Agenda

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Work Session and Regular Meeting

Meeting Date:	04/26/2016
Department:	Airport

AGENDA CAPTION:

Consider Approval Of Consent To Assignment Of Ground Lease #0560-1201 (Addison Express II, L.P.) Commonly Known As 4500 Claire Chennault Drive To Cutter Aviation Deer Valley I, L.P. And Its Creation Of A Leasehold Mortgage.

BACKGROUND:

Addison Express II L.P. (AEII) is requesting that consideration and consent be given to the sale and assignment of their ground leasehold interests to Cutter Aviation Deer Valley I, L.P. an Arizona limited partnership (Cutter). Also, Cutter is requesting the Town’s consent to the creation of a leasehold mortgage pursuant to the terms of an estoppel agreement between the Town and their lender.

AEII acquired the existing building improvements and underlying leasehold interests in October 1998. In 2002 the lease term was extended by 14 years to the current scheduled expiration date of 12/31/2036. AEII has subleased a portion of the premises to Cutter for the past 2 ½ years for aircraft sales, maintenance, and charter management.

The property is located along Taxiway Alpha just south of the JetPort, and the lease site consists of 153,244 square feet, or 3.518 acres. The improvement contains three distinct aircraft hangars totaling 55,266 square feet, 6,000 square feet of office space, and 62,315 square feet of aircraft ramp.

Cutter Aviation is a family owned business that has been operating for over 86 years. It currently has seven other locations that include full FBO services, aircraft sales, maintenance, avionics, and aircraft charter management services. Cutter is requesting the Town’s consent to the creation of a leasehold mortgage pursuant to the terms of the proposed bank estoppel letter substantially in the form as attached. The proposed estoppel letter is from AEII, the assignor, who is extending seller financing to Cutter by accepting a $2,300,000 promissory note back as a portion of the total purchase price for the leasehold interest and building improvements. The note will be secured with a leasehold deed of trust referencing the real property subject to the ground lease subordinate and inferior to the Landlord’s lien created by the Ground Lease. The terms and conditions of the estoppel letter are consistent with the Town’s practice regarding such matters.

RECOMMENDATION:

Administration recommends approval.

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