DEPARTMENT: Aviation
DEPARTMENT HEAD: Frank Miller
COUNCIL DISTRICTS IMPACTED: Citywide
SUBJECT:
General Aviation Federal Inspection Station
SUMMARY:
Consideration of the following Ordinances related to the General Aviation Federal Inspection Station (GA FIS) at San Antonio International Airport (SAT):
A. This Ordinance authorizes an amendment to the lease agreement with Smart Traveling, Inc. (STI) to add 17 acres, relinquish three acres for the GA FIS project and extend the lease for an additional 25 years. STI will invest $40,000,000.00 in capital improvements by 2030.
B. This Ordinance authorizes a 25-year lease agreement with San Antonio Sky Place Real Estate Ventures, LLC (Sky Place), a subsidiary of STI, for 0.46 acres of land. As part of the lease agreement, Sky Place agrees to design and construct the GA FIS facility to meet federal and local standards.
C. This Ordinance authorizes a 25-year sublease of the proposed lease agreement with Sky Place between Sky Place and the City of San Antonio for the City to take possession of the GA FIS upon completion of its construction for the purpose of a GA FIS to be operated by U.S. Customs and border Protection (CBP).
D. This Ordinance authorizes a Marshalling Permit for non-exclusive marshalling services for GA aircraft at the Airport.
E. This Ordinance authorizes a construction contract with J3 Company, LLC (J3) for taxilane and apron improvements for the GA FIS facility in an amount of $3,162,885.00.
BACKGROUND INFORMATION:
Federal law requires the CBP to process passengers entering the United States from international flights from both commercial and general aviation (GA) aircraft. Both types of aircraft were utilizing international gates at Terminal A of the San Antonio International Airport (SAT) to deplane the passengers for processing by the CBP. This single location for both operations led to traffic congestion at the gate, causing delays to scheduled commercial traffic and GA aircraft as well as safety concerns.
In October 2012, the City Council authorized a Memorandum of Agreement (MOA) between the CBP and City for both an interim and permanent solution to the problem. In November 2013, the City completed renovations to an area on the ground level under Gate 1 (previously Gate 16) at the south end of Terminal A. The area is now the site for the processing of international GA aircraft, so GA and commercial aircraft no longer use the same gates.
In the MOA, the City and CBP also agreed to the need of a permanent location for the processing of GA passengers away from the terminals to be opened by September 2016. According to the MOA, the City will design and build the permanent location and the CBP will relocate the GA FIS activities to the permanent location.
Solicitation
In August 2013, the City released a Request for Interest (RFI) to solicit interest for a third-party to design and build a permanent facility on the north side of the airport at their cost that would be in compliance with federal and local regulations. The solicitation was sent to all of the fixed-based operators and tenants with large GA operations at Airport.
In September 2013, one response was received. Representatives from the City and CBP reviewed the proposal and proceeded with negotiations. As part of the proposal, the firm responded with the location identified in the RFI but requested consideration for another location. After a review, the City agreed to the proposed location.
Ordinances
A. Amendment to Lease Agreement with Smart Traveling, Inc. (STI)
In December 2011, City Council authorized a 25-year lease agreement with STI at SAT through Ordinance 2011-12-15-1051. As part of the agreement, STI agreed to invest $4 million in improvements to the existing hangar.
This amendment will add two tracts of land, 16.9 acres and 0.27 acres, for the construction of additional fixed-based operations, maintenance repair operations, additional hangar space, and a fuel farm. It will also release approximately three acres for the GA FIS facility and associated taxilane and apron area, and public access roadway. STI agrees to increase its investment to $40,000,000.00 in the proposed additional capital improvements by 2030. STI is required to make a capital investment in the amount of $19,000,000.00 by 2022 or the lease agreement will revert to the current expiration date (2036) and not 2051.
B. Lease Agreement with San Antonio Sky Place Real Estate Ventures, LLC (a subsidiary of STI)
Under this lease agreement, Sky Place will lease 0.46 acres of the approximately three acres that will be relinquished by STI to the City in the proposed lease amendment. Sky Place will design and construct a GA FIS facility to meet the CBP standards at an estimated cost of $2,335,014.00. If the costs exceed $2,000,000.00, the City of San Antonio agrees to pay up to $427,127.00, the estimated cost for furniture, fixtures and equipment. If the balance of the construction costs exceeds $2,335,014.00, Sky Place will be responsible for the additional costs.
C. Sublease to the Proposed Lease Agreement with Sky Place
The 25-year sublease to the proposed lease agreement with Sky Place will allow the City of San Antonio to take possession of the GA FIS upon completion of construction. The City will then enter into a separate agreement with CBP for its operations, which will be taken to City Council for authorization once the facility is under construction.
Rent will be paid by the City for the sublease in the same amounts established in the lease agreement with Sky Place.
D. Marshalling Permit
Marshalling services include guiding, signaling and passenger escort services for GA aircraft. This Ordinance will authorize a form of Permit that may be executed by the Aviation Director to allow the authorized permittee, on a non-exclusive basis, to provide marshalling services to GA aircraft at the Airport. The Permit has a year-to-year term with automatic renewals that may be cancelled by either party with a 30-day written notice.
E. Construction Contract with J3 for Taxilane and Apron Improvements Around the GA FIS facility
In order to support the GA FIS, improvements to the apron and taxilane area are required, which the City agreed to fund. The scope of this work includes the construction of new concrete apron and taxilane between two existing apron areas to provide sufficient space for GA aircraft parking and maneuvering; the construction of a new taxiway connector from the apron to Taxiway Romeo; and, the reconstruction of portions of the existing airfield access road to accommodate the improvements and comply with Federal Aviation Administration (FAA) design standards.
In August 2014, the City released an Invitation For Bids for the improvements. The solicitation was advertised in Hart Beat and on the City of San Antonio website. Three bids were opened on September 23, 2014. The design firm, RS&H, reviewed the proposal and recommended moving forward with the lowest bid submitted by J3.
The solicitation was submitted under the Disadvantaged Business Enterprise (DBE) program to allow the Airport to seek reimbursement from the Federal Aviation Administration. The Small Business Section of the Aviation Department has reviewed and approved the DBE Good Faith Effort Plan submitted by J3.
ISSUE:
City Council approval is required for the lease agreements, permit and construction contract.
ALTERNATIVES:
City Council could elect to not authorize these Ordinances related to the GA FIS project. However, that action could jeopardize the City of San Antonio meeting the requirement under the 2012 MOA with the CBP to have a permanent GA FIS facility opened by September 30, 2016. The Economic and Community Development Council Committee was briefed on the project on April 1, 2014. In addition, the City Council received an update on the project during the Aviation Department FY 2015 Budget presentation on August 27, 2014.
FISCAL IMPACT:
A. Amendment to Lease Agreement with Smart Traveling, Inc. (STI)
The rent for the next year will remain under the current lease agreement until March 31, 2016. With this amendment, the City will receive $350,870.00 per year during this time.
· Under the lease amendment, the total projected ground rent over the remaining term is $22,746,219.00 and the total projected hangar rent starting in 2016 is $20,528,913. These amounts include the deferment of a portion of rental payments between 2016 and 2028 which will be amortized and repaid to the City over the last 15 years (2037-2051) of the lease term at an interest rate of three percent.
· These rates are based on STI meeting its capital investment requirements of $19,000,000.00 by 2022 and a total capital investment amount of $40,000,000.00 by 2030.
B. Lease Agreement with San Antonio Sky Place Real Estate Ventures, LLC (a subsidiary of STI)
During the initial construction period of the GA FIS, the rent is $1,500 until the building is constructed. Once the building is constructed, the ground rent is $0.309 per square foot for 2015 and $0.318 per square foot in 2016. It then increases 15 percent every five years. If the construction cost for the GA FIS exceeds $2,000,000.00, the City will pay up to $427,120.00, which is budgeted and appropriated in the FY 2015 - FY 2020 Aviation Capital Budget. If construction costs exceed $2,427,120.00, Sky Place will be responsible for those costs. In addition, the City will reimburse Sky Place an estimated $50,000.00 for exterior ramp/taxiway lighting.
C. Sublease Agreement to the Proposed Lease Agreement with Sky Place
The City will pay Sky Place the same amount of rent as Sky Place is paying the City under the Lease agreement for the GA FIS facility.
D. Marshalling Permit
Permittees are required to charge fair and equitable fees for the marshalling services provided to GA aircraft. The City receives no fee from this permit.
E. Construction Contract For Taxilane and Apron Improvements
The amount of $3,162,885.00 is budgeted and appropriated in the FY 2015 - FY 2020 Aviation Capital Budget, including $750,000 of direct soft cost.
RECOMMENDATION:
Staff recommends the authorization of the Ordinances related to the GA FIS project at the San Antonio International Airport.