Okaloosa County BOCC — March 15, 2016 — Agreement and Hangar Assignment of Lease Clennan to KRS — agenda request

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: March 15, 2016 TO: Honorable Chairman and Members of the Board FROM: Tracy Stage SUBJECT: Agreement and Hangar Assignment of Lease Clennan to KRS DEPARTMENT: Airport BCC DISTRICT: 5 STATEMENT OF ISSUE: The Department of Airports requests the Board of County Commissioners (Board) approve the proposed Agreement and Assignment of Lease from Clennan Family Foundation, Mr. Roy Clennan, Block 4 Lot 2, to KRS Express, Inc., Mr. Kim Smith at the Destin Executive Airport. BACKGROUND: The Clennan Family Foundation, Mr. Roy Clennan, entered into a lease agreement for hangar space, Block 4 Lot 2, at the Destin Executive Airport on August 9,2012, and is requesting approval to assign his existing hangar lease to KRS Express, Inc., Mr. Kim Smith. An Assignment of Lease was prepared in accordance with the Lease for Hangar Space Renewal dated July 19, 2006. The internal coordination of this Assignment of Lease has been completed and approved. Assignment of Lease documents were sent to Mr. Clennan for signature on June 9, 2015 and executed by Mr. Clennan on December 28, 2015. The Assignment of Lease documents were sent to Mr. Smith; however, Mr. Smith refused to sign the documents. Mr. Smith did not agree with the March 3, 2015 ground lease fee (current appraisal rate of $2.75 per square foot) and hired the law firm, Matthews and Jones, LLP. Mr. Matthews made a public records request and reviewed all hangar leases and appraisals. Mr. Matthews also obtained his own independent appraisal. The County Attorney and Airport Staff have worked with Mr. Matthews and Mr. Kim Smith to reach the following agreement: Mr. Smith would accept the Assignment of Lease for Mr. Clennan's existing lease rate of $1.57 per square foot. The Airport will obtain an independent appraisal for the fair market value for the hangars leaseholds prior to May 15, 2016 and provide a copy to Mr. Smith and his attorney, Mr. Matthews. No sooner than forty five (45) days after the County provides the appraisal to Mr. Smith, the County will submit the appraisal to the Board of County Commissioners to be considered at a Public Meeting. Mr. Smith and other interested parties may submit relevant information to the Board for its consideration. If the appraisal is approved by the Board, the ground lease rate will be adjusted and amended within sixty (60) days to reflect the new ground lease rate. The County agrees to all stipulations in the Assignment of Lease. The hangar lease transfer fee, KRS Express certificates of insurance, and signed lease documents have been received and are attached. OPTIONS: Approve, Reject or Table. RECOMMENDATIONS: Staff recommends the Board approve the Assignment of Lease as stated above and approve staff to obtain an independent appraisal and return to the Board for review and consideration of the fair market value for ground lease rates at the Destin Executive Airport and the Bob Sikes Airport. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator