TO: Board of Supervisors
FROM: Steven Lederer, Director of Public Works
REPORT BY: Mark Witsoe, A.A.E., Airport Manager
SUBJECT: Approval of Amendment No. 3 to Agreement 230234B, Amended and Restated Guaranty Agreement 230235B, Consent to a Deed of Trust, and Memorandum of Lease
RECOMMENDATION
title
Approve and authorize Amendment No. 3 to Lease Agreement No. 230234B with SkyserviceUS California LLC. (Skyservice); Amended and Restated Guaranty Agreement No. 230235B with ALIS 1A, LLC; and the Consent to the Deed of Trust between SkyserviceUS California, LLC and Royal Bank of Canada thereby allowing the Fixed Base Operator to financially encumber the leasehold estate at the Napa County Airport. (No Fiscal Impact)
body
BACKGROUND
Lease Agreement No. 230234B with SkyserviceUS California, LLC (Skyservice) for Fixed Base Operator (FBO) services and development was approved by the Board on December 6, 2022. Amendment No. 1 to the Agreement was executed on March 21, 2023 to adjust the square footage of the commercial hangar based upon actual measurements. Amendment No. 2 to the Agreement was executed on June 25, 2024 to increase the size of the leasehold and add a joint funded fuel farm infrastructure project. The Guaranty Agreement No. 230235B with ALIS 1A, LLC (parent corporate entity) as financial and operational security to the lease was approved by your Board on December 6, 2022.
Skyservice requested the County’s consent to record a leasehold deed of trust against Skyservice’s leasehold interest to secure a $35 million loan by its parent company, Leading Edge Jet Midco LLC. The loan would also be secured by three other FBO interests held by related entities in the United States. While the original lease provided Skyservice with rights to borrow funds for the development of the FBO using the leasehold estate as collateral, it did not contemplate using the leasehold estate to secure a loan to its parent company. Therefore, to approve this encumbrance, an amendment to the Lease was required. Amendment No. 3 allows for this form of mortgage, limits further encumbrances and includes the previously contemplated survey of the leasehold premises to reconcile the previous size and location with the design documents including validation by survey. As an element of considering this encumbrance, County requested amendments to the Guaranty Agreement with the parent corporate entity ALIS 1A, LLC to strengthen the County’s financial security in the event of a default under the loan or transfer of the leasehold interest to another party. These provisions were incorporated into the proposed Amended and Restated Guaranty Agreement No. 230235B. The County will also execute the proposed Consent to the Deed of Trust with the lender and Skyservice, which will be recorded against the leasehold estate acknowledging the County’s consent to the use of Skyservice’s leasehold interest as security for the loan.
A Memorandum of Lease stating the relevant facts of the lease agreement, as amended, will be executed administratively and recorded. The minor differences in square-footage of the premises will be reflected in the rental amounts charged when Skyservice receives their certificate of occupancy. The Lease Agreement, as amended, already includes a process for an administrative adjustment of the rents when the scheduled occupancy event occurs.
Recommended Action:
Approve and authorize the Chair to sign Amendment No. 3 to Lease Agreement No. 230234B with SkyserviceUS California LLC. (Skyservice); Amended and Restated Guaranty Agreement No. 230235B with ALIS 1A, LLC, and the Consent to the Deed of Trust between SkyserviceUS California, LLC and Royal Bank of Canada thereby allowing the Fixed Base Operator to encumber the leasehold estate at the Napa County Airport.
FISCAL IMPACT
|
Is there a Fiscal Impact? |
No |
|
Is it currently budgeted? |
Yes |
|
Where is it budgeted? |
Airport Enterprise 501000 |
|
Is it Mandatory or Discretionary? |
Discretionary |
|
Discretionary Justification: |
The original agreement provided Lessee with certain rights to finance their improvements to the leasehold estate |
|
Is the general fund affected? |
No |
|
Future fiscal impact: |
Premises survey may inform a minor rental adjustment |
|
Consequences if not approved: |
Lessee will not be able to secure their loan in a timely manner |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The Board previously considered and adopted a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for this Project, pursuant to Resolution No. 2020-120. There have been no substantial changes to the Project or new information of substantial importance within the meaning of CEQA Guidelines section 15162 that would warrant additional environmental review in connection with this action.