Los Angeles World Airports

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1 Los Angeles World Airports December 4,2013 LAX The Honorable City Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA LA/Ontario Subject: APPROVAL OF AMENDMENTS AND CONSENT TO ASSIGNMENTS TO Van Nuys LEASES WITH SIGNATURE FLIGHT SUPPORT CORPORATION; MAGUIRE AVIATION VAN NUYS: ROMEO, LLC; AND ROSCOE ASSOCIATES, City of Los Angeles LLC AT VAN NUYS AIRPORT. Eric aarcem Mayor Board 01 Airport Commissioners Sean 0, Burton President Valeria C. Velasco Vice President Gabriel L. Eshagluan Jackre Goldberg Beatrice C. HSt! Matthew M. Johnson Dr. Cynthia A. Telles Gina Marie Lindsey Executive Director In accordance with Section 606 of the City Charter, the Board of Airport Commissioners transmits for your approval the Amendments and Consent to Assignments to Leases with various entities, listed below, at Van Nuys Airport. RECOMMENDA TlON FOR CITY COUNCIL 1. APPROVE the Amendments and Consent to Assignments to Leases with various entities, listed below, at Van Nuys Airport. 2. CONCUR in the Board's action authorizing the Executive Director to execute these Amendments and Consent to Assignments to Leases with various entities, listed below: i. Third Amendment to Lease VNA-8361 with Roscoe Associates, LLC and Consent to Assignment to Signature 8361, LLC. ii. Second Amendment to Lease VNA-8433 with Maguire Aviation-Van Nuys: Romeo, LLC and Consent to Assignment to Signature 8433, LLC. iii. Second Amendment to Lease VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC and Consent to Assignment with Signature 8390, LLC. iv. Second Amendment to Lease VNA-7156 with Signature Flight Support, Corporation and Consent to Assignment to Signature 7156, LLC. 3. FIND that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f of the Los Angeles City CEQA GUidelines. The Board of Airport Commissioners, at their meeting held on December 2, 2013, by Resolution Nos ; 25287; and approved the Amendments and Consent to Assignments subject to the approval of your Honorable Body is attached. There is no fiscal impact to the City's General Fund as a result of this action. 1 worto Wc~y Los Angeles C;;;ili()rrli,,\ Mail PO. ij()k Sl)2Hl Los AIlW;ies C<liil()lfl;" 000\)9<:0 I G TdG'phOllc :310 (){I!l C:i:'!:J'J Internet \V\'IW.I;l'I,'i).,H"1'O

2 Los Angeles City Council December 4, 2013 Page 2 CONCLUSION Please return the attached Amendments and Consent to Assignment documents to the Department of Airports' Board Office after City Council approval and Certification of that approval. Very truly yours, Sandra J. Miller - Commission Executive Assistant II BOARD OF AIRPORT COMMISSIONERS cc: Trade, Commerce and Tourism Committee Councilmember LaBonge, E-file Councilmember Bonin, E-file Councilmember Buscaino, E-file CAO (Airport Analyst), E-file CLA (Airport Analyst), E-file City Clerk's Office, Enc. (one original and one copy)

3 Los Angeles World Airports TM RESOLUTION NO BE IT RESOLVED that the Board of Airport Commissioners approved a Third Amendment to Lease VNA-8361 with Roscoe Associates, LLC, and approve the Consent to Assignment of said Lease to Signature 8361, LLC, for the premises located at Roscoe Boulevard at Van Nuys Airport, as referenced on the board report attached herein and made part of; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to execute said Third Amendment and Consent to Assignment to Lease No. VNA-8361 with Roscoe Associates, LLC and all necessary documents to consummate this transaction, in each case upon approval as to form by the City Attorney and upon approval by the City Council; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to enter into an escrow agreement to facilitate the transaction as described in the board report; and BE IT FURTHER RESOLVED that this item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II Section 2(f) of the Los Angeles City CEQA Guidelines; and BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Cornmlssloners at its Special Meeting held on Monday, December 2, r: Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS

4 Meeting Date: s Development Reviewed by: ~/;- Detibie Bowers - d/ D 1 uty Executive Director torney. e Director Reviewed for ~I~;I Date,. IApproval Status I fk I\iIY 0 NONA 1'1)$', CEOA I8lY D N I ES Capital Budget Operating Budget Ill IIlIYO N DNA ~~. o i Completed I CAO Review: J2il' I Pending o,n/a Procurement 11118/20131 DY ON 181tend I MT S UBJEC T: Third Amendment to Lease No. VNA-8361; Consent to Assignment of Lease No. VNA-8361 for the premises located at Roscoe Boulevard at Van Nuys Airport Approve a Third Amendment to Lease No. VNA-8361 with Roscoe Associates; LLC and approve the Consent to Assignment of Lease No. VNA-8361 to Signature 8361, LLC for the premises located at Roscoe Boulevard at Van Nuys Airport that will address outstanding investment and construction obligations under the existing lease. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 3. APPROVE a Third Amendment to Lease No. VNA-8361 for the premises located at Roscoe Boulevard as referenced in this report. 4. APPROVE Consent to Assignment of Lease No. VNA-8361 to Signature 8361, LLC as referenced in this report. 5. AUTHORIZE the Executive Director to execute the Third Amendment and Consent to Assignment to Lease No. VNA-8361 with Roscoe Associates, LLC and all necessary Page ROSCOE VNA-8361.docx

5 documents to consummate this transaction, in each case after approval as to form by the City Attorney. 6. AUTHORIZE the Executive Director to enter into an escrow agreement to facilitate the transaction as described in this report. DISCUSSION: 1. Purpose This proposed Third Amendment and Consent to Assignment of Lease No. VNA-8361 in connection with other related Maguire Aviation transactions, will restructure development obligations, change construction performance dates, and collectively result in a higher probability of completing planned development previously scheduled at Van Nuys Airport (VNY). Furthermore, the Third Amendment will help to: 1. Avoid certain consequences and reduce risks of impending default, bankruptcy and/or foreclosure proceedings related to non-performance under the current Lease; " 2. Upgrade and enhance the viability of development obligations historically with Maguire Aviation through securing new financial guarantees with proposed assignee, Signature 8361, LLC; 3. Provide a clear pathway and metering plan for development to occur, which indirectly benefits other tenants having investment obligations at VNY; 4. Conform key provisions of LAWA's standard lease and foster key initiatives described in the Van Nuys Real Estate Redevelopment Plan. 2. Prior Related Actions July 17, Board Order AO-5020 (Lease No. VNA-8361) The Board authorized a 35-year Lease between the City and Air Sources, Inc covering approximately acres of aviation land at Roscoe Boulevard at Van Nuys Airport. August 15, (Lease No. VNA-8361) LAWA executed the First Amendment to Air Sources, Inc. Lease No. VNA-8361 revising the leasehold size from acres to acres and making appropriate modification to the rent. August 20, Board Order No. AO-5074 (Lease No. VNA-8361) The Board authorized a Second Amendment to Air Sources, Inc. Lease No. VNA-8361; Consent to Assignment of Lease No. VNA-8361 from Air Sources, Inc. to Roscoe Associates, LLC; Consent to Financing with Vineyard Bank; and Estoppel Certificate in connection with financing requirements for phase 1 of the planned redevelopment project associated with the Lease at VNY. Page ROSCOE VNA 8361.docx

6 3. Current Action LAWA staff and Maguire Aviation Group, LLC (Maguire Aviation) have completed year-long negotiations resulting in Maguire Aviation's current request for the Board to approve the proposed Third Amendment and subsequent Consent to Assignment of Lease No. VNA to Signature 8361, LLC. Approval of the Third Amendment and Consent to Assignment would result in the following key changes: A. Premises - On the effective date of the Third Amendment, an approximately 3.26 acre portion of the premises would be deleted thus decreasing the total leasehold premises to approximately acres. B. Term - No Change. C. Use - No Change. D. Improvements - Development schedule has been updated to require completion of a minimum investment of $3,000,000 by no later than December 31, E. Rental Adjustments - Lease is subject to standard annual rental adjustments of no less than 2% and no more than 7% relative to the Consumer Price Index (CPI). F. Periodic Adjustments - Lease is subject to standard periodic adjustments, including updated language regarding appraisal arbitration. G. VNY Deficit Recovery Program (DRP) - Lease is subject to standard language regarding the DRP. Under the DRP and subject to limitations and activation by the Board, certain annual deficits with respect to operation of VNY may be allocated to and recovered from tenants at VNY. H. Mortgage Financing and Other Encumbrances - Lease is subject to standard language, including provisions for Lessee and Sub-lessee construction financing or refinancing from a reputable lender acceptable to the Board. I. Assignments and Subleases - Lease is subject to standard language. J. Assignment Fees - Staff has determined that no assignment fee is due under Lease. Approval of the proposed Third Amendment and Consent to Assignment of Lease No. VNA- 8361, collectively will not take effect absent the closing of all other related approved transactions between Maguire Aviation, Signature Flight Support Corporation and all related special purpose entities (Signature 7156, LLC; Signature 8433, LLC; Signature 8390, LLC and Signature 8361, LLC). Page ROSCOE VNA-8361.docx

7 Action Requested Staff requests the Board approve the Third Amendment to Lease No. VNA-8361 with Roscoe Associates, LLC and approve the Consent to Assignment of Lease No. VNA-8361 to Signature 8361, LLC for the premises located at Roscoe Boulevard at Van Nuys Airport, and authorize the Executive Director to execute the Third Amendment and Consent to Assignment and all necessary documents to consummate this transaction, in each case after approval as to form by the City Attorney. Fiscal Impact Approval of the Third Amendment to Lease No. VNA-8361 and subsequent Consent to Assignment will not result in any new rental revenue to LAWA. However, the above referenced DRP will facilitate and secure future revenue streams that will benefit and further stabilize the Van Nuys Operating Budget. 4. Alternatives Considered Take No Action Ifthe Third Amendment and Consent to Assignment of Lease No. VNA-8361 are not approved, the likely result would be LAWA affirming a Lease default and acting to terminate Lease No. VNA-8361, which would consequently lead to an increased risk of potential Lessee foreclosure, tenant bankruptcy, and/or litigation. Such a path would result in a reduction in LAWNs rental revenue and cause LAWA to initiate a new competitive process to secure a lessee (operator) for the premises. APPROPRIA TlONS: No appropriations are required for this item. STANDARD PROVISIONS: 1. This item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA GUidelines. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Signature 8361, LLC will comply with the provisions of the Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to Leases. 6. Signature 8361, LLC will comply with the provisions of the Affirmative Action Program. 7. Signature 8361, LLC must submit a Business Tax Registration Certificate number prior to execution of the Consent to Assignment. Page ROSCOE VNA-8361.docx

8 8. Signature 8361, LLC will comply with the provisions of the Child Support Obligations Ordinance. 9. Signature 8361, LLC must have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports prior to execution of the Consent to Assignment. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). 11. Signature 8361, LLC must submit the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Consent to Assignment. 12. Signature 8361, LLC must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the Consent to Assignment. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Signature 8361, LLC must submit the Bidder Contributions CEC Form 55 and comply with its provisions prior to execution of the Consent to Assignment. Page ROSCOE VNA-8361.docx

9 Los Angeles World Airports RESOLUTION NO BE IT RESOLVED that the Board of Airport Commissioners approved a Second Amendment to Lease VNA-8433 with Maguire Aviation-Van Nuys: Romeo, LLC, and approve the Consent to Assignment of said Lease to Signature 8433, LLC, for the premises located at Vanowen Street at Van Nuys Airport, as referenced on the board report attached herein and made part hereof; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to execute said Second Amendment and Consent to Assignment to Lease No. VNA-8433 with Maguire Aviation-Van Nuys: Romeo, LLC and all necessary documents to consummate this transaction, in each case upon approval as to form by the City Attorney and upon approval by the City Council; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to enter into an escrow agreement to facilitate the transaction described in the board report; and BE IT FURTHER RESOLVED that his item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II Section 2(f) of the Los Angeles City CEQA Guidelines; and BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Special Meeting held on Monday, December 2, Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS

10 Meeting Date: 12/2/2013 Reviewed by: D I Completed CAO Review: Jilf I Pending D I N/A Reviewed for I Date I Approval Status I J! Capital Budget lif:l~p; lily 0 NONA II!? Operating Budget ii8~.~ I!iIYO N DNA II""~' CEOA IElY0 N I ES Procurement 111/18/2013 OY ON 181Gond i MT S UBJE C T: Second Amendment to lease No. VNA 8433; Consent to Assignment of lease No. VNA 8433 for premises located at Vanowen Street at Van Nuys Airport Approve the Second Amendment to Lease No. VNA 8433 with Maguire Aviation-Van Nuys: Romeo, LLC and approve the Consent to Assignment of Lease No. VNA-8433 to Signature 8433, LLC for the premises located at Vanowen Street at Van Nuys Airport. RECOMMENDA TlONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 3. APPROVE Second Amendment to Lease No. VNA-8433 for the premises located at Vanowen Street as referenced in this report. 4. APPROVE Consent to Assignment of Lease No. VNA-8433 to Signature 8433, LLC as referenced in this report. 5. AUTHORIZE the Executive Director to execute the Second Amendment and Consent to Assignment to Lease No. VNA-8433 with Maguire Aviation-Van Nuys: Romeo, LLC and all necessary documents to consummate this transaction, in each case after approval as to form by the City Attorney. Page 1 MAGUIRE VNA-8433.docx

11 6. AUTHORIZE the Executive Director to enter into an escrow agreement to facilitate the transaction described in this report. DISCUSSION: 1. Purpose This proposed Second Amendment and Consent to Assignment of Lease No. VNA-8433 in connection with other related Maguire Aviation transactions, will restructure development obligations, change construction performance dates, and collectively result in a higher probability of completing planned development previously scheduled at Van Nuys Airport (VNY). Furthermore, the Second Amendment will help to: 1. Avoid certain consequences and reduce risks of impending default, bankruptcy and/or foreclosure proceedings related to non-performance under the current Lease; 2. Upgrade and enhance the viability of development obligations historically with Maguire Aviation through securing new financial guarantees with proposed assignee, Signature 8433, LLC; 3. Provide a clear pathway and metering plan for development to occur, which indirectly benefits other tenants having investment obligations at VNY; 4. Conform key provisions of LAWA's standard lease and foster key initiatives described in the Van Nuys Real Estate Redevelopment Plan. 2. Prior Related Actions November 19, Board Order AO-5087 (Lease No. VNA-8433) The Board authorized a 30-year Lease between the City and Sky trails Aviation, LLC covering leasehold located at Vanowen Street at Van Nuys Airport for the development of a Commercial Hangar Operation. August 4, Board Order No. AO-5104 (Lease No. VNA-8433) The Board authorized 100% transfer of membership interests in Skytrails Aviation, LLC from the Sullivan Family Trust to Maguire Aviation Group, LLC (i) First Amendments to Leas Nos. VNA-8390 and VNA-8433; (ii) Consent to Assignment of Lease Nos. VNA- 8390, VNA-8433, and VNA-8432; (iii) Consent to Name Change from Skytrails Aviation, LLC to Maguire Aviation - Van Nuys: Romeo, LLC; (iv) Consent to Leasehold Financing from Pacific Western Bank (Lender); (v) FBO Management Agreement (vi) Form of Estoppel Certificates; and (vii) Memoranda of Leases. 3. Current Action LAWA staff and Maguire Aviation Group, LLC (Maguire Aviation) have completed year-long negotiations resulting in Maguire Aviation's current request for the Board to approve the proposed Second Amendment and subsequent Consent to ASSignment of Lease No. VNA to Signature 8433, LLC. MAGUIRE Page 2 VNA-8433.docx

12 Approval of the Second Amendment and Consent to Assignment would result in the following key changes: A. Premises - On the effective date of the Second Amendment, the adjacent leasehold under Lease No. VNA-5223 would terminate and its premises (approximately 9.46 acres) would be added to Lease No. VNA-8433 (approximately 7.98 acres) thereby increasing the total leasehold premises to approximately acres. B. Term - The expiration date of Lease No. VNA-8433 would change from December 31, 2037 to December 31, 2042, contingent upon exercising a five-year Lease extension option. C. Extension Option - Lessee may exercise a five-year Lease extension option subject to an extension option payment to LAWA totaling $3,750,000. D. Use - Existing FBO uses would continue on the northern 9.46 acre portion of the premises and existing non-fbo uses would continue on the southern 7.98 acre portion of the premises. E. Improvements - Development schedule has been updated to require completion of a minimum investment of $6,300,000 by no later than December 31,2018. F. Minimum Annual Guarantee - Lessee is required to pay LAWA, fuel flow fees, based upon a minimum annual guarantee (MAG) of 21,000 gallons in jet fuel sales. Lessee must also pay LAWA any shortfall (in fuel flow fees) between the MAG and actual jet fuel sales within any year during the five-year extension term. G. Rental Adjustments - Lease is subject to standard annual rental adjustments of no less than 2% and no more than 7% relative to the Consumer Price Index (CPI). H. Periodic Adjustments - Lease is subject to standard periodic adjustments, including updated language regarding appraisal arbitration. I. VNY Deficit Recovery Program (DRP) - Lease is subject to standard language regarding the DRP. Under the DRP and subject to limitations and activation by the Board, certain annual deficits with respect to operation of VNY may be allocated to and recovered from tenants at VNY. J. Mortgage Financing and Other Encumbrances - Lease is subject to standard language, including provisions for Lessee and Sub-lessee construction financing or refinancing from a reputable lender acceptable to the Board. K. Assignments and Subleases - Lease is subject to standard language. L. Assignment Fees - Staff has negotiated an assignment fee payment of $300,000 at the transaction closing. Approval of the proposed Second Amendment and Consent to Assignment of Lease No. VNA-8433, collectively will not take effect absent the closing of all other related approved transactions between Maguire Aviation, Signature Flight Support Corporation and all related MAGUIRE Page 3 VNA-8433.docx

13 special purpose entities (Signature 7156, LLC; Signature 8433, LLC; Signature 8390, LLC and Signature 8361, LLC). Action Requested Staff requests the Board approve the Second Amendment to Lease No. VNA-8433 with Maguire Aviation-Van Nuys: Romeo, LLC and approve the Consent to Assignment of Lease No. VNA-8433 to Signature 8433, LLC for the premises located at Vanowen Street at Van Nuys Airport, and authorize the Executive Director to execute the Second Amendment and Consent to Assignment and all necessary documents to consummate this transaction, in each case after approval as to form by the City Attorney. Fiscaiimpact Approval of the Second Amendment to Lease No. VNA-8433 and subsequent Consent to Assignment will not result in any new rental revenue to LAWA other than a one-time assignment fee of $300,000 and compensation of $3,750,000 contingent upon the Lessee exercising a five-year extension option. However, the above referenced DRP and Fuel Flow MAG will facilitate and secure future revenue streams that will benefit and further stabilize the Van Nuys Operating Budget. 4. Alternatives Considered Take No Action If the Second Amendment and Consent to Assignment of Lease No. VNA-8433 are not approved, the likely result would be LAWA affirming a Lease default and acting to terminate Lease No. VNA-8433, which would consequently lead to an increased risk of potential Lessee foreclosure, tenant bankruptcy, and/or litigation. Such a path would result in a reduction in LAWA's rental revenue and cause LAWA to initiate a new competitive process to secure a lessee (operator) for the premises. However, Lease No. VNA-5223 would remain separate and stand-alone from Lease No. VNA-8433 and would continue its normal operations. APPROPRIATIONS: No appropriations are required for this item. STANDARD PROVISIONS: 1. This item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Signature 8433, LLC will comply with the provisions of the Living Wage Ordinance. Page 4 MAGUIRE VNA-8433.docx

14 5. The Small Business Enterprise Program does not apply to Leases. 6. Signature 8433, LLC will comply with the provisions of the Affirmative Action Program. 7. Signature 8433, LLC must submit a Business Tax Registration Certificate number prior to execution of the Consent to Assignment. 8. Signature 8433, LLC will comply with the provisions of the Child Support Obligations Ordinance. 9. Signature 8433, LLC must have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports prior to execution of the Consent to Assignment. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). 11. Signature 8433, LLC must submit the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Consent to Assignment. 12. Signature 8433, LLC must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provlslons of the Equal Benefits Ordinance prior to execution of the Consent to Assignment. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Signature 8433, LLC must submit the Bidder Contributions CEC Form 55 and comply with its provisions prior to execution of the Consent to Assignment. MAGUIRE PageS VNA 8433.docx

15 Los Angeles World Airports RESOLUTION NO LAX BE IT RESOLVED that the Board of Airport Commissioners approved a Second Amendment to Lease VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC, and approve the Consent LAlOnta". to Assignment of said Lease to Signature 8390, LLC, for the premises located at Noys Valjean Avenue at Van Nuys Airport, as referenced on the board report attached herein and City 01 Los Angeles made part hereof; and Eric aercetn Mayor lsoard of Airport Commissioners Sean O. Burton President vatena C. Velasco Vice President Gabriel L. Eshaghian Jackie Goldberg Beatrice C. Hsu Matthew M. johnson Or. Cynthia A. Telles Gina Marie Lindsey Executive Director BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to execute said Second Amendment and Consent to Assignment to Lease No. VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC and all necessary documents to consummate this transaction, in each case upon approval as to form by the City Attorney and upon approval by the City Council; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to enter into an escrow agreement to facilitate the transaction described in the board report; and BE IT FURTHER RESOLVED that this item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II Section 2(f) of the Los Angeles City CEQA Guidelines; and BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Special Meeting held on Monday, December 2, Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS 1. World Wi;'Y Los Angeles C,liifomin Mall I!O. 130x 0221G Los Ail,~eI('S C,)Ii!orllii1 0()O(jS)//Hi Telephone 310 (ii\lj!)7:s:( tntcmot "JWW,I;\WIl,ilCt'O

16 Meeting Date: 12/2/2013 Reviewed by:. D 'completed CAO Review: CiiJ'! Pending I D I N/A Reviewed for I Date Approval Status,' ax. Capital Budget It~J,'$l I1lIY0 NONA D5: Operating Budget III126ft;! IiIlYO NONA ir.s CEOA I llljy0 N ES OY ON llljicnd MT SUBJEC T: Second Amendment to Lease No. VNA-8390j Consent to Assignment of Lease No. VNA-8390 for premises located at 7535 Valjean Avenue at Van Nuys Airport Approve a Second Amendment to Lease No. VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC and approve the Consent to Assignment of Lease No. VNA-8390 to Signature 8390, LLC for the premises located at 7535 Valjean Avenue at Van Nuys Airport. RECOMMENDA TlONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2, DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 3, APPROVE a Second Amendment to Lease No. VNA-8390 for the premises located at 7535 Valjean Avenue as referenced in this report. 4. APPROVE Consent to Assignment of Lease No. VNA-8390 to Signature 8390, LLC as referenced in this report. 5. AUTHORIZE the Executive Director to execute the Second Amendment and Consent to Assignment to Lease No. VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC and all MAGUIRE Page 1 VNA-8390.docx

17 necessary documents to consummate this transaction, form by the City Attorney. in each case after approval as to 6. AUTHORIZE the Executive Director to enter into an escrow agreement to facilitate the transaction described in this report. DISCUSSION: 1. Purpose This proposed Second Amendment and Consent to Assignment of Lease No. VNA-8390 in connection with other related Maguire Aviation transactions, will restructure development obligations, change construction performance dates, and collectively result in a higher probability of completing planned development previously scheduled at Van Nuys Airport (VNY). Furthermore, the Second Amendment will help to: 1. Avoid certain consequences and reduce risks of impending default, bankruptcy and/or foreclosure proceedings related to non-performance under the current Lease; 2. Upgrade and enhance the viability of development obligations historically with Maguire Aviation through securing new financial guarantees with proposed assignee, Signature 8390, LLC; 3. Provide a clear pathway and metering plan for development to occur, which indirectly benefits other tenants having investment obligations at VNY; 4. Conform key provisions of LAWA's standard lease and foster key initiatives described in the Van Nuys Real Estate Redevelopment Plan. 2. Prior Related Actions March 5, Board Order AO-5052 (Lease No. VNA-8390) The Board authorized a 30-year Lease between the City and Sky trails Aviation, covering leasehold located at 7535 Valjean Avenue at Van Nuys Airport. LLC August 4, Board Order No. AO (Lease No. VNA-8390) The Board authorized 100% transfer of membership interests in Sky trails Aviation, LLC from the Sullivan Family Trust to Maguire Aviation Group, LLC (l) First Amendments to Leas Nos. VNA-8390 and VNA-8433; (ii) Consent to Assignment of Lease Nos. VNA- 8390, VNA-8433, and VNA-8432; (iii) Consent to Name Change from Skytrails Aviation, LLC to Maguire Aviation - Van Nuys: Romeo, LLC; (iv) Consent to Leasehold Financing from Pacific Western Bank (Lender); (v) FBO Management Agreement (vi) Form of Estoppel Certificates; and (vii) Memoranda of Leases. 3. Current Action LAWA staff and Maguire Aviation Group, LLC (Maguire Aviation) have completed year-long negotiations resulting in Maguire Aviation's current request for the Board to approve the proposed Second Amendment and subsequent Consent to Assignment of Lease No. VNA to Signature 8390, LLC. MAGUIRE Page 2 VNA-8390.docx

18 Approval of the Second Amendment and Consent to Assignment would result in the following key changes: A. Premises - On the effective date of the Second Amendment, an approximately 2.25 acre portion of the premises would be deleted for airfield purposes thus decreasing the total leasehold premises to approximately acres. B. Term - No Change. C. Use - No Change. D. Improvements - Development schedule has been updated to require completion of a minimum investment of $6,900,000 by no later than December 31, E. Rental Adjustments - Lease is subject to standard annual rental adjustments of no less than 2% and no more than 7% relative to the Consumer Price Index (CPI). F. Periodic Adjustments - Lease is subject to standard periodic adjustments, including updated language regarding appraisal arbitration. G. VNY Deficit Recovery Program (DRP) - Lease is subject to standard language regarding the DRP. Under the DRP and subject to limitations and activation by the Board, certain annual deficits with respect to operation of VNY may be allocated to and recovered from tenants at VNY. H. Mortgage Financing and Other Encumbrances - Lease is subject to standard language, including provisions for Lessee and Sub-lessee construction financing or refinancing from a reputable lender acceptable to the Board. I. Assignments and Subleases - Lease is subject to standard language. J. Assignment Fees - Staff has determined that no assignment fee is due under Lease. Approval of the proposed Second Amendment and Consent to Assignment of Lease No. VNA-8390, collectively will not take effect absent the closing of all other related approved transactions between Maguire Aviation, Signature Flight Support Corporation and all related special purpose entities (Signature 7156, LLC; Signature 8433, LLC; Signature 8390, LLC and Signature 8361, LLC). Action Requested Staff requests the Board approve the Second Amendment to Lease No. VNA-8390 with Maguire Aviation-Van Nuys: Romeo, LLC and approve the Consent to Assignment of Lease No. VNA-8390 to Signature 8390, LLC for the premises located at 7535 Valjean Avenue at Van Nuys Airport, and authorize the Executive Director to execute the Second Amendment and Consent to Assignment and all necessary documents to consummate this transaction, in each case after approval as to form by the City Attorney. MAGUIRE Page 3 VNA 8390.doGX

19 Fiscal Impact Approval of the Second Amendment to Lease No. VNA-8390 and subsequent Consent to Assignment will not result in any new rental revenue to LAWA. However, the above referenced DRP will facilitate and secure future revenue streams that will benefit and further stabilize the Van Nuys Operating Budget. 4. Alternatives Considered Take No Action If the Second Amendment and Consent to Assignment of Lease No. VNA-8390 are not approved, the likely result would be LAWA affirming a Lease default and acting to terminate Lease No. VNA-8390, which would consequently lead to an increased risk of potential Lessee foreclosure, tenant bankruptcy, and/or litigation. Such a path would result in a reduction in LAWNs rental revenue and cause LAWA to initiate a new competitive process to secure a lessee (operator) for the premises. APPROPRIA No appropriations TlONS: are required for this item. STANDARD PROVISIONS: 1. This item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Signature 8390, LLC will comply with the provisions of the Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to Leases. 6. Signature 8390, LLC will comply with the provisions of the Affirmative Action Program. 7. Signature 8390, LLC must submit a Business Tax Registration Certificate number prior to execution of the Consent to Assignment. 8. Signature 8390, LLC will comply with the provisions of the Child Support Obligations Ordinance. 9. Signature 8390, LLC must have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports prior to execution of the Consent to Assignment. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). MAGUIRE Page 4 VNA 8390.docx

20 11. Signature 8390, LLC must submit the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Consent to Assignment. 12. Signature 8390, LLC must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the Consent to Assignment. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Signature 8390, LLC must submit the Bidder Contributions CEe Form 55 and comply with its provisions prior to execution of the Consent to Assignment. PageS MAGUIRE VNA-8390.docx

21 Los Angeles World Airports TM RESOLUTION NO BE IT RESOLVED that the Board of Airport Commissioners approved a Second Amendment LA" to Lease VNA-7156 with Signature Flight Support, Corporation, and approve the Consent to LM'nta,io Assignment of said Lease to Signature 7156, LLC, for the premises located at 7240 Van N.y. Hayvenhurst Avenue at Van Nuys Airport, as referenced on the board report attached herein City ct tcs "' tes and made part hereof; and Eric Garcetti Mayor Board of Airport Commissioners Sean O. Burton President Valeria C. Velasco Vice President Gabriel L. Eshaghran Jackie Goldberg Beatrice C. Hsu Matthew M. Johnson Dr. Cynthia A. Telles Gina Marie Lindsey Executive Director BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to execute said Second Amendment and Consent to Assignment to Lease No. VNA-7156 with Signature Flight Support, Corporation and all necessary documents to consummate this transaction, in each case upon approval as to form by the City Attorney and upon approval by the City Council; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to enter into an escrow agreement to facilitate the transaction described in the board report; and BE IT FURTHER RESOLVED that this item, as a continuing administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II Section 2(f) of the Los Angeles City CEQA Guidelines; and BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section I hereby certify that this Resolution No is true and correct, as adopted by the Board of Airport Commissioners at its Special Meeting held on Monday, December 2, 2013., Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS

22 Meeting Date: 12/2/2013 Reviewed by: ty Executive Director CAO Review: o Completed 181 Pending o! N/A Reviewed for Date!APDrovalstatusllll! Cap~al Budget IIt'1:L(,/ ~ WilY 0 NONA r' Operating Budget :lij;;t's'lqaydnona tr CEQA lilly0 N ES r Procurement 11/21/2013 OY ON ~ Cond I MT ' SUBJECT: Second Amendment to Lease No. VNA-7156; Consent to Assignment of Lease No. VNA-7156 for premises located at 7240 Hayvenhurst Avenue at Van Nuys Airport Approve the Second Amendment to Lease No. VNA-7156 with Signature Flight Support, Corporation and approve the Consent to Assignment of Lease No. VNA-7156 to Signature 7156, LLC for the premises located at 7240 Hayvenhurst Avenue at Van Nuys Airport. RECOMMENDA TlONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 3. APPROVE the Second Amendment to Lease No. VNA-7156 with Signature Flight Support, Corporation for the premises located at 7240 Hayvenhurst Avenue as referenced in this report. 4. APPROVE the Consent to Assignment of Lease No. VNA-7156 with Signature Flight Support, Corporation to Signature 7156, LLC. 5. AUTHORIZE the Executive Director to execute the Second Amendment and Consent to Assignment to Lease No. VNA-7156 with Signature Flight Support, Corporation and all SIGNATURE Page 1 VNA-7156.docx

23 necessary documents to consummate this transaction, form by the City Attorney. in each case after approval as to 6. AUTHORIZE the Executive Director to enter into an escrow agreement to facilitate the transaction described in this report. DISCUSSION: 1. Purpose This proposed Second Amendment and Consent to Assignment of Lease No. VNA-7156 in connection with other related Maguire Aviation transactions, will restructure development obligations, change construction performance dates, and collectively result in a higher probability of completing planned development previously scheduled at Van Nuys Airport (VNY). Furthermore, the Second Amendment will help to: 1. Avoid certain consequences and reduce risks of impending default, bankruptcy and/or foreclosure proceedings in connection to non-performance under other related leases; 2. Upgrade and enhance the viability of development obligations through securing new financial guarantees with proposed assignee, Signature 7156, LLC; 3. Provide a clear pathway and metering plan for development to occur, which indirectly benefits other tenants having investment obligations at VNY; 4. Conform key provisions of LAWA's standard lease and foster key initiatives described in the Van Nuys Real Estate Redevelopment Plan. 2. Prior Related Actions February 18, Board Order No. AO-4325 (Lease No. VNA-7156) The Board authorized an approximately thirty-four (35) year replacement lease with Beechcraft West covering approximately acres at Van Nuys Airport. May 3, Resolution No (Lease Nos. VNA-7156, ONT-6439, ONT-4062 and NBO-1161) The Board authorized the Consent to the Articles and Agreement of Merger from Beechcraft West, Inc. to United Beechcraft, Inc. September 18, (Lease No. VNA-7156) The City approved a name change from United Beechcraft, Services, Inc. Inc. to Raytheon Aircraft February 5, Board Order No. AO-5051 (Lease No. VNA-7156) The Board authorized a first amendment to Lease with Raytheon Aircraft Services, Inc to provide an optional 5-year repayment plan for retroactive land and improvement rental adjustments and rental rates effective February 15, November 16, (Lease No. VNA-7156) The City approved a name change from Raytheon Aircraft Services, Inc to Hawker Beechcraft Services, Inc. Page 2 SIGNA TURE VNA docx

24 September 15, Resolution No (Lease No. VNA-7156) The Board authorized Consent to Assignment of Lease from Hawker Beechcraft Services, Inc to Signature Flight Support, Corporation. 3. Current Action LAWA staff and Maguire Aviation Group, LLC (Maguire Aviation) have completed year-long negotiations resulting in Signature Flight Support, Corporation's (Signature's) acquisition of Maguire Aviation's leasehold interests at Van Nuys Airport. In connection with the acquisition, Signature is also requesting the Board to approve the proposed Second Amendment and subsequent Consent to Assignment of Lease No. VNA-7156 to Signature 7156, LLC. Approval of the Second Amendment and Consent to Assignment would result in the following key changes: A. Premises - No Change. B. Term - The expiration date of Lease No. VNA-7156 would change from December 31, 2026 to December 31, 2038, contingent upon exercising a twelve-year Lease extension option. C. Extension Option - Lessee may exercise a twelve-year Lease extension option subject to an extension option payment to LAWA totaling $3,750,000. D. Use - No Change. E. Rental Adjustments - Lease is subject to standard annual rental adjustments of no less than 2% and no more than 7% relative to the Consumer Price Index (CPI). F. Periodic Adjustments - Lease is subject to standard periodic adjustments, including updated language regarding appraisal arbitration. G. VNY Deficit Recovery Program (DRP) - Lease is subject to standard language regarding the DRP. Under the DRP and subject to limitations and activation by the Board, certain annual deficits with respect to operation of VNY may be allocated to and recovered from tenants at VNY. H. Mortgage Financing and Other Encumbrances - Lease is subject to standard language, including provisions for Lessee and Sub-lessee construction financing or refinancing from a reputable lender acceptable to the Board. I. Assignments and Subleases - Lease is subject to standard language. J. Assignment Fees - Staff has determined that no assignment fee is due under Lease. Approval of the proposed Second Amendment and Consent to Assignment of Lease No. VNA-7156, collectively will not take effect absent the closing of all other related approved transactions between Maguire Aviation, Signature Flight Support Corporation and all related SIGNATURE Page 3 VNA-7156.docx

25 special purpose entities (Signature 7156, LLC; Signature 8433, LLC; Signature 8390, LLC and Signature 8361, LLC). Action Requested Staff requests the Board approve the Second Amendment to Lease No. VNA-7156 with Signature Flight Support, Corporation and approve the Consent to Assignment of Lease No. VNA-7156 to Signature 7156, LLC for the premises located at 7240 Hayvenhurst Avenue at Van Nuys Airport, and authorize the Executive Director to execute the Second Amendment and Consent to Assignment and all necessary documents to consummate this transaction, in each case after approval as to form by the City Attorney. Fiscal Impact Approval of the Second Amendment to Lease No. VNA-7156 and subsequent Consent to Assignment will not result in any new rental revenue to LAWA other than compensation of $3,750,000 contingent upon the Lessee exercising a twelve-year extension option. However, the above referenced DRP will facilitate and secure future revenue streams that will benefit and further stabilize the Van Nuys Operating Budget. 4. Alternatives Considered Take No Action If the Second Amendment and Consent to Assignment of Lease No. VNA-7156 are not approved, it is likely that Signature would terminate its acquisition of related Maguire interests. The likely result would be LAWA affirming lease defaults and acting to terminate related Maguire Lease Nos. VNA-8433, VNA-8390 and VNA-8361, which would consequently lead to an increased risk of potential Lessee foreclosure, tenant bankruptcy, and/or litigation. Such a path would result in a reduction in LAWA's rental revenue and cause LAWA to initiate a new competitive process to secure a lessee (operator) for the above referenced premises. APPROPRIA TlONS: No appropriations are required for this item. STANDARD PROVISIONS: 1. This item, as a contlnuinq administrative, maintenance and personnel-related activity, is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.f. of the Los Angeles City CEQA Guidelines. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Signature 7156, LLC will comply with the provisions of the Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to Leases. Page 4 SIGNA TURE VNA 7156.docx

26 6. Signature 7156, LLC will comply with the provisions of the Affirmative Action Program. 7. Signature 7156, LLC must submit a Business Tax Registration Certificate number prior to execution of the Consent to Assignment. 8. Signature 7156, LLC will comply with the provisions of the Child Support Obligations Ordinance. 9. Signature 7156, LLC will have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports prior to execution of the Consent to Assignment. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). 11. Signature 7156, LLC must submit the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Consent to Assignment. 12. Signature 7156, LLC must be determined by Public Works, Office of Contract Compliance, to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the Consent to Assignment. 13. This action is not subject to the provisions of the First Source Hiring Program. 14. Signature 7156, LLC must submit the Bidder Contributions CEC Form 55 and comply with its provisions prior to execution of the Consent to Assignment. SIGNATURE Page 5 VNA-7156.docx