CA-19-01-5 January 15, 2019 PROPOSED LEASE AGREEMENT EXCLUSIVE FLIGHT LLC, DBA AFTERGLOW AIRCRAFT SOLUTIONS BACKGROUND: Exclusive Flight LLC, DBA Afterglow Aircraft Solutions ( Afterglow ) approached the Staff, through the Chamber of Commerce, expressing their interest in operating an aircraft exterior paint, interior refurbishments and detailing facility from Building 400 at the Airport Business Park. Please refer to the attached Exhibit that shows the proposed area. Afterglow began operating in 2010 and currently has leases at five (5) airports; Springdale, AR (ASG), Fayetteville, AR (FYV), Shreveport, LA (SHV & DTN) and Tulsa, OK (TUL). They also have mobile operations that perform services at airports across the area. Staff has worked with Afterglow to establish terms and conditions for a proposed lease as follows. PROPOSED BUSINESS TERMS: The parties have agreed, subject to Little Rock Municipal Airport Commission ( Commission ) approval, to the following business terms: Tenant: Premises: Afterglow Building 400 Hangar Space 26,686 square feet Building 400 Other Space 5,239 square feet Ramp Afterglow will be assessed a Ramp Utilization Charge that provides for its use of the ramp to access its premises and the airfield. Parking Afterglow will be assessed a Parking Utilization Charge that provides for its use of designated vehicle parking spaces to access its premises and public roads. The Premises will be leased in the following phases: Phase I Lease of center paint bay and access (10,125 sf hangar space) and related office/shop space (1,746 sf) Phase II Lease of north paint bay and access (10,125 sf hangar space) and related office/shop space (1,746 sf). Phase II may be added to premises by Tenant at any time during first eighteen (18) months of term, but no later than August 1, 2020. Summary prepared by Greg Garner, AAE Manager of Business & Properties
CA-19-01-5 Phase III Lease of south paint bay and access (6,400 sf hangar space) and related office/shop space (1,747 sf). Phase III may be added to premises by Tenant at any time during first thirty (30) months of term, but no later than August 1, 2021. Commencement Date: Proposed lease commencement of February 1, 2019. Term: Five (5) Years Renewals: One 5 year mutual renewal option Rental & Fees: (See Attached spreadsheets) Phase I Rental: $64,797.75 per year or $5,399.81 per month Phase II Rental* $129,595.50 per year or $10,799.63 per month Phase III Rental*: $172,556.25 per year or $14,379.69 per month Phase III Rental (Triple Net Option)*: $111,256.25 per year or $9,271.35 per month * Note: Current rental rates are used for Phases II and III. Actual rate will be the then current rate that has been adjusted by PPI from lease commencement. Common Area and System Charges: Charges for reimbursement of costs for the operation and maintenance of common areas and systems associated with the Premises will be included as a separate part of Afterglow s rental to the Airport. These will included, but not be limited to, the water treatment system, fire suppression system, common area repair and maintenance such as landscaping, mowing, etc. These charges will be adjusted on an as needed basis to cover actual costs. Rental Credit: In consideration of start-up expenses, Afterglow shall be granted a three (3) month rental credit to be taken during the first three (3) months of the lease term. Rental Adjustments: The rental shall be adjusted on an annual basis by relative changes in the Producers Price Index, All Urban Consumers, All Items ( PPI ). In no event shall the rental decrease as a result of changes in PPI. Deposit: A security deposit equal to six (6) months rental is required. Initial amount equal to 3 months upon execution and remainder paid in monthly installments over the next 3 months. Tenant may provide a Letter of Credit from a bank or institution acceptable to the Commission in lieu of the deposit. Summary prepared by Greg Garner, AAE Manager of Business & Properties
CA-19-01-5 Use: Operation of an aircraft exterior paint, interior refurbishments and detailing facility. Utilities, Maintenance & Repair: Afterglow to pay all utilities for leased area. Afterglow pays for its own telephone and data. Initially, Commission is responsible for all maintenance, including, but not limited to, interior and exterior building maintenance, roof, and systems maintenance unless noted. Afterglow is responsible for janitorial services, hangar door maintenance and maintenance of aircraft painting systems including all Paint Bay heating and air filtration systems. Once Phase III is in effect, the lease may convert to Triple Net Lease with Afterglow responsible for all maintenance, including, but not limited to, interior and exterior building maintenance, roof, and systems maintenance. Afterglow will be given the option to not convert to a triple net lease and maintain existing lease and rental payment structure. Taxes: Afterglow shall be responsible for any and all taxes assessed on the Premises, Afterglow s operation or personal property. Insurance: Afterglow will provide the Commission with its customarily required insurance coverages for aviation tenants in coverage limits to be determined. Said insurance shall provide for a thirty (30) day notice of cancellation. After Phase III, Afterglow shall maintain Building Insurance, at 100% replacement cost. Afterglow will be responsible for insuring its contents. Commission will maintain building insurance if Afterglow does not elect to change to triple net lease. Acceptance of Premises: Afterglow shall accept the Premises as is. Specifically, the aircraft painting systems in the building are to be accepted as is. The other Building Systems are to be cleaned and put in satisfactory operating condition by the Commission upon occupancy. Afterglow shall inspect the space to be leased and notify the Commission of items that are not functioning properly within thirty (30) days of occupancy. Square Footage: Square Footage numbers presented are subject to review and confirmation. Does not include space used for Waste Water Treatment System for total site. Commission maintains this system. Improvements: Commission to approve, in advance, all improvements and associated expenditures. Best Use of Airport Land: Language to be included that gives the Commission the option to take back ground area from the Afterglow leasehold to allow better use of other Airport property or other leaseholds This provision will also, in no way, affect or impact the Commission s rights under Eminent Domain. Summary prepared by Greg Garner, AAE Manager of Business & Properties
CA-19-01-5 Access: : Language to be included that the Commission/separate tenants shall have access/easements to allow travel from other Airport property or from property the Commission leases to another tenant across/through the Afterglow leasehold to the airfield system. This may be for aircraft, vehicles, fueling, maintenance, etc. Afterglow will not impede access to other areas. Buy-Out: The Commission reserves the right to buy-out Afterglow s lease, at any time for any reason, with 180 days advance written notice, with; 1) a payment to Afterglow equal to the value of Commission approved capital improvements made by Afterglow to the leasehold amortized straight line over a ten year period, and 2) an additional payment equal eighteen (18) months rental, if the buy-out takes place during years 1 through 5 of the lease term, or an additional amount equal to twelve (12) months rental, if the buy-out takes place during years 6 through 10 of the lease term. Security Access Control System: A security access control system shall be installed as necessary to control access to/from secure areas and the premises. Commission is responsible for the installation, operation and maintenance of the system. RECOMMENDATION: Staff recommends that the Commission authorize the Executive Director, or his designee, to enter into a Lease Agreement with Afterglow based upon the general business terms set forth above. Summary prepared by Greg Garner, AAE Manager of Business & Properties
AFTERGLOW - BLDG. 400 RENTAL - PHASE I Square Rate Annual Monthly Description Footage PSFPA Rental Rental Building 400 Hangar 10,125 $ 5.25 $ 53,156.25 $ 4,429.69 Office/Shop 1,746 $ 5.25 $ 9,166.50 $ 763.88 Building 400 Totals: 11,871 $ 62,322.75 $ 5,193.56 Ramp Utilization Charge $ 1,980.00 $ 165.00 Parking Utilization Charge $ 495.00 $ 41.25 Grand Totals: $ 64,797.75 $ 5,399.81 Common Area and System Charges: Charges for reimbursement of costs for the operation and maintenance of common areas and systems associated with the Premises will be developed and included as a separate part of the rental. These will include, but not be limited to, the water treatment system, fire suppression system, common area repair and maintenance such as landscaping, mowing, etc. These charges will be adjusted on an as needed basis to cover actual costs.
AFTERGLOW - BLDG. 400 RENTAL - PHASE II Square Rate* Annual Monthly Description Footage PSFPA Rental Rental Building 400 Hangar 20,250 $ 5.25 $ 106,312.50 $ 8,859.38 Office/Shop 3,492 $ 5.25 $ 18,333.00 $ 1,527.75 Building 400 Totals: 23,742 $ 124,645.50 $ 10,387.13 Ramp Utilization Charge $ 3,960.00 $ 330.00 Parking Utilization Charge $ 990.00 $ 82.50 Grand Totals: $ 129,595.50 $ 10,799.63 Common Area and System Charges: Charges for reimbursement of costs for the operation and maintenance of common areas and systems associated with the Premises will be developed and included as a separate part of the rental. These will include, but not be limited to, the water treatment system, fire suppression system, common area repair and maintenance such as landscaping, mowing, etc. These charges will be adjusted on an as needed basis to cover actual costs. Rental Rate:* Current rate used. Actual rate will be then current rate that has been adjusted by PPI from lease commencement.
AFTERGLOW - BLDG. 400 RENTAL - PHASE III Square Rate* Annual Monthly Description Footage PSFPA Rental Rental Building 400 Hangar 26,686 $ 5.25 $ 140,101.50 $ 11,675.13 Office/Shop 5,239 $ 5.25 $ 27,504.75 $ 2,292.06 Building 400 Totals: 31,925 $ 167,606.25 $ 13,967.19 Ramp Utilization Charge $ 3,960.00 $ 330.00 Parking Utilization Charge $ 990.00 $ 82.50 Grand Totals: $ 172,556.25 $ 14,379.69 Common Area and System Charges: Charges for reimbursement of costs for the operation and maintenance of common areas and systems associated with the Premises will be developed and included as a separate part of the rental. These will include, but not be limited to, the water treatment system, fire suppression system, common area repair and maintenance such as landscaping, mowing, etc. These charges will be adjusted on an as needed basis to cover actual costs. Rental Rate:* Current rate used. Actual rate will be then current rate that has been adjusted by PPI from lease commencement.
AFTERGLOW - BLDG. 400 RENTAL - PHASE III - Triple Net Square Rate* Annual Monthly Description Footage PSFPA Rental Rental Building 400 Hangar 26,686 $ 3.25 $ 86,729.50 $ 7,227.46 Office/Shop 5,239 $ 3.25 $ 17,026.75 $ 1,418.90 Building 400 Totals: 31,925 $ 103,756.25 $ 8,646.35 Ramp Utilization Charge $ 6,000.00 $ 500.00 Parking Utilization Charge $ 1,500.00 $ 125.00 Grand Totals: $ 111,256.25 $ 9,271.35 Common Area and System Charges: Charges for reimbursement of costs for the operation and maintenance of common areas and systems associated with the Premises will be developed and included as a separate part of the rental. These will include, but not be limited to, the water treatment system, fire suppression system, common area repair and maintenance such as landscaping, mowing, etc. These charges will be adjusted on an as needed basis to cover actual costs. Rental Rate:* Current rate used. Actual rate will be then current rate that has been adjusted by PPI from lease commencement.