REPORT TO THE CITY COUNCIL FROM: FRANCISCO PARTIDA, Interim Director of Aviation Airports Department BY: MELISSA GARZA-PERRY, Airports Properties Manager Airports Department MICHAEL VASQUEZ, Airports Property Supervisor Airports Department SUBJECT ..Title Actions related to the Lease Agreement with Flight Caf�, LLC a California Limited Liability Company inside the Administration/Terminal Building at Fresno Chandler Executive Airport (FCH). (Council District 3) 1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 (Existing Facilities), under of the California Environmental Quality Act (CEQA) Guidelines; and 2. Approve the Lease Agreement with Flight Line Caf�, LLC., a California Limited Liability Company (Lessee), at FCH inside the Administration/Terminal Building for a term of three (3) years, with the Ending Date of May 31, 2028. The minimum amount of potential revenue generated by this Lease is approximately $8,400 (in monthly land rent) per year, in addition to annual rent adjustments based on the Consumer Price Index (starting on June 1, 2026) with a maximum of 2%, and the implementation of percentage rent with a rate of eight and one-half percent (8.5%) fee, during Year 2 of this Lease, and ten percent (10%) fee, during Year 3 of this Lease, for its total monthly Gross Receipts (which refers to the total amount of monies earned by Lessee before deduction of any expenses, in its operations at FCH). The minimum total anticipated revenue during the life of this Lease is approximately $25,200, including annual Consumer Price Index rental adjustments with a maximum of 2%, plus eight and one-half percent (8.5%) fee, during Year 2, and ten percent (10%) fee, during Year 3, Lessee's monthly gross revenues from all its operations at FCH. (Council District 3) ..Body RECOMMENDATION Staff recommend the City Council (Council) adopt a finding of Categorical Exemption, pursuant to Section 15301/Class 1 (Existing Facilities), of the California Environmental Quality Act (CEQA) Guidelines, and authorize the City Manager, or designee, to execute this three (3) year Lease with Flight Line Caf�, LLC. (Brenda D. Dalforno, Manager, and Mark Dalforno, Manager), a California Limited Liability Company (Lessee), to continue operating the restaurant located inside the Administration/Terminal Building at FCH. The minimum amount of potential revenue generated by this Lease is approximately $8,400.00 annually. However, this Lease also contains provisions for the City of Fresno, Airports Department (Airports), to conduct annual Consumer Price Index rental adjustments with a maximum of 2%, starting June 1, 2026, and to collect an eight and one-half percent (8.5%) fee, during Year 2, and a ten percent (10%) fee, during Year 3, of Lessee's monthly gross revenues from all its operations at FCH. The total anticipated minimum revenue during the life of this Lease is approximately $25,200. EXECUTIVE SUMMARY Lessee is currently operating the restaurant inside FCH's Administration/Terminal Building as a month-to-month holdover. Lessee started operating at FCH on September 1, 2024, when Henry Wang, an individual, assigned his remaining interest to the restaurant (a lease agreement that was in its last year) to Lessee. The assignment, which was attested on August 29, 2024, expired on May 31, 2025. This proposed Lease would allow Lessee to continue operating at FCH, without any disruption to the restaurant, potentially through May 31, 2028. BACKGROUND Historically, FCH's restaurant facility, which is approximately 1,556 square feet including restaurant space (1,396 square feet) and basement storage space (160 square feet), serves as a staple to the Central Valley's aviation community. Prior to Lessee's current operation, which was through an assignment of lease, the restaurant was run by Henry Wang, an individual, from 2016 to August 31, 2024. During that time, the restaurant became an attractive destination for downtown Fresno businesses and pilots throughout the west coast. Since taking over FCH's restaurant facility, on September 1, 2024, Lessee has expanded its offerings (adding many Mexican dishes/flavors to the menu) and increased the restaurant's hours of operation from five days per week to seven days per week. Lessee's assignment expired on May 31, 2025, and Lessee is currently operating FCH's restaurant as a month-to-month holdover. Therefore, this proposed Lease, which is for a new term of three (3) years, would allow Lessee to continue operating at FCH, without there being any disruption to the restaurant, potentially through May 31, 2028. Under the previous three (3) year lease agreement, which was initially executed by Henry Wang, and later assigned to Lessee, the restaurant facility's monthly rental structure was $500.00 ($6,000.00 annually) during Year 1, $600.00 ($7,200.00 annually) during Year 2, and $700.00 ($8,400.00 annually) during Year 3. Moreover, the previous lease agreement did not include any annual rental adjustments based on the Consumer Price Index (CPI) and did not include any percentage rental fees, as FCH had not fully recovered from the pandemic and Airports did not want to impede Henry Wang from continuing to operate the restaurant without there being any potential disruption in food services to FCH's patrons, including transient pilots and neighborhood residents. Under this proposed Lease, Lessee's monthly rental structure would be $700.00 ($8,400.00 annually) and include annual CPI rental adjustments with a maximum of 2.00%, starting June 1, 2026. In addition, also starting June 1, 2026, Airports would start collecting the following monthly percentage rental fees from Lessee: during Year 2, an eight and one-half percent (8.5%) fee, and during Year 3, a ten percent (10%) fee of Lessee's monthly gross revenues from all its operations at FCH. As Lessee has expanded the restaurant's hours of operation to seven days a week, which required the hiring of full-time staff and upgrading the kitchen's antiquated equipment with modern, more efficient equipment, Airports is proposing to waive a percentage rental fee during Year 1 of this proposed lease to allow Lessee an opportunity to recoup some of the costs associated with expanding the restaurant's operations at FCH. The City Attorney has reviewed and approved this Lease as to form, and Risk Management has reviewed and approved all insurance requirements. ENVIRONMENTAL FINDINGS Staff has performed a preliminary environmental assessment of this Project and has determined that this Lease falls within the Categorical Exemption set forth in CEQA Guidelines Sections 15301/Class 1 (existing facilities) which exempt projects involving a negligible or no expansion of an existing facility. This exemption applies because this project involves the Lease and operation of an existing restaurant and there will be no alteration of the facilities, with no or negligible expansion of airport facility use. Staff determined under the CEQA Guidelines this project fits within the definition of existing facilities in Section 15301/Class 1 as Categorically Exempt from further CEQA review. Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to this project. LOCAL PREFERENCE Local preference is not applicable because this is not an award of product, services or construction agreement. FISCAL IMPACT The minimum total potential revenue during the life of this Lease will be approximately $25,200.00. 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: Lease Agreement Flight Line Caf�, LLC. Categorial Exemption