In March 2021, Addison Airport advertised Request for Qualification (RFQ) #21-76 for the aeronautical redevelopment opportunity of three parcels of airport land, which opportunity included a 2.12-acre site. The Airport received one qualified response which triggered an existing contractual obligation under a ground lease agreement between the Town of Addison and Sky B&B, LLC (“Sky B&B”). Under that ground lease, the Town was required to provide Sky B&B written notice of the proposal it received for the subject 2.12-acre site. Upon receipt of the Town’s written notice, Sky B&B elected to exercise its right under the ground lease to submit its own proposal to redevelop the subject 2.12-acre site. After careful consideration, Town staff elected to terminate RFQ #21-76 to pursue negotiations with Sky B&B for this redevelopment opportunity.
The same ownership of Sky B&B also formed Sky Squared, LLC, a Texas limited liability company (“Sky Squared”), as a special-purpose entity to hold the leasehold interest and ownership of the proposed building improvements made to the subject 2.12-acre site, subject to a 40-year ground lease agreement. The subject 2.12-acre site is immediately north of Sky B&B’s hangar facility, southeast of the Taxiway Alpha and Taxilane Sierra intersection, and it has 214 linear feet of frontage along Taxiway Alpha.
In consideration of the proposed ground lease, Sky Squared proposes to construct a 31,000 gross square-foot executive jet hangar to accommodate up to Design Group III corporate aircraft (e.g., Gulfstream IV – VII, Global Express), with a 28-foot-high hangar door, and a clear span of no less than 110 feet. The proposed use is for the storage of corporate aircraft owned or under the operational control of Sky B&B or Sky Squared, and for the sub-leasing of aircraft storage space to similar aeronautical operators. Pursuant to the terms of the proposed ground lease, Sky Squared’s minimum capital investment will be $4.5 million.
Pursuant to the terms of the Ground Lease, the Town agrees to reconstruct a 270-foot section of Eddie Rickenbacker Drive, an airport common area ingress/egress easement, which is in fair to poor condition; and a section of the Airport Vehicle Service Drive, a common area service road within the airport operating area for aircraft fuel trucks and other vehicles, also in fair to poor condition. The estimated costs for these improvements is $500,000 and to be funded from the Airport’s Capital Improvement Program.
The proposed redevelopment represents an estimated $66,500 in annual real-estate revenue (ground rent) and $23,000 in fuel flowage fees to the Airport. This equates to approximately $4.2 million over the 40-year lease term.
| Overview of Estimated Economic Impact |
| Ground Rent |
$66,500 |
$.72 per SFL ; 2.12 acres (92,347 SFL) |
| Fuel Flowage Fees |
$23,000 |
Est. @ $.73/hangar square feet |
| Projected Business Property Tax (Aircraft) |
$154,000 |
Assume $25 million @ $.61466/mil
(DCAD est. TOA rate) |
| Projected Ad valorem Leasehold Tax |
$27,600 |
Assume $4.5 million @ $.61466/mil |
| Total Annual Economic Benefit |
$271,100 |
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| Net Cashflow over Lease Term |
$4,220,000 |
Ground Rent and Fuel Flowage Fees Only |
| Net Present Value (NPV) of Cashflow (disc. @ 6%) |
$1,510,000 |
|
| Tenant's Minimum Capital Investment |
$4,500,000 |
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The proposed redevelopment and lease arrangement supports the Town’s objectives for the Airport by enhancing the overall value of the Airport with new development, increased revenue, and an enhanced tax base. The proposed redevelopment and use of the facilities are consistent with the 2013 Airport Strategic Plan and 2016 Airport Master Plan Update.
The city attorney has reviewed the Ground Lease and other related documents, finding the same acceptable for the Town’s purposes. |