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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 05/03/2022 - SECOND READING OF ORDINANCE NO. 050, 2022, APPROVI Agenda Item 9 Item # 9 Page 1 AGENDA ITEM SUMMARY May 3, 2022 Airport STAFF Jason Licon, Airport Director Josh Birks, Economic Health Director Judy Schmidt, Legal SUBJECT Second Reading of Ordinance No. 050, 2022, Approving an Estoppel Certificate that Modifi es an Existing Lease Between the Cities of Fort Collins and Loveland and Discovery Air, LLC, for Property Located at the Northern Colorado Regional Airport. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on April 19, 2022, requests approval of an estoppel certificate requested by Discovery Air LLC (“Discovery Air”) with respect to a fifty -year ground lease of Airport property (the “Lease”) previously approved by Council. The requested Estoppel Certificate contains provisions that effectively modify the Lease and therefore requires Council approval. An estoppel certificate is a legally-binding signed statement certifying for another's benefit – in this case Discovery Air’s lender - certain facts regarding the Lease as accurate and it will be enforced to “estop” (or prevent) the Cities from asserting a different state of facts. An estoppel certificate is customarily provided under long-term leases, is necessary to obtain financing and is called for by the Discovery Air Lease. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. ATTACHMENTS 1. First Reading Agenda Item Summary, April 19, 2022 (w/o attachments) (PDF) 2. Ordinance No. 050, 2022 (PDF) Agenda Item 17 Item # 17 Page 1 AGENDA ITEM SUMMARY April 19, 2022 Airport STAFF Jason Licon, Airport Director Josh Birks, Economic Health Director Judy Schmidt, Legal SUBJECT First Reading of Ordinance No. 050, 2022, Approving an Estoppel Certificate that Modifies an Existing Lease Between the Cities of Fort Collins and Loveland and Discovery Air, LLC, for Property Located at the Northern Colorado Regional Airport. EXECUTIVE SUMMARY This ordinance requests approval of an estoppel certificate requested by Discovery Air LLC (“Discovery Air”) with respect to a fifty-year ground lease of Airport property (the “Lease”) previously approved by Council. The requested Estoppel Certificate contains provisions that effectively modify the Lease and therefore requires Council approval. An estoppel certificate is a legally-binding signed statement certifying for another's benefit – in this case Discovery Air’s lender - certain facts regarding the Lease as accurate and it will be enforced to “estop” (or prevent) the Cities from asserting a different state of facts. An estoppel certificate is customarily provided under long-term leases, is necessary to obtain financing and is called for by the Discovery Air Lease. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The Northern Colorado Regional Airport is a jointly owned and operated public facility shared by the Cities of Fort Collins and Loveland. In 2015 the Cities entered into an intergovernmental agreement (IGA) under which they own and operate the Northern Colorado Regional Airport (“Airport”) as a joint venture and created the Northern Colorado Regional Airport Commission (“Commission”) to exercise certain powers and authority to operate and maintain the Airport. The Airport Commission on behalf of the Cities traditionally grants long-term land leases to private sector investors or builders to construct aviation support facilities. This is a standard procedure for all publicly owned airports and is in accordance with FAA regulatory standards. The IGA sets forth the parameters of the Commission’s delegated authority to enter Airport leases on behalf of the Cities. Where such parameters are not met, however, leases may require approval by both Councils. By adoption of Ordinances No. 148, 2018 and 163, 2020, Council approved a long-term (fifty year) ground lease and first amendment thereto (the "Lease") with Discovery Air, LLC ("Discovery Air") for Airport land on which it is constructing a “fixed base operator” (“FBO”) development (the “Project”). The Lease required approval by the Councils of both Fort Collins and Loveland because of the length of the term (including an extended 50-year term and potential extension of an additional fifty years upon expiration of the initial term) and a reduced lease rate to compensate for the developer’s investment in shared airport infrastructure. ATTACHMENT 1 COPY Agenda Item 17 Item # 17 Page 2 Discovery Air has completed the first phase of the Project and its lender has requested a non-standard estoppel certificate (the “Lender Estoppel Certificate”) that effectively modifies the certain terms and conditions of the Lease by obligating the Cities to enter into a new lease agreement with the lender or its designee if the Lease is terminated due to a Discovery Air default. This new lease would be on the same terms and conditions and for the remaining term, so long as:  There is no continuing default under the Lease and no violation of applicable Federal Aviation Administration (FAA) rules, regulations, or grant assurances; and  The Cities determine, in their reasonable business judgment, that lender or its designee has the financial and operational experience and capacity to conduct the FBO Services (as defined in the lease) required under the lease, as determined by the ground lessor in their reasonable business judgment. (The lender is required to provide information documenting the experience, operational and financial capacity of the proposed lessee with any request for execution of a new lease under this paragraph.) PUBLIC OUTREACH The Lease and the Project are in line with the adopted and approved Airport Master Plan, of which considerable outreach and public input is included, as are numerous public hearings including adoption by both Councils. It additionally conforms with the Airport’s adopted Strategic Plan, which involved considerable outreach and public involvement. ATTACHMENTS 1. Northern Colorado Regional Airport Commission Resolution R-10-2020 (PDF) 2. First Amendment to Ground Lease Agreement (PDF) 3. Discovery Air LLC Original Ground Lease Agreement (PDF) COPY -1- ORDINANCE NO. 050, 2022 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING AN ESTOPPEL CERTIFICATE THAT MODIFIES AN EXISTING LEASE BETWEEN THE CITIES OF FORT COLLINS AND LOVELAND AND DISCOVERY AIR, LLC, FOR PROPERTY LOCATED AT THE NORTHERN COLORADO REGIONAL AIRPORT WHEREAS, the Cities of Loveland and Fort Collins (collectively the “Cities” and “Loveland” or “Fort Collins” individually) jointly own and operate the public airport known as the Northern Colorado Regional Airport (the “Airport”); and WHEREAS, by adoption of Ordinance No. 148, 2018, City Council approved a long-term (fifty year) ground lease (the “Lease”) with Discovery Air, LLC (“Discovery Air”) for Airport land on which it is constructing a “fixed base operator” (“FBO”) development (the “Project”); and WHEREAS, Discovery Air has arranged financing related for the Project and has requested that the Cities sign an estoppel certificate in the form attached hereto as Exhibit “A” (the “Lender Estoppel Certificate”), giving certain assurances to the Developer’s lender with respect to the Lease; and WHEREAS, while the Lease provides that the Cities will execute a general estoppel certificate, the Lender Estoppel Certificate effectively modifies certain terms of the Lease as previously approved by the Council and the Cities’ rights under the Lease; and WHEREAS, more specifically the Lender’s Estoppel Certificate modifies the remedies available to the Lender if the Lease is terminated due to default by Discovery Air by obligating the Cities to enter into a new lease with the Lender or its designee for the then-remaining term of the Lease on the same terms and conditions so long as there is no violation of Federal Aviation Administration (FAA) rules, regulations or grant assurances and the Cities determine, in their reasonable business judgment, that the Lender or its designee has the financial and operational experience and capacity to conduct the FBO service required by the Lease (the “New Lease Remedy”); and WHEREAS, Airport staff has reviewed the New Lease Remedy with FAA representatives and has received no objection to it as inconsistent with the required FAA Grant Assurances; and WHEREAS, City Council desires to approve the Lender’s Estoppel Certificate, including the New Lease Remedy that effectively modifies the Lease previously approved by Council; and WHEREAS, City Council finds that approval of the Lender’s Estoppel Certificate is in the best interests of the Airport, the City and its residents and serves the public purpose of furthering economic development of the Airport. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: -2- Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council approves the Lender’s Estoppel Certificate in the form attached hereto as Exhibit “A” and incorporated herein by this reference. Section 3. That the City Council hereby authorizes the City Manager to execute the Lender’s Estoppel Certificate on behalf of the City and, after consultation with the City Attorney, to further modify the Lender’s Estoppel Certificate in form or substances as necessary to fulfill the purposes of this Ordinance and protect the best interest of the City. Introduced, considered favorably on first reading, and ordered published this 19th day of April, A.D. 2022, and to be presented for final passage on the 3rd day of May, A.D. 2022. ____________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on this 3rd day of May, A.D. 2022. ____________________________________ Mayor ATTEST: _____________________________ City Clerk EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A EXHIBIT A