Title
Arizona Aviation Partners Ground Lease at Phoenix Goodyear Airport (Ordinance S-50563)
Description
Request to authorize the City Manager, or his designee, to enter into a ground lease with Arizona Aviation Partners, LLC (AZ Partners) for approximately 28 acres of vacant land at Phoenix Goodyear Airport (GYR).
Report
Summary
AZ Partners is requesting to enter into a ground lease at GYR to construct an air cargo facility on approximately 28 acres (1,219,680 square feet) of vacant land. The proposed cargo facility may include cold and/or dry storage facilities, maintenance and repair facilities, or other approved aeronautical uses with an investment of approximately $40 million.
Contract Term
The Primary Lease Term will be 35 years, with one 10-year renewal option to be exercised at the sole discretion of the Aviation Director. The Primary Lease Term will be preceded by a development period of up to 24 months to construct improvements before ground rent commences. The Primary Lease Term will commence after the 24-month development period or when a Certificate of Occupancy is issued for the cargo building, whichever occurs first.
Financial Impact
Rent for the first year of the Primary Term of the lease will be at the rate of $0.34 per square foot, or approximately $414,691 per year. Rent will be adjusted annually commencing after the first year of the Primary Term based on the Phoenix-Mesa-Scottsdale Consumer Price Index. Rent Credits of approximately $4 million will be applied to rent during the Primary Lease Term in order to compensate AZ Partners for improvements outside the leased premises area that benefit GYR and are necessary to make the development of the leased area operational. Such improvements are expected to include: taxiway connectors, vehicle access roads, and utility connections. Total rent anticipated over the Primary Term of the lease, if the extension option is exercised, will be approximately $18,661,095.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board, Business and Development Subcommittee recommended approval of the item on Jan. 4, 2024 by a vote of 3-0.
The Phoenix Aviation Advisory Board recommended approval of the item on Jan. 18, 2024 by a vote of 6-0.
Location
Phoenix Goodyear Airport, 1658 S. Litchfield Road, Goodyear, Ariz.
Council District: Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.