Title
Mesa Airlines, Inc. Hangar Agreement (Ordinance S-44612)
Description
Request to authorize the City Manager, or his designee, to enter into an amendment to Land Lease Agreement 134356 (Lease) with Mesa Airlines, Inc. (Mesa) for hangar and ramp space at Phoenix Sky Harbor International Airport to extend the term for two years and add three options to extend the term for one year each. The amendment may contain other terms and conditions deemed necessary or appropriate by the City Manager or his designee. The City will receive approximately $1,651,865 over the term of the Lease, if all options to extend are exercised, not including CPI adjustments.
Report
Summary
Mesa currently leases approximately 22,467 square feet of executive hangar space and approximately 67,823 square feet of ramp space (Premises). The Lease will expire on Sept. 30, 2018. Mesa wants to extend the term of the Lease. During the extended term, Mesa will pay approximately $11.75 per square foot per year for the hangar space and $0.97 per square foot per year for the ramp space, plus applicable taxes. These rates will be adjusted annually based on the Phoenix-Mesa Consumer Price Index (CPI).
Contract Term
The term of the Lease will be extended by two years. The Lease will include three options to extend the term for one year each that may be exercised at the sole discretion of the Aviation Director.
Financial Impact
Rent for the first year of the extended term will be approximately $330,373. The City will receive approximately $1,651,865 over the term of the Lease, if all options to extend are exercised, not including CPI adjustments.
Concurrence/Previous Council Action
This item was approved by the Downtown, Aviation, Economy and Innovation Subcommittee on May 2, 2018 by a vote of 4-0.
Location
2919 E. Air Lane
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Aviation Department.