TITLE
Recommendation to authorize City Manager to execute the Third Amendment to Lease No. 16419 with Catalina Flying Boats, Inc. for City-owned property at 3215 East Spring Street to extend the term of the lease through May 31, 2048, at the initial monthly rental rate of $3,870. (District 5)
DISCUSSION
In 1992, the City Council authorized the execution of Lease No. 16419 (Lease) between the City of Long Beach and Catalina Flying Boats, Inc. (CFB) for approximately 1.24 acres of City-owned property located at 3215 E. Spring Street at the Long Beach Airport. The site is presently improved with a 4,400 square foot aircraft hangar and aircraft tie-down areas with capacity for up to three aircraft. CFB provides local charters and same-day air and delivery services to Catalina Island. The 25-year Lease will terminate in 2017. The current annual rent is approximately $39,100. The annual rent is adjusted every five years based on a fair market land value reappraisal. The improvements are owned by CFB.
There are approximately nine years remaining on the current term of the Lease. CFB has requested an amendment to the Lease to extend the term through 2048, an additional 31 years, in order to secure financing for the installation of fueling tanks on the site for its aircraft. CFB also seeks to secure occupancy consistent with the useful life of the proposed capital improvements.
In June 2007, at staff's request, Keyser Marston Associates produced a lease extension analysis for the CFB leasehold to determine the potential additional revenue to the City from leasing the improvements to another tenant during the proposed 31-year extension period. At the end of the current Lease period in 2017, the City would own the improvements and could lease the site to another tenant for rent based on both land value and improvements. For purposes of the analysis, the following assumptions were utilized:
ยท Annual operating income for the property was based on current lease rates fo...
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