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HomeMy WebLinkAboutContract 43601-A1CSC No. 43601-Al AMENDMENT TO CITY SECRETARY CONTRACT NO. 43601 FORT WORTH MEACIIAM INTERNATIONAL, AIRPORT GROUND AND HANGAR LEASE AGREEMENT LEASE SITE 40S This AMENDMENT TO CITY SECRETARY CONTRACT ("CSC") NO. 43601 ("AMENDMENT") is made and entered into by and between the CITY OF FORT WORTH ("Lessor"), a home rule municipal corporation organized under the laws of the State of Texas and FORTY SOUTH, LLC ("Lessee"), a Texas limited liability company, acting by and through COLE MEANS its duly authorized Managing Member, each individually referred to as a "party" and collectively referred to as the "parties." RECITALS The following statements are true and correct and form the basis of this Amendment. WHEREAS, on or about January 4, 1983, Burnett Aviation Co., Inc. ("Former Lessee") and the Lessor entered into City Secretary Contract ("CSC") No. 12887, a thirty (30) year Fixed Base Operator Lease for unimproved ground space known as Lease Sites 40S and 43S at Fort Worth Meacham International Airport ("Airport"), consisting of a total of 236,778 square feet of ground space expiring on January 3, 2013 ("Previous Lease"); and WHEREAS, Former Lessee requested to divide Lease Sites 40S and 43S into three individual lease tracts to be known as Lease Sites 39S, 40S, and 41S (formerly 43S); and WHEREAS, on or about September 11, 2012, through Mayor and Council Communication (M&C) No. C-25812, City Council authorized Lessor to enter into a certain Ground Lease Agreement (CSC 43601) with Former Lessee, dated September 14, 2012, (the "Lease"), for the use of real property consisting of 111,194 square feet of ground space, including a 14,400 square foot hangar known as Lease Site 40S ("Premises") at the Airport; WHEREAS, the Initial Term of the Lease includes three (3) options to renew at ten (10) years each with a requirement that upon exercising the first renewal, a per square foot hangar rate will be added to Lessee's monthly rental payment which would be based on a third -party appraisal of the hangar at the time the renewal is to occur; WHEREAS, shortly after the execution of the Lease, Former Lessee, based on their own desires, subsequently expanded the footprint of the original hangar on the Premises to 25,250 square feet; and Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South,1.LC CSC No. 43601 Page 1 of 6 OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX WHEREAS, in June of 2022, Aviation Department staff contracted with a licensed third - party appraiser ("JLL") to perform an appraisal of the hangar on the Premises to determine the per square foot fair market value in anticipation for the upcoming first ten-year renewal under the Lease, if it were to occur ("Initial Appraisal") which came back with a rate of $7.50 per square foot; WHEREAS, On or about August 23, 2022, City Council, through M&C 22-0645, authorized a certain Consent to Assignment (CSC 43601-CAI) dated August 25, 2022, which approved an assignment of the leasehold interest in Lease Site 40S from Former Lessee to Lessee that indicated within the discussion section of the M&C that the hangar under the Lease was now 25,250 square feet however the Lease was never amended to reflect the hangar's updated footprint; WHEREAS, Lessee was subsequently provided a copy of the Initial Appraisal for the hangar on Lease Site 40S before any renewal was executed that reflected the 25,250 square feet amount of hangar space; WHEREAS, On November 15, 2022, the Lessor and Lessee entered into CSC 43601-RI ("Renewal") acknowledging Lessee's exercising of the first, ten-year, option to renew the Lease which was intended to reflect the new hangar rental rate incorporating all 25,250 square feet of hangar space; WHEREAS, the annual hangar rental rate represented on the Renewal was inadvertently calculated using the inaccurate 14,400 square feet, the footprint of the hangar prior to expansion, and not the current 25,250 square feet of hangar space that currently exists on the Premises; WHEREAS, when this discrepancy was presented to Lessee by Lessor, Lessee requested Lessor to contact JLL due to an inconsistency with the Initial Appraisal and a separate appraisal conducted by JLL for Lessor in August of 2022 for a hanger directly adjacent to the Premises with almost identical improvements ("41 S Appraisal"); WHEREAS, Lessor agreed to contact JLL and upon JLL's review, JLL acknowledged in an email to Aviation Department staff on February 9, 2023 that the price per square foot for the 41 S Appraisal was established a few months after the Initial Appraisal and, within that time, additional research and JLL's subsequent conversations with other airport operator professionals allowed for a more accurate fair market value determination on the conservative end of the published rental range for Lease Site 41S; WHEREAS, the Appraiser subsequently provided an amended appraisal for the Premises on February 9, 2023 ("Amended Appraisal") that established a rental rate of $6.25 per square foot for the hangar on the Premises; Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, I.LC CSC No. 43601 Page 2of6 WHEREAS, the parties would now like to amend the Lease to acknowledge the correct size of the hangar on the Premises by changing the definition of "I langar" to accurately reflect the current 25,250 square feet of improvements owned by the City under the Lease as well as correctly idcntify the hangar rental rate and amounts due by Lessee based on the Amcndcd Appraisal. NOV, THEREFORE, for good and valuable consideration, the receipt and adequacy of which arc hereby acknowledged, Lessor and Lessee hereby agree as follows: 1. The Lease is hereby amended by deleting Section "1", "PROPERTY LEASED" in its entirety and replacing it with the following: 1. PROPERTY LEASED. Lessor hereby demises to Lessee 111,194 square feet of ground space ("ground"), including a 25,250 square foot hangar ("Hangar") at the Airport, identified as Lease Site 40S, also known as 3524 Lincoln Avenue, ("Premises"), as shown in Exhibit "A", attached hereto and hereby made a part of this Lease for all purposes. 2. The Lease is hereby amended by deleting Exhibit "A" of the Lease in its entirety and replacing it with the attached Exhibit "A" of this Amendment. 3. Section 2 of the Renewal (CSC 43601-R1) is deleted in its entirety and replaced with the following: 2. In accordance with 3.2.3. "Ten -Year Adjustments, Hangar Rate," in the Lease, the new hangar rate of $6.25 per square foot for the 25,250 square foot Hangar or One Hundred Fifty -Seven Thousand Eight Hundred Twelve Dollars and 50/100 ($157,812.50) per year, payable in monthly installments of Thirteen Thousand One Hundred Fifty -One Dollars and 04/100 ($13,151.04), which will be added as part of the rent under the Lease in addition to the already established ground rate. The hangar rate is commensurate with the appraised fair market value as reported by a licensed third -party appraiser. 4. Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, LLC CSC No,43601 Page 3 of 6 City acknowledges that Lessee has paid $9,000.00 for the month of January based on the incorrect rental amounts represented in the Renewal, and therefore, based on the correct rental amounts reflected in this Amendment, the remainder amount due for the month of January, 2023 under the Lease is $4,151.04. Additionally, a corrected invoice for February 1, 2023 will be mailed to the Lessee to reflect the change. 5. All other terms and conditions of the Lease that are not expressly amended herein or directly in conflict with the provisions and conditions of this Amendment shall remain in full force and effect. 6. The statements set forth in the recitals above are true and correct and form the basis upon which Lessor and Lessee have entered into this Amendment. The Lease is a public document on file in Lessor's City Secretary's Office and is incorporated herein by reference for all purposes. [Signature Pages Follow] Amendment and Correction for Fort Worth Meacham international Airport Lease with Forty South, LLC CSC No, 43601 Page 4 of 6 IN WITNESS WHEREOF, the parties hereto have executed this Amendment in multiples on this the day of , 2023. CITY OF FORT WORTH: By: Dana Burghdoff (grr 13, 205 17:12 CDT) Dana Burghdoff Assistant City Manager Date: Apr 13, 2023 STATE OF TEXAS COUNTY OF TARRANT § RF BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared Dana Burghdoff, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of the City of Fort Worth and that he executed the same as the act of the City of Fort Worth for the purposes and consideration therein expressed and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE this , 2023. Apr 13, 2023 SELENA ALA Notary Public STATE OF TEXAS Notary I.D. 132422528 My Comm. Exp. Mar. 31, 2024 APPROVED AS TO FORM AND LEGALITY: By: By: Thomas Royce Hansen Jannette S. Goodall Assistant City Attorney City Secretary day Selena Ala (Apr 13, 202317:13 CDT) Notary Public in and for the State of Texas M&C: C-25812 Approval Date: 09/11/2012 Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, !LC CSC No. 43601 Page 5 of 6 ATTEST: OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX Contract Compliance Manager: By signing, I acknowledge that I am the person responsible for the monitoring and administration of this contract, including ensuring all performance and reporting requirements. 'a.u4a,Ba Barbara Goodwin Real Property Manager LESSEE: ATTEST: FORTY SOUTH, LLC By: r .44 - At•E MEANS Date: Fe.6rvArvi 21. 2623 STATE OF TEXAS § COUNTY OF TARRANT § BY:—(Yittr BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared COLE MEANS known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act of FORTY SOUTH, LLC and that s/he executed the same as the act of FORTY SOUTH, LLC for the purposes and consideration therein expressed and in the capacity therein stated. GIVE DER MY HAND AND SEAL OF OFFIC this day mvsi Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, LLC CSC No. 43601 Page 6 of 6 , 2023. Nola P , he in a d for the State of Texas W►LLIAM P TERRY N My CoNotarymmfsslon►D130517396 Expires June 26, 2024 EXHIBIT A LOCATION MAP Subject Location Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, LLC CSC No. 43601 Page 7 of 9 Exhibit "Art 407N R4'K R 4tRVEY BLOCK 3 MEACHAM AIRPORT CABIwr A, SUDS 2446 P.R.,T.C.,T. P.O.B. LEASE SIS i/2VpF x. 231776.5.136 Y- e67071t.17 11s114 WMu NOR KWh N 3#3031` C p36' 413 AREA: 2.12a ACHES 02.521 SF.)•F— r` s 4e40'OTP W 70.0' CROSS "-V IN CONCRETE FlUl CVOS Mat e rost 440 w 61M4'>A' E 3E61' / maul Iva 40S -q, AREA 2.552 ACRES (/11.I9( ` Sins'cnY or rr. WDIOIi sway smear 4 Rq BLOCK 3 MEACHAM AIRPORT CABINET A, SLIDE 2445 P.R..T.C.,T. 7A Lair I „11 Cal` sm yg,i ESN' 16 .86' 11Y26 5- 9577" L1= N 4513'11" W 42.07' • DENOTES A 5/8' IRON ROD SET WTTTM A RED PLASTIC CAP STAMPED "CITY OF FT. WORTH SURVEY DMS10N" CONTROL MONUMENT CMS MCI WETIRF tart Or FT. tlNRIN SUMO WSW- • WOW Telly Or rr. WARM sumer Drawer • •r 3• • . AO 1" = 60' N E11417' E ab.57' P.0.B. LEASE 40S NATS •X' CUT 1N CONCAVE x- 2318337.15 Y+ E676610.51 BLOCK 3 MEACRAM AIRPORT CABINET A, SLIDE 2445 ax r .1 ' Y,W * WOW OF F7. NaaI71 6/6Tri• 'CRY 0f R W0RIN '°ff w 39S AREA: 0.765 ACRES (33,042 SF.}r vaSsr seer. RIR MAP OF SURVEY SHOWING MEACHAM AIRPORT LEASE PARCELS 39S, 40S AND 418 SITUATED IN BLOCK 3, MEACHAM AIRPORT ACCORDING TO PLAT RECORDED IN CABINET A, SLIDE 2445, PLAT RECORDS OF TARRANT COUNTY, TEXAS. BEARING BASE: CITY OF FORT WORTH INTEGRATED C.P.S. NETWORK SYSTEM. NAD. 83, NORTH CENTRAL 'TEXAS TONE. DISTANCES ARE GROUND MEASUREMENTS. 69 0 60 LED 180 GRAPHIC SCALE' IN FEET s SY17.'1C W P.O.H. LEASE 36S War X— 227656143 — e676f26.62 NOTE: In accordance with the Tacos Board of Prahxslenal Land Surveying, General Rohm of Procedures and PrnCticee, 663.18(C), 'Prervnine,y, (lea document shall not by recorded for any purpose, Preliminary documents released from the surveyor's control which Include lhis text in place of the sarvayoru signature need not Comply wRh the other minimum standards promulgated In this chapt, SURVEYED ON THE GROUND 114 MARCH AND APRIL OF 2012. SURREY OM30N' ,YtN R010ER 51RVeY A-rm alelar (W+•1 a Aural ;Orr L a.M. cis AKAaFeIieg RT WORTH pa st.(..Qy Wm* la - red IMM X 9 . . 7at N0..0Yxessr Exhibit "A" FORT WORTH. REAL PROPPRfl DELS1CRIPTION M14C 4M .A1PPW?Y LEASE .4 W A parcel of land situated in Block 3, Meacham Airport, as recorded in Cabinet A, Slide 2445, Plat Records of Tarrant County, Texas, and including a portion of that certain tract of land known as Burnett Aviation according to Lease recorded in Volume 7439, Page 296, Deed Records of Tarrant County, Texas, and being more particularly described by metes and bounds as follows: Beginning at a mark "X" cut in concrete at the northeast corner of herein described parcel, said corner bears: South 08 degrees 35 minutes 12 seconds East, 183.44 feet from a 5/8" iron rod found with a red plastic cap stamped "CITY OF FT. WORTH SURVEY DIVISION" at the northeast comer of said Burnett Aviation Lease; Thence: South 08 degrees 35 minutes 12 seconds East, 301.28 feet to a 518" iron rod found with a red plastic cap stamped "CITY OF FT. WORTH SURVEY DIVISION" at the southeast comer of herein described parcel; Thence: South 81 degrees 22 minutes 32 seconds West, 257.70 feet to a 5/8" iron rod found with a red plastic cap stamped "CITY OF FT. WORTH SURVEY DIVISION" at the southwest comer of herein described parcel on the monumented easterly right-of-way line of Lincoln Ave. (60.0' right-of-way per plat monumented as a 70.0' right-of-way); Thence: with said monumented right-of-way line, North 45 degrees 13 minutes 11 seconds West, 278.18 feet to a 5/8" iron rod found with a red plastic cap stamped "CITY OF FT. WORTH SURVEY SECTION" at the beginning of a curve having a radius of 565.0 feet; Thence: with said curve to the right along said monumented right-of-way line through a central angle of 09 degrees 21 minutes 37 seconds, an arc length of 92.30 feet whose chord bears: North 40 degrees 33 minutes 41 seconds West, 92.20 feet to a 5/8" iron rod set with a red plastic cap stamped "CITY OF FT. WORTH SURVEY DIVISION" at the end of said curve for the northwest comer of herein described parcel; TRANSPORTATION AND PUBLIC WORKS DEPARTMENT SURVEYING SERVICES THE Crrr of FORT WORTH * 8851 Camp Bowie Blvd West * Fort. WORTH, TEXAS 76116 817 392-7925 * Fax 817-392-7895 Exhibit "A" f 1 Thence: departing said monumented right-of-way line, North 81 degrees 24 minutes 48 seconds East, 472.51 feet to the Place of Beginning, and containing some 2.552 acres (111,194 square feet of land), more or less. Surveyed on the ground in March and April of 2012. Basis of Bearings: The City of Fort Worth Integrated G.P.S. Network System, N.A.D. 83, North Central Texas Zone. All distances are ground measurements. Bearing base line as shown on Map of Survey. Note: In accordance with the Texas Board of Professional Land Surveying, General Rules of Procedures and Practices, 663.19(9), this "report" consists of the hereon real property description, and a Map of Survey being attached herewith. * Oq�l CRYSTAL D: RABBIS ....;.•A••6157, :. /� Ik`4�1 TRANSPORTATION AND PUBLIC WORKS DEPARTMENT SvxvE' G Sp:VlcEs TEE CITY as Foxy WORTH * 8851 Camp -©vie Blvd West * Fortr WORTa, TEXAS 76116 817 392-7925 * FAx 817-342-7895 CITY COUNCIL AGENDA COUNCIL ACTION: Apprrawd on 9.I1112412 Create New From This M.0 DATE ni 1112312 REFERENCE NCI.:—C-25312 LOG NAME: Efl 4 us f ia ref a pri *Ark Traa CURT WORTH Frif BUR)1ETT AVIATION CODE: C TYPE: COSENT P9JIBUC NNO HEARING: SUBJECT: Autttortze Elieraf:en 0 Three EraLr y Lease Agreements wen E&xi c Avutian Co. re., ter Lease Ste: 335 4CS and 413 al Fee: girth Mca_ham International /'Jrper•.,CC{JNC CISTRJCT 21 RECOMMENDATION : It Is recommended that the Gtty Gounct aWIWI a the execulon ol Fete Erc•rd Lease Agreements wth Burnt,: Awatknrr Co. Inc :or Leade Sites 395, i0S and 415 Fert1\orth Meacham IntcrraLiarsa ArpCrt. DISCUSSION: On December 2. 1992. (ME.C.. C.-50371 E rnct Avatlari Co ..(C., tiBurncli} entered into City Seue:ry Contract 'CSC) No 12B27, a Freed E:r:c Opera/Kr Le.me Aired fl I. for Ground Space kneven as Lease Site 405 and h3=• corilstlng a: a term o' 23C. 7 73 square recto' grounri space or land c atslsh a 14,433 Yid 22,35C s pare c,. hangar, resperlxrety, were icori,trucle -CSC No. 12887 centar6 a SG yet lose *term. wd et re en #,:rsuar, 3, 2013. UGcn the crrlrat,Grr cf this le_ee, E s-ntr ha& requested tadrr+de Lease Ste 40S and 415 lino vier rndr.ry.tal lease Tacts ro t c known :d Lee Sits 395, 4C-5 and 41S iformedy 413 TI Aviation J7tc arrent has :,greed to the de.' CO Cr the lease 7a_t as it aril preode tar ceconued econamc sowtt .rid de eioprnrrr ern the ACV: Side cr the AJrFcr. The lease Agrcemcrr. nor Le:&e Site 335 will receire manda'r.,ry Improvements as the :Ire ccrss:sls of 33,C42 srauare recto! urrieneloced ground sp.-rce. J(s deveicpirrg d-c sec, Burnett pre ►ases to con:tn c1 a rSOD sqllafe 1r hart gar on the site. The lease wit prcr.lje'cr a .3C yew term oat one option renew !or :n addrenal 10 years. . The innal term cC the leas 'till commence J:ruarf 2C13 and MI s,cpre- January 3 2C43. In arc' danrr th1lh fine current 5_tcduk. o' R:.1cs and Charges, the lease :IX veil generate revenue In the acrcuntel S9921.34 annu:Jly of in the .a -noun of S743.45 monthly at a ground rate o1 5077 per square IJat Tine lease Agrccmcrr.; for 4CB and 413'MI be tor site: akeadr deaciopcd Lease Site:15 N11 canslst cf 111,194 square tee! ram' cyounrd :pace µith a 14,4C0 square xct hangar. Lease Ste 415 wit consist cf 52,521 square lest orair#7 spas Mith a 22,3SC sclera e-ct hangar. Each el thc:c feasts wit p+ronidr_• for a 10 year Ecrm 'am 1-re cc11orts to renew for an addtlarlal 10 years eacti. Trre rnc:LaJ:errn of the kr.es 1,0.17 crx7rcnce January 4 2013 and will expire January 3; 2C23. n accerdancc,Mth me wrrcnt tic hole oI Rote, and Charges Eerie Sm.4CG ,ill g`-neexe rc.cnuc n the amr,rr. of S3C,022 .2.5 nnualy or : the amen. a' S2,5a1.97 r-.crslhtr al a gre.tnd rate et :0.27 per square foci_ Lease 5re 415 wll oencr:le rt•renue to the :r^:r_..tsl of s25 007 E7 annual; or in the :r+o.nt cf 12,033 97 menthe? al a 9roUnd rale of SO 27 per square toot. D.r1ng the nllal term fur each Ie:e:e, rental r:,Ir s .ubpcl t3 an Increase Dyer, to (elect 7sc upma►d percentage charrit d any, in I'd. Consis— r Price Irma Ica the pc, ►:d snce tt►e lac: riju;tmcrtt. Rerr.:J r:Ia. g ng the rill temr, "Al .iticct *,a a ground rule adeal-Emcrl (.cry Amendment and Correction for Fort Worth Meacham International Airport Lease with Forty South, 1.I,C CSC No. 43601 Page 8of() 11,.e years. The ground rate- wil art omancaily be att..&lad co equal C-Fc then current rate. pruaL J by the Schedule of Rack: and Charges` In addron to annual rent alusrcnts t Lc Ste: 4CS and 41S, staring J,rriari 4, 21123 for the t1r s: ronc wV termsa hangar ram corrrnefaurate wrn tic appraised Fair Markel Value steal 1;e added, bated on the Sctxdsc of Rarer and Charges lc( c tw.e. or rocs ol proper', at the Airport sk Ytar to Inc type or tjpc-. cr proper" that comprise the hangar. Berg 1 lrtt year thercaMr fi.c for each addt,ortal renemal tern cf the kvs4 the hangar rale steal aulomsnc.:dt, be r 1istad to equal the then a4^ ,raced Far Market Valle, as Frrrcrbc'i by 1-pe Schedule c? Rams and Charges fcr tic type or pr ii at the Alrper sireglar to Ine type or types cr' Fr• -rty that comprise etc Hangar. Al Agreement terrr4 Ki1 be In accordance mth the C ty and AYIatkr5 DcpariT,ortt poioes The properties are located In C CF"-NCL METRICT2. FISCAL INFO RMAT1GM'C.ERTIFICATION: "Tee Fnanoal P'zragcrnent Scrdkes Director crrtr'ies :fiat the Avignon Depolment Is respcnsble .'or dtc ootk'lkn aid deposit ct uri : due the C1-f. TO FundlAccoeuntt'r,arytors FROM FurrpetrAecounrMarte s Ff4o c1t:1-1: v.3.35124. :Skim I tliyi for City Mann Wilco by, Ferrbando Ccs a 01221 Oripinat:np D partry nt Haut Bill WeMead e,S.i121 Additional Information Contact annlc Htrrti i.54C5,r ATTACHMENTS 5nProi [JL RNETT AVIATION Ert r b r A cd Amendment and Correction for Fort Worth Meacham international Airport Lease wish Forty South, LLC CSC No. 43601 Page 9 of 6 M&C Review Page 1 of 3 Official site of the City of Fort Worth, Texas A CITY COUNCIL AGEND FORS II Create New From This M&C DATE: 4/11/2023 REFERENCE NO.: **M&C 23- 0260 LOG NAME: 55FTW RENEWAL AND ASSIGNMENT LEASE 40S, FTW 3524 LLC CODE: C TYPE: CONSENT PUBLIC NO HEARING: SUBJECT: (CD 2 / Future CD 2) Authorize Execution of an Amendment to City Secretary Contract 43601, a Hangar and Ground Lease Agreement for Lease Site 40S at Fort Worth Meacham International Airport with the Current Tenant, Forty South, LLC, to Include the Correct Square Footage of the Existing Hangar and Update the Fair Market Per Square Foot Rental Amount Based on an Amended Third Party Appraisal and Authorize the Execution of a Consent to Assignment of the Same Lease from Forty South, LLC to FTW 3524 LLC RECOMMENDATION: It is recommended that the City Council: 1. Authorize execution of an amendment to City Secretary Contract 43601, a hangar and ground lease agreement for Lease Site 40S at Fort Worth Meacham International Airport with the current tenant, Forty South, LLC, to include the correct square footage of the existing hangar and update the fair market per square foot rental amount based on an amended third -party appraisal; and 2. Authorize execution of a consent to assignment of City Secretary Contract 43601, a hangar and ground lease agreement for Lease Site 40S, by the current tenant, Forty South, LLC to FTW 3524 LLC, at Fort Worth Meacham International Airport. DISCUSSION: On January 4, 1983, Burnett Aviation Co., Inc. (Former Lessee) entered into City Secretary (CSC) 12887, a Fixed Based Operator Lease for ground space known as Lease Sites 40S and 43S, consisting of a total of 236,778 square feet of ground space. The Lease contained a thirty (30) year lease term ending on January 3, 2013. On or about September, 2012, Lessor and Burnett Aviation agreed to divide Lease Sites 40S and 43S into three individual tracts to be known as Lease Sites 39S, 40S and 41S (formerly 43S) and enter into three different agreements for each lease site. On September 11, 2012 through Mayor and Council Communication (M&C) C-25812, City Council authorized the City of Fort Worth (City) to execute a ground lease agreement under CSC 43601 (Lease) with Former Lessee, with an effective date of January 4, 2013 for lease and use of real property known as Lease Site 40S and any improvements and facilities thereon. Lease Site 40S had improvements including a 14,400 square foot hangar at the time Lease Site 40S was created. Former Lessee subsequently expanded the footprint of the hangar to 25,250 square feet. On August 25, 2022, through M&C 22-0645, City Council authorized CSC 43601-CAI, a consent to assignment of the Lease from Former Lessee to Forty South, LLC (Current Lessee). The Lease consists of 111,194 square feet of ground space. Existing improvements include a 25,250 square foot hangar. The lease term had a termination date of January 3, 2023 with three (3) options to renew for an additional ten (10) year term each. In preparation for the upcoming lease renewal, staff contracted a third -party appraiser (JLL) to perform an appraisal of the hangar (Initial Appraisal), which came back with a rate of $7.50 per square foot per year based on a hangar square footage of 25,250. Current Lessee was provided a copy of the Initial Appraisal. http://apps.cfwnet.org/council packet/mc review.asp?ID=30887&councildate=4/11/2023 4/13/2023 M&C Review Page 2 of 3 On November 15, 2022, Current Lessee and Lessor entered into CSC 43601-R1, exercising the first renewal option as provided for in CSC 43601. In accordance with Section 3.2.3 Ten -Year Adjustments, Hangar Rate in the Lease, a hangar rate based on the Initial Appraisal was applied at a rate of $7.50 per square foot per year. Through a routine audit of the account in January, 2023, staff discovered that the price per square foot was inadvertently calculated on the renewal using the hangar footprint prior to expansion of the hangar which was 14,400 square feet; however, the intent was to incorporate all 25,250 square feet of hangar space which reflects the added space to the hangar that was conducted by Former Lessee. Upon notification of the discrepancy, the Current Lessee requested and the City agreed to contact JLL and address an inconsistency in the Initial Appraisal and an appraisal performed on a hangar known as 41 S which was built and finished out by the same developer in the same time period. After review of the Initial Appraisal, JLL subsequently revised the market rate assumption in the Initial Appraisal to $6.25 per square foot per year, more accurately reflecting fair market value for similar City -managed hangars on the Airport. Upon City Council approval, an amendment for CSC 43601 will accurately define the leased premises as 111,194 square feet of ground space (Ground), to include a 25,250 square foot hangar (Hangar) and incorporate the re-evaluated fair market value by JLL. Additionally, through the proposed amendment, the Current Lessee will be responsible for paying the City any amounts owed, per the new fair market value rental rate and square footage, that had not been paid since the renewal of the Lease went into effect in January of this year. Annual revenue from the ground rate will be fifty-two thousand two hundred sixty-one dollars and 18/100 ($52,261.18), paid in monthly installments of four thousand three hundred fifty-five dollars and 10/100 ($4,355.10). Annual revenue from the hangar rate will be one hundred fifty-seven thousand eight hundred twelve dollars and 50/100 ($157,812.50). Rental rates shall be subject to an increase on October 1st of any given year, based on the upward percentage change in the Consumer Price Index for the Dallas -Fort Worth Metropolitan area. At no time will the adjusted rate exceed the then current rate published in the Aviation Department's Schedule of Rates and Charges. Five-year rate adjustments are applied to the ground rate with the next scheduled adjustment on January 4, 2028 and every fifth year thereafter. On January 17, 2023, staff received a request from the Current Lessee to consent to an assignment of the Lease to FTW 3524 LLC (FTW 3524). Upon City Council approval, FTW 3524 will assume the leasehold interest and obligations associated with the Lease. The Lease prohibits any assignment of the Lease or causing any lien to be made on improvements constructed on the leased premises without City Council approval. These types of transactions are routine for airport tenants and staff has no objection to this request. Fort Worth Meacham International Airport is located in COUNCIL DISTRICT 2/FUTURE COUNCIL DISTRICT 2. FISCAL INFORMATION/CERTIFICATION: The Director of Finance certifies that upon approval of the above the lease, funds will be deposited into the Municipal Airport Fund Financial Management Services) is responsible for the collection TO TFund Department Account Project Program Activity ID ID FROM Fund Department ID Account Project Program ID recommendations and execution of . The Aviation Department (and and deposit of funds due to the City. Budget Year Activity Budget Year Submitted for City Manager's Office bv: Dana Burghdoff (8018) Originating Department Head: Roger Venables (5402) Reference # (Chartfield 2) Reference # (Chartfield 2) Amount Amount http://apps.cfwnet.org/council packet/mc review.asp?ID=30887&councildate=4/11/2023 4/13/2023 M&C Review Additional Information Contact: Ricardo Barcelo (5403) ATTACHMENTS FID TABLE1.xlsx (CFW Internal) Form 1295 Certificate - Forty South 6-17-22.odf (CFW Internal) Form1295Certificate FTW 3524 LLC.odf (CFW Internal) Location Mao 40S.odf (Public) Page 3 of 3 http://apps.cfwnet.org/council packet/mc review.asp?ID=30887&councildate=4/11/2023 4/13/2023