Subject: Approval of Major Amendment
to the Airport Master Plan for Mineta San Jose International Airport to
Redesignate a Vacant West Side Parcel from Air Carrier to General Aviation Use
and 6th Amendment to Ground Lease with San Jose Jet Center to Expand
Leasehold
COUNCIL DISTRICT: City-Wide
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Adoption of a resolution approving a Major Amendment to the Airport Master Plan for the Norman Y. Mineta San Jose International Airport to redesignate a vacant west side parcel from Air Carrier to General Aviation use. |
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Approval of a 6th Amendment to the Ground Lease with San Jose Jet Center to expand its leasehold, extend the term from June 30, 2035 to 35 years from the possession date of the additional premises, with one 10-year option to extend, with the first year’s interim construction rent on the additional premises commencing at notice to proceed, in the amount of $100,419.74, and full rent on the additional premises commencing when the City has issued an Occupancy Permit at an annual rate of $401,678.97 subject to annual Consumer Price Index increases, and subject to increase by appraisal every five (5) years during the term of the lease. |
The current Airport Master Plan, adopted by the City Council in June 1997, consists of a phased program of facility improvements intended to adequately accommodate projected commercial airline demand by the year 2010. An existing 7-acre vacant site on the west side of the Airport, bounded by the existing San Jose Jet Center (SJJC) general aviation leasehold, the airfield, the FAA Air Traffic Control Tower, and the Airport property line, is currently designated in the Airport Master Plan for development as “Air Carrier Facilities/Employee Parking Garage”. At the request of SJJC, which desires to expand its leasehold onto the subject parcel to accommodate additional corporate aviation activity, the Airport proposes to change the intended use of this site to “General Aviation” (which is defined under federal regulations as aviation other than air carrier or military). The Airport also proposes to delete the employee parking garage project from the Master Plan development program, and instead designate the existing Terminal A Garage as the primary location for future employee parking upon completion of the planned new central terminal and public parking garages.
The San Jose Municipal Code (Chapter 25.02, Part 3) sets forth criteria and procedures for formally amending the adopted 1997 Airport Master Plan. To date, eight (8) “minor” amendments have been approved. The subject proposed action would be the first “major” amendment, as it would potentially increase the projected number of aircraft operations (total takeoffs and landings) beyond the levels identified in the current Airport Master Plan.
The SJJC leasehold at 1250 Aviation Avenue currently comprises Airport parcels W-10, W-11, and W-12 (approximately 15 acres total). SJJC has been operating as a general aviation Fixed Base Operator (FBO) pursuant to its ground lease since 1986. The ground lease term currently runs through June 30, 2035.
The adopted Airport Master Plan development program includes approximately 70 improvement projects. The proposed Major Amendment consists of two specific changes to the program:
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Add new “Project G-8”: Construct general aviation facilities accommodating up to 40 based aircraft on 7-acre parcel between the existing San Jose Jet Center leasehold and the FAA Air Traffic Control Tower leasehold. |
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Revise “Project T-7” (Construct 2,600-space employee parking garage on west side adjacent to the Air Traffic Control Tower) to Relocate employee parking to existing Terminal A Garage upon completion of new Short Term Public Parking Garage (“Project T-4”). |
The proposed Airport land use changes are indicated on the attached exhibit and further discussed below.
The Airport Master Plan calls for a phased reduction in general aviation activity and facilities in order to implement airfield facility improvements, to preserve adequate airfield capacity to serve the projected increase in commercial aviation demand, and to provide additional landside acreage for commercial aviation-related facilities. By the year 2010, all general aviation facilities are planned to be located exclusively on the southwest side of the Airport, from the north end of the existing SJJC leasehold on the north to Airport Boulevard on the south. Planned improvements to the west side general aviation area would include conversion of non-aviation land uses to general aviation use and a reconfiguration of the layout of facilities and FBO leaseholds to accommodate up to an estimated 320 based aircraft and 115,000 annual general aviation operations.
While general aviation has been declining both locally and nationally in terms of total activity, the corporate aviation segment of general aviation, characterized by relatively larger and higher performance aircraft used for business travel, has been increasing. Corporate aviation typically utilizes FBO services such as enclosed aircraft storage, transient parking aprons, and fueling. SJJC, the largest FBO at the Airport, has expressed an interest in adding the 7-acre vacant site immediately adjacent to its existing 15-acre leasehold for the purpose of expanding its facilities to serve additional corporate aviation demand that is currently or potentially unaccommodated locally.
The subject site is the last remaining undeveloped parcel on the west side of the Airport. Landside access is available from the terminus of Aviation Avenue on the south end and from the Brokaw Road/Martin Avenue intersection on the north end. There is no physical barrier separating the south edge of the parcel from the existing developed improvements of SJJC, while the entire north edge of the parcel is fenced off from the adjacent FAA Air Traffic Control Tower leasehold and the Airport’s airfield lighting “regulator vault” structure. The Airport’s assessment is that the site could accommodate up to a maximum of 40 based corporate aircraft, in turn potentially generating approximately 14,000 additional aircraft operations per year at SJC. In 2002, aircraft operations at SJC totaled 207,500, of which 65,800 were by general aviation (including non-air carrier charters). The existing Airport Master Plan forecasts a total of approximately 316,000 aircraft operations by the year 2010, of which 115,000 would be general aviation (including non-air carrier charters).
In recognition of SJJC’s expansion interest, and given the Airport’s assessment that alternative and more suitable locations for a future employee parking structure exist on the east side of the Airport (as discussed below), the Airport proposes to amend the Airport Master Plan to redesignate the subject parcel for general aviation use. Upon City approval of the Master Plan amendment, the City could amend its lease with the SJJC to allow SJJC to develop and operate the site.
The Airport Master Plan identifies a demand for 2,600 Airport employee parking spaces. Most of this demand is associated with airline and other passenger terminal services. At present, employee parking is provided in a surface parking lot on the northwest side of the Airport (approximately 1,100 spaces) serviced by shuttle buses, plus a small number of spaces adjacent to the Airport terminal buildings and other facilities on the east side of the Airport. Due to the physical constraints of the Airport and the Master Plan’s goal to provide on-Airport facilities to adequately accommodate projected commercial aviation demand, all Airport parking requirements (public, rental car, and employee) are planned to be provided in garage structures. An Airport employee parking garage is designated for development on the subject 7-acre site, with shuttle bus service providing access to and from the east side passenger terminal complex.
In November 2001, the Airport Master Plan was amended to revise several of the proposed projects in the Airport terminal area. Most notably, instead of three separate terminal buildings (Terminal A, a new Terminal B, and a remodeled/expanded Terminal C as originally approved), a single “central terminal” would be developed connecting existing Terminal A and upgraded portions of existing Terminal C with new centralized ticketing, security, baggage claim, and other passenger processing facilities. In addition, instead of a separate public parking garage for each terminal, the amended Master Plan now provides for all public short term parking to be in one new garage constructed opposite the central terminal, all public long term parking to be in one new garage constructed on the interim site currently used for rental car parking, and all rental car parking to be in a garage constructed adjacent to the new public short term garage.
Upon completion of those garage projects, the existing 2,200-space Terminal A garage would therefore become available to serve approximately 85% of the projected employee parking demand, with one or more of the other new terminal area garages accommodating the balance of the employee parking.
Placing Airport employee parking within the terminal area is clearly preferable to a remote structure on the west side of the Airport. The elimination of the proposed west side employee parking garage project from the Airport Master Plan development program would save an estimated $45 million in capital costs, plus the operational cost and vehicle trips associated with operating shuttle buses between the garage and the central terminal. In turn, the 7-acre west side garage site can be redesignated for a different use.
In coordination with the Planning, Building, and Code Enforcement (PBCE) Department, an environmental consultant has analyzed the proposed changes to the Airport Master Plan and concluded that the potential increase in the projected number of general aviation aircraft operations and relocation of employee parking would not result in any significant impacts beyond those already identified in the Airport Master Plan Environmental Impact Report (EIR) as recently supplemented. Specifically, the potential increase in general aviation aircraft operations would not measurably change the Airport’s projected noise impact area, and the relocation of 2,600 employee parking spaces from the west side to the east side of the Airport would not measurably increase peak hour traffic impacts on any nearby intersection. A “Second Addendum” to the Master Plan EIR documenting this analysis was issued by PBCE on April 2, 2003.
d. Amendment to San Jose Jet Center Lease Agreement
SJJC has been serving Silicon Valley corporate aviation for 17 years. Companies such as Intel utilize SJJC for daily transport of employees to and from campuses located in other regions. The volume of activity has increased over the years, resulting in congested ramp and hangar facilities and an inability to serve the increasing demand on the existing SJJC leasehold.
The terms and conditions of the proposed 6th Amendment to the ground lease with SJJC are consistent with current City standards, including SJJC responsibility for all costs associated with the removal of the existing improvements, soil testing and removal or remediation of any contaminants and hazardous materials. Other key terms and provisions of the amended ground lease are outlined in Attachment A. The layout and design of new facilities to be constructed by SJJC upon execution of the amended ground lease would be subject to a City Site Development Permit issued by the Planning Department.
e. SJJC Compliance with Airport Noise Control Program
Section 25.04.330(C) of the San Jose Municipal Code requires staff to provide Council with a review of a tenant’s historical compliance with the Airport Noise Control Program prior to Council approval of new landside facilities serving that tenant. Attachment B is a Summary of Airport Curfew Intrusions from 1999 through 2002, including data for general aviation. Although Airport staff currently tracks all general aviation curfew operations as reflected in the attached summary, the Airport historically has not had the means to determine from which FBO a particular general aviation operation has occurred. Under the proposed lease, SJJC will be required to report to Airport staff any operations from its facility that occur during the curfew hours. This will enable Airport staff to maintain curfew operation records specific to SJJC’s operation on the west side of the Airport. The lease provisions regarding SJJC’s compliance with the Airport Noise Control Program are summarized in Attachment A.
f. Compliance with Other Provisions of the San Jose Municipal Code
Section 25.04.330(D) of the San Jose Municipal Code requires that, prior to approval of new general aviation facilities, Council is to be provided with a report on Airport activity levels and comparison to the Airport Master Plan activity projections. The Airport Department prepares an annual status report on the Airport Master Plan which includes activity level data. The most recent annual report was provided to Council in June 2002. While general aviation aircraft operations and number of based aircraft have been tracking slightly below the Master Plan projections, the corporate aviation segment of general aviation, characterized by larger and higher performance aircraft used for business travel, has remained strong.
Section 25.04.330(E) of the Municipal Code requires that, prior to approval of new lease agreements for general aviation development, the Council be provided information demonstrating that demand exceeds existing facilities or that a written commitment has been provided by the subject general aviation operator to occupy and fund the cost of development and operation. SJJC’s proposal to invest in an expansion of its facilities demonstrates that demand for corporate aviation facilities exceeds current capacity; moreover, the subject 6th Amendment to the SJJC ground lease provides for SJJC responsibility for all costs associated with development and operation of expanded leasehold.
Under the provisions of the San Jose Municipal Code, Section 25.02.310, the proposed Major Amendment to the Airport Master Plan was referred to the Airport and Planning commissions for review and advisory action. At its public meeting of March 3, 2003, the Airport Commission unaminously recommended Council approval. At its public meeting of April 9, 2003, the Planning Commission recommended Council approval. Also, under State regulations, the Santa Clara County Airport Land Use Commission (ALUC) reviewed the proposed amendment at its public meeting of March 26, 2003, and determined it to be consistent with the ALUC Plan. A public notice of the Council public hearing on this item was published in both the San Jose Post Record and Mercury News.
The preparation of the proposed Major Amendment to the Airport Master Plan and 6th Amendment to the Ground Lease with SJJC has been coordinated with the City Attorney’s Office, the Planning, Building and Code Enforcement Department, and SJJC.
The approval of this proposed lease agreement would help the City to support the corporate aviation needs of Silicon Valley, provide revenue to the Airport, and thus be consistent with the general principles of the February 4, 2003 budget strategy memo approved by Council.
Resolution No. 67380 and 71451, PP 03-04-107.
RALPH G. TONSETH
Director of Aviation
Airport Department
ATTACHMENT A
SJJC 6th
Amendment Basic Terms and Conditions
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Term – 35 years on entire facility from additional premises possession date. |
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Additional Premises Possession Date – Not more than 120 days after City issues Notice to Proceed with construction of improvements for the additional premises. |
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Renewal – SJJC has a 10 year option to extend the term at market rental value for land and improvements. |
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Rent - $1.29/SF/YR as established by appraisal in October 2000 (and since amended by yearly CPI increases), with an interim construction rent on proposed additional premises of twenty-five (25) percent of the “base ground rental” rate then in effect from date of Notice to Proceed until certificate of occupancy is issued or until expiration of twelve (12) months from the date of Notice to Proceed, whichever date is earlier. |
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Current Rent on SJJC’s Premises $838,266.46/year |
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Interim Construction Rent for Additional Premises $100,419.74/year |
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Full Rent for Additional Premises $401,678.97/year (after NTP or 12 Months) |
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Total Proposed Rental Income to City (Current and Additional Premises) $1,239,945.43/year |
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Improvements – Four million five hundred thousand dollar ($4,500,000) minimum investment; title to improvements to be vested in SJJC during lease term. At the end of the lease term, improvements will either revert to the ownership of the City or be demolished by SJJC at the option of the City. If SJJC decides to exercise the 10-year option, the then current market rental value will include the value of the improvements in addition to the ground rental. |
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Authorized Subleases – The term of any subleases or agreements for use may not in any event extend beyond the term of the Master Lease. |
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Restrictions on SJJC’s Use – Noise Control |
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Aircraft Operated or Controlled by SJJC – SJJC agrees at all times to abide by the Airport Noise Control Program, as said Program may be modified, altered, or amended from time to time by City, with regard to aircraft that SJJC either operates or controls. In addition, effective as of the date that these restrictions are included by amendment or in a new lease with each of the other FBO’s at the Airport (AvBase and ACM), and are applicable to all of their subtenants pursuant to the terms of the leases, SJJC separately agrees to adhere to and abide by at all times the curfew period as set out in the Program. |
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Aircraft Operated or Controlled by Sublessees – SJJC shall include provisions in its subleases requiring its sublessees to abide by the Airport Noise Control Program, as said Program may be modified, altered, or amended from time to time by City. SJJC shall include these provisions in each of its subleases when new subleases are signed, when existing subleases are amended, and when existing subleases are voluntarily extended. In addition, effective as of the date that these restrictions are included by amendment or in a new lease with each of the other FBO’s at the Airport (AvBase and ACM), and are applicable to all of their subtenants pursuant to the terms of the leases, the sublessees will also agree to adhere to and abide by at all times the curfew period as set out in the Program. SJJC assigns its right to terminate its subleases to the City in the event that a sublessee conducts a prohibited operation during the curfew period, and the City may proceed with an eviction action against the subtenant in the event the sublessee conducts a prohibited operation during the curfew period. |
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Failure to Comply - SJJC’s failure to comply with the provisions of the sections relating to the Airport Noise Control Program shall be deemed to be an event of default, which could subject the Lease to termination by the City. |
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Reporting Curfew Hour Operations – For each Operation SJJC knows or has reason to know, was conducted to or from its Premises during the Curfew Period, SJJC shall notify City of each such Operation by any sublessee, itinerant user or any other person or entity. SJJC shall provide, on a form acceptable to the Director of Aviation, information reasonably available to SJJC regarding the Operation which shall include, but is not limited to, the following information: aircraft type and identification number, name, phone number, and address of the aircraft owner and/or operator, and date and time of operation. |
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ATTACHMENT
B
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1999 |
2000 |
2001 |
2002 |
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Curfew Intrusions as % of Total Operations: |
0.61% |
0.62% |
0.41% |
0.39% |
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% of Intrusions Approved as Compliant: |
95% |
89% |
83% |
71% |
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% of Intrusions Denied
(Non-Compliant): |
5% |
11% |
17% |
29% |
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% of Intrusions by Stage 2
Business Jets: |
4% |
3% |
4% |
4% |
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% of Intrusions by
Non-Scheduled Transports: |
1% |
2% |
3% |
5% |
Attach 11 x 17 map exhibit