Agenda Item Wording:
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Ordinance Adoption to Authorize an Airport Lease Agreement - Second reading and adoption of Ordinance No. 2024-18 to authorize the City Manager to execute an Airport Lease Agreement between the City of Visalia and Air Methods, LLC for its location at the Visalia Municipal Airport Administration Building.
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Deadline for Action: None
Submitting Department: Administration
Contact Name and Phone Number:
Jody Miller, Airport Manager, (559)713-4282, Jody.Miller@visalia.city <mailto:Jody.Miller@visalia.city>
John Lollis, Assistant City Manager, (559)713-4323, John.Lollis@visalia.city
Department Recommendation:
Staff recommends that the City Council hold the second reading and adoption of Ordinance No. 2024-18, authorizing the City Manager to execute an Airport Lease Agreement with Air Methods, LLC in its current location at the Visalia Municipal Airport Administration Building for three (3) years with two (2) single year renewal options at the lease rent rate of Eight Hundred Sixty-Nine dollars and twelve cents ($869.12) monthly with annual Consumer Price Index (CPI) adjustments.
Background Discussion:
The City of Visalia and Air Methods, LLC currently have two (2) separate lease agreements at the Visalia Municipal Airport, including one agreement for space in the Airport Administration Building, and the second agreement for a hangar.
The City first entered into a lease agreement for air ambulance operations at the Airport with SkyLife Helicopters in February 2012, including the use of approximately 845 square feet in the Airport Administration Building for crew quarters and office space for a term of four (4) years. A successor lease with SkyLife was executed in September 2016 for a term of four (4) years. In January 2020, Air Methods Corporation assumed the lease from SkyLife and entered into a new lease for four (4) years, expiring December 31, 2023, after which they have continued leasing the space on a month to month basis.
This newly proposed Airport Lease Agreement for the space within the Visalia Airport Administration Building would cover a period of three (3) years with two (2) single year renewal options. This proposed Agreement would begin on January 1, 2025, with a potential agreement end date of December 31, 2029, should both option years be executed. The adoption of an Ordinance is required by the City Charter for lease agreements with a duration of more than five (5) years.
Over the past year, Air Methods has made changes to options at the Airport, splitting its staff between the lease space in the Airport Administration Building and its hangar, which the proposed Amendment would allow both Air Methods and Airport staff a duration of time to verify that the new crew alignment is effective prior to committing to a long-term agreement.
Staff recommends the Amendment to the Agreement as the space within the Airport Administration Building is uniquely suited for Air Methods, as the overnight crews utilize the previous Fire Station rest areas, bathroom, kitchen, and living room space. Should an Agreement not be reached for that space and Air Methods chooses to move its crews, Airport staff would likely be unable to find another tenant that fits the space within the Airport Administration Building, resulting in a considerable loss of revenue.
In addition to being a great addition to the Airport in terms of operations and revenue, the air ambulance operation is a valuable asset to the entire community and broader region, adding to the level of public health and safety for Visalia residents and visitors.
Fiscal Impact:
The Airport would continue to receive Eight Hundred Sixty-Nine dollars and Twelve cents ($869.12) as the monthly lease rent rate consistent with the market rate established by the Federal Aviation Administration, plus annual CPI adjustments for a minimum of three (3) years with the potential of five (5) years should Air Methods exercise the two (2) single year renewal options. Additionally, the Airport will continue to make ancillary profits from the Agreement in the form of fuel sales.
Prior Council Action:
February 21, 2012: Council authorized an Airport Lease Agreement between the City and SkyLife Helicopters for space in the Airport Administration Building
June 1, 2020: Council authorized the current Airport Lease Agreement between the City and Air Methods Corp for hangar space at the Visalia Municipal Airport
December 16, 2024” Council introduced and held the first reading of Ordinance No. 2024-18 to execute an Airport Lease Agreement between the City of Visalia and Air Methods, LLC for its location at the Visalia Municipal Airport Administration Building
Alternatives:
City Council could not authorize the execution of the Amendment or direct staff to further negotiate the proposed Amendment.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to hold the second reading and adoption of Ordinance No. 2024-18, authorizing the City Manager to execute an Airport Lease Agreement lease between the City of Visalia and Air Methods, LLC for its Visalia Municipal Airport Administration Building location, for the specified terms and rent rate.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
1. Draft Ordinance No. 2024-18
2. Draft Airport Lease Agreement
3. Airport Lease Agreement - January 1, 2020