County updates three Fallbrook Community Airpark leases

Three tenants of Fallbrook Community Airpark were given updated leases following a March 26 vote of the San Diego County Board of Supervisors.

The supervisors approved a new 30-year lease with L18 Airpark Corporation, two new ten-year leases with McDaniel Brothers, LLC, and an amended and restated lease with a new 30-year term for Aircraft Hangar Management, LLC.

L18 Airpark Corporation leases 4.11 acres and provides space for general aviation business and aircraft storage. L18 Airpark Corporation has plans to convert an underutilized storage building into aircraft hangars.

The original 30-year lease with L18 Airpark Corporation was approved by the supervisors in February 2003. The original lease called for a renegotiation of the rental rate every five years, and a discussion of the lease led to the replacement of the existing lease with a new 30-year lease. “Because they wanted the additional time, we gave them an entire new lease,” said Lee Ann Lardy, the supervising real property agent for County Airports. “By giving them a new lease it gives them a whole new 30-year period.”

The new lease took effect on June 1, 2008, and will terminate on May 31, 2038. L18 Airpark Corporation will pay a base monthly rent of $1,562, or $380 per acre, which is a 10 percent increase over the amount from the previous lease. The base monthly rent is subject to annual cost of living adjustments based on changes in a Consumer Price Index specified in the lease, and as was the case with the original lease the rent will be renegotiated every five years.

L18 Airpark Corporation will also pay the county an equity payment of $61,691 as a result of postponing the lease expiration. Improvements built by the leaseholder become county property at the end of the lease period, so the equity payment covers the capital improvements built during the first five years of the lease and reimburses the county for postponing ownership of those improvements. The amount of equity payment was calculated based on the age and condition of the improvements and will be amortized over 15 years at monthly payments of $621.

The plans to convert the storage building into aircraft hangars call for L18 Airpark Corporation to spend at least $41,059 to upgrade the facilities and convert the mini-storage units into four aircraft storage hangars. The mini-storage units are not in demand, and since the Federal Aviation Administration requires that structures located on land designated for aviation use are used for aviation-related purposes the mini-storage units also require constant monitoring to ensure that non-aviation related items are not stored there.

Aircraft Hangar Management, LLC, which leases 5.9 acres at the airpark, was also operating under a lease originally approved in February 2003 and requested a new lease. “Both of them wanted to do some more developing,” Lardy said of L18 Airpark Corporation and Aircraft Hangar Management, LLC. “The two FBOs [fixed-base operators] are going to be doing some more improvements.”

Aircraft Hangar Management, LLC, which currently operates a fuel facility and provides space for aircraft storage and general aviation business, seeks to construct a new 2,000 square foot hangar. The capital investment will cost at least $52,468.

The fuel facility is located on 0.13 acres of land adjacent to the original leasehold, and Aircraft Hangar Management, LLC, had been utilizing the area for parking and for the fuel facility under an annually renewable airport use permit. The new lease adds that 0.13-acre area to the leasehold, eliminating the need to renew the annual permit.

The new Aircraft Hangar Management, LLC, lease began on March 1, 2008, and will end on February 28, 2038. The previous lease called for a rental adjustment on March 1, 2008, so the amended lease was made retroactive to that date. The base monthly rent of $380 per acre equates to $2,291, which is also a 10 percent increase over the previous lease, and is subject to annual cost of living adjustments and to renegotiation every five years. The new lease also involves an equity payment of $98,282, which will be amortized over 15 years at $989 per month. “It keeps them there another 30 years,” Lardy said.

The new leases with McDaniel Brothers, LLC, began on May 1, 2008, and will be effective through April 30, 2018. The initial leases took effect on May 1, 2000, and were scheduled to expire on April 30, 2010.

“It will replace the existing lease,” Lardy said. “Basically they’re getting two new ten-year leases.”

The two leases, both on non-aviation land, were originally executed with McDaniel Brothers Partnership and became effective on May 1, 2000. The southern leasehold totals 21.80 acres and the northern leasehold encompasses 19.74 acres. The leasehold was assigned to McDaniel Brothers, LLC, in February 2003 to reflect an official name change for the avocado company.

“It’s not good land for aviation development because of the slope,” Lardy said. “It’s a nice compatible use to have these avocado trees.”

While the lack of structures enables an airport buffer zone, the topping of the trees is necessary both for aviation safety and for grove worker safety. McDaniel Brothers was reluctant to pay for the extensive topping work without assurance of a new lease.

The uncertainty of the produce industry led to a shorter term than for the other two new leases approved that day. “That’s all he wanted to commit to right now,” Lardy said of the ten-year lease period.

“He was happy with ten years, so that’s what we worked out,” Lardy said. “We try to work with what works best for the businesses. We want the businesses to be successful.”

Although the southern leasehold will remain at 21.80 acres, the northern lease area was reduced from 18.57 acres to 17.34 acres. The land removed from the leasehold will be cleared of trees to enhance the safety of landing aircraft.

The minimum base rent for the McDaniel Brothers lease areas increases from $251 per acre to $285 per acre. The leases also include a percentage rent based on 15 percent of net sales, and both leases are subject to annual cost of living adjustments.

The Fallbrook Airpark Advisory Committee had unanimously recommended the new leases for all three of the tenants.

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