Agenda Item Wording:
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Authorization for staff to appropriate $100,000 from the Airport Enterprise Fund to pay expenses generated by the recently approved lease between the Federal Express Corporation and the City of Visalia.
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Deadline for Action: None
Submitting Department: Administration - Airport
Contact Name and Phone Number:
Jody Miller, Airport Manager, 713-4282, Jody.Miller@visalia.city
Nick Mascia, Assistant City Manager, 713-4323, Nick.Mascia@visalia.city
Department Recommendation:
Staff recommends that Council authorize Staff to appropriate $100,000 from the Airport Enterprise Fund to pay expenses associated with the recently agreed upon lease between the Federal Express Corporation and the City of Visalia. The total amount agreed upon was $98,655.41. This amount will cover $85,000 in required renovations and repairs to the Federal Express location at the Airport and $13,655.41 to be paid to Fischer Company, a consultant hired by the Federal Express Company for handling all negotiations of the lease. The $98,655.41 will be reimbursed to the city by the Federal Express corporation over the first 36 months of the newly agreed upon lease as described herein.
Background Discussion:
The current lease agreement between the City of Visalia and the Federal Express Corporation was signed into agreement after the second reading and adoption of its accompanying ordinance on June 6th 2022. In the negotiation of that lease, the Federal Express Corporation had required improvements/renovations to be done to their facility at the airport to include:
*Replace damaged acyovin and touch up paint on the other walls in the Customer Service Area
*New interior paint throughout the office portions of the facility.
*Replace carpet and wall base throughout the office portion of the facility
*Reseal all windows and replace blinds in the office portion of the facility
*Replace vinyl flooring in all four (4) restrooms
*Replace or repair/refinish countertops and cabinets in the breakroom
*Install ten (10) exhaust fans in the warehouse sort area
*Replace the two (2) evaporative coolers
*Replace or seal metal exterior and trim where necessary due to rusting and holes.
*Paint the exterior of the stucco portion of the building once the necessary repairs are complete
*All paved areas should be sealed and restriped after fixing any cracking/potholes.
In the preparation of the lease, Visalia Airport personnel obtained quotes for the requested improvements which totaled to $55,319, during the negotiation process City staff and the Federal Express Corporation agreed upon the lessee paying $85,000 towards these improvements in the event of raising costs pushing the work past the expected $55,319 total, with the understanding that the $85,000 amount would be the total paid whether the costs came in higher or lower. Additionally, the Federal Express Corporation hired consultants (Fischer Company) to handle their side of the lease amendment negotiation, for an additional cost of $13,655.41 which the City agreed to pay upfront but would be reimbursed by the Federal Express Corporation. This led to a total owed to the City of Visalia in the amount of $98,655.41. This amount owed is to be split into even payments of $2,740.43 to be paid over the first 36 months of the new agreement on top of the standard monthly lease rate. In the event of either lessee or lessor terminating the agreement within the initial thirty-six months all remaining due of the $98,655.41 would be due in full at that time.
The Airport has agreed to have all requested improvements completed within one year of the signing of the lease and plans to stagger the work to allow the monthly payment of $2,740.43 from the Federal Express Corporation to accumulate throughout the year to offset the expense of each improvement. The $13,655.41 for Fischer Company consulting fees will be due upon signing and therefore will be the first expense to be followed thereafter by the renovations/improvements.
Fiscal Impact:
Visalia Municipal Airport will receive $2,740.43 monthly for the initial 36 months of the newly agreed upon lease term to recoup the $98,655.41. This amount is on top of the agreed upon monthly lease rate of $11,379.51 plus annual CPI adjustments that will be paid by the Federal Express Corporation.
Prior Council Action:
May 2nd 2022: Council introduced Ordinance 2022-08 and conducted its first reading authorizing an amended lease between the City of Visalia and the Federal Express Corporation.
June 6th 2022: Council conducted the second reading and adoption of Ordinance 2022-08. Authorizing an amended lease between the City of Visalia and the Federal Express Corporation.
Alternatives: City Council could not authorize the appropriation of funds to pay for the associated costs of the lease and Airport Staff would have to find a different way, returning to City Council, to fulfill the lease.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the appropriation of $100,000 from the Airport Fund to pay expenses generated by the recently approved lease with Federal Express Corporation.
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Environmental Assessment Status: NA.
CEQA Review: N/A
Attachments: .
1. Ordinance 2022-08
2. Federal Express Lease
3. Exhibit Showing FedEx Airport Location