20240814-011 Air General RCA — original pdf

Backup

City of Austin Recommendation for Action File #: 24-5164, Agenda Item #: 7. 8/29/2024(cid:4) Posting Language Authorize negotiation and execution of a lease with Air General, Inc., for certain premises consisting of approximately 17,701 square feet of building space, 12,768 square feet of cargo handling space, and related improvements for its air freight and mail handling operations at Austin-Bergstrom International Airport, for a term of 10 years. Lead Department Aviation Prior Council Action: N/A Fiscal Note It is anticipated that the agreement will generate an estimated $4.51 million over a 10-year period. For More Information: Inquiries should be directed to Tracy Thompson, Airport Chief Officer - Business & External Affairs at tracy.thompson@flyaustin.com. Council Committee, Boards and Commission Action: To be reviewed by the Austin Airport Advisory Commission on August 14, 2024. Additional Backup Information: The Department of Aviation (Aviation) seeks to lease a portion of its air cargoport facility located at 9402 Cargo Avenue, Suite A (Cargo East Facility). Air General, Inc. (Air General) is currently a subtenant of a third-party developer and operator of a separate cargoport facility at AUS, providing cargo services for six airlines. Due to that facility’s limited size, Air General has outgrown its current operational space. Thus, Air General was identified as a potential tenant able to fulfill the highest and best use of the Cargo Facility. Under the proposed terms for this new Lease that would include a 10-year term, Air General would lease for its exclusive use, 17,701square feet of building space and approximately 12,768 square feet of cargo handling space for its operations, and would be assigned the right to use approximately 20% of the Cargo Facility’s employee parking area. An estimated $4.51 million is forecasted over the 10-year lease term based upon the following model. The rental rate is calculated based on a cost recovery model related to the construction of the facility, including debt service and coverage. The rate model also includes ground rent and operating and maintenance expenses. These items are calculated for a 10-year lease term, resulting in an escalating Base Rent applicable throughout the term. The AUS-established rate for cargo handling area rent is then added to this Base Rent. Tenant improvement costs are not considered, as Air General would be responsible for any approved improvements. City of Austin Page 1 of 1 Printed on 8/8/2024 powered by Legistar™ (cid:5) (cid:6)