five (25) year term at a discount rate of 5%. but not to exceed $3,829.06 per month ( ). The initial lease payment is due and payable prior to occupancy of the facility but not later than the commencement date of this lease agreement. All subsequent lease payments shall be due and payable in advance on or before the first day of each calendar month thereafter. In addition to any remedy available to it hereunder, the City may impose as additional rentals a delinquency charge on all overdue payments, at the maximum rate allowed by law. 6. City shall maintain and keep in good repair so much of the Airport premises as are not under the exclusive control of SkyVenture Aviation. SkyVenture Aviation shall, at the termination, surrender or forfeiture of this lease, return said premises in the same or better condition the premises were at the beginning of the lease, normal wear and tear excepted. 7. SkyVenture Aviation shall provide for and supply at its expense all janitor service with respect to the demised premises, and shall pay for all utilities serving the demised premises, including, but not limited to heat, light, gas, electricity, and water, sewer and trash removal. 8. Improvements: SkyVenture Aviation shall bear the cost of all improvements or additions made to the interior or exterior of the aircraft hangar at the airport including the grounds included as part of the leased premises. No improvements or additions to any part of the leased premises shall be made by SkyVenture Aviation 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 conform to all City Ordinances with appropriate permits issued as necessary. 9. Maintenance: 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 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 the SkyVenture Aviation, or SkyVenture Aviation's agents or invites, upon notice from SkyVenture Aviation, 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 the aircraft hangar at the airport untenable, 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. If the demised premises are completely destroyed, City may reconstruct the hangar at the City's own cost and the rent payable hereunder shall be adjusted as set forth above, or the City may, at its option, cancel this agreement, such cancellation to be effective as of the date the hangar was destroyed, and the rent adjusted as set forth above. Routine maintenance of the hangar doors shall remain the responsibility of the City. SkyVenture Aviation shall not make any alterations to the controls of the hangar doors. 10. SkyVenture Aviation agrees to observe and obey City's Ordinances and Regulations with respect to use of the demised 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 SkyVenture Aviation's aircraft at the Airport. "The Minimum Standardsfor Fayetteville Municipal Airport, Drake Field" herein referred to as Airport Minimum Standards at Fayetteville Municipal Airport are made part of this lease by reference as if included word for word. 11. SkyVenture Aviation agrees that it shall use the premises for the implementation and conducting of an Aircraft Flying School and Maintenance and Repair Facility. SkyVenture Aviation agrees that is shall use the premises only for the storage of airplanes and materials and equipment necessarily related to the operation of said aircraft and the maintenance and repair of aircraft and that no other vehicles, equipment or supplies shall be stored on the premises unless expressly agreed to by the City. SkyVenture Aviation further agrees not to store any flammable material on the demised premises other than a limited supply of oils and agents necessary for the maintenance and repair of aircraft on the premises or in any way endanger or violate the provisions of the City's standard commercially available property insurance policy or the requirement of same. Such violations shall constitute a material breach of this Agreement. 12. Hazardous Substance: SkyVenture Aviation 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 SkyVenture Aviation is responsible or legally liable, SkyVenture Aviation shall indemnify and hold harmless the City from any and all claims, damages, fines, judgements, penalties, costs, liabilities, or losses including, without limitation and decrease in value of the Lease 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 SkyVenture Aviation, SkyVenture Aviation's agents, employees, and invitees. This indemnification includes, without limitation, and all cost incurred because of any investigation of the Airport or any cleanup, removal, or restoration mandated by a federal, state, local agency or political subdivision. 13. If the demised premises are partially damaged by fire or other casualty which is not due to the negligence or fault of the SkyVenture Aviation, said premises shall be repaired with due diligence by the City at City's expense. If the damage is so extensive as to render such building untenable, 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. lithe demised premises are completely destroyed, City may reconstruct the hangar at the City's own cost and the rent payable hereunder shall be adjusted as set forth above, or City may, at its option, cancel this agreement, such cancellation to be effective as of the date the hangar was destroyed, and the rent adjusted as set forth above. 14. SkyVenture Aviation shall maintain in force during the Term and any extended term, public liability and property damage insurance in comprehensive form as reasonably maybe required by the City and outlined in the Airport Minimum Standards. The insurance shall be issued by an insurer licensed to do business in the State of Arkansas. Concurrent with the execution of this Agreement, SkyVenture Aviation 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) 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. SkyVenture Aviation agrees to indemnify City against any liability for injuries to persons or damage to property caused by SkyVenture Aviation's use or occupancy of the lease premises; provided, however, that SkyVenture Aviation shall not be liable for any injury, damage or loss occasioned by 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. SkyVenture Aviation agrees that it will not discriminate by segregation or otherwise against any person or persons because of race, creed, color, religion, national origin, sex, martial 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 4 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, client, guests, and invites. 17. Assigning, Subletting and Encumbering. SkyVenture Aviation 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, nor grant any license or concession for all or any part of said Leased Premises, without the prior written consent of the Airport Director, which consent shall not be unreasonably withheld. Any consent by the Airport 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 SkyVenture Aviation's creditors or otherwise by operation of law shall not be effective to transfer or assign SkyVenture Aviation's interest under this Agreement unless the Airport shall have first consented thereto in writing. Neither SkyVenture Aviation's interest in this Agreement, not any estate created hereby in SkyVenture Aviation 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 SkyVenture Aviation are transferred, or if any partnership interests of SkyVenture Aviation 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 SkyVenture Aviation, same shall be deemed an assignment for the purposes of this Section 17 and shall require the Airport's prior consent, and SkyVenture Aviation shall notify the Airport of any such change or proposed change. 18. Termination: The City or SkyVenture Aviation may terminate this lease at any time by giving the other party 60 days written notice of termination. On the expiration or other termination of this lease SkyVenture Aviation's right to use the demised premises shall cease, and SkyVenture Aviation shall vacate the premises without unreasonable delay. All property installed, erected, or placed by SkyVenture Aviation in, on, or about the premises leased hereunder shall be deemed to be personalty and shall remain the property of SkyVenture Aviation. SkyVenture Aviation 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 SkyVenture Aviation's obligation to repair all damage, if any, resulting from such removal. Any, and all property not removed by SkyVenture Aviation 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 the City. 19. The City may enter the premises leased to SkyVenture Aviation at any reasonable time for any purpose necessary or incidental to the performance of its obligations or SkyVenture Aviation's obligations hereunder. 20. SkyVenture Aviation shall maintain the demised premises in a clean and orderly fashion at all times. SkyVenture Aviation shall be responsible for the upkeep and mowing of the leased property. 21. SkyVenture Aviation shall not start or operate aircraft engines within the aircraft hangar leased E hereby and shall not allow such operations by any other person. 22. SkyVenture Aviation shall not at any time assign this lease or sublet the demised premises without the prior written consent of City, such consent not to be unreasonably withheld. 23. Any notice or consent required by this Agreement shall be sufficient if sent by Certified Mail, return receipt requested, postage paid, to the following address: ,lIaWO01 `f�I1Yll�l`/IrAIlIJ Airport Administration Office 4500 S. School Avenue, Suite F Fayetteville, Arkansas 72701 Phone: 479-718-7642 SKYVENTURE AVIATION Mark Frankum and/or Kathy Moore 4500 South School Avenue Suite C Fayeteville, Arkansas 72701 Phone: Office 479-521-9400 Cell 870-219-9907 or 870-219-6656 24. This agreement shall be construed under the laws of the State of Arkansas. 25. 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. IN WITNESS WHEREOF, the parties have executed this Lease on the day and year first above written. CITY OF FAY TEVI iIIIIARKANSAS TR,"'''., By: ,4i'( (/;f7 Dan Coody, Mayor • . .Fa • ;FAYETTEVILLE? ATTEST •: By: •. y„ _ �5 G,ti c Sondra Smith, City Clerk SkyVenture Aviation: I have received a copy of "The Minimum Standards for the Fayetteville MunicipalAirportDrake Field" (tenant's initial) Cie ''6 LEASE ATTACHMENT NUMBER ONE Rent adjustments shall be made as of the commencement of each of the Dates Upon Which Rent Increases Apply and shall be determined by the following formula: Rent as last so increased under this Lease multiplied by: I + Current Index - Base Index Base Index plus: one percent (1%) of the Rent as last so increased under this Lease Where, "Current Index" shall be the CPI (D-1 Consumer Price Index -All City Average, ""all items groups, subgroups and special groups, 'published monthly in the Monthly Labor Review ofthe Bureau of Labor Statistics of the United States Department of Labor) for the month immediately prior to the applicable Dates Upon which Rent Increases Apply, and Base Index shall be the CPI for the month immediately prior to the Commencement Date or the most recent Dates Upon Which Rent Increases Apply, whichever is applicable. In no event, however, shall the Rent for any period be less than the Rent as last so increased under this Lease. In the event that such CPI is no longer published or otherwise available, the adjustment provided for herein shall be by the successor (or the most nearly comparable successor index) thereto, adjusted as appropriate to the applicable dates. LEASE AGREEMENT This LEASE AGREEMENT made this o_yt_ day of , .2Ca 6 , by and between the City of Fayetteville, Arkansas, hereinafter called the Cit , and Woolsey Aviation Inc., dba Million Air Fayetteville, Attn: Roger Woolsey. 4500 S. School Avenue, Suite M. Fayetteville. Arkansas 72701, Ph 479-443-4343. herein after called Million Air. WHEREAS, the City is the owner of an airport known as the Fayetteville Municipal Airport, Drake Field, herein after referred to as the Airport; and WHEREAS, the Airport has contracted to construct a hangar at adjacent to the new West Side General Aviation Apron with an address of South School Avenue. Fayetteville. Arkansas 72701 at the Fayetteville Municipal Airport, Drake Field (the Airport); and WHEREAS, the City will be the owner of the aircraft hangar at the Airport; and WHEREAS, Woolsey Aviation Inc. desires to lease said aircraft hangar at the airport; NOW, THEREFORE, the parties, in consideration of the mutual covenants contained herein, hereby agree as follows: 1. The City leases to Woolsey Aviation, and Woolsey Aviation Inc. leases from the City, the aircraft hangar at the airport located at South School Avenue, Fayetteville, Arkansas 72701, as reflected on Exhibit "A" attached hereto and made a part hereof. 2. Woolsey Aviation Inc. is granted the use, without charge, 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. Woolsey Aviation Inc. shall have at all times the full and free right to ingress to and egress from the demised premises and facilities referred to herein for Million Air, its employees, customers, passengers, guests, and other invitees. Such rights shall also extend to persons or organizations supplying materials or furnishing services to Million Air. 4. Subject to earlier termination as hereinafter provided, the initial term of this agreement shall be for five (Shears commencing on the 1st day of the month following the receipt of a Certificate of Occupancy issued by the City of Fayetteville and ending five years from the beginning of the initial term. At least 60 days prior to the yearly termination date, Woolsey Aviation Inc. shall give the Airport written notice if Woolsey Aviation Inc. would like to continue leasing the subject aircraft hangar at the airport. Renewals shall be four (4) options of five (5) years each, with an increase in the lease rate at the time of the renewal in accordance with the formula located at Attachment One and based on the growth in the CPI plus 1% of the current lease rate. 5. Rent: Woolsey Aviation Inc. shall pay rent per month at the rate determined from the final construction cost of the building, including engineering as amortized over a twenty five (25) year term at a discount rate of 5%, but not to exceed $3,829.06 per month ( three thousand and eight hundred and twenty-nine dollars and six cents ). The initial lease payment is due and payable prior to occupancy of the facility but not later than the commencement date of this lease agreement. All subsequent lease payments shall be due and payable in advance on or before the first day of each calendar month thereafter. In addition to any remedy available to it hereunder, the City may impose as additional rentals a delinquency charge on all overdue payments, at the maximum rate allowed by law. 6. City shall maintain and keep in good repair so much of the Airport premises as are not under the exclusive control of Million Air. Woolsey Aviation Inc. shall, at the termination, surrender or forfeiture of this lease, return said premises in the same or better condition the premises were at the beginning of the lease, normal wear and tear excepted. 7. Woolsey Aviation Inc. shall provide for and supply at its expense all janitor service with respect to the demised premises, and shall pay for all utilities serving the demised premises, including, but not limited to heat, light, gas, electricity, and water, sewer and trash removal. 8. Improvements: Woolsey Aviation Inc. shall bear the cost of all improvements or additions made to the interior or exterior of the aircraft hangar at the airport including the grounds included as part of the leased premises. No improvements or additions to any part of the leased premises shall be made by Woolsey Aviation Inc. 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 conform to all City Ordinances with appropriate permits issued as necessary. 9. Maintenance: 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 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 the Million Air, or Million Air's agents or invites, upon notice from Million Air, the City will immediately cause repairs to be made and restore the defective portions to 2 good condition. If the damage is so extensive as to render the aircraft hangar at the airport untenable, 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. If the demised premises are completely destroyed, City may reconstruct the hangar at the City's own cost and the rent payable hereunder shall be adjusted as set forth above, or the City may, at its option, cancel this agreement, such cancellation to be effective as of the date the hangar was destroyed, and the rent adjusted as set forth above. Routine maintenance of the hangar doors shall remain the responsibility of the City. Woolsey Aviation Inc. shall not make any alterations to the controls of the hangar doors. 10. Woolsey Aviation Inc. agrees to observe and obey City's Ordinances and Regulations with respect to use of the demised 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 Million Air's aircraft at the Airport. "The Minimum Standards for Fayetteville Municipal Airport, Drake Field" herein referred to as Airport Minimum Standards at Fayetteville Municipal Airport are made part of this lease by reference as if included word for word. 11. Woolsey Aviation Inc. agrees that it shall use the premises for the implementation and conducting of an Aircraft Flying School and Maintenance and Repair Facility. Woolsey Aviation Inc. agrees that is shall use the premises only for the storage of airplanes and materials and equipment necessarily related to the operation of said aircraft and the maintenance and repair of aircraft and that no other vehicles, equipment or supplies shall be stored on the premises unless expressly agreed to by the City. Woolsey Aviation Inc. further agrees not to store any flammable material on the demised premises other than a limited supply of oils and agents necessary for the maintenance and repair of aircraft on the premises or in any way endanger or violate the provisions of the City's standard commercially available property insurance policy or the requirement of same. Such violations shall constitute a material breach of this Agreement. 12. Hazardous Substance: Woolsey Aviation Inc. 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 Woolsey Aviation Inc. is responsible or legally liable, Woolsey Aviation Inc. shall indemnify and hold harmless the City from any and all claims, damages, fines, judgements, penalties, costs, liabilities, or losses including, without limitation and decrease in value of the Lease 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 Million Air, Million Air's agents, employees, and invitees. This indemnification includes, without 3 limitation, and all cost incurred because of any investigation of the Airport or any cleanup, removal, or restoration mandated by a federal, state, local agency or political subdivision. 13. If the demised premises are partially damaged by fire or other casualty which is not due to the negligence or fault of the Million Air, said premises shall be repaired with due diligence by the City at City's expense. If the damage is so extensive as to render such building untenable, 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. If the demised premises are completely destroyed, City may reconstruct the hangar at the City's own cost and the rent payable hereunder shall be adjusted as set forth above, or City may, at its option, cancel this agreement, such cancellation to be effective as of the date the hangar was destroyed, and the rent adjusted as set forth above. 14. Woolsey Aviation Inc. shall maintain in force during the Term and any extended term, public liability and property damage insurance in comprehensive form as reasonably maybe required by the City and outlined in the Airport Minimum Standards. The insurance shall be issued by an insurer licensed to do business in the State of Arkansas. Concurrent with the execution of this Agreement, Woolsey Aviation Inc. 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) 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. Woolsey Aviation Inc. agrees to indemnify City against any liability for injuries to persons or damage to property caused by Million Air's use or occupancy of the lease premises; provided, however, that Woolsey Aviation Inc. shall not be liable for any injury, damage or loss occasioned by 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. Woolsey Aviation Inc. agrees that it will not discriminate by segregation or otherwise against any person or persons because of race, creed, color, religion, national origin, sex, martial 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 4 the City solely to tenants, their employees, customers, patients, client, guests, and invites. 17. Assigning, Subletting and Encumbering. Woolsey Aviation Inc. 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, nor grant any license or concession for all or any part of said Leased Premises, without the prior written consent of the Airport Director, which consent shall not be unreasonably withheld. Any consent by the Airport 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 Million Air's creditors or otherwise by operation of law shall not be effective to transfer or assign Million Air's interest under this Agreement unless the Airport shall have first consented thereto in writing. Neither Million Air's interest in this Agreement, not any estate created hereby in Woolsey Aviation Inc. 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 Woolsey Aviation Inc. are transferred, or if any partnership interests of Woolsey Aviation Inc. 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 Million Air, same shall be deemed an assignment for the purposes of this Section 17 and shall require the Airport's prior consent, and Woolsey Aviation Inc. shall notify the Airport of any such change or proposed change. 18. Termination: The City or Woolsey Aviation Inc. may terminate this lease at any time by giving the other party 60 days written notice of termination. On the expiration or other termination of this lease Million Air's right to use the demised premises shall cease, and Woolsey Aviation Inc. shall vacate the premises without unreasonable delay. All property installed, erected, or placed by Woolsey Aviation Inc. in, on, or about the premises leased hereunder shall be deemed to be personalty and shall remain the property of Million Air. Woolsey Aviation Inc. 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 Million Air's obligation to repair all damage, if any, resulting from such removal. Any, and all property not removed by Woolsey Aviation Inc. 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 the City. 19. The City may enter the premises leased to Woolsey Aviation Inc. at any reasonable time for any purpose necessary or incidental to the performance of its obligations or Million Air's obligations hereunder. 20. Woolsey Aviation Inc. shall maintain the demised premises in a clean and orderly fashion at all times. Woolsey Aviation Inc. shall be responsible for the upkeep and mowing of the leased property. 21. Woolsey Aviation Inc. shall not start or operate aircraft engines within the aircraft hangar W leased hereby and shall not allow such operations by any other person. 22. Woolsey Aviation Inc. shall not at any time assign this lease or sublet the demised premises without the prior written consent of City, such consent not to be unreasonably withheld. 23. Any notice or consent required by this Agreement shall be sufficient if sent by Certified Mail, return receipt requested, postage paid, to the following address: CITY OF FAYETTEVILLE Airport Administration Office 4500 S. School Avenue, Suite F Fayetteville, Arkansas 72701 Phone: 479-718-7642 Woolsey Aviation Inc, dba Million Air Fayetteville Attn: Roger Woolsey 4500 S. School Avenue, Suite M Phone: 479-443-4343 24. This agreement shall be construed under the laws of the State of Arkansas. 25. 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 IN WITNESS WHEREOF, the parties have executed this Lease on the day and year first above written. CITY OF FAYETTEVIL YTRF ''., By: A/21 Y G'. Dan Coody, Mayor FAYETTEVI• LLE; 3 AT By: Sondra Smith, City WOOLSEY AVIATION INC.: I have received a copy of "The Minimum Standards for the Fayetteville Municipal Airport Drake Field" (tenant's initial) By: R er Woolsey, Owner Date From: Clarice Pearman To: Boudreaux, Ray Date: 7.25.06 10:59AM Subject: leases Ray, Attached are various leases submitted by you for review and signature. If anything else is needed please let me know. Thanks. Clarice CC: Audit