Submitted By: Matthew Grow
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Presentation By: Matthew Grow
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Department: Aviation
STAFF RECOMMENDATION (Motion Ready):
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Approve Fixed Base Operator Lease Amendment No. 2 with Sheltair Ocala, LLC to accommodate hangar development expansion at the Ocala International Airport
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OCALA’S RELEVANT STRATEGIC GOALS:
Operational Excellence, Fiscally Sustainable
PROOF OF PUBLICATION:
NA
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BACKGROUND:
On June 1, 2015, the City entered into a 30-year lease agreement (the “Original Lease”) with Sheltair Ocala, LLC (“Sheltair”) to provide fixed based operations, contribute financially to a new general aviation terminal building, and construct a new corporate hangar of at least 10,000 sq. ft., all of which has been satisfied.
The lease was amended in February 2020 (“Amendment No. 1”) to accommodate 3,085sq. ft. of rental space in the new general aviation. Amendment No. 1 also reset the term to 30 years for construction of a new 20,000 sq. ft. hangar which became operational in December 2020.
With the Airport experiencing unprecedented demand for hangar space, Sheltair requests Amendment No. 2 to accommodate a phased construction of five, 20,000 sq. ft. hangars over the course of 10 years. This construction will occur on property currently leased and optioned by Sheltair.
FINDINGS AND CONCLUSIONS:
Amendment No. 2 is consistent with the intent of the original lease and Amendment No. 1.
Sheltair is in good standing, is a proactive partner in Airport development, and has met their obligations as set forth in the Original Lease.
Amendment No. 2 provides for three phases of construction. Phase 1 will take place on property already leased by Sheltair, will accommodate two new hangars and requires demolition of Hangar 14, the oldest hangar at the Airport. The Phase 2 parcel will accommodate two additional hangars. Phase 3 involves removal and replacement of a smaller hangar also located on the existing Sheltair leasehold. In all, Amendment No. 2 accommodates five new 20,000 sq. ft. hangars.
If Sheltair chooses not to move forward with any of the improvements, the lease term does not change and expires as scheduled on May 31, 2050. Construction of at least one of the hangars will extend the lease term by 30 years, but not to exceed May 31, 2063. Hence, they have 10 years to build at least one of the five hangars.
The Airport Advisory Board has worked closely on the Sheltair proposal and supports the development.
FISCAL IMPACT:
Phase 1: Existing Sheltair leasehold- no change in lease rate.
Phase2: Sheltair will pay $1000 per acre annually for a non-exclusive option on Phase 2 ($2,560). If exercised, the lease rate for Phase 2 is the greater of either $0.26 per sq. ft. or 10% of the appraised value.
Phase 3: Existing Sheltair leasehold- no change in lease rate.
Additionally, separately from the planned development, current rent for the existing improvements with terms expiring May 31, 2050 will be adjusted on June 1, 2050, to reflect the then fair market rent at that time.
PROCUREMENT REVIEW:
This Amendment has been reviewed by Procurement and Contracting in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
This Amendment has been reviewed and approved for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve with Changes
• Table
• Deny