TO: Mayor and City Council
THROUGH: Keith Stahley, City Manager
FROM: Brian D. Martin, PE, Public Works Director
SUBJECT:
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Ground lease amendment and sublease addendum with Aviation Properties Northwest, LLC (dba Metal Innovations, Inc.) for real property at the Salem-Willamette Valley Airport.
Ward(s): 2
Councilor(s): Nishioka
Neighborhood(s): SEMCA, SESNA
Result Area(s): Strong and Diverse Economy
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SUMMARY:
summary
In 2022 Aviation Properties Northwest, LLC (Lessee) (dba Metal Innovations, Inc., Sub-Lessee) acquired a leasehold interest in property at the Salem-Willamette Valley Airport via assignment of an existing lease from Carpenter Commercial Properties. (Attachment 1, Lease). Since that time, Lessee has purchased an adjacent hangar property totaling 19,500 sf. Lessee, Sub-Lessee and City desire to amend the Lease with Aviation Properties Northwest, LLC (Attachment 3, Fifth Amendment) and the associated sublease with Metal Innovations, Inc. (Attachment 2, First Sublease Addendum) to reflect the addition of the newly acquired property.
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ISSUE:
Shall City Council authorize the City Manager to execute the First Addendum and the Fifth Amendment with the Lessee?
RECOMMENDATION:
recommendation
Authorize the City manager to execute the First Addendum and the Fifth Amendment with the Lessee.
body
FACTS AND FINDINGS:
Lessee recently purchased an existing aircraft hangar and associated improvements located at 2870 25th ST SE, a 19,500 property immediately adjacent to the Lessee’s primary leasehold.
Staff and Lessee have come to terms on a Fifth Amendment (Attachment 3) to the Lease to incorporate the additional property into Aviation Properties Northwest, LLC Lease and Metal Innovations, Inc. Sublease (Attachment 2). (Key facts of the Amendments are below.
Square Feet: 19,500
Term: 58 years
Rental Rate: $0.3769/per square foot
Rental Rate Adjustment: Every three years via appraisal
Special Conditions:
• Right of first negotiation on vacant property adjacent to Lease premises
The transaction is revenue-neutral to the airport fund as it transfers the lease payment from the previous Lessee to the current Lessee.
BACKGROUND:
In 2022 Aviation Properties Northwest, LLC (dba Metal Innovations, Inc., Lessee) acquired a leasehold interest in property at the Salem-Willamette Valley Airport via assignment of an existing lease from Carpenter Commercial Properties; Aviation Properties Northwest, LLC also entered into a sublease agreement with Metal Innovations, Inc.
The original Carpenter Commercial Lease had been twice amended, once in 1999 (First Amendment) and again in 2015 (Second Amendment).
Since 2022, when Aviation Properties Northwest assumed the Lease, there have been two additional lease amendments, one in 2023 (Third Amendment) and again in 2024 (Fourth Amendment).
John Paskell
Airport Manager
Attachments:
1. Attachment 1 - Lease
2. Attachment 2 - First Sublease Addendum
3. Attachment 3 - Fifth Lease Amendment