Title
An Ordinance authorizing the execution of a ground lease agreement by and between the City of Lee's Summit and LS Management Services, LLC for a period of 30 years with options for two additional ten-year terms for the development of a Hangar located on the West side of the North Apron at the Lee Summit Municipal Airport and authorizing the Mayor to execute an agreement for the same.
(Note: First read by Council on March 18, 2025. Passed by unanimous vote.)
Body
Issue/Request:
An Ordinance authorizing the execution of a ground lease agreement by and between the City of Lee's Summit and LS Management Services, LLC for a period of 30 years with options for two additional ten-year terms for the development of a Hangar located on the West side of the North Apron at the Lee Summit Municipal Airport and authorizing the Mayor to execute an agreement for the same.
Key Issues:
•Approval of this ordinance would authorize the execution of a Ground Lease Agreement with LS Management Services, LLC to construct a hangar on the West Side of the North Apron at the Lee’s Summit Municipal Airport.
•The hangar will be used to perform Aircraft airframe and powerplant maintenance, avionic repair, inspections and installation and will also be used by a flight school to conduct flight training and store training aircraft.
•The lease provides ground for the development of a 100’ by 120’ aircraft hangar, ramp, and automotive parking.
•LS Management Services, LLC has agreed to a initial ground lease rate of $0.41 per square foot.
•The initial annual rental rate will be $9,409.50 for the first five years with a five year CPI adjustment in year 6, then increasing each year based on the CPI (December -December period) and being effective July 1 each year.
•The lease term is for an initial term of twenty (30) years with options for up to two (2) additional ten (10) year renewal periods .
Proposed Committee Motion:
I move to recommend to City Council for approval of an Ordinance authorizing the execution of a ground lease agreement by and between the City of Lee's Summit and LS Management Services LLC for a period of 30 years with options for two additional 10-year terms for the development of a Hangar located on the West side of the North Apron at the Summit Municipal Airport and authorizing the Mayor to execute an agreement for the same.
Background:
The attached Lease Agreement is for the development of a 100’ ft by 120’ ft aircraft hangar on leased premises encompassing 22,950 square ft, or less. The tenant intends to perform Airframe and Powerplant maintenance, Avionics installation, repair, and inspection services. Additionally, it will be used by a flight school to conduct flight training and aircraft storage. Both Midwest Avionics and Summit Flight Academy will operate under separate FBO Agreements. The lease term is for 30 years plus two additional 10-year renewal options. The ground lease rental encompasses the footprint of the building, ramp area, and automobile parking. This lease is part of a program at the Airport to develop existing airside property (e.g. hangars, terminal building, and fixed base operator (FBO) facilities) on the airport that will generate additional revenue for the airport and help support the Council’s goal of a more financially self-sustaining Airport that generates economic activity for the City of Lee's Summit.
The Lease has substantively the same terms and conditions as other ground lease agreements that have been approved in the past. Currently there are four other privately developed aircraft hangar storage facilities located on the Airport. The Lease contains comprehensive indemnification and insurance provisions, as well as detailed termination provisions, which allows the City to terminate the Lease if LS Management Services, LLC defaults on its payments to the City.
Impact/Analysis:
Increase in annual ground lease revenues. It provides the ability to add additional aircraft at the Airport and improve the services offered at the Airport.
Timeline:
Start: Construction will begin Spring 2025
Finish: Late Fall 2025
Other Information/Unique Characteristics:
FAA Airspace Study has been completed. MODOT has been advised of the development. On Call Airport engineering consultant will update the FAA Exhibit A.
Presenter
Joel Arrington, Airport Manager
Recommendation
Recommendation:
Committee Recommendation
Committee Recommendation: