TO: Mayor and City Council
THROUGH: Krishna Namburi, City Manager
FROM: Brian D. Martin, PE, Public Works Director
SUBJECT:
title
Amendment of ground lease with Hangar II, LLC for property located at the Salem-Willamette Valley Airport.
Ward(s): Ward 2
Councilor(s): Nishioka
Neighborhood(s): SEMCA, SESNA
Result Area(s): Good Governance; Strong and Diverse Economy.
end
SUMMARY:
summary
The Salem-Willamette Valley Airport and Hangar II, LLC (tenant) seek to amend the ground lease for a new aircraft hangar based environmental site assessment findings.
end
ISSUE:
Shall City Council authorize the City Manager to execute an amended ground lease with Hangar II, LLC for property located at the Salem-Willamette Valley Airport?
RECOMMENDATION:
recommendation
Authorize the City Manager to execute an amended lease agreement with Hangar II, LLC for property located at the Salem-Willamette Valley Airport.
body
FACTS AND FINDINGS:
The First Amendment to the Lease Agreement (Attachment 1) includes modifications as follows:
Lease Agreement Terms
Original lease start date of August 1, 2024, is amended to December 1, 2025
Original lease end date of July 31, 2064, is amended to November 31, 2065
Exhibit C: Environmental Addendum
Exhibit C amends Section 4.9 of the lease to established that the Tenant, through the course of its due diligence, conducted two separate Phase II environmental site assessments of the leased property which identified the presence of hazardous substances, specifically per- and polyfluoroalkyl substances (PFAS), in the subsurface soils.
This addendum indemnifies the Tenant from future claims relating to these pre-existing contaminates but does not release the liability of hazardous substances introduced by the Tenant.
Exhibit D: Access Addendum
Exhibit D reinforces Section 1.3 establishing access to the leased property through a common-use ingress and egress route, as requested by their lender. Schedule I provides a depiction of this route.
Exhibit E: Development Activity Addendum
Exhibit E amends Section 1.2 of the lease to require a Contaminated Media Management Plan (CNMP) and Health and Safety Plan (HASP) for all ground disturbance activities on the leased property.
This addendum also establishes conditions for property development that address stormwater management, ground water use, worker exposure, and material disposal consistent with Oregon Department of Environmental Quality (DEQ) and industry standards.
BACKGROUND:
Hangar II, LLC (tenant) entered a forty (40) year lease agreement effective August 1, 2024 (Attachment 2), for property located at the Salem-Willamette Valley Airport with the intent to construct an aircraft hangar. During due diligence, the tenant conducted a Phase I Environmental Site Assessment which concluded with a finding of recognized environmental concern (REC).
The REC identified that a historic fire training area, approximately 250 feet west of the site, potentially included the use of aqueous film-forming foam (AFFF)- a product used to extinguish aircraft fires and later known to contain chemicals called per- and polyfluoroalkyl substances (PFAS). Subsequent Phase II environmental assessments of the property confirmed the presence of PFAS in the soil.
In September 2025, the Oregon Environmental Quality Commission adopted rules to include some PFAS in the definition of hazardous substances in Oregon Administrative Rule (OAR) 340-122-0115 (30). This ruling gave DEQ the authority to require investigation and removal and remedial actions of PFAS releases and aligns with similar standards developed by the Environmental Protection Agency (EPA).
Aaron Ison, Airport Manager (AIC)
Attachments:
1. Attachment 1 - Hangar II, LLC Lease Agreement First Amendment
2. Attachment 2 - Hangar II, LLC Lease Agreement dated August 1, 2024