Subject: EIGHTH AMENDMENT TO LEASE – WILLIAMS
SCOTSMAN
Council District: City-Wide
Approval of an Eighth Amendment to the Federal Inspection Services Facility Lease Agreement with Williams Scotsman to extend the lease term from February 1, 2002, through July 31, 2002, at a total annual cost not to exceed $82,740, and authorizing the City Manager to exercise the right to hold over on a month-to-month basis with no increase in rent or change in terms, at the sole discretion of City.
Background
On October 3, 1989, the City Council approved a lease agreement with Scotsman Group for the modular building to serve as a temporary Federal Inspections Services (FIS) Facility at Norman Y. Mineta San Jose International Airport. Seven (7) amendments to this lease have been approved by Council in order to extend the term, increase the total payments, approve change orders for the facility, and for the purchase of equipment. The latest amendment provides for at term that expires January 31, 2002, and requires City Council approval to extend the term.
Analysis
The lease agreement with the Scotsman Group for a 23,000 square foot temporary FIS Facility was required due to the startup of direct international airline service to Mexico and the subsequent startup of direct service to Tokyo. Currently four Airlines use the services at this facility; American Airlines, Mexicana, Air Canada and Alaska. It was anticipated that the initial two (2) year lease term would be sufficient until a new FIS Facility could be constructed. However, due to various delays, a new FIS Facility has not yet been completed. The new interim FIS Facility is currently under construction and is scheduled to be completed by midyear 2002. Therefore, it is recommended that the lease of the temporary FIS Facility be extended, pending completion of the new interim FIS Facility.
Williams-Scotsman has agreed to a lease extension for six (6) months at the current monthly rent of $14,893 (including applicable taxes). The proposed amendment further provides that the City, in its sole discretion, may hold over on a month-to-month basis, by providing written notice from the City Manager at least 30 days prior to the scheduled July 31, 2002 expiration date, at no increase in monthly rent.
Not applicable.
This item has been coordinated with the City Attorney’s Office and Risk Management.
FY 2001-2002 (2/02 - 6/02) $74,466 including tax
FY 2002-2003 (7/01-7/31/01) $14,893 including tax
If month-to-month option is exercised $14,893 per month
FUND: Airport Renewal and Replacement Fund --527
AMOUNT: $326,000
BUDGET DOCUMENT: Adopted Capital Budget, Page 22, Item 7
2000-2001 Proposed Capital Budget, Page 61 Item 52
(As Adopted by Council on June 19, 2001, Ordinance No.
26415)
RALPH G. TONSETH
Director of Aviation
Airport Department