Authorize Execution of Amendment No. 2 to City Secretary Contract No. 29135 to Reduce the Ground Space of Lease Site 6N and 8N and Authorize Execution of a New Ground Lease Agreement with Mandatory Improvements for 269,230 Square Feet of Ground Space Known as Lease Site 14C with FW American Aero Operating Company, LLC, at Fort Worth Meacham International Airport (COUNCIL DISTRICT 2)

It is recommended that the City Council:

1.  Authorize the execution of Amendment No. 2 to City Secretary Contract No. 29135 to reduce the ground space of Lease Site 6N-8N with FW American Aero Operating Company, LLC, at Fort Worth Meacham International Airport.

2.  Authorize the execution of a new Ground Lease Agreement with mandatory improvements for 269,230 square feet of ground space known as Lease Site 14C with FW American Aero Operating Company, LLC, at Fort Worth Meacham International Airport.

On May 1, 2018, Mayor and Council Communication (M&C C-28674), City Council approved the acceptance of a Texas Department of Transportation Aviation Division grant for the design and construction of the Midfield Redevelopment Project at Fort Worth Meacham International Airport (Airport).

This project will remove the failed infrastructure encompassed in the closed Runway 9/27 corridor so as to redevelop the area in accordance with the Airport's Master Plan and Airport Layout Plan. The redevelopment of the midfield area will create new taxiways that will stimulate hangar development opportunities and provide increased economic viability for the Airport through lease revenue and fuel flowage fees.

FW American Aero Operating Company, LLC (American Aero) currently holds the existing 6N and 8N Lease (CSC No. 29135-CA1). In order to facilitate the required clearance to construct the new Taxiway G, it is necessary to reduce the southern boundary of the current ground lease space by approximately 110,470 square feet. In recognition of the reduction in ground space the City has agreed to offer American Aero new ground space, known as Lease Site 14C, as a part of the Midfield Redevelopment project at Fort Worth Meacham International Airport.

The new Ground Lease will include a total of 269,230 square feet of ground space. American Aero will pay a ground rate in accordance with the published Schedule of Rates and Charges at the time of commencement. Commencement of the Lease will begin upon completion of the Midfield Redevelopment Project.

Mandatory Improvements will be deferred for a period of 5 years after commencement of the lease. Until completion of the Midfield Redevelopment Project, American Aero will compensate the City, in consideration for the Lease Agreement, an amount of $43,076.80 annually.

The term of the new Ground Lease is recommended for thirty years, effective upon commencement of the Ground Lease Agreement, with one 10-year option to renew, bringing the lease term to a total of forty years. All terms and conditions of the lease agreement will be in accordance with City and Aviation Department policies.

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 rate that is current in the Schedule of Rates and Charges. Five-year rate adjustments will be applied to the ground rate starting on October 1, 2019 and every fifth year thereafter.

The FAA has stated that they had no objection to the Lease Agreement based on what has been represented to them regarding its terms.

ADVISORY BOARD APPROVAL: On November 8, 2018, the Aviation Advisory Board voted to recommend that the City Council approve this action.

Fort Worth Meacham International Airport is located in COUNCIL DISTRICT 2.