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Item # 8.

Council Meeting

Meeting Date:	08/23/2022
Department:	Airport
Pillars:	Excellence in Transportation Systems
Milestones:	Implement the Asset Management Plan in accordance with the Asset Management Policy, utilizing information systems

AGENDA CAPTION:

Consider Action on a Resolution Consenting to the Change of Control of Scarborough I Airport, LP (“Tenant”) from Scarborough I Airport GP, LLC, to Bel Air Addison, LLC, and Authorizing the City Manager to Execute the Consent of Landlord Confirming the Change of Control Agreement.

BACKGROUND:

Airport Ground Lease tenant Scarborough I Airport, LP is requesting the Town’s consideration and consent to the change of control of its ownership pursuant to the requirements of its ground lease.

On June 28, 2022, Scarborough I Airport, LP (“Scarborough”) and the Town of Addison executed and entered into a ground lease agreement (“Ground Lease”) affecting 0.55 acres of airport land (“Leased Premises”) abutting and adjacent to the off-airport property at 16445 Addison Road. Pursuant to the terms of the Ground Lease, Scarborough has the option to extend the lease term to 40 years provided it reconstructs all the aircraft apron improvements on the Leased Premises and a portion of Taxiway Uniform’s common area adjacent to the Leased Premises (“Airport Improvements”) pursuant to a separate Developer Participation Agreement by and between the Town and Scarborough.

Also on June 28, 2022, the Town gave its consent to Scarborough’s assignment of the Ground Lease to Bel Air Communities, LLC on the condition that Scarborough satisfactorily completes the Airport Improvements and formally secures the extended lease term from the Town. The construction of the Airport Improvements is currently underway and is due to be completed within the next 30 days.

Scarborough and Bel Air Communities, LLC are requesting the Town vacate the aforementioned assignment of ground lease (which has not yet been made effective) and in lieu thereof, consider and consent to a Change of Control Agreement. The reason given by the two parties for this alternative form of conveyance is primarily for tax considerations. The change in form of conveyance is of little or no consequence to the Town. With the change of control, the Tenant remains the same as do all terms and conditions of the Ground Lease.

Accordingly, Bel Air Addison, LLC (“Bel Air”), a Delaware limited liability company, a wholly owned subsidiary of Bel Air Communities, LLC, a Plano-based national real estate developer and owner of multi-family and residential communities, will acquire all the “membership” interest in Scarborough I Airport, LP from Scarborough I Airport GP, LLC, Mr. James Feagin, Manager. Mr. Jerry Guerrero is the owner and manager of Bel Air Addison, LLC. In so doing, Bel Air Addison, LLC will also acquire the controlling interests of the off-airport fee simple property located at 16445 Addison Road, which is adjacent and contiguous to the Leased Premises subject to the Ground Lease. The fee simple property together with the Leased Premises will be used in support of Bel Air’s corporate flight department and based aircraft operations.

The City Attorney has reviewed the Change of Control Agreement and Consent of Landlord and finds both to be acceptable for the Town’s purposes. It is to be noted that the Consent of Landlord executed by the City Manager will be delivered in trust to the escrow agent administering the transaction between the parties, which agreement shall be fully executed by the parties at the closing of the transaction. The escrow agent will be instructed to provide the Town of Addison with a publicly recorded copy of the document for its records.

RECOMMENDATION:

Administration recommends approval, subject to Scarborough complying with the Ground Lease and satisfactorily achieving Final Completion of the Airport Improvements as defined in the Developer Participation Agreement.

Attachments
Resolution - Scarborough Change of Control
Subject Location