Okaloosa County BOCC — March 3, 2015 — Proposed Settlement Agreement with mitigation terms for Destin Jet to — agenda request

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: March 3, 2015 TO: Honorable Chairman and Members of the Board FROM: Sunil Harman SUBJECT: Proposed Settlement Agreement with mitigation terms for Destin Jet to operate both FBO locations DEPARTMENT: Airport BCC DISTRICT: All STATEMENT OF ISSUE: The Board is requested to approve proposed amendments to the current lease agreements with the two FBOs, Destin Jet and Regal Air Destin, to allow Destin Jet to assume the Regal Air Destin lease as amended and operate both FBO locations under the Destin Jet brand at DTS. The Department of Airports staff and the County Attorney negotiated the lease amendments as a settlement with the FBO operators to resolve ongoing lease compliance issues and declining airport revenues. The amendments were negotiated with terms in exchange for assurance that the current Regal Air Destin purpose built FBO terminal and leasehold will continue to be operated for that use only, an increase in fuel flowage fees paid to the County and accelerated repayment of Regal Air Destin's debt. BACKGROUND: Over the last year, concerns have been raised regarding the viability of sustaining two FBOs at the Destin Airport due to declining fuel sales due to downturn in general aviation activity; resultant losses of airport revenues and compliance with existing lease agreements. The following is a summary of the negotiated settlement proposal: County agrees to authorize Destin Jet and Regal Air to operate under common ownership and brand with the following conditions: a. Destin Jet and Regal Air agree to increase its fuel flowage to $.075 cents per gallon from $0.05 and $0.06 per gallon respectively. b. Regal Air agrees to pay $50,000 towards the balance owed to the County for the assumption of Miracle Strip Aviation’s past due lease payments and the remaining balance over a 24 month period, rather than a sixty (60) month period as originally agreed to by Regal Capital, LLC. c. Regal Air agrees to remove all “Regal Air” signage and operate the two FBO locations as a single brand, Destin Jet. d. County agrees to extend the Destin Jet lease from February 24, 2044 to April 14, 2049. The language in the lease allowed for a 20 year lease and a 20 year extension which was to begin from the Date of Beneficial Occupancy which was April 15, 2009 and ending April 14, 2049. The lease effective date is February  26, 2004 and expires on February 26, 2044. This will correct an error in the original agreement. To enable and adopt the negotiated settlement terms the Board is being presented with the following lease amendments for approval: 1) EXHIBIT A - Amendment Number 4 to Lease Agreement L04-0233-AP20-93 with Destin Jet, LLC, for Fixed Base Operator Destin/Ft. Walton Beach (DTS) 2) EXHIBIT B - First Amendment to amended and restated lease agreement L97- 101-AP with Regal Air Destin for Fixed Base Operator Destin/Ft. Walton Beach (DTS). OPTIONS: Approve, reject or table. RECOMMENDATIONS: Staff recommends that the Board approve the negotiated settlement agreement by approving and authorizing the Chairman to execute the lease amendments as provided. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator