REPORT TO THE CITY COUNCIL FROM: HENRY THOMPSON, Director of Aviation Airports Department BY: MELISSA GARZA-PERRY, Airports Properties Manager Airports Department THROUGH: MICHAEL VASQUEZ, Airports Properties Supervisor Airports Department SUBJECT ..Title Actions related to the Lease Agreement with John Tomaino, an individual, d.b.a. American Helicopters, which is a Specialized Aviation Service Operation (SASO) that runs a helicopter and airplane flight training business at Fresno Chandler Executive Airport (FCH). (Council District 3) 1. Adopt a finding of Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act Guidelines 2. Approve the revised Lease Agreement (Lease), which contains amended language (staff received direction from the City Council on September 29, 2022), with John Tomaino, an individual, d.b.a. American Helicopters, to continue operating a helicopter and airplane flight training business at FCH for a term of three (3) years. The amount of potential revenue generated by this Lease is $57,101.59, plus an annual CPI adjustment. (Council District 3) ..Body RECOMMENDATION Staff recommends that City Council adopt a finding of Categorical Exemption, pursuant to Section 15301 of the California Environmental Quality Act (CEQA) Guidelines, and authorize the Director of Aviation, or designee, to execute this Lease with John Tomaino, an individual, d.b.a. American Helicopters, to continue operating on FCH's airfield for a term of three (3) years. The amount of potential revenue generated by this Lease is $57,101.59, plus an annual CPI adjustment. EXECUTIVE SUMMARY John Tomaino, an individual (Mr. Tomaino), is currently operating American Helicopters at 612 W. Kearney Boulevard, which is located on FCH's airfield, as a month-to-month holdover. Mr. Tomaino's original agreement expired on February 28, 2022. Despite the COVID-19 pandemic negatively impacting his helicopter and airplane flight training school, which was a similar experience of other businesses that were also located on FCH's airfield in 2020 and 2021, American Helicopters was able to survive the economic downturn. This Lease will allow Mr. Tomaino to continue running American Helicopters at FCH's airfield through November 30, 2025. BACKGROUND American Helicopters has been a fixture at FCH, since 2006. Mr. Tomaino began leasing the current location of 612 W. Kearney Boulevard (Leasehold) on March 1, 2010. The Leasehold consists of approximately a 29,500 square foot parcel, which includes a 6,560 square foot hangar with office space. As a month-to-month holdover, Mr. Tomaino pays a monthly rental rate of $1,091.80 for an annual rental rate of $13,101.59. However, AGI Valuations, Inc., completed an appraisal, in May 2022, of the Leasehold and determined its Fair Market Rental Value to be $1,833.33 per month (approximately $22,000.00 annually). On September 29, 2022, Airports' staff received the following direction from the City Council: "the monthly rent shall be increased to the fair market [rental] value for leased space, which shall be $1,833.33, commencing on year two of the term lease." Consequently, under this proposed revised Lease, American Helicopters' monthly rental structure would be $1,091.80 ($13,101.59 annually) during Year 1, $1,833.33 per month ($22,000 annually) during Year 2, and $1,833.33 ($22,000 annually) during Year 3. In addition, during Year 3 of this proposed revised Lease, there would be an annual Consumer Price Index (CPI) adjustment (increase only) on December 1, 2024. This proposed rental structure, which is reasonable given FCH has not fully recovered from the pandemic, would allow Mr. Tomaino to continue operating American Helicopters without there being any disruption in helicopter and airplane flight training services to the local aviation community and FCH's patrons. The City Attorney has reviewed and approved this Lease as to form. ENVIRONMENTAL FINDINGS This Agreement falls within the Class 1 Categorical Exemption for Existing Facilities set forth in the CEQA Guidelines, Section 15301 for existing facilities, as it involves no alteration of existing facilities, with no expansion of use, and will not result in any significant negative effects relating to traffic, noise, air quality or water quality. Furthermore, none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to this project. LOCAL PREFERENCE Local preference was not implemented because this item is regarding an existing tenant that desires to continue operating at FCH. FISCAL IMPACT The potential revenue generated by this Lease will be $57,101.59, plus an annual CPI adjustment. All revenue will be deposited into the Airports Enterprise Fund and will contribute to the operation and maintenance of FCH. There is no impact to the General Fund or ratepayers of the City of Fresno from this item. Attachments: - Revised Lease Agreement for John Tomaino, dba. American Helicopters, at FCH.