Memorandum

City of Lawrence

Legal Services Department

TO:	David L. Corliss, City Manager
FROM:	Toni Wheeler, Director of Legal Services Roger Zalneraitis, Economic Development Coordinator
C:	Diane Stoddard, Cynthia Wagner and Jonathan Douglass
Date:	January 6, 2010
RE:	Lease Agreement With LWC Partners, LLC for Real Property at the Lawrence Municipal Airport

City staff has been in discussions with representatives of LWC Partners, LLC (hereinafter “LWC”) regarding leasing property at the Lawrence Municipal Airport.  One of LWC’s principals, John Scott, owns and operates Hawkeye Helicopter, Inc., a firm that engages in the business of transmission and pipeline inspection services.  A draft lease agreement has been prepared.  A summary of the major terms of the Land Lease Agreement follows:

Lease Term and Option Terms:  The term of the Agreement is twenty (20) years, with four additional successive five (5) year option periods. 

Rent:  The initial annual rent is $10,585 payable in 12 monthly installments of $882.09.  In the second year of the agreement, and each year, thereafter, the rent is adjusted based upon the Consumer Price Index (CPI – All Urban Consumer, US).  In years one through ten, LWC’s rent will be subject to a Job Creation Credit Agreement.  LWC, through Hawkeye Helicopter, anticipates locating four to six employees at the Lawrence Municipal Airport, with the potential to grow to between 10 and 15 employees in five years’ time.  Every full-time Hawkeye Helicopter employee located in Lawrence, will result in a $1,350 credit per year, up to a maximum of 98% of the annual rent.  This means that the credit will be maximized when Hawkeye Helicopter reaches eight (8) full-time employees in Lawrence.  After the fifth year, the maximum job credit allowed is equal to 50% of the annual rent.  After the end of the tenth year, the job credit will expire and LWC will pay the full market rate for the Land Lease Agreement.

Use:  LWC is authorized to use the leased premises and the Airport, for aviation purposes, including the maintenance, operation, service, repair and storage of aircraft, and to conduct its business activities there.  

Maintenance:   LWC agrees to maintain the leased premises, and any improvements thereon, including the parking lot.  Parking spaces in the parking lot will be available for use by the public.  The City will maintain, including removing snow, the runways, taxi-ways, tie-down areas and other city facilities.  

Utilities:  LWC agrees to pay for all electricity, gas and water used on the Lease Premises.  The City agrees to extend and provide sanitary sewer and water utility service lines suitable for the firm’s intended use. 

Property Taxes:   LWC will pay all ad valorem property taxes and assessments due on the Lease Premises and upon the hanger and improvements which are not otherwise exempt. 

Hangar Construction:  LWC will construct a hanger on the leased premises, approved in advance by the City as both landlord and land use regulator.  The hanger will comply with the Airport’s minimum standards.  At the expiration of the lease or sooner, if the agreement is terminated, the City will have the first right of refusal to purchase the hanger and any alterations, additions or improvements. 

Additional standard lease provisions and provisions required by the FAA are contained in the lease. 

Action Requested:  Staff recommends the City Commission authorize the City Manager to execute agreements in substantially the form of the attached Land Lease Agreement and Job Creation Credit Agreement with LWC Partners, L.L.C., if appropriate.