HomeMy WebLinkAbout2008-11-24 09-016 ORDERCOUNCIL ACTION
Item No. 09 01 6
Date: November 24, 2008
Item/Subject: ORDER, Authorizing the Airport to Enter into a Lease Amendment with the Sargent
Corporation for its Lease for building #457 at Bangor International Airport.
Responsible Department: Airport
Commentary:
In 2006, the Airport entered into a hangar lease with SCT Corporation, d/b/a Sargent Corporation. The
lease is for a five (5) year term with a 5% rental increase each year for the lease of Building # 457.
The Sargent Corporation requested the Airport make improvements to this facility in return for a two
year lease extension. The improvements include installing a new passenger entry door and upgraded
security cipher lock system, a new office window, installing a bi-fold hangar door, upgrading the
overhead door motor and insulating the hangar. The initial estimated cost of these improvements was
$194,250. Since this estimate was prepared, bids have been received for insulating the hangar and the
actual cost will be below the estimate. The current estimate is $137,250. Should SCT Corporation opt
out of the lease prior to its final year, they would be responsible for reimbursing the airport for 50% of
the actual costs for the improvements.
By making these improvements, the Airport will be able to retain this tenant. In addition, these
improvements will add to the value of this hangar and are very similar to improvements the Airport is
making in its other facilities as part of our energy conservation measures. Given the new cost estimate,
this project has a payback period of 3.4 years. A payback analysis is attached.
Rebecca Hupp
Department Head
Manager's Comments:
This has been reviewed and is recommended by the Transportation and Infras ucture Committee.
City Manager
Associated Information: Payback analysis.
Budget Approval:
Finance Director
Legal Approval:
Solicitor
Introduced for
X Passage
First Reading
Referral
Assigned to Councilor Blanchette November 24, 2008
CITY OF BANGOR
(TITLE.) ORDER, Authorizing the Airport to Enter into a Lease Amendment with the Sargent
Corporation for its lease for building #457 at Bangor International Airport.
WHEREAS, The Sargent Corporation currently leases Building #457 at Bangor
International Airport; and
WHEREAS, both parties desire to amend the lease by extending it for an additional
two years in exchange for capital improvements to the facility; and
WHEREAS, the improvements are similar in nature to improvements being made to
other airport facilities to improve energy efficiency and Will add value to
the hangar's infrastructure; and
s7
WHEREAS, the Sargent Corporation would be responsible for payment of 50% of the
actual costs for the improvements in the event of early lease termination;
NOW, THEREFORE, BE IT ORDERED BY THE CITY COUNCIL OF THE CITY OF
BANGOR that
the Airport is authorized to enter into a lease amenment with Sargent Corporation in a
form acceptable to the City Solicitor or the Assistant City Solicitor.
IN CITY COUNCIL
November 24, 2008
Notion Made and Seconded
for Passage
P�s�sed. /-, "
\J -w
DEPUTY CITY cLERik
# 09-016
(TITLE,) Authorizing the Airport to Enter
YintoaLease Agreement withthe Sargent
Corporation fo its lease for building
14-57 at Bangor international Airport
Assigned to Councilor VLJA
Bangor International Airport
Building 457 Upgrade
Payback Analysis
Improvement Items:
New Passenger Ent $2,000
Upgraded Security Cipher Lock System $750
New Office Window $500
---- ------- -------- _
Overhead Door Motor 'Completed'
Bi -Fold Hangar Door $70,000
Insulating the Hangar $64,000
0 1 2 3 4 5 6 7
Total IWi ftiInvestment l n Building Up9_ra_
Normal Maintenance Items
'Capital Item
Lease � ExtensionReduced Maintenance
Reduced Electrical Costs
Avo�idedFuel Costs
"-'---'--"-
Other Benefits
[Other Benefits]
Total Benefits
Cumulative Benefits
$20,520$21,552
_07-50
$22,632
$23,760
$24,948
$24,948
$24,948
___V0
W__
-
__f2_,_6_06_
$0
$0
$0
$0
$0
$0
$0
$17,500
$17,500
$17,500
$17,500
$17,600
$17,500
$17,500
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$38,020
$39,802
$42,132
$41,760
$42,448
$42,448
$42,448
$38,020
$77,822
$119,954
$161,714
$204,162
$246,610
$289,058
'Additional d6iii (Excluding Init-lail Capital _1nve9ime!_jt_s_)
'Maintenance
Depreciation on capital expenditures (uses 20 yr perioq_
$6,700
$6,700
$6,700
$6,700
$6,700
$6,700
$6,700
[bih-e r- Costs]
[Other Costs]
. . . ....... Total Costs
$6,700
$6,700
$6,700
$6,700
$6,700
$6,700
$6,700
Net Benefits Costs
$31,320
$33,102
$35,432
$35,060
$35,748
$35,748
$35,748
Depreciation added back
6,700
6,700
6,700
6,700
6,700
6,700
6,700
j
Cashfl
TT10W_ _
___($137,250) 38,020
$39,802
$42,132
$0,760
$42,448
$42,448
$42 ,448
Cumulative cash flow
($137,250) 2_30)
$59,428)
($17,296)
$24,464
$66,912
$109,360
$151,808
. . .... . .... . .........
........._....d.
. ... .. ..... .. ......
... ... ....
---- - --
nternal rate of return
-6.3%
6.8%
14.6%
19.4%
22.5%
Internal rate of return (IRR forar 14.6%
_
�ba .41
Year of > 6% IRR 4
11/1912006
2:39 PM