HomeMy WebLinkAboutResolution 99-013 lease agreement for avra valley airportMARANA RESOLUTION NO. 99-13
A RESOLUTION OF THE TO%ZN COUNCIL OF THE TO%.~ OF *IAP. ANA. ARIZONA
APPROVING TNAT CERTAIN LEASE AGREEMENT BETWEEN Pl.XlA COL .%TY AND PIMA
AVIATION. INC.. AND AGREEING TO THE FUTURE ASSUMPTION OF SUCH LEASE
UPON TRANSFER OF J'UKISDi[CTION. FULL OWNERSHIP. AND SPONSORSHIP OF THE
AVP~A VALLET AIRPORT.
WHEREAS. Pima Count2.' is the owner of ce,qam reai and personal properv kno~q as the
Avra Valle? Airpor~ (Airport/. which in unincorporated Pima County ahhough it is complete!N
surrounded by the Town of Mararia; and
~,kTIEREAS. Pima Counu' is recognized by' the Federal Aviation Administration (FAA) as
the Ai~ort Sponsor of the Airport: and
WHEREAS, Pima Count?' has indicated its desire to trans~br ownership and Sponsorship of
the Airport to the Town of Marann under ce~ain circumstances: and
WHE,KEAS, Pima County and Pima Aviation. Inc. (PAI) have been negotiating the terms of
a lease agreement tbr certain lands located upon the Airport, and Pima County has indicated its
willingness to enter into such a lease only if and when the Airport is transfkrred to the Town of
5iarana; and
WHEREAS. the Town of Marana has indicated its ~viiiingness to accept assignment of such
lease only if and when the Airpo~-t is located within the boundaries of the Town of Mararia. and if
and when ~t~!l o~nership and Sponsorship oilhe .Airport is transferred to the Town: and
NOW, THEREFORE. BE IT RESOLVED by' the Mayor and Council of the Town o fMa~-ana.
Arizona. that the Lease Agreement attached hereto as Exhibit A (and incorporated herein b:,' titis
reference) is acceptable to the To~n of Marann. and it*the Lease is exeauted b~ Rma Coun%' ano
PAi. the Town wiI1 accept assignment of the lease only' upon the following conditions:
Oxxnership o£ all re:d and persona! propert? located at the Airport ,,xhlc'n ~s ownea and or
:ontroiled by Phma Counr/sha(l bc transrerez o} ,.~a~an[} deed and or bill or'sale to the
To%n o~' },{ar2n?.. sid a:lncxa~.ion b~in~ cornpick and :lnzd.
Pima Count,, to 5darana ha'~c been comple:ed
. . and t_ oun~::l ot dz:. Toxxn ot Mamn,~. ,.M ~zona. ths
PASSEDAN~ADOPTEDb~theMavor' ' - " '~ ~ ' ..... ' ;
ATTEST: ._- ........ -.,
'To w~/
APPROVED AS TO~
/D~niel J. Hoct~ Town Attorney
bla~ or OP-h-~ MAtE H'ARN
EXHIBIT A
Sample - to be used for
future development lease
agreements
MASTER DEVELOPMENT LEASE AGREEMENT
PIMA AVIATION, INC.
&
PIMA COUNTY
Master Development Lease Agreement
Pima County/Pima Aviation, Inc
Table of Contents
ARTICLE I - DESCRIPTION OF PREMISES ....................................... 1
1.1 Premises.
1.2 Removal of Land from Premises.
1.3 Removal of Land from Leased Premises Due to Governmental Regulation ..... 2
ARTICLE II - TERM ........................................................... 2
2.1 Initial Term ....................................................... 2
2.2 Extension Term.
2.3 Appraisal for Extension Term ......................................... 3
ARTICLE III -
3.1
3.2
3.3
3.4
3.5
COMPENSATION ................................................ 4
Fixed Rent ........................................................ 4
Percentage Rent .................................................... 4
Fuel Flowage Fee .................................................. 4
Amendment of Compensation by Mutual Agreement ...................... 5
Record Keeping .................................................... 5
ARTICLE
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
IV - USE OF PREMISES ............................................... 5
Aviation Related Uses ............................................... 5
Non-Airport Activities .............................................. 6
Report of Leasing Activity ........................................... 6
Approval of Subleases .... i ......................................... 6
Lawful Use and Condition of Premises ................................. 7
Other Rights of LESSEE ............................................. 7
Public Funding for Improvements ..................................... 8
Financing of Improvements .......................................... 9
ARTICLE V - INSURANCE ..................................................... 9
5.1 LESSEE's Insurance ................................................ 9
5.2 Sublessees' Insurance ............................................... 9
5.3 Additional Insured ................................................. 10
5.4 Unavailability of Insurance .......................................... 10
ARTICLE VI
6.1
6.2
6.3
- iNDEMNIFICATION ............................................. 10
By LESSEE ..................................................... 10
By LESSOR ..................................................... 10
Duty of Care ..................................................... 10
ARTICLE VII - CONSTRUCTION OF STRUCTURES
AND IMPROVEMENTS ON THE PREMISES ............................... 11
7.1 LESSEE's Improvements ........................................... 11
7.2 LESSOR's Approval ............................................... 11
7.3 No Obligation for Leasehold Improvements ............................. 12
7.4 No Liens ........................................................ I2
Master Development Lease Agreement
Pima County/Pirna Aviation, Inc. i
7.5 Consent to Removal ............................................... 12
7.6 No Obligation For Public Airport Facilities ............................. 12
ARTICLE
8.1
8.2
8.3
VIII - ENVIRONMENTAL PROVISIONS ................................ 13
Definitions ....................................................... 13
Compliance ...................................................... 14
Remedies ........................................................ 16
ARTICLE
9.1
9.2
9.3
9.4
IX - PUBLIC UTILITIES .............................................. 17
Payment ......................................................... 17
Repair .......................................................... 17
Provision of Utilities ............................................... 17
Rights of Way .................................................... 17
ARTICLE X - MAINTENANCE ................................................ 18
10.1 LESSEE's Obligations ............................................. 18
10.2 LESSOR's Obligations ............................................. 18
10.3 Notice by LESSEE ................................................ 18
10.4 Inspection by LESSOR ............................................. 18
ARTICLE XI o TAXES ........................................................ 18
ARTICLE XII
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
12.11
12.12
12.13
12.14
- RULES AND REGULATIONS .................................... 18
LESSOR's Regulations ............................................. 18
Department of Transportation Regulations .............................. 19
Non-Discrimination ............................................... 19
Fairness ......................................................... 19
Applicable to Other Agreements ...................................... 19
Affirmative Action ................................................ 19
Non-Compliance .................................................. 20
Future Development ............................................... 20
Future Construction ............................................... 20
Elevation Restriction ............................................... 20
Subordination to Federal Agreements .................................. 20
No Exclusive Right ................................................ 21
Applicable to Subleases ............................................ 21
Compliance with Aviation Regulations ................................ 21
ARTICLE XIII - SUPERIOR RIGHTS ............................................ 21
13.1 Preemption by U.S ................................................ 21
13.2 Disclaimer ....................................................... 21
ARTICLE XIV - RESERVATION OF EASEMENT ................................. 21
14.1 LESSOR's Reservation of Rights ..................................... 21
I4.2 No Obstruction ................................................... 22
Pima County/Pima Aviation, Inc. ii
ARTICLE XV - ASSIGNMENT ................................................. 22
15.1 LESSOR's Consent ................................................ 22
15.2 Compliance with Requirements ...................................... 22
ARTICLE XVI - TERMiNATION BY LESSOR .................................... 23
16.1 Default by LESSEE ................................................ 23
16.2 Additional Defaults ................................................ 23
16.3 No Waiver ....................................................... 23
16.4 Remedies Cumulative .............................................. 23
ARTICLE XVII - TERMiNATION BY LESSEE .................................... 24
17.1 Causes .......................................................... 24
17.2 Expiration of Cause ................................................ 24
17.3 Non-Waiver ...................................................... 24
17.4 Remedies Cumulative .............................................. 24
ARTICLE XVIII - SURRENDER OF POSSESSION;
CONDITION OF PREMISES ............................................. 25
18.1 Surrender ........................................................ 25
18.2 Condition ....................................................... 25
18.3 RemovalofPersonalProperty ....................................... 25
18.4 Transfer to LESSOR ............................................... 25
ARTICLE XIX - AIRPORT TRANSFER.: ........................................ 25
19.1 Transfer of Lease to Marana ......................................... 25
19.2 Termination Upon Subsequent Transfer to Pima Cotmty ................... 25
ARTICLE XX
20.1
20.2
20.3
20.4
20.5
20.6
20.7
20.8
20.9
20.10
20.11
20.12
20.13
- GENERAL PROVISIONS ........................................ 26
Cumulative ...................................................... 26
Non-Waiver ...................................................... 26
Time of Essence .................................................. 26
Entire Agreement ................................................. 26
Modification ..................................................... 26
Abandonment .................................................... 26
Successors and Assigns Bound ....................................... 27
Article Headings .................................................. 27
Severability ...................................................... 27
Applicable Law ................................................... 27
Authority ........................................................ 27
Recording and Effective Date ........................................ 27
Approvals ....................................................... 27
ARTICLE XXI - NOTICES ..................................................... 27
21.1 Addresses ....................................................... 27
21.2 Service .......................................................... 29
21.3 Change of Address ................................................ 29
Master Development Lease Agreement
Pirna Count3'./Pima Aviation, Inc, iii
Master Development Lease Agreement
Pima CounW/Pima Aviation, Inc. iV
MASTER DEVELOPMENT LEASE AGREEMENT
THIS LEASE is made and entered into this __ day of ,199 , by
and between PIMA COUNTY, a political subdivision of the State of Afizona ("LESSOR") and
PIMA AVIATION, INC., an Arizona corporation ("LESSEE"). LESSOR and LESSEE may be
referred to collectively in this Lease as the "parties."
RECITALS
1. LESSOR is the owner of the Airport known as AVRA VALLEY AIRPORT, located in
Pima County, Arizona (the "Airport").
2. In the interest of promoting economic development and achieving other public benefits,
LESSOR is desirous of encouraging various private businesses and appropriate governmental
agencies to locate their aviation related facilities on presently undeveloped Airport land.
3. The parties believe that the foregoing goal can be achieved most efficiently by leasing
certain undeveloped portions of the Airport to LESSEE, who will in turn function as master
developer, in cooperation with LESSOR, for the purpose of developing such property and marketing
and subleasing it to end users.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual agreement to the terms and
conditions set forth below, LESSOR does hereby lease to LESSEE a portion of Airport, as follows:
ARTICLE I - DESCRIPTION OF PREMISES
1.1 Premises.
LESSOR hereby leases to LES SEE a portion of Airport, which portion consists of
approximately 73 acres, as particularly described on EXHIBIT A (the "Premises"). LESSEE shall
have, subject to the terms and provisions of this Lease and any subleases, the use, occupancy and
control of the Premises with all improvements constructed thereon.
1.2 Removal of Land from Premises.
During the Initial Term and Extension Term, at the request of either party to this
Lease, LESSEE and LESSOR may meet to discuss whether any portions of the Premises should be
deleted from the Premises for the purpose of being utilized for additional public airport facilities or
for any other public purpose of Lessor. Any such deletion shall require the mutual written agreement
ofLES SOR and LES SEE unless such deletion occurs through the use of eminent domain as provided
hereinafter. In the event that such deletion takes place, LESSOR shall use its best ef±brts to provide
in substitution for the parcel deleted another parcel of equivalent size and fair rental value located
PirnaCounty/PimaAviation, Inc Page 1 of 29
within the Airport. If such substituted parcel is accepted by LESSEE, the Premises shall be
redefined to include the substituted parcel in lieu of the deleted parcel and the "Fixed Rent" (defined
below) shall be adjusted to reflect any difference in the size of the Premises. If no such parcel is
mutually agreed upon, LESSOR shall be entitled to exercise its right of eminent domain to condenm
LESSEE's leasehold interest in the parcel to be deleted, subject to LESSEE's right to receive
compensation for the appraised value of such leasehold interest.
1.3 Removal of Land from Leased Premises Due to Governmental Regulation
In the event that any portion of the Premises cannot be developed in the manner
contemplated by this Lease by reason of governmental regulation, including but not limited to FAA
regulations regarding setbacks, clear zones, and restricted visibility zones at the intersection of
ranways (any one of the foregoing may be referred to as a "Restriction"), such portion may, at the
option of the LESSEE, be deleted from the Premises. In the event that such deletion takes place,
LESSOR shall substitute another parcel of equivalent size and fair rental value located within the
Airport which is acceptable to LESSEE. Upon acceptance of such substituted parcel, the Premises
shall be redefined to include the substituted parcel in lieu of the deleted parcel and the "Fixed Rent"
(defined below) shall be adjusted to reflect any difference in the size of the Premises.
If the Restriction appears on the existing Airport Master Plan, the deletion and
substitution shall be implemented as soon as possible after the Commencement Date.
If the Restriction is set forth in a subsequent amendment to the Airport Master
Plan, the deletion and substitution shall be implemented as soon as possible after the FAA
has accepted such amendment.
If any portion of the Premises is or becomes unavailable for development due
to governmental regulation not shown on the Airport Master Plan, the deletion and
substitution shall be implemented as soon as possible after such regulation becomes
effective.
Any substitution referred to above shall not affect the Fixed Rent (defined
below), unless the substituted parcel is different in size from the deleted parcel.
ARTICLE II - TERM
2.1 Initial Term.
The Initial Term of this Lease shall be for a period of twenty-five Lease Years
beginning on the 1 st day of ,199 (the "Commencement Date"). As used
herein the term "Lease Year" means a one year period beginning on the first day of the Initial Term
or on any subsequent anniversary of such date and ending on the day preceding the next following
anniversary of such date.
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Pima County/Pima Aviatmn, Inc. Page 2 of 29
2.2 Extension Term.
If LESSEE is not in default in the performance of any of the terms of this Lease ~vhen
the initial twenty-five year term expires, LESSOR shall extend this Lease at the option of LESSEE
for a single additional twenty-five year period (the "Extension Term"). LESSEE shall exercise the
option to extend this Lease by notifying LESSOR in writing that LESSEE is exercising its option
to extend the Lease. Such notification shall be made at least one (1) year and no more than three (3)
years prior to the expiration of the Initial Term. Except for the Fixed Rent (see below), which shall
be redetermined in accordance with this Article upon receipt of LESSEE's written notice to exercise
its option to extend this Lease, the terms and provisions of this Lease shall apply to the Extension
Term.
2.3 Appraisal for Extension Term.
During the thirty (30) days following LESSEE's exercise of its option to extend this
Lease, the parties shall meet and attempt to agree on the Fixed Rent for the first Lease Year of the
Extension Term. If they are unable to do so, Lessor shall, within thirty (30) days thereafter, provide
Lessee with a list of four (4) independent MAI appraisers who meet the Competency Provision of
the Uniform Standards of Professional Practice, particularly those who are experienced with valuing
similar airport type properties. Within twenty (20) days after receiving such list, Lessee shall give
notice to Lessor of its choice of Qualified Appraiser from among those named. Lessor shall
promptly engage the chosen Qualified Appraiser to determine the Fixed Rent for the first Lease Year
of the Extension Term based on the then prevailing market rate for unimproved land at other similar
airport facilities in Arizona, and if none in Arizona can be used, then in other comparable localities
the appraiser believes are relevant. LESSOR shall promptly notify LESSEE of the results of such
appraisal. The determination of the chosen Qualified Appraiser shall be conclusive and binding on
the parties.
In determining the Fixed Rent for the Extension Term, the Qualified Appraiser shall
use a "land value" basis, i.e., shall take into consideration only the unimproved land value of the
Premises, and shall not include the value of any improvements made thereon by LESSEE or its
sublessees during the Initial Term. However, the appraisal shall take into consideration any
improvements made to the Airport by LESSOR which in the appraiser's professional opinion
increase the land value of the Premises.
Notwithstanding the foregoing, the Fixed Rent per acre per year for the first Lease
Year of the Extension Term shall in no event be less than such Fixed Rent for the last Lease Year
of the Initial Term. Fixed Rent for the third through twenty-fifth Lease Years of the Extension Term
shall be determined as follows:
Commencing upon the expiration of the first two (2) Lease Years of the Extension
Term and every two (2) Lease Years thereafter (the "CPI-U Adjustment Dates"), the Fixed Rent for
the next two (2) Lease Years shall be increased by the amount of any percentage increase in the CPI-
U during the most recent two (2) calendar year period over the calendar year preceding that two (2)
calendar year period, applying the Consumer Price Index for all Urban Consumers (CPI-U), as
published by the U.S. Department of Labor, Bureau of Statistics. In the event publication of the CPI-
M~ster Development Lease Agreement
Pima Coun~/Pima Aviation. Inc. Page 3 of 29
U is terminated, then such periodic adjustment shall be made by application of the index published
by the U.S. Department of Labor which most closely resembles the CPI-U.
ARTICLE III - COMPENSATION
3.1 FixedRent.
Notwithstanding any additional rent, fees, taxes, or other monies paid to LESSOR
pursuant to this Lease or otherwise, LESSEE agrees to pay to LESSOR an amount of rent per acre
of the Premises for each Lease Year determined in accordance with the rent schedule attached hereto
as Exhibit "B" (the "Fixed Rent"), plus rental tax. The Fixed Rent shall be payable quarterly in
advance. The Fixed Rent for partial acres shall be pro-rated. Fixed Rent for land which is deleted
from the Premises or taken by eminent domain shall cease as of the first day of the calendar month
following the month in which such land ceases to be a part of the Premises.
3.2 Percentage Rent.
3.2.1
In addition to the fixed rent set forth above, LESSEE agrees to pay to
LESSOR a sum equal to five (5%) of LESSEE's actual gross receipts
from sublease of any portion of the Premises to a sublessee (the
"Percentage Rent").
3.2.2
As used in this Lease, "actual gross receipts" shall mean the total
rents received by LESSEE from sublessees pursuant to subleases of
portions of the Premises, excluding rental tax. If LESSEE utilizes
any portion of the Premises for its own use, then the fair market rental
value of those portions shall be added to actual gross receipts.
3.2.3
The actual gross receipts and Percentage Rent shall be computed on
a quarterly basis. Percentage Rent for a quarter shall be due and
payable no later than thirty (30) days following the end of such
quarter. A report indicating the method of computation in reasonable
detail shall accompany each remittance.
3.3 Fuel Flowage Fee
During the Initial Term and Extension Term, LESSEE shall pay to LESSOR, in
addition to rent, sales taxes and other taxes, and all other fees, a fee (the "Fuel Flowage Fee") for
every gallon of all aviation fuel and other fuel dispensed on the Premises, whether dispensed directly
into an airplane or other vehicle, dispensed into a fuel pumping truck, or dispensed into any other
container (but excluding any fuel which has already been subject to payment of a Fuel Flowage Fee
when it was previously dispensed at the Airport). LESSEE may assign the obligation to pay the Fuel
Flowage Fee to subtenants, and to the extent such Fees are actually paid by the subtenant, LESSEE's
obligation for such fees is satisfied. The Fuel Flowage Fee shall be in the amount of three cents
($0.03) per gallon. On a quarterly basis, by the tenth (10th) day of each quarter, LESSEE shall report
to LESSOR the number of gallons of fuel dispensed during the previous month and shall remit the
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Pima County/Pima Aviation, Inc. Page 4 of 29
Fuel Flowage Fee based thereon. LESSEE shall submit a statement of fuel flowage for the preceding
calendar year not later than March 1 of each year. The statement shall show in reasonable detail the
amount of actual gross receipts during the preceding calendar year for fuel sales and amount paid
to LESSOR for Fuel Flowage Fees during the same period. Such annual statement shall be
accompanied by the signed opinion of the person certifying such statement specifically stating that
he has examined the report of fuel sales for such year, that he has examined LESSEE's books and
records as he considered necessary under the circumstances, and that such statement accurately
presents the total fuel sales of such year. An adjustment shall be made with the furnishing of each
annual statement with respect to Fuel Flowage Fees if LESSEE shall have paid an amount different
than was required to be so paid. The amount of any increase shall be paid and delivered with the
annual statement and the amount of any decrease shall be deducted from subsequent payments. Each
sublease shall include a section imposing the same payment and reporting obligations upon the
sublessee with regard to fuel it dispenses at the Airport.
3.4 Amendment of Compensation by Mutual Agreement.
During the Initial Term and Extension Term, at the request of either party to this
Lease, LESSEE and LESSOR shall meet to discuss whether there should be a change in the Fixed
Rent referred to in paragraph 3.1, the Percentage Rent referred to in paragraph 3.2 or the Fuel
Flowage Fee referred to in paragraph 3.3. Any such change shall be made prospectively only and
shall require the mutual written agreement of LESSOR and LESSEE
3.5 RecordKeeping.
LESSEE shall keep true and accurate account records, books and data in accordance
with generally accepted accounting principles which shall show all rents billed to and receipts
collected from third parties for any part of the Premises. LESSEE shall maintain annual corporate
income tax returns and corporate financial statements certified by a Certified Public Accountant.
LESSOR shall have the fight to examine all financial books and records pertaining to this Lease or
to the use of the Premises upon three (3) business days advance written notice to LESSEE.
ARTICLE IV - USE OF PREMISES
4.1 Aviation Related Uses.
LESSEE shall develop the Premises only for businesses associated with aviation or
airport related activities and related structures so long as they are consistent with FAA regulations
and do not interfere with the LESSOR's ability to receive grant funding. LESSEE's development
of the Premises shall be in a manner to maximize the overall value of the Premises in a reasonable
fashion. Any development of the Premises shall, to the greatest extent possible, avoid the creation
of unusable or unmarketable areas of the Premises.
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Pima County/Pima Aviation, Inc. Page 5 of 29
4.2 Non-Airport Activities.
LESSEE shall not permit its sublessees, agents, customers, patrons or others to
engage in activities which are not reasonably related to Airport purposes without first obtaining the
prior written consent of LESSOR.
4.3 Report of Leasing Activity.
4.3.1 On a periodic basis, but not less than annually, LESSEE shall submit
a written report to LESSOR describing LESSEE's efforts to develop the
Premises, the names of persons or entities which have inquired about
subleasing a portion of the Premises, and a description of the status of
planned development. If any person or entity requests to sublease a portion
of the Premises and LESSEE does not enter into a sublease with such person
or entity, LESSEE shall provide written justification for LESSEE's decision
not to sublease to such person or entity and shall, if requested by LESSOR or
the Federal Aviation Administration ("FAA"), provide economic data to
support LESSEE's action. If any person or entity interested in leasing a part
of the Premises (a "Prospect") requests to sublease a portion of the Premises
for use as a general aviation, full-service fixed base operation providing
substantially the same services as the existing fixed base operator at the
Airport, and LES SEE does not reach agreement with such Prospect within six
(6) months after receipt from such Prospect of a formal written proposal,
LESSEE shall promptly refer such Prospect to LESSOR's Airport Manager
for all further negotiations (which negotiations shall relate only to property
other than the Premises) and shall confirm such referral by written notice to
the Airport Manager accompanied by all information in LES SEE's possession
pertaining to such Prospect. LESSEE shall thenceforth refrain from any
further contact with such Prospect except to the extent specifically requested
by LESSOR.
4.3.2 LESSOR shall promptly advise LESSEE of any Prospect of which
LESSOR or its officials or employees becomes aware. If LESSOR is
contacted by any Prospect it shall refer such Prospect to LESSEE.
4.4 Approval of Subleases.
LESSEE is permitted to sublet portions of the Premises only for aviation related
activities, subject to prior written approval of LESSOR. Such approval shall not be unreasonably
withheld. When requesting LESSOR's approval of a sublease, LESSEE shall accompany its request
with a copy of the actual sublease documents it plans to submit for execution by the sublessee,
including a specific description of the activities to be conducted by the sublessee at the Airport.
Within thirty (30) days after submission of the proposed sublease documents by LESSEE, LESSOR
shall notify LESSEE in writing of approval or rejection thereof. In the event LESSOR deems such
thirty (30) day period to be inadequate for its review of a proposed sublease, LESSOR may extend
such period for an additional thirty (30) days by giving written notice thereof to LES SEE prior to the
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Pima County/Pima Aviation, Inc. Page 6 of 29
expiration of the initial period. Thereafter, such period may be extended only for good cause or by
mutual agreement of the parties. If LESSOR rejects the sublease, it shall give detailed reasons
therefor and use its best efforts to provide recommended revisions or other conditions for acceptance.
All subleases, amendments, and other lease documents shall be approved as to form by LESSOR,
as evidenced by the signature of LESSOR's designated representative on the original of such
document. Any such sublease shall only be for a portion of the Premises reasonably necessary for
the authorized activity of the sublessee, shall be subject to the terms of this Lease, and shall contain,
as a minimum, the provisions required by this Lease. In lieu of initially submitting the actual
sublease documents, LESSEE may submit to LESSOR for approval a memorandum of
understanding or letter of intent (a "Proposal") between LESSEE and the proposed sublessee. A
Proposal shall cover all of the essential business terms of the deal in sufficient detail for LESSOR
to evaluate them as provided above. In the event a Proposal is so approved, LESSEE and the
sublessee shall proceed to finalize the sublease documents, which shall remain subject, however, to
LESSOR's final review and approval, which approval will not be unreasonably withheld or delayed.
4.5 Lawful Use and Condition of Premises.
LESSEE shall comply with all County, state and federal laws, including without
limitation FAA Regulations and any and all applicable zoning laws that may apply to LESSEE's use
of the Premises. LESSEE shall obtain, at its own cost, any licenses that may be required by law for
its operation. LESSOR will assist and cooperate to the extent possible to obtain required licenses
and permits.
4.6 Other Rights of LESSEE.
LESSOR hereby grants LESSEE and its sublessees and their agents, employees,
contractors, and invitees the following additional privileges, uses and rights, all of which are subject
to the terms, conditions and covenants contained in this Lease and all of which shall be non-
exclusive with respect to the Airport:
The use of all public airport facilities and improvements which are
now or may hereafter be constructed and are appurtenant to the
Airport.
The right of ingress and egress from the Premises to all runways,
taxiways and facilities enumerated in the preceding paragraph, and
over and across the public roadways serving the Airport, subject to
any and all ordinances, rules and regulations which are now or may
hereafter apply at Airport.
Master Development Lease Agreement
Pima County/Pima Aviation, Inc. Page 7 of 29
4.7
Public Funding for Improvements.
4.7.1 LESSOR acknowledges that LESSEE's ability to sublease various
portions of the Premises may depend upon the availability of certain
improvements, whether on or off the Premises. LESSOR therefore agrees
that in the event the Airport Master Plan (as it now exists or may hereafter be
amended) contemplates the construction or improvement of airport facilities
or infrastructure or a prospective sublessee of the Premises requires such
construction or improvement as a condition of entering into a sublease and
LESSOR approves such project, LESSOR shall (a) take all actions necessary
to obtain as promptly as possible whatever state, federal or other
governmental funding may be available to pay for such project, and (b) in the
event such funding is granted, pay for any portion of the cost of the project
which is not paid by such funding, but in no event more than ten percent
(10%) of the cost. In addition, LESSOR shall use its best efforts to obtain
governmental funding to construct such other airport improvements as
LESSEE may deem desirable, provided that such funding covers at least
ninety percent (90%) of the cost thereof. This section shall not obligate
LESSOR to construct or improve any airport facilities or infrastructure unless
state and/or federal funding is available for such purpose.
4.7.2 LESSOR makes no representation that governmental funding for
Public Airport Facilities will be made available or as to the amount thereof.
4.7.3 Nothing contained in this Paragraph 4 shall be deemed to obligate
LESSOR to pay for or seek other governmental funding for any project or
improvement which is located entirely within a subleased portion of the
Premises or which benefits only one sublessee. LESSOR acknowledges that
as of the Commencement Date, LESSEE may be unable to sublease any part
of the Premises by reason of the lack of a water delivery system at the Airport
sufficient to provide the fire protection required by the relevant governmental
authorities. LESSOR therefore agrees to use due diligence and take all
actions reasonably necessary to ensure that, within twenty-four (24) months
following the Commencement Date, a suitable water delivery system is
designed and either constructed or will imminently be constructed, to the
extent necessary to allow LESSEE to sublease the Premises without the use
thereof by sublessees violating applicable legal, regulatory or insurance
requirements. In the event the lack of a water delivery system prevents
LESSEE from subleasing the premises within such twenty-four (24) month
period, the Fixed Rent shall abate until such progress on the water delivery
system is made that LESSEE is permitted to sublease and construct on the
Premises. After the completion of such construction, LESSEE or its
sublessees, as the case may be, shall be responsible for paying the cost of
installing fire protection systems as required by applicable fire codes in any
buildings or other improvements owned or occupied by LESSEE or its
sublessees at the Airport.
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Pima County/Pima Aviation, Inc Page 8 of 29
4.8 Financing of Improvements.
LESSOR acknowledges that LESSEE intends to borrow money from time to time in
order to finance the construction of improvements to the Premises for use by sublessees, and that the
lender (the "Leasehold Mortgagee") will require a mortgage or deed of trust encumbering LES SEE's
interests under this Lease and the subleases (a"Leasehold Mortgage") as collateral for any such loan.
The exact terms that a Leasehold Mortgagee will require to protect the security for its loan will not
be known until LESSEE negotiates for a specific loan, but LESSOR acknowledges that such terms
will, at a minimum, include the agreement by LESSOR to: send the Leasehold Mortgagee a copy of
any notice which it sends to LESSEE under this Lease; allow the Leasehold Mortgagee additional
time to cure any defaults by LESSEE; obtain the Leasehold Mortgagee's consent to any amendment,
modification, cancellation, or surrender of this Lease; and allow the Leasehold Mortgagee to
foreclose and otherwise enforce its Leasehold Mortgage (by, for example, collecting rent directly
from sublessees or having a court appoint a receiver) in the event of a default by LESSEE under the
terms of the loan. These terms may be contained in an amendment to this Lease or in a separate
agreement. LESSOR agrees that it will not unreasonably withhold or delay its approval of such an
amendment or agreement, provided that LESSOR's legitimate interests are reasonably protected,
including its right to approve any receiver to be appointed by a court during the foreclosure of the
Leasehold Mortgage and the ultimate purchaser of LESSEE's interest at the foreclosure sale.
ARTICLE V - INSURANCE
5.1 LESSEE's Insurance.
LESSEE shall keep and maintain at its sole cost fire and extended damage coverage
insurance for all structures and facilities constructed on the Premises in an amount reasonably
comparable to that of similar insurance carried by other Airport Lessees in the State of Arizona.
LESSEE shall also keep and maintain at its sole cost and expense a Three Million Dollar
($3,000,000.00) single limit comprehensive public or commercial general liability insurance policy
with specific provisions covering bodily injuries, property damage, premises liability, contractual
liability, completed operations, if any, products liability, if any, and Hangar Keepers Liability. In
addition, LESSEE shall provide such additional insurance, for example jump and special events
coverage, as may be reasonable and appropriate to cover liability arising out of activities authorized
by LESSEE or its sublessees to be conducted on the Premises.
5.2 Sublessees' Insurance.
In lieu of providing such insurance itself, LESSEE may require a sublessee to
maintain (i) property damage and/or liability insurance with respect to any improvements which such
sublessee is occupying and (ii) additional insurance with respect to the activities such sublessee is
conducting at the Airport. Such sublessees and any insurance policies which they provide shall be
subject to all of the requirements this Article imposes with regard to LESSEE's insurance, including
but not limited to those in the following paragraph.
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PimaCounty/PimaAviation, Inc. Page 9 of 29
5.3 Additional Insured.
LESSEE shall name LESSOR as additional insured on all liability policies and shall
provide LESSOR with copies of certificates of insurance and the endorsement of additional insured
each year as the policies are renewed. LESSEE shall also require insurer to provide LESSOR with
a ~witten notice of cancellation a minimum of thirty (30) days before cancellation. LESSOR shall
name LESSEE as an additional insured on all liability policies, and shall provide LESSEE with a
copy of the certificate of insurance and the endorsement of additional insured each year as the policy
is renewed.
5.4 Unavailability of Insurance.
If LESSEE cannot obtain any insurance required pursuant to this Lease because of
its unavailability or unreasonably prohibitive cost, LESSEE shall be emitled to be relieved of the
requirement to maintain such insurance provided it discontinues the activity which would otherwise
be covered thereby. The parties may renegotiate the terms of this Lease with respect to insurance
requirements in the event LESSEE encounters difficulty in fulfilling such requirements.
ARTICLE VI - INDEMNIFICATION
6.1 ByLESSEE
LESSEE shall indemnify, defend and hold harmless LESSOR, its officers,
departments, employees and agents from and against any and all suits, actions, legal or
administrative proceedings, claims, demands or damages of any kind or nature arising out of this
Lease which are the result of any act or omission of LESSEE, its agents, employees, or any one
acting under the direction or control or on behalf of LESSEE, its agents or employees.
6.2 By LESSOR
LESSOR shall indemnify, defend and hold harmless LESSEE, its owners, affiliates,
officers, employees and agents from and against any and all suits, actions, legal or administrative
proceedings, claims, demands or damages of any nature arising out of this Lease which are the result
of any act or omission of LESSOR, its officers, departments, employees and agents or anyone acting
under their direction or control or on their behalf.
6.3 Duty of Care.
LESSEE shall exercise reasonable care on the Premises and Airport and shall advise
LESSOR when conditions which may pose an uureasonable risk of harm to members of the general
public are discovered. When LESSEE is advised by its employees or the LESSOR that an unsafe
or dangerous condition exists on the Premises, LESSEE shall take reasonable steps to correct the
condition and shall be responsible that members of the general public are not exposed to danger.
LESSOR shall take reasonable steps to correct any such condition with regard to portions of the
Airport which are outside the Premises and not otherwise leased.
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ARTICLE VII - CONSTRUCTION OF STRUCTURES
AND IMPROVEMENTS ON THE PREMISES
7.1 LESSEE's Improvements.
LESSEE may construct improvements related to the subleasing and development of
the Premises as contemplated by this Lease, provided:
All proposed construction shall conform to the scheme contained in
the Airport master plan; and
LESSEE is not in default in the performance of any of the terms of
this Lease.
7.2 LESSOR's Approval.
LESSEE shall notify LESSOR in ~vriting of its intention to Construct improvements
on the Premises. The written notice shall specify the location of the improvements together with a
detailed site plan and (if available) architectural plans, specifications and other relevant
documentation. Additionally, the written notice will set forth the particular infrastructure needs of
the improvements, including but not limited to water, electric, fire protection, transportation,
wastewater, and other utilities. These documents shall be submitted to the Airport Manager and such
other officials as LESSOR may designate. LESSOR acknowledges the necessity for expedited
review of all plans submitted by LESSEE to LESSOR pertaining to the development of the Premises
in order to avoid LESSEE losing potential subleases due to time delay, and agrees to use its best
efforts to accomplish such expedited review of the plans. If LESSOR rejects the proposed
improvements, LESSOR shall give detailed reasons therefor and will use its best efforts to provide
recommended revisions for acceptance. If LESSOR gives its acceptance, such acceptance shall be
subject to LESSEE's compliance with Part 77 of the FAA Regulations, as they may be amended.
LESSOR may refuse to permit the construction or installation of any improvement if the type of
construction or installation or the location of such improvement (1) does not meet LESSOR's
reasonable and lawful requirements for safe use of the Airport, (2) does not comply with the
LESSOR's building codes, laws or other regulations, (3) does not conform to the applicable laws of
the United States or the State of Arizona, or (4) does not conform to the applicable regulations of
the FAA. Following approval of such improvements, LESSEE shall obtain the necessary permits
and proceed with approval and construction as set forth in the LESSOR's applicable development
codes. LESSEE shall have the right to make major alterations and modifications in any buildings,
structures or other improvements now or hereafter constructed or installed in or on the Premises,
subject to the provisions of this paragraph. Items of normal repair and maintenance and minor
alterations and modifications constructed at a cost under ten thousand dollars ($10,000.00) need not
be submitted to LESSOR for approval unless required by applicable development or building codes.
In the event LESSOR is unable to provide sufficient personnel (either in-house staff
or outside consultants to LESSOR) to revie~v the plans within the time desired by LESSEE, LESSEE
may elect to pay the masonable costs incurred by LESSOR to retain such consultants or other experts
as LESSOR may reasonably deem necessary to review the plans on behalf of LESSOR. Because of
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PimaCounty/PimaAviation, Inc. Page 11 of 29
LESSEE's liability for the consultant's fees, any consultants under this paragraph shall be selected
by the agreement of both LESSOR and LESSEE. LESSOR and LESSEE shall diligently select
consultants following a request by LESSEE hereunder. LESSEE acknowledges that the consultants'
recommendations will be subject to review and revision by LESSOR's staff and that LESSOR shall
not be bound by any of the consultants' recommendations unless approved by LESSOR's governing
body or other board or person having final approval rights with respect to the plans. LESSOR's non-
liability for a consultant's fees hereunder shall be unconditional and LESSEE shall indemnify and
hold LESSOR harmless from any claims relating to such fees.
7.3 No Obligation for Leasehold Improvements.
LESSOR shall have no obligation to pay for the cost of construction of leasehold
improvements in connection with subleases of the Premises.
7.4 No Liens.
LESSEE shall not permit any mechanic's lien to be filed against the Premises or the
improvements located on the Premises by reason of work, labor, services, or materials supplied or
claimed to have been supplied, whether before or after the commencement of this Lease. If any
mechanic's lien is at any time filed against the Premises or any improvement on the Premises,
LESSEE shall, as soon as possible after notice of the filing of the lien, cause such lien to be
discharged of record by payment, deposit, bond, order of a court of competent jurisdiction, or
otherwise. If LESSEE fails to discharge the lien in a reasonable time, LESSOR may discharge such
lien with LESSEE's approval or after a final judgment is rendered either by paying the amount
claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings.
Ifa foreclosure action initiated by a lienor results in a final judgment in its favor, the LESSOR may,
at its sole option, pay the full amount of such final judgment. Any amount paid or expended by
LESSOR, including but not limited to costs and reasonable attorney's fees for any of such purposes,
with interest at twelve percent (12%) per annum from the date of payment, shall be repaid by
LESSEE to LESSOR on demand. LESSOR's options under this paragraph shall be in addition to
any other right or remedy LESSOR may have.
7.5 Consent to Removal.
No building, structure or other improvement installed, constructed, erected or placed
by LESSEE on the Premises shall be removed from the Premises without the prior written consent
of LESSOR, which shall not be unreasonably withheld.
7.6 No Obligation For Public Airport Facilities.
Notwithstanding anything in this Lease to the contrary, neither LESSEE nor its
permitted sublessees shall have any responsibility or obligation for the construction, installation or
maintenance of the Public Airport Facilities.
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ARTICLE VIII - ENVIRONMENTAL PROVISIONS
LESSEE shall, at LESSEEls own expense, comply with all present and hereinafter
enacted Environmental Laws, and any amendments thereto, applicable to LESSEE's operation on
the Premises.
8.1 Definitions.
"Environmental Laws" means any one or all of the following as the
same are amended from time to time: the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq.; the Resource Conservation and Recovery Act,
42 U.S.C. Section 6941 etseq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300h et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et
seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq; the Arizona
Environmental Quality Act, A.R.S. Section 49-201 et seq.; the
Arizona Hazardous Waste Management Act, A.R.S. Section 49-921
et seq.; and the Arizona Underground Storage Tank Regulation
statute, A.R.S. Section 49-1001 et seq.; and the regulations
promulgated thereunder and any other laws, regulations and
ordinances (whether enacted by the local, state or federal government)
now in effect or hereinafter enacted that deal with the regulation or
protection of the environment, including the ambient air, ground
water, surface water, and land use, including sub-strata land.
b. The term "hazardous material" includes:
Those substances included withinthe definitions of hazardous
substance, hazardous material, toxic substance, regulated
substance, or solid waste in the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq.; and the
Hazardous Materials Transportation Act, 49 U.S.C. Section
1801 et seq. and the regulations promulgated thereto;
ii.
Those substances included within the definitions of hazardous
substance, pollutant, toxic pollutant, regulated substance,
hazardous or solid waste in the Arizona Enviromnental
Quality Act, A.R.S. Section 49-201 e! seq.; including, but not
limited to, the Water Quality Assurance Revolving Fund
statute, A.R.S. Section 49-701 et seq., and the Underground
Storage Tank Regulation statute, A.R.S. Section 49-1001 et
seq.;
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PimaCounty/PimaAviation. lnc. Page 13 of 29
8.2
iii.
Those substances listed in the United States Department of
Transportation Table (49 D.F.R. Section 172.101 and
amendments thereto) or by the Environmental Protection
Agency as hazardous substances (40 C.F.R. part 302 and
amendments thereto); and,
iV.
All substances, materials and wastes that are, or that become,
regulated under, or that are classified as hazardous or toxic
under any environmental law.
The term "release" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing, or dumping.
Compliance.
8.2.1
LESSEE shall not cause any hazardous material to be used,
generated, manufactured, produced, stored, brought upon, or released,
on, under, or about the Premises, or transported to and from the
Premises, by LESSEE, its affiliated entities, owners, agents,
employees, contractors, invitees, sublessees or a third party in
violation of any Environmental Law, and shall use its reasonable best
efforts to prevent any such occurrence. LESSEE shall indemnify,
defend and hold harmless LESSOR, its successors and assigns, its
employees, agents and attorneys from and against any and all liability,
loss, damage, expense, penalties and legal and investigation fees or
costs, arising from or related to any claim or action for injury,
liability, breach of warranty or representation or damage to persons
or property and any other claims or actions brought by any person,
entity or governmental body, alleging or arising in connection with
contamination of, or adverse effects on, the environment or violation
of any Enviromnental Law or other statute, ordinance, rule,
regulation, judgment or order of any government or judicial entity
which are incurred or assessed as a result (whether in part or in
whole) of any activity or operation on or discharge from the Premises
during the term of this Lease by LESSEE or its owners or related
entities. This obligation includes but is not limited to all costs and
expenses related to cleaning up the Premises, land, soil, underground
or surface water as required under the law. LES SEE's obligations and
liabilities under this Paragraph shall continue so long as LESSOR
bears any liability or responsibility under the Environmental Laws for
any action that occurred on the Premises during the term of this
Lease. This indemnification of LESSOR by LESSEE includes,
without limitation, costs incurred in connection with any investigation
of site conditions or any cleanup, remedial, removal or restoration
work required by any federal, state or local governmental agency or
Minster Development Lease Agreement
Pima County/PimaAviation. Inc Page 14 of 29
8.2.2
8.2.3
8.2.4
political subdivision. The parties agree that LESSOR's right to
enforce LESSEE's promise to indemnify is not LESSOR's sole
remedy for LESSEE's violation of any provision of this Paragraph;
LESSOR shall also have the rights set forth in Paragraph 8.3 in
addition to all other rights and remedies provided by la~v or otherwise
provided in this Lease. Notwithstanding the foregoing, nothing
contained in this Paragraph 8.2 shall obligate LESSEE to indemnify,
defend or hold LESSOR harmless from the results of any negligence
or wilful misconduct by LESSOR or its agents, nor to waive any legal
right or remedy LESSEE might have against LESSOR by reason
thereof.
Without limiting the foregoing, if the presence of any hazardous
material on, under or about the Premises caused or permitted by
LESSEE in violation of this Lease results in any contamination of the
Premises, LESSEE shall promptly take all actions at its sole cost and
expense as are necessary to return the Premises to the condition
existing prior to the introduction of any such hazardous material to
the Premises; provided that LESSOR's approval of such actions shall
first be obtained, which approval shall not be unreasonably withheld
so long as such actions would not potentially have any material
adverse long-term effect on the Premises.
LESSEE shall, at LESSEE's own cost and expense, make all
submissions to, provide all inforelation to, and comply with all
requirements of the appropriate governmental authority (the
"Government") under the Environmental Laws pertaining to
LESSEE's operation on the Premises. Should the Government
determine that a site characterization, site assessment and/or a
cleanup plan be prepared or that a cleanup should be undertaken
because of any spills or discharges of hazardous materials at the
Premises during the term of this Lease which are caused by LESSEE
or a sublessee, licensee or invitee, then LESSEE shall, at LESSEE's
own cost and expense, prepare and submit the required plans and
financial assurances, and carry out the approved plans. At no cost or
expense to LESSOR, LESSEE shall promptly provide all information
reasonably requested by LESSOR to determine the applicability of the
Environmental Laws to the Premises, or to respond to any
governmental investigation or to respond to any claim of liability by
third parties which relates to environmental contamination.
LESSEE shall immediately notify LESSOR of any of the following:
(a) any correspondence or communication from any govermmental
entity regarding the application of Environmental Laws to the
Premises or LESSEE's operation on the Premises, and (b) any change
in LESSEE's operation on the Premises that will change or has the
Master Development Lease Agreement
Pima Counw/Pima Aviation. Inc. Page 15 of 29
potential to change LESSEE's or LESSOR's obligations or liabilities
under the Environmental Laws.
8.2.5
LESSEE shall make the provisions of this Paragraph 8.2 binding
upon the other party in any sublease agreement or contract by which
it grants a right or privilege to any person, firm or corporation under
this Lease.
8.3 Remedies.
LESSEE's material failure to comply with any of the requirements and obligations
of Paragraph 8.2 or applicable Environmental Law shall constitute a default of this Lease and shall
permit LESSOR to pursue the following remedies, in addition to all other rights and remedies
provided by law or otherwise provided in the Lease, to which LESSOR may resort cumulatively, or
in the alternative:
LESSOR may, at LESSOR's election, and upon ten (10) days written
notice to LESSEE, make payments required of LESSEE under this
Paragraph 8 or perform LESSEE's obligations under this Paragraph
and be reimbursed by LESSEE for the cost thereof, unless such
payment is made or obligation performed by LES SEE within such ten
(10) day period.
LESSOR may~ at LESSOR's election, and upon ten (10) days written
notice to LESSEE, terminate this Lease, unless, within such ten (10)
day period, LESSEE cures the default or, if the default is one which
cannot reasonably be cured in that time, commences such cure and
thereafter diligently pursues it. Upon LESSOR's termination,
LESSOR shall be entitled to recover from LESSEE damages equal to
the present value of the total amount by which all Rent and Fuel
Flowage Fees during the balance of the Lease tem~ exceeds the
amount of loss of such items that LESSEE proves could have been
reasonably avoided by LESSOR.
Notwithstanding any other provision in this Lease to the contrary,
LESSOR shall have the right of"self-help" or similar remedy in order
to minimize any damages, expenses, penalties and related fees or
costs, arising from or related to a violation of Environmental Law on,
under or about the Premises.
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ARTICLE IX - PUBLIC UTILITIES
9. I Payment.
LESSEE shall pay or cause its permitted sublessees to pay for all public utility
services supplied to it on the Premises, including electricity, gas, water and sewage service.
9.2 Repair.
LESSOR retains the right to use any utility lines currently located on the Premises
and shall have the right and duty to repair the same when necessary. LESSEE shall not be required
to pay the cost of repairing currently existing utilities. Utility repairs shall be done on a priority basis
and shall not unreasonably interfere with LESSEE's operations.
9.3 Provision of Utilities.
LESSOR shall take all actions necessary to obtain as promptly as possible whatever
outside funding may be available to pay for the cost of creating all utility corridors necessary to
maximize the value of the Premises and cover the cost of bringing utilities to the Premises. Without
limiting the foregoing, LESSOR shall pay the cost of extending electricity and water lines along the
western side of the existing taxiway along the 20 foot utility corridor identified in the legal
description of the Premises and shall provide a water supply to LESSEE and to other water users on
the Premises sufficient to allow fulfillment of the development and subleasing purposes
contemplated by this Lease. LESSOR shall bear the cost of the maintenance of the water supply
system. LESSOR may, at its sole option and expense, install a water meter and charge LESSEE for
the water at commemial rates prevailing in the community for similarly situated water users. Unless
governmental funding for such purpose is available as provided in Paragraph 4.7, LESSEE shall, at
no cost or expense to LESSOR, provide all public utility and sewage connections within the
Premises which are needed for buildings, structures and other improvements constructed on the
Premises by LESSEE or its sublessees.
9.4 Rights of Way.
if requested to do so by LESSEE, LESSOR shall grant reasonable rights-of-way on
or across the Airport to public utility companies for the purpose of supplying LESSEE with utilities,
but LESSOR reserves the right to designate the location of such rights-of-way.
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Pima County/Pima Aviation. Inc Page 17 of 29
ARTICLE X - MAINTENANCE
10.1 LESSEE's Obligations.
LESSEE shall retain the title to all improvements made by LESSEE on the Premises
until such time as the title thereto transfers to LESSOR pursuant to Paragraph 18.4 below. LESSEE
shall keep and maintain all improvements on the Premises to which LESSEE has title in a clean,
good, safe and usable condition, and shall promptly commence and continue with reasonable due
diligence to rapair any damage or defects.
10.2 LESSOR's Obligations.
LESSOR shall keep and maintain in good condition and repair in
compliance with FAA Regulations, other applicable Federal and State law and regulations
and LESSOR's approved maintenance plan, all Public Airport Facilities as well as any non-public
improvements to which LESSOR has title.
10.3 Notice by LESSEE.
Upon discovery, LESSEE shall immediately notify LESSOR of any Airport property
in need of maintenance and repair. Airport property owned by LESSOR shall be repaired on a
priority basis if it adversely affects LESSEE's operation; otherwise, such repairs and maintenance
shall be done within a reasonable time.
10.4 Inspection by LESSOR.
The condition of the Airport, LESSEE's operation, and the Premises shall be subject
to inspection at any time by LESSOR with reasonable frequency and at reasonable times on no less
than twenty-four (24) hours advance notice unless such notice is not feasible due to an emergency.
ARTICLE XI - TAXES
LESSEE shall pay before delinquent any and all applicable taxes levied or assessed
by any government body as a result of LESSEE's operations and including but not limited to all
rental taxes which may be levied or assessed against LESSOR and/or LESSEE, as provided by the
Marana Tax Code.
ARTICLE XII - RULES AND REGULATIONS
12.1 LESSOR's Regulations.
LESSEE shall observe and obey all applicable rules and regulations xvhich have been
or may in the future be adopted by LESSOR; provided, however, that such rules and regulations shall
be consistent with rules, regulations and orders of the FAA and with the provisions of this Lease.
In addition LESSEE shall comply with the foliowing standard FAA lease provisions listed in
Paragraphs 12.2 through 12.17 below.
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12.2 Department of Transportation Regulations.
If facilities are constructed, maintained, or otherwise operated on the Premises for a
purpose for which a Department of Transportation program or activity is extended or for another
purpose involving the provision of similar services or benefits, LESSEE shall maintain and operate
such facilities and services in compliance with all other requirements imposed pursuant to Title 49,
Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part
21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation
EflEctuation of Title VI of the Civil Rights Act of t 964, as may be amended from time to time.
12.3 Non-Discrimination.
LES SEE, its successors in interest and assigns, do hereby covenant and agree that (1)
no person on the grounds of race, color, or national origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to discrimination in the use of the Airport facilities
on the Premises, (2) that in the construction of any improvements on, over, or under the Premises
and the furnishing of services thereon, no person on the grounds of race, color, physical disability
or national origin shall be excluded from participation in, denied the benefits of, or otherwise be
subject to discrimination, (3) that the LESSEE shall use the Promises in compliance with all other
requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of
Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally Assisted
Programs of the Department of Transportation Effectuation of Title VI of the Civil Rights Act of
1964, as may be amended from time to time.
12.4 Fairness.
LESSEE shall furnish its accommodations and services on a fair, equal and not
unjustly discriminatory basis to all users thereof.
12.5 Applicable to Other Agreements.
LESSEE shall insert Paragraphs 12.2, 12.3, and 12.4 in any rental agreement, Sub-
operator's agreement and the like, by which LESSEE grants a right or privilege to any person, firm
or corporation to render accommodations or services to the public on the Premises.
12.6 Affirmative Action.
LES SEE shall undertake an affirmative action program as required by 14 C.F.R. Part
152, Subpart E, to insure that no person shall on the grounds of race, creed, color, national origin,
or sex be excluded from participating in any employment activities covered in 14 CFR Part 152,
Subpart E. LESSEE covenants that no person shall be excluded on these grounds from participating
in or receiving the services or benefits of any program or activity covered by this provision. LESSEE
shall require its suborganizations, sublessees, agents, and employees provide assurances to LESSEE
that they similarly shall undertake affirmative action programs and that they shall require assurances
from their suborganizations, as required by 14 CFR Part 152, Subpart E, to the same effect.
Master Development Lease Agreement
Pima County/Piraa Aviation. Inc. Page 19 of 29
12.7 Non-Compliance.
Ira complaint is lodged alleging non-compliance by LESSEE with Paragraphs 12.2,
12.3, or 12.4 of this Article and an investigation and determination of non-compliance is made by
a proper authority, LESSEE shall have a reasonable time but not less than thirty (30) days to comply
after receipt of written notice of such non-compliance from LESSOR. Failure by LESSEE to cure
the non-compliance shall constitute a material breach of this Lease and LESSOR shall have the right
to terminate this Lease and the estate hereby created in accordance ~vith ARTICLE XVI, at the
election of LESSOR. LESSOR may enforce Paragraphs 12.2, 12.3, and 12.4 of this Article through
court action or any other legal remedy in lieu of termination.
12.8 Future Development.
LESSOR reserves the right to further develop or improve the air navigation facility
and the landing and apron areas for the Airport in coordination with the FAA for further growth and
development. LESSOR shall use its best efforts to do so without interfering with or hindering
LESSEE's operation. LESSEE shall not be required to bear any of the cost or expense of
construction and maintenance of such improvements.
12.9 Future Construction.
LESSEE agrees to comply with the notification and review requirements covered in
Part 77 of the Federal Aviation Regulations in the event future construction of a building is planned
for the leased premises, or in the event of any planned modification or alteration of any present or
future building or structure situation on the leased premises.
12.10 Elevation Restriction.
LESSEE, by accepting this Lease, expressly agrees for itself, its successors and
assigns that it will not erect nor permit the erection of any structure or object, nor permit the growth
of any tree on the land leased hereunder above the permitted mean sea level elevation. In the event
the aforesaid covenant is breached, the LESSOR reserves the right to enter upon the land leased
hereunder and to remove the offending structure or object and cut the offending tree, all of which
shall be at the expense of the LESSEE.
12.11 Subordination to Federal Agreements.
This Lease shall be subordinate to the provisions and requirements of any existing
or future agreement between LESSOR and the United States or its agencies and departments relative
to the development, operation or maintenance of the Airport.
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12.12 No Exclusive Right.
Nothing in this Lease shall be construed to grant or authorize the granting of an
exclusive right within the meaning of Section 308(a) of the Federal Aviation Act of 1958 (49 U.S.C.
§ 1349), as amended.
12.13 Applicable to Subleases.
LESSEE shall insert the relevant provisions of this Article 12 in any agreement or
contract by which it grants a right or privilege to any person, firm or corporation under a sublease.
12.14 Compliance with Aviation Regulations.
LESSEE shall conduct its operations and activities on the Airport in compliance with
all applicable regulations of the FAA and the Arizona Department of Aeronautics.
ARTICLE XIII - SUPERIOR RIGHTS
13.1 Preemption by U.S.
During time of war or national emergency, LESSOR may enter into agreements with
the United States Government for use of part or all of the Airport. LESSOR will coordinate any such
agreement which affects LESSEE's operation with LESSEE in advance to the extent feasible. If any
such agreement is executed by LESSOR, the provisions of this Lease, insofar as they are inconsistent
with the provisions of any agreement made by LESSOR with the United States Government shall
be supemeded, and LESSEE shall have no claim against LESSOR for any loss or damage sustained
by LESSEE because of the making of such agreement by LESSOR.
13.2 Disclaimer.
The parties shall not be required to repair, replace, rebuild or construct any building
or portion of any building so long as the obligated party is prevented from so doing by action of the
United States Government.
ARTICLE XIV - RESERVATION OF EASEMENT
14.1 LESSOR's Reservation of Rights.
LESSOR hereby reserves for the use and benefit of aircraft using the Airport a right
of flight for the passage of aircraft in the airspace above the uppermost level of the construction on
the Premises, together with the right to cause such noise as may be inherent in the operation of
aircraft now known or hereafter used for navigation of or flight in the air using said airspace, or
landing at, or taking off from, or operating on Airport.
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14.2 No Obstruction.
LES SEE shall not make use of the Premises in any manner which might interfere with
the landing and taking off of aircraft from the Airport or otherwise constitute a hazard. If this
provision is violated, LESSEE shall immediately remedy the situation upon reasonable notice by
LESSOR. If LESSEE does not immediately remedy the hazard, LESSOR may at its option enter
upon the Premises and abate the hazard at the expense of LESSEE. This paragraph shall not apply
to improvements constructed with LESSOR's approval under Paragraph 7.2.
ARTICLE XV - ASSIGNMENT
15.I LESSOR's Consent.
LESSEE shall not assign, sell, transfer, mortgage or pledge this Lease or any interest
in it without first obtaining written consent from LESSOR, which consent shall not be unreasonably
withheld. LESSEE granting to a lender a security interest in the proceeds of a sublease or in
buildings or other improvements constructed for a sublessee in order to finance the cost of such
construction shall not constitute an assignment prohibited hereby. Any change in principal
ownership or control of LESSEE, except if due to the death or disability of a shareholder or made
for estate planning or testamentary purposes, shall be considered an assignment of rights under this
Lease. Any assignment of this Lease by LESSEE shall be upon the following conditions:
Any assignment of this lease shall be in writing, signed by all Parties
to this Lease, and signed by the assignee.
Any assignment of this Lease shall provide that the assignee assumes
and agrees to perform all of the terms, covenants and agreements
which LESSEE has agreed to perform under this Lease. Provided
LESSOR approves the assignee's financial and operative capabilities,
LESSOR shall enter into a new agreement (novation) with LESSEE's
assignee. LESSOR's approval for such novation shall not be
unreasonably withheld or delayed. LESSOR shall thereafter rely
solely on the assignee, and LESSEE shall have no further liability to
LESSOR under this Lease except with respect to environmental
indemnifications for releases which occurred prior to the assignment.
Absent a novation, the assignee shall become jointly and severally
liable with LESSEE or any successor in interest of LESSEE for the
performance of the terms and covenants of this Lease.
15.2 Compliance with Requirements.
Any assignment or transfer whatsoever or pledge or mortgage made contrary to the
terms of this Article shall be void.
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ARTICLE XVI - TERMINATION BY LESSOR
16.1 Default by LESSEE.
If LESSEE defaults in the payment of any sums due LESSOR under this Lease,
defaults by the nonperformance of some other obligation set forth in this Lease, or if one of the
events of&fault set forth in Paragraph 16.2 below takes place, LESSEE shall have thirty (30) days
after written notice is served in accordance with Article XX to cure or remedy the default. If
LESSEE fails to cure or remedy the default within thirty (30) days after such notice has been served,
or, in the event such default cannot reasonably be remedied within such thirty (30) day period, to
commence such remedy within such period and diligently pursue it thereafter, LESSOR may, at its
option, and without prejudice to any other right or remedy, terminate this Lease and recover
possession of the Premises by summary proceedings.
16.2 Additional Defaults.
In addition to the events of default mentioned above, any of the following shall also
constitute an event of default hereunder:
bo
The making by LESSEE of any general assignment, or general
arrangement for the benefit of creditors;
The filing by or against LESSEE of a petition to have LESSEE
adjudged a bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy unless the same is dismissed
within sixty (60) days;
The appointment of a trustee or receiver to take possession of
substantially all of LESSEE's assets located at the Premises, or of
LESSEE's interest in this Lease, where possession is not restored to
LESSEE within thirty (30) days; or
The attachment, execution, or other judicial seizure of substantially
all of LESSEE's assets located at the Premises, or of LESSEE's
interest in this Lease, where such seizure is not discharged within
thirty (30) days.
16.3 No Waiver.
No waiver by LESSOR of a default in any of the terms, covenants or conditions of
this Lease shall be construed to be or act as a waiver of any subsequent default.
16.4 Remedies Cumulative.
All remedies granted to LESS OR under this Article are cumulative and are in addition
to any other rights LESSOR may have as a matter of law.
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ARTICLE XVII - TERMINATION BY LESSEE
17.1 Causes.
Without prejudice to any of its other remedies under law, or this Lease, LESSEE may
terminate this Agreement upon thirty (30) days written notice given in accordance with ARTICLE
XX, upon or after the happening of or during the continuation of any of the following events:
The inability of LESSEE or its sublessees to use, for a period of
ninety (90) days, any material portion of the Promises or
improvements thereon, because of any law, role, regulation or other
action or failure to act on the part of any governmental authority
having jurisdiction thereof.
The material default by LESSOR under this Lease and the failure of
LESSOR to remedy such default for a period of thirty (30) days after
receipt of written request or demand from LESSEE to remedy the
same, or; in the event such default is incapable of being remedied
within such thirty (30) day period, to commence such remedy within
such period and diligently pursue it thereafter.
The assumption by the United States Government or any authorized
agency thereof of the operation or control of Airport or any part of it
in a way that substantially restricts LESSEE for a period of thirty days
from conducting its operations on the Premises.
Discovery of a defect or condition in the Premises, including but not
limited to the presence of hazardous waste or other soil problems,
which could be reasonably expected to have a material adverse effect
on LESSEE's ability to use the Premises for the purposes
contemplated by this Lease.
17.2 Expiration of Cause.
If the basis for termination by LESSEE ceases to exist prior to a termination, the right
to terminate on such basis shall cease.
17.3 Non-Waiver.
No waiver by LESSEE of a default in any of the terms, covenants or conditions of
this Lease shall be construed to be or act as a waiver of any subsequent default.
17.4 Remedies Cumulative.
All remedies granted to LESSEE under this article are cumulative and are in addition
to any other rights LESSEE may have as a matter of law.
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ARTICLE XVIII - SURRENDER OF POSSESSION;
CONDITION OF PREMISES
18.1 Surrender.
Upon the expiration or earlier termination of this Lease, LESSEE shall immediately
surrender the Premises to LESSOR.
18.2 Condition.
The Premises shall be returned to LESSOR in the same condition as maintained by
LESSEE during its operation prior to surrender.
18.3 Removal of Personal Property.
All buildings, structures and improvements shall be delivered to LESSOR in good
condition, ordinary wear and tear excepted. Not later than thirty (30) days after the expiration or
termination of this Lease, LESSEE shall remove any and all signs, trade fixtures, machinery and
equipment from the Premises. LESSEE shall repair any damage caused by such removal. Upon
failure of LESSEE to remove such personal property within the thirty day period, LESSOR may at
its option cause the personal property to be removed and charge LESSEE the actual costs of such
removal or take title to the personal property.
18.4 Transfer to LESSOR.-
All permanent buildings, structures and improvements constructed, installed, erected
or placed on the Premises by LES SEE or its sublessees to which LESSOR does not already have title
shall automatically become the property of the LESSOR upon the expiration or earlier termination
of this Lease without further action on the part of either party, without cost or charge to LESSOR,
and without further conveyance or transfer to LESSOR; provided, however, that LESSEE shall, if
requested by LESSOR, execute any instruments or documents reasonably required by LESSOR to
evidence the vesting of title to such improvements and property.
ARTICLE XIX - AIRPORT TRANSFER
19.1 Transfer of Lease to Marana.
The undersigned parties enter into this Agreement solely on the condition that the
Airport will be transferred from Pima County to the Town of Marana. In the event that the Airport
is not transferred to Marana, for whatever reason, this Agreement will be null and void and the
respective parties will have no obligations whatsoever regarding the subject matter of this
Agreement.
19.2 Termination Upon Subsequent Transfer to Pima County.
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Pima County enters into this Agreement solely to facilitate the transfer of the Airport
to the Town of Marana. In the event that Pima County obtains ownership or assignment of the Town
of Marana's interest in the Airport in the future, this Agreement will be null and void and neither
Marana nor Pima County shall have any obligations to Lessee or Lessee's successors under this
Agreement.
ARTICLE XX - GENERAL PROVISIONS
20. t Cumulative.
Unless specifically indicated otherwise, no remedy, right, option or election set forth
in any provisions of this Lease shall be deemed exclusive; rather, each shall be cumulative with other
remedies in law or equity. This Lease shall be deemed both a contract between the Parties and a
declaration of conditions, covenants and restrictions nmning with the land for the duration of the
Lease term or any extensions of it.
20.2 Non-Waiver.
No circumstance in which LESSOR or LESSEE expressly or impliedly consents to,
suffers, or permits the doing by the other of any act or omission under this Lease shall be construed
to be or shall be a waiver of any provision or condition of this Lease or shall be construed to condone
any future breaches, unless the provision or condition in question is expressly waived in writing by
the waiving party.
20.3 Time of Essence.
Time is of the essence in the performance of all terms and conditions of this Lease.
20.4 Entire Agreement.
This instrument contains the entire agreement between the parties, and no statement,
promise or inducements made by either party or agent of either party that is not contained in this
instrument shall be valid or binding.
20.5 Modification.
This Lease may not be enlarged, modified or altered except in writing by the parties.
20.6 Abandonment.
If the Premises are abandoned, deserted or vacated by LESSEE for thirty (30) days
or more, and remain so for an additional thirty (30) days after Lessor gives LESSEE notice thereof,
LESSOR may, at its option, terminate this Lease and reenter and repossess the Premises without
liability to LESSEE.
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20.7 Successors and Assigns Bound.
All the terms, covenants and conditions of this Lease shall inure to and bind the
successors and assigns of the parties to this Lease.
20.8 Article Headings.
The article headings in this Lease are for convenience and reference only and are not
intended to define or limit the scope of any provision of this Lease.
20.9 Severability.
If any term or condition of this Lease is invalid or unenforceable, all other terms and
conditions shall remain in full force and effect.
20.10 Applicable Law.
This Lease shall be governed by the laws of the State of Arizona, and any actions to
enforce or interpret the terms and provisions of this Lease shall be brought and maintained in Pima
County, Arizona.
20.11 Authority.
Each of the respective undersigned signatories for LESSEE and LESSOR warrant that
they have authority to enter into this Lease for and on behalf of the party for whom they are signing
and to legally bind such party.
20.12 Recording and Effective Date.
Upon execution by all parties, this Lease shall be recorded in the office of the Pima
County Recorder, and the Lease shall be effective on the date recorded.
20.13 Approvals.
Whenever this Lease requires the approval or consent of a party, such approval or
consent shall not be unreasonably withheld or delayed.
ARTICLE XXI - NOTICES
21.1 Addresses.
All notices under this Lease shall be in writing, and shall be deemed sufficiently served if
hand delivered or sent by certified mail, postage prepaid, to the recipient at the following address:
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If to LESSOR:
Airpo~Manager
TOWN OFMARANA
13251N. Lon Adams Road
Marana, Adzona 85653
Town Manager
TOWN OF MARANA
13251 N. Lon Adams Road
Marana, Arizona 85653
and with a copy to:
Daniel J. Hochuli
Daniel J. Hochuli & Associates, P.C.
Town Attorney
220 E. Wetmore Road, Suite 110
Tucson, AZ 85705
If to LESSEE:
PIMA AVIATION, 1NC., c/o Gary Abrams
Avra Valley Airport ·
Leased Premises Office
11700 W. Avra Valley Road, #86
Marana, Arizona 85653
and with copies to:
PIMA AVIATION, INC.
P.O. Box 5367
Tucson, Arizona 85703
MARK B. RAVEN, Esq.
Law Offices of Raven & Kirschner, P.C.
1600 Norwest Tower
One South Church Avenue
Tucson, Arizona 85701-1612
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21.2 Service.
Service of any notice or demand by hand delivery shall be deemed complete upon the
date of delivery. Service of any notice or demand by certified mail shall be deemed complete upon
receipt.
21.3 Change of Address.
Either party may change its address to such other addresses as such party may
designate to the other in writing from time to time.
1N WITNESS WHEREOF, the Parties have affixed their signatures below.
LESSEE: LESSOR:
By: By:
Title: Title:
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