LEGISLATIVE ACTION ITEM
SPONSOR: Grover C. Robinson, IV, Mayor
SUBJECT:
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PENSACOLA INTERNATIONAL AIRPORT - PENSACOLA AVIATION CENTER LEASE AGREEMENT AMENDMENT NO. 11
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RECOMMENDATION:
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That City Council authorize the Mayor to execute Amendment No. 11 with Pensacola Aviation Center to provide for the expansion of hangar facilities and improvements to the fuel farm, and to confirm the previously approved extension of the lease. Further, that City Council authorize the Mayor to take all actions necessary to execute the Amendment.
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HEARING REQUIRED: No Hearing Required
SUMMARY:
Pensacola Aviation Center (PAC) is the full-service Fixed Base Operator serving the Pensacola International Airport. As a Fixed Base Operator, PAC is required to provide fueling, aircraft maintenance, pilot and passenger waiting areas, aircraft parking and storage, and a variety of other services to the operators of the privately and corporate-owned aircraft using the facility.
To provide aircraft parking and storage, Pensacola Aviation Center currently manages various hangars on the Airport. This includes 43 “T” hangars totaling 62,600 square feet that are used to house individual small single and twin-engine aircraft, and four clear span hangars totaling 55,700 square feet that are used to house a number of medium-sized single and twin-engine aircraft.
The recently completed Master Plan reviewed all of the facilities on the Pensacola International Airport and outlined those items needed to meet current and forecast demand. The number of T hangars and clear span hangars was last expanded in 2008. Given the growth in general aviation activity over the last eleven years, the Master Plan identified a current need for an increase in both types of facilities.
In lieu of providing these facilities itself, the City of Pensacola typically works with private entities such as Pensacola Aviation to fund, construct, and operate the various hangars and buildings required to accommodate the needs of the general aviation community. In consideration of the development and to allow a company to amortize the investment, the City grants longer term leases.
In October 2019, City Council approved Amendment No. 10 to the lease with Pensacola Aviation. Under this Amendment, Pensacola Aviation was to invest $2.9 million dollars to develop additional T hangars and an additional 20,000 square foot clear span hangar. To allow for the amortization of the investment, the lease with Pensacola Aviation was extended seventeen years to September 30, 2049.
Pensacola Aviation actually has two different leaseholds on the Airport. Both leaseholds would be affected by the proposed capital investment, and both would need to be amended to account for the development and the additional amortization period. Previously approved Amendment No. 10 with the main Pensacola Aviation lease did not take this into account. Proposed Amendment No. 11 takes into account the capital investment of $1.9 million for the main leasehold. This includes $1 million to design and construct additional T hangars, $600,000 to design and construct an office addition to an existing hangar facility, and $300,000 in equipment improvements to the fuel farm. In consideration of this capital investment, the previously approved lease extension to September 30, 2049 would remain in effect.
A separate amendment to the secondary Pensacola Aviation leasehold, formerly held by Aerose, LLC, would take into account the proposed capital improvements for that site.
PRIOR ACTION:
August 25, 1997: City Council approved the lease with Pensacola Aviation Center, Inc.
March 26, 1997: City Council approved Amendment No. 1 to the lease.
January 14, 1999: City Council approved Amendment No. 2 to the lease.
November 18, 1999: City Council approved Amendment No. 3 to the lease.
January 10, 2002: City Council approved Amendment No. 4 to the lease.
November 20, 2003: City Council approved Amendment No. 5 to the lease.
October 12, 2006: City Council approved Amendment No. 6 to the lease.
June 28, 2007: City Council approved Amendment No. 7 to the lease.
May 26, 2011: City Council approved Amendment No. 8 to the lease.
January 10, 2013: City Council approved Amendment No. 9 to the lease.
October 24, 2019: City Council approved Amendment No. 10 to the lease.
FUNDING:
N/A
FINANCIAL IMPACT:
Pensacola Aviation pays ground rent for the property it uses on the main leasehold. The annual rental payment is currently $59,470.97. The additional property required for the T hangar expansion and office expansion on the existing hangar will be added to the annual rental. The overall rental rate is adjusted every five years.
CITY ATTORNEY REVIEW: Yes
5/28/2020
STAFF CONTACT:
Keith Wilkins, City Administrator
Richard Barker, Jr., Deputy City Administrator - Administration & Enterprise
Daniel Flynn, Airport Director
ATTACHMENTS:
1) Pensacola Aviation Center Lease Agreement Amendment No. 11
PRESENTATION: No end