REPORT TO THE CITY COUNCIL
FROM: MARK THORPE, Director of Aviation
Airports Department
BY: JOSHUA CASTELLANO-GONZALEZ, Assistant Director of Finance and Administration
Airports Department
MELISSA GARZA-PERRY, Airports Properties Manager
Airports Department
SUBJECT
Title
Approve the Fourth Amendment to the Airport Lease Agreement with Federal Express Corporation, for use of the cargo ramp located at the Fresno Air Terminal, extending the term for six (6) months, through June 30, 2027 and land rent revenue generated by this lease extension is approximately $55,436.22 (Council District 4)
Body
RECOMMENDATION
Staff recommends Council approve the Fourth Amendment to the Airport Lease Agreement with Federal Express Corporation, for use of the cargo ramp located at the Fresno Air Terminal, extending the term for six (6) months, through June 30, 2027, land rent revenue generated by this lease extension is approximately $55,436.22, and authorize the City Manager, or designee, to execute al documents related to this amendment.
EXECUTIVE SUMMARY
Lessee’s current twenty-one-year Lease at FAT will expire on December 31, 2026. Lessee has been at its current location, running its air cargo operations, since November 15, 2005. The Fourth Amendment will extend the term through June 30, 2027, which coincides with the date all signatory airlines’ initial terms of their Airport Use and Lease Agreements (AUA) at FAT are set to expire. As Lessee’s landing fees (how the fees are calculated) are tied to the rate calculation(s) expressed in FAT’s AUAs, the intent is to merge Lessee’s land rent into a future AUA. This proposed Fourth Amendment would allow Lessee to continue operating at FAT, without any disruption to its cargo operations, potentially through June 30, 2027, while Lessor and Lessee negotiate a new AUA, which will coincide with all signatory airlines’ extending their existing AUAs.
BACKGROUND
Lessee currently runs an air cargo operation that supports Fresno and the surrounding region from the Air Cargo Ramp on the north side of FAT’s airfield. The operation uses Boeing 757 aircraft daily with increased frequency during peak holiday periods. FAT’s Air Cargo Ramp has sufficient infrastructure to accommodate the region’s current needs and forecasted growth. Currently, Lessee represents 35% of all cargo activity at FAT’s cargo ramp, with approximately 6.5 million pounds of cargo loaded and unloaded over the past twelve consecutive months. The current monthly rent is $9,239.37, which is in accordance with the Lease’s terms. All other provisions shall remain in place as part of the Lease. In addition to monthly rent, FedEx also pays landing fees for use of the airfield.
The City Attorney has reviewed and approved this Fourth Amendment to the Airport Lease Agreement as to form, and Risk Management has reviewed and approved all insurance requirements.
ENVIRONMENTAL FINDINGS
This Project was previously found to be categorically exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301/Class 1 for Existing Facilities because it involves the operation of an existing cargo facility with no alteration to the facility and negligible expansion of the overall airport facility use. A Categorical Exemption was accordingly adopted by Council in July 2021. This Amendment to the existing Lease Agreement only extends the term of the Agreement and does not involve any changes to the Project description. No further environmental analysis is required.
LOCAL PREFERENCE
Local preference is not applicable because this is not an award of product, services or construction agreement.
FISCAL IMPACT
The land rent revenue generated by this Fourth Amendment to the Airport Lease Agreement will be $55,436.22. The total minimum land rent revenue received during the full term of the Lease is $1,699,084.49. All revenue will be deposited into the Airports Enterprise Fund and will contribute to the operation and maintenance of FAT. There is no impact to the General Fund or ratepayers of the City of Fresno from this item.
Attachments:
Original Executed FedEx Lease Agreement
First Amendment to the FedEx Lease Agreement
Second Amendment to the FedEx Lease Agreement
Third Amendment to the FedEx Lease Agreement
Fourth Amendment to the Airport Lease Agreement