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Agenda Item
ASR
Control 25-000459 |
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MEETING
DATE: |
06/24/25 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
5 |
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SUBMITTING Agency/Department: |
John
Wayne Airport (Approved) |
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Department contact person(s): |
Charlene
V. Reynolds (949) 252-5183 |
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Evanna
Barbic (949) 252-5232 |
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Subject: Approve Bond Financing and Related
Documents for Clay Lacy Aviation, Inc.
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Agreement(s) and Resolution(s) |
Public
Hearing |
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3
Votes Board Majority |
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Budgeted: N/A |
Current Year
Cost: N/A |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: No |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 3/8/2022 #21, 1/12/2021 #S42B,
9/15/2020 #S21A, 8/11/2020 #11 |
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RECOMMENDED
ACTION(S):
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1. |
Open the public hearing and receive
public comments pursuant to Section 147(f) of the Internal Revenue Code of
1986, as amended, regarding the proposed issuance of California Municipal
Finance Authority revenue obligations for the purpose of financing the cost
of the acquisition, construction, renovation, equipping and furnishing of
certain Fixed Base Operation Aviation Facilities, not to exceed $120,000,000,
for the benefit of Clay Lacy Aviation, Inc. |
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2. |
Close the public hearing. |
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3. |
Adopt a Resolution approving the
issuance of California Municipal Finance Authority to issue revenue
obligations for the purpose of financing the cost of the acquisition,
construction, renovation, equipping and furnishing of certain Fixed Base
Operation Aviation Facilities, not to exceed $120,000,000, for the benefit of
Clay Lacy Aviation, Inc. |
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4. |
Approve and execute Third Amendment to
the Northwest Full-Service Fixed Base Operation Lease with Clay Lacy
Aviation, Inc. to facilitate the financing of the improvement project
effective upon Board of Supervisors approval, through December 31, 2055. |
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5. |
Approve and execute the Consent to
Assignment of Interest in Lease from Clay Lacy Aviation, Inc. to Clay Lacy
Santa Ana, LLC. |
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6. |
Approve and execute the Guaranty of
Lease Obligations by Clay Lacy Aviation, Inc. in favor of the County of
Orange. |
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7. |
Approve and execute the Indemnification
Agreement by Clay Lacy Aviation, Inc. in favor of the County of Orange. |
SUMMARY:
Adoption of the Resolution and
approval of the Third Amendment and associated documents to the Northwest
Full-Service Fixed Base Operation Lease will allow Clay Lacy Aviation, Inc. to
facilitate the financing of its improvement project through the issuance of
revenue obligations.
BACKGROUND
INFORMATION:
On June 25, 2019, the Board of
Supervisors (Board) certified Final Program Environmental Impact Report 627
(EIR 627), along with the associated CEQA Findings of Fact, Mitigation
Monitoring and Reporting Program and Statement of Overriding Considerations.
The Board also approved the Proposed Project, including specific land use
requirements.
Subsequently, on September 10,
2019, the Board authorized the issuance of a Request for Proposal (RFP) and
model leases for Fixed Base Operators (FBO) for the following parcels: (1)
Northeast Full-Service FBO, (2) Northwest Full-Service FBO, and (3) Southwest
Limited-Service FBO. A total of nine proposals were received on December 19,
2019.
Selection
and Award of Full- and Limited-Service FBOs
On August 11, 2020, the Board
reviewed the submitted proposals and selected three FBOs for lease
negotiations: Clay Lacy Aviation, Inc. (Clay Lacy) for the Northwest
Full-Service FBO; Aviation Consultants, Inc., doing business as ACI Jet (ACI
Jet), for the Northeast Full-Service FBO; and Jay’s Aircraft Maintenance, Inc.
for the Southwest Limited-Service FBO.
On September 15, 2020, the Board
awarded leases to Clay Lacy and ACI Jet for their respective Full-Service FBOs.
Both leases commenced on January 1, 2021, with 35-year terms ending on December
31, 2055. On November 3, 2020, the Board awarded the Limited-Service FBO lease
to Jay’s Aircraft Maintenance, Inc.
First
Amendment to Lease
On January 12, 2021, the Board
directed the Airport Director to amend and execute revised leases with ACI Jet,
Clay Lacy, and Jay’s Aircraft Maintenance, Inc., removing the following
provision: “LESSEE shall not permit the
operation of a Regularly Scheduled Commercial User as defined in section 2.40
of John Wayne Airport’s Phase 2 Commercial Airline Access Plan and Regulation,
as may be amended from time to time.”
The First Amendment to each FBO
lease was subsequently executed.
Second
Amendment to Lease
On March 8, 2022, the Board
approved the Second Amendment to Clay Lacy’s lease, allowing modifications to
its site plans and corresponding conceptual plans. The revised site plan
included reconfiguring space allocated to the Orange County Sheriff’s Department
(OCSD), designating it as a shared space within a new community hangar.
Financing of the
Improvement Project by the California Municipal Finance Authority
Adoption of the Resolution and
approval of the Third Amendment to the Lease (Lease) will allow Clay Lacy to
finance its improvement project through the issuance of revenue obligations
(Obligations) by the California Municipal Finance Authority (Authority), in an
aggregate principal amount not to exceed $120,000,000. The proceeds of which
will be loaned to Clay Lacy and will be utilized for the following purposes:
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1. |
The acquisition,
construction, reconstruction, installation, and equipping of certain portions
of FBO aviation facilities at John Wayne Airport (JWA), including: |
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· A customer
terminal building (approximately 6,500 square feet), |
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· Four hangars,
including associated office space (approximately 123,000 square feet of
hangar space and approximately 27,000 square feet of office space), and |
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· Additional
hangar, office, and ramp space to be located at JWA |
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2. |
Payment of
capitalized interest on the Obligations; |
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3. |
Funding of one
or more reserve funds for the Obligations; and |
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4. |
Payment of
certain issuance costs in connection with the Obligations. |
The County of Orange (County) will
be the owner of the improvement project, which will be leased and operated by
Clay Lacy.
Clay Lacy has requested that the
Authority issue one or more series of tax-exempt revenue obligations, and loan
the proceeds to support its FBO aviation improvement project. The
Authority has extensive experience issuing billions of dollars in bonds on
behalf of public, private, and nonprofit entities throughout California.
Since the Clay Lacy improvement
project will be located within the geographical jurisdiction of the County,
Section 147(f) of the Internal Revenue Code requires the Board to hold a public
hearing and approve both the Clay Lacy Project and the issuance of the revenue
obligations.
Third
Amendment to Lease
The Third Amendment will revise
Lease Section 3.01, Leased Premises, by including language stating that upon
the full and final completion of the improvement project by Clay Lacy, the
County will assume ownership of the improvements constituting the facilities.
The facilities will continue to be leased to and operated by Clay Lacy.
Assignment,
Guaranty, and Indemnification
Section
8.01 of the Lease requires the County’s written consent to a transfer of Clay
Lacy’s interest in the Lease. Clay Lacy seeks Board approval to assign and
transfer to Clay Lacy Santa Ana, LLC (Assignee) all its rights, title and
interest in the lease. The assignment does not relieve Clay Lacy of its Lease
obligations. The assignment does not relieve Clay Lacy of any interest,
responsibility, or liability in or under the terms of the Lease. Both Clay Lacy
and Assignee will be fully responsible for complying with all provisions of the
Lease and will both be directly liable for all obligations under the
Lease.
In addition, Clay
Lacy shall execute a Guaranty of Lease Obligations in favor of the County,
which shall guaranty the full and faithful performance of all terms and
provisions of the Lease.
In addition to the indemnification
language in Section 11.02 of the Lease, Clay Lacy will also execute and enter
into an Indemnification Agreement, which will provide additional protection in
favor of the County.
Compliance
with CEQA: This
project is a necessarily included element of the project considered in Final
EIR No. 627, certified by the Board on June 25, 2019, and Addendum No.
PP-22-0001 for Amendment No. 1 to EIR No. 627, adopted by the Board on March 8,
2022, which adequately addressed the effects of this action. These documents
adequately addressed the effects of the proposed project. No subsequent changes
have been made to the project; no substantial changes have occurred in the
circumstances under which the project is being undertaken; and no new
information of substantial importance to the project that was not known, could
not have been known, or have become known when EIR No. 627, Amendment No. 1 to
EIR No. 627, and the Mitigation Monitoring and Reporting Program were certified
and adopted; therefore, no further environmental review is required.
FINANCIAL
IMPACT:
There is no financial impact or
liability to the County of Orange. Clay Lacy shall reimburse Fund 280 in an
aggregate amount of $210,000 for all costs incurred in connection with the
processing of any associated documents, including but not limited to, all
County’s staff time and attorney fees incurred in connection with this Lease,
and any associated assignments, guaranties, resolutions, and public hearing
notices.
STAFFING
IMPACT:
N/A
ATTACHMENT(S):
Attachment
A – Resolution - Approving Revenue Obligations
Attachment B – Internal Revenue Code Section 147
Attachment C – Third Amendment to Northwest Full-Service FBO Lease with Clay
Lacy Aviation, Inc.
Attachment D – Consent to Assignment of Interest in Lease
Attachment E – Guaranty of Lease Obligations
Attachment F – Indemnification Agreement