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HomeMy WebLinkAboutC2015-011 - 1/13/2015 - Approved CORPUS CHRISTI INTERNATIONAL AIRPORT AMENDED AND RESTATED HANGAR AND FIXED BASE OPERATOR'S LEASE STATE OF TEXAS § COUNTY OF NUECES § This Corpus Christi International Airport Amended and Restated Hangar and Fixed Base Operator's Lease (hereinafter"Lease" or"Lease Agreement") is entered into by and between the CITY OF CORPUS CHRISTI ("Lessor"), a Texas home-rule municipal c rporatio , acting by and through its City Manager pursuant to Ordinance No. f(?)0:41 _, and SIGNATURE FLIGHT SUPPORT CORPORATION ("Lessee"), a Delawa a corporation authorized to do business in Texas, acting by and through its duly authorized officers. The initial addresses of the parties are as follows: City Lessee Director of Aviation Attn: General Counsel City of Corpus Christi Signature Flight Support Corporation 1000 International Drive 201 South Orange Avenue, Suite 1100 Corpus Christi, Texas 78406 Orlando, Florida 32801 WHEREAS, on August 29, 1959, Lessor leased certain sites at the Corpus Christi International Airport for commercial hangar and fixed base aviation operations, herein referred to as the "Master Lease;" and WHEREAS, on July 14, 1960, a lease agreement covering certain of the Master Lease sites, or portions thereof, was assigned to Gault Aviation and WHEREAS, said lease agreement was later amended on July 14, 1960, February 14, 1961, May 27, 1964, May 25, 1966, and November 15, 1966; and WHEREAS, on February 20, 1980, an assignment of said lease agreement from Gault Aviation to Air Associates, Inc., later known as Van Dusen Airport Services Company, was approved by Lessor; and WHEREAS, said lease agreement was later amended and/or modified on December 7, 1983 and December 17, 1985; and WHEREAS, said lease agreement was assigned on December 16, 1986 from Van Dusen Air, Inc. to Van Dusen Air Services Company, Limited Partnership, and was later amended and assigned from Van Dusen Airport Services, L.P. to Page Avjet Airport Services, Inc., a wholly owned subsidiary of Page Avjet Corporation (Page) on October 31, 1990; and WHEREAS, Page Avjet Airport Services, Inc_changed its name to Signature Flight Support Corporation pursuant to a Certificate of Amendment of Certificate of Incorporation dated October 1, 1992; and WHEREAS, Lessee is a current tenant pursuant to the above-referenced lease agreement, together with all assignments, amendments, modifications, and name changes thereof. 2015-011 1/13/15 Ord. 030394 Signature Flight Support Corp. INDEXED WHEREAS, the parties hereto desire to modify the provisions of said lease agreement; and NOW, THEREFORE, the following Amended and Restated Hangar and Fixed Base Operator's Lease is hereby entered into by and between the parties hereto in complete substitution for the previous lease agreement and all amendments and modifications thereto, as heretofore amended: ARTICLE 1. DEFINITIONS As used herein, the following words and phrases shall have the meanings set forth below: 1.01 Affiliate. "Affiliate" is any corporation or other entity which directly or indirectly controls or is directly or indirectly controlled by or is under common control with Lessee; "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities or by contract or otherwise. 1.02 Airport. "Airport" means Corpus Christi International Airport. 1.03 AOA. "AOA" means Aircraft Operating Area. 1.04 Appraisal. "Appraisal" means the process to arrive at a property valuation based on rental rates for similar property at the Airport and at similar nearby airports and consistent with airports included in the appraisal done by Aviation Management Consulting Group, dated November 18, 2011, identified in EXHIBIT 2, attached hereto and incorporated into this Lease that will be utilized to set rental rates during the term of this Lease. 1.05 Aviation Director. "Aviation Director" means the Aviation Director of the City of Corpus Christi or Assistant Aviation Director. 1.06 Capital Improvement. "Capital Improvement" means an expenditure for a project or improvement at the Leased Premises that increases the value of the Leased Premises or extends its life expectancy by(i) returning the Leased Premises to its originally efficient operating condition if it has deteriorated to a state of disrepair and is no longer functional for its intended use, (ii) rebuilding Leased Premises to a like-new condition after the end of its economic useful life, or (iii) replacing or adding a major component or substantial structural part of the Leased Premises. 1.07 DOT. "DOT" means the United States Department of Transportation, and any federal agency succeeding to its jurisdiction. 1.08 FAA. "FAA" means the Federal Aviation Administration of the United States government, and any federal agency succeeding to its jurisdiction. 1.09 FBO. "FBO" is an abbreviation for Fixed Base Operator, which is further defined in the Minimum Standards for Commercial Aeronautical Service Providers. 1.10 Fiscal Year. "Fiscal Year" means a period of twelve (12) consecutive months commencing on October 1 and ending on September 30. 1.11 Leased Premises. "Leased Premises" means those certain premises at Airport more particularly described in Article 2. Page 2 of 36 1.12 Maintenance. "Maintenance" means a repair of less than $100,000 that keeps the Leased Premises in proper working condition but does not add to the value or extend the life expectancy of the Leased Premises. Maintenance merely keeps the Leased Premises in an operating condition over its probable useful life for which it was acquired. 1.13 Sign. "Sign" means any advertising sign, billboard, identification sign or symbol, or other similar device, regardless of content. 1.14 Subsidiary. "Subsidiary" shall mean any corporation or other entity not less than fifty percent (50%) of whose outstanding stock (or other form of equity ownership) shall, at the time, be owned directly or indirectly by Lessee or the entity owning directly or indirectly 50% or more of Lessee, as applicable. 1.15 Trade Fixtures. "Trade Fixtures" shall mean, but shall not be limited to, any signs(electrical or otherwise) used to identify Lessee's business; all shelves, bins, racking, machinery and equipment used in connection with Lessee's required or permitted activities pursuant to this Lease, whether or not such machinery or equipment is bolted or otherwise attached to the Leased Premises; and all other miscellaneous office equipment, furnishings, and personal property. 1.16 TSA. "TSA" means the Transportation Security Administration, and any federal agency succeeding to its jurisdiction. ARTICLE 2. DESCRIPTION OF LEASED PREMISES 2.01 Lessor, for and in consideration of the rents, covenants and promises herein contained to be kept, performed and observed by Lessee, does hereby lease unto Lessee, and Lessee does hereby accept from Lessor, the property, including all structures and improvements erected on the property existing and in operation as of the Commencement Date of this Lease (collectively referred to as "Leased Premises") located at 574 Hangar Lane, at the Airport, identified in EXHIBIT 1, attached hereto and incorporated into this Lease. ARTICLE 3. RENTAL 3.01 Lessee agrees to pay Lessor the rental as indicated on the tables (entitled "Premises Rent" and "Fuel Farm Rent") below, monthly in advance (without notice or demand, both of which are expressly waived)for the use and occupancy of the Leased Premises, at the times and in the manner hereinafter provided. During the Term, any change in rent will be based on an Appraisal by a third party appraiser, pursuant to the Appraisal process defined herein and described in section 3.03 herein. Initial values will be determined by the amount set by the appraisal done by Aviation Management Consulting Group, dated November 18, 2011, identified in EXHIBIT 2, attached hereto and incorporated into this Lease. All rentals shall be calculated based on the Appraisal and shall be paid by Lessee to Lessor in advance without invoicing, notice or demand, in equal monthly installments on or before the first day of each calendar month beginning on the Commencement Date and continuing throughout the remainder of the term of this Lease and any extension(s) hereof. In the event that the term of this Lease shall commence on the day other than the first day of any calendar month or expire on a day other than the last day of a calendar month, then, and in such event, the rent will be prorated for the first or last month as the case may be. Page 3 of 36 From Commencement Date through Initial Term: PREMISES RENT Premises Area SF Acreage Rent per sf/yr Annual Monthly Rental Rental Hangar 2 15,000 0.34 $1.50 $ 22,500.00 $ 1,875.00 Hangar 3 30,800 0.71 $1.65 $ 50,820.00 $4,235.00 Office 3 5,770 0.13 $5.65 $ 32,600.50 $ 2,716.71 Office 4 5,032 0.11 $5.65 $ 28,430.80 $ 2,369.23 Office 5 7,464 0.17 $5.65 $42,171.60 $ 3,514.30 Terminal 4,900 0.11 $6.00 $ 29,400.00 $ 2,450.00 Parking Lot 1.18 51,602 $0.30 $ 15,480.60 $ 1,290.05 Apron 62,000 1.42 $0.325 $ 20,150.00 $ 1,679.17 Undeveloped 22,944 0.53 $0.30 $ 6,883.20 $ 573.60 Fuel Farm 0.11 Pad 4,776 $0.30 $ 1,432.80 $ 119.40 TOTAL 210,288 4.81 $249,869.50 $20,822.46 FUEL FARM RENT Capacity Rent per Annual Rent Description (Gallons) GAL/YR JETA 36,000 $0.750 $27,000 AVGAS 12,000 $0.750 $9,000 UNLEADED 2,000 $0.750 $1,500 DIESEL 2,000 $0.750 $1,500 TOTAL 52,000 $0.750 $39,000 3.02 All rent and payments that become due and payable by the Lessee shall be made to the City of Corpus Christi, Office of the Aviation Director, Corpus Christi International Airport, 1000 International Drive, Corpus Christi, Nueces County, Texas, 78406 unless otherwise notified in writing. All rent and payments unpaid for ten (10) days after the date due shall bear interest at the rate of eighteen (18) percent per annum from that date. 3.03 (a) At the City's sole expense, the Appraisal shall be updated by the City approximately every five (5) years after the date ofthe previous Appraisal, to arrive at an updated property rental valuation that will be utilized to set rental rates for any subsequent five (5) year period, irrespective of whether or not one or more Options are exercised by Lessee. Following the Commencement Date of this Lease, any increase(s) will (i) be based on the most current Appraisal, (ii) be implemented on a continuing five-year cycle, utilizing the 2011 Appraisal as the base date for the five-year cycle, and (iii) take effect upon the date next following 30-days advance notice, as set out in this paragraph. Such continuing five-year cycle is unaffected by the exercise of an Option or by any number of Options that may be exercised by Lessee at any one Page 4 of 36 time. The City shall provide Lessee with not less than 30 days advance written notice of the amount of the increase(s) and the date the rental rate increase(s) will take effect. (b) The appraiser shall be a qualified and impartial member of the Appraisal Institute or a person with equivalent credentials, experienced in airport property appraisals. ARTICLE 4. USE OF LEASED PREMISES Lessee shall use the Leased Premises solely for operating an FBO as defined Section 15 of the current Minimum Standards dated October 17, 2012, for Commercial Aeronautical Service Providers and as the same may be amended from time to time, which includes performing and/or subleasing to qualified tenants to perform full aircraft servicing facilities including but may not be limited to the sale of aircraft and aircraft parts; aircraft maintenance and repair; servicing of aircraft engines, instruments, propellers and accessories in connection with said business, aircraft storage, aircraft training, aircraft charter and rentals, aviation school instruction, classroom and flight simulator instruction, and other flight instruction provided only to those persons already holding an aircraft pilot license and seeking a certification towards an aircraft being manufactured or sold on the Leased Premises, and such other activities reasonably incidental thereto and such business directly related thereto or as may be set forth in the Minimum Standards as amended from time to time. Such use may also include any other activity or services normally performed or offered by an FBO at the Airport, as adopted in the Minimum Standards, as they may be amended from time to time, and such other aviation related uses as may be included in the Minimum Standards as amended from time to time. Provided Lessee is a holder of a valid aviation fuel dispensing permit issued by the City of Corpus Christi and not in default of any other provision of this Lease, Lessee may also conduct fueling operations as authorized under said fuel dispensing permit on the Leased Premises. In connection with such use and occupancy, Lessee shall have the right to occupy and maintain, as required by this Lease, all buildings, shops, hangars and other improvements existing on the Leased Premises as of the Commencement Date of this Lease. The City reserves the right to replace or repair portions of the apron included in the Leased Premises. During any such replacement or repair work, if Lessee cannot use portions of the apron due to the work being done, the City will provide Lessee alternate space of substantially the same size of said portions and as close to the Leased Premises as is practical. Prior to the award of any contract for such replacement or repair, the City shall consult with Lessee on alternative space options and use its best efforts to provide an alternative that has the least impact on Lessee's operations. Following the completion of any such replacement or repair, Lessee's Leased Premises will be restored to its original layout. Lessee waives any claims for compensation for loss caused by such temporary relocation provided the steps identified herein are followed. The Lessee shall not at any time leave the Leased Premises vacant, but shall in good faith continuously throughout the term of this Lease conduct and carry on in the entire Leased Premises the type of business for which the Leased Premises are leased, except during periods in which the Leased Premises may not be occupied as a result of fire or other casualty, or reasonable periods for repairs and alterations, all such repairs and alterations to be diligently pursued to completion. All services performed by Lessee shall be in compliance with all applicable state and federal environmental rules and regulations at Lessee's sole expense. Page 5 of 36 No other activities shall be conducted on the Leased Premises unless authorized in writing by the Aviation Director provided, however that such other activities be aeronautical in nature. ARTICLE 5. LEASE TERM 5.01 The initial term of this Lease shall be five (5) years ("Initial Term") that shall commence on the sixty-first (61st) day following the date of passage of an Ordinance by the City Council of Corpus Christi approving this Lease ("Commencement Date") and shall terminate at midnight of the last day of the 5-year term unless earlier terminated in accordance with this Lease or extended for additional periods as provided in section 5.02 below. Together the Initial Term and any extension shall collectively be referred to as the Term of this Lease. 5.02 Lessee shall have the option to extend the Term by up to four (4) additional five (5) year periods ("Option(s)"), with the maximum term of the Lease not to exceed twenty-five (25) years. Each five (5) year Option shall be conditioned upon i) a Capital Improvement Plan (as defined herein in the paragraph below) and related budget, agreed upon by the parties as described herein, ii) a capital investment by Lessee of not less than One Million One Hundred Thousand dollars ($1,100,000) for Direct Construction Costs (as defined below) for such Capital Improvements, and iii) a performance bond or irrevocable standby letter of credit in the face amount of the agreed upon budget for the Capital Improvement Plan, as described below, provided however, if the Lessee submits and the City approves a Capital Improvement Plan equal to or in excess of a multiple of$1,100,000, the Term of this Agreement shall be extended for five year Option periods equal to the multiple of the Direct Construction Costs in the approved Capital Improvement Plan. Upon satisfaction of the foregoing three conditions, the Term of this Agreement shall be extended by amendment to be promptly issued by the City and countersigned by the Lessee. Failure to meet any of the three conditions stated herein will invalidate the Option. As used herein, "Capital Improvement Plan" means a detailed description of the Capital Improvements including budgetary costs, and intended uses for each item intended to be installed or constructed at the Leased Premises by the Lessee. "Direct Construction Costs" means all general contractor and construction related trades required to complete the project in accordance with the approved drawings as well as related costs associated with architecture, engineering, testing, permits, and construction management. Subject to the requirements set forth in Article 13 herein, Lessee will submit the above- referenced Capital Improvement Plan to the Aviation Director before the end of the thirtieth (30th) month after the Commencement Date of the Initial Term (or current Option period, in the case of exercise of the first, second or third Option). The Aviation Director shall have thirty (30) calendar days after receipt of the Capital Improvement Plan, to approve or to object in writing to any matter referenced within. If the Aviation Director objects within such 30-day period in writing to any matter contained within such Plan (including its budget), the Aviation Director and Lessee agree to work together in good faith to resolve any such objections to the reasonable satisfaction of both parties. Subject to the approval by the Aviation Director of the Capital Improvement Plan, Commencement of Construction of such Capital Improvements shall begin no later than the end of the sixth (6th) month of the fourth (4th) year after the Commencement Date of the Initial Term (or current Option period, in the case of exercise of the first, second or third Option). "Commencement of Construction" means (i) to commence the work of constructing the Capital Improvements or features with all approvals thereof required by applicable governmental authorities obtained as necessary; (ii) a notice to proceed has been issued to the contractor; and (iii) onsite construction of the site development components (such as drainage, extensive grading or utilities) is underway and being pursued. Page 6 of 36 As security for full and faithful Completion of such Capital Improvements required for each Option, before the end of the thirtieth (30th) month after the Commencement Date of the Term (or current Option period, in the case of exercise of the first, second or third Option), Lessee must furnish to the Aviation Director a performance bond or irrevocable standby letter of credit in the face amount of the agreed upon budget for the Capital Improvement Plan referenced above, but in no event less than One Million One Hundred Thousand dollars ($1,100,000), issued by a surety company or bank authorized and licensed to transact business in the State of Texas, with the City of Corpus Christi Aviation Department as obligee or beneficiary, respectively, and, if a bond, not subject to reduction or cancellation except after thirty (30) days' written notice by certified mail, return receipt requested, to the Aviation Director. Said performance bond or irrevocable standby letter of credit shall be kept in force until Completion of the above- referenced Capital Improvement. "Completion" means issuance of Certificates of Occupancy for the Capital Improvement(s) have been issued or a determination by an engineering or architectural firm that the Capital Improvement Plan is substantially complete and Lessee may safely use and occupy the improvements. A bond or irrevocable letter of credit, as described above, must be valid for six (6) months or more and require, as sole documentation for payment, a statement in writing from the Aviation Director setting forth (i) the circumstances giving rise to the call on the bond or giving rise to the draft on a letter of credit or (ii) a statement of the failure to furnish proof of renewal or replacement of the bond or letter of credit, as applicable, no less than thirty (30) days prior to the expiration of the then current bond or letter of credit and, if a letter of credit was posted, accompanied by a properly drawn draft in an amount not to exceed the face value of the letter of credit. Upon Lessor's request, Lessee shall provide documentation such as invoices, contracts, proof of payment, and other records satisfactory to the Aviation Director as evidence of expenditure towards Capital Improvement Plan. Only in the event that this Lease is terminated by the City prior to the end of an exercised Option without fault or default on the part of Lessee and (i) other than as a result of the lawful assumption by the United States Government or any authorized agency thereof of the operation, control or use of the Leased Premises that substantially restricts Lessee from operating thereon; or(ii) other than as a result of the issuance by any court of competent jurisdiction of an injunction that prevents or restrains the use of the Leased Premises that prevents Lessee from operating thereon, the total Direct Construction Costs for the approved Capital Improvement Plan associated with said Option shall be amortized on a straight line basis over the term of that Option and a payment issued by the City to the Lessee for the unamortized amount of the Direct Construction Costs for the approved Capital Improvement Plan for the remaining balance of that Option term, with payment to be made within sixty (60) days of such termination. If the Lease is terminated as a result of a Lessee default as stated in Section 24 of this Lease or for any reason other than that stated in the immediately preceding sentence herein, no reimbursement of Direct Construction Costs will be made and Lessee forfeits the full investment to the City. The budget for the Capital Improvement Plan required to exercise an Option, as described in this Section 5.02, shall be in addition to the deferred maintenance and other maintenance required in Article 15 herein. The performance bond or irrevocable standby letter of credit required to exercise an Option, as described in this Section 5.02, shall be in addition to the performance guarantee required in Article 8 herein. Page 7 of 36 ARTICLE 6. INDEMNIFICATION 6.01 Lessee shall indemnify, hold harmless and defend the City, its officers, officials, employees, and agents ("Indemnitees") from and against any and all liability, loss, damages, claims, demands, causes of action, and judgments of any nature on account of personal injuries, property loss, or damage (including, without limitation to the foregoing, workers' compensation and death claims) which arise out of or in connection with this Lease Agreement or the performance of this Lease Agreement, regardless of whether the injuries, death, loss, or damage are caused by or are claimed to be caused by the concurrent or contributory negligence of Indemnitees, but not by the sole negligence of Indemnitees unmixed with the fault of any other person. Lessee must, at its own expense, investigate all claims and demands, attend to their settlement or other disposition, defend all actions based thereon with counsel satisfactory to Indemnitees, and pay all charges of attorneys and all other costs and expenses of any kind arising from any liability, loss, damages, claims, demands, or actions. The indemnification obligations of Lessee under this section shall survive the expiration or earlier termination of this Lease Agreement. 6.02 Intentionally left blank. 6.03 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF THE PERFORMANCE OF THIS AGREEMENT. ARTICLE 7. INSURANCE 7.01 General Requirements. Lessee shall not commence use or occupancy of the Leased Premises until Lessee has obtained the types and amounts of required insurance as indicated below and until such insurance has been reviewed by the City and a Certificate of Insurance is received indicating required coverage. If the coverage period ends prior to the end of the Term of this Lease, including any extensions thereof, Lessee must, prior to the end of the coverage period, forward a new Certificate of Insurance to City as verification of continuing coverage for the duration of the Term of this Lease. Lessee must submit certificates of insurance for all sub lessees, assignees and subcontractors to the City prior to commencing work. Lessee and all sub lessees', assignees' and subcontractors' insurance coverage shall be written by companies licensed to do business in the State of Texas at the time the policy is issued and shall be written by companies with an A.M. Best rating of A-VII or better. Hazardous materials insurance, if required, shall be written by companies with an A.M. Best rating of A-VII or better. Lessee, sub lessees, assignees and subcontractors must obtain workers' compensation coverage through a licensed insurance company in accordance with Texas law. The contract for coverage must be written on a policy and with endorsements approved by the Texas Department of Insurance. The coverage provided must be in amounts sufficient to assure that all workers' compensation obligations incurred by the Operation will be promptly met. Page 8 of 36 The following conditions apply: (a) Approval of insurance by City and the required minimums shall not relieve or decrease the liability or responsibility of the Lessee hereunder and shall not be construed to be a limitation of liability on the part of the Lessee. (b) The Lessee, sub lessees, assignees and subcontractors must obtain and maintain in force insurance at all times during the Term of this Lease. (c) All endorsements naming the City as additional insured, waivers of subrogation, and notices of cancellation, endorsements, as well as Certificates of Insurance shall indicate: City of Corpus Christi Department of Aviation 1000 International Drive Corpus Christi, Texas 78406 Attn: Director of Financial Services A copy of the insurance certificate shall be provided to the City's Risk Management Division. (d) It is intended that Policies required in the Minimum Standards, which may be amended from time to time, covering the City and Lessee shall be considered primary and non- contributory coverage, as applicable. (e) If insurance policies are not written for the amounts specified below, the Lessee, sub lessees, assignees and subcontractors shall carry Umbrella or Excess Liability Insurance for any differences in amounts specified. If Excess Liability Insurance is provided, it shall follow the form of the Primary Coverage. (f) The City shall be entitled, upon request and without expense, to receive certified copies of policies and endorsements thereto. (g) The City reserves the right to review insurance requirements set forth during the term of a Lease and to make reasonable adjustments to required types of insurance coverage, limits, and exclusions when deemed necessary and prudent by the City based upon changes in statutory law, court decisions, the claims history of the industry or financial considerations of the insurance company as well as the Lessee, sub lessees, assignees and subcontractors. (h) The Lessee, sub lessees, assignees and subcontractors shall not cause any insurance to be cancelled or permit any insurance to lapse during the Term of a Lease or as required in the Lease. (i) The Lessee, sub lessees, assignees and subcontractors shall provide all deductibles and self-insured retentions, if any, stated in the policies. All deductibles and self- insured retentions shall be disclosed on the Certificates of Insurance. (j) Liability Insurance provided by the Lessee, sub lessees, assignees and subcontractors pursuant to the Minimum Standards shall cover and protect the City, its officials, officers, agents, Personnel, contractors, successors, and assigns, as their interests may appear. Page 9 of 36 (k) The Lessee, sub lessees, assignees and subcontractors are responsible for insuring their own interest. 7.02 Specific Insurance Requirements. The Lessee, sub lessees, assignees and subcontractors shall obtain, and maintain throughout the Term of this Lease, the following insurance coverages and furnish certificates of insurance and policy endorsements as evidence thereof: (a) Workers' Compensation and Employers Liability coverage with limits consistent with statutory benefits outlined in the Texas Workers' Compensation Act (Section 401) and minimum policy limits for employers liability of$1,000,000 bodily injury each accident, $1,000,000 bodily injury by disease policy limit and $1,000,000 bodily injury by disease each Personnel. The following endorsements shall be added to the policy: (i) A Waiver of Subrogation in favor of the City of Corpus Christi; (ii) A thirty (30) day written notice of Cancellation/Material Change in favor of the City. (b) Property insurance coverage on an "All Risk of Physical Loss" form for 100% of the replacement value of all improvements constructed by or for Lessee on the Leased Premises. Coverage shall include, but not be limited to, fire, wind, hail, theft, vandalism, and malicious mischief. The coverage shall be written on a replacement cost basis. The proceeds from such insurance shall be used to restore the improvements to their original condition in the event of a covered loss. Lessee is responsible for insuring their own interests. Lessee is responsible for deductibles for any loss. (c) Liability insurance in the specific types and amounts specified in section 7.03 below as applicable for the proposed Commercial Aeronautical Service Operator, as defined in the Minimum Standards, as may be amended from time to time. (i) All Commercial General Liability Insurance policies shall contain: (1) Waiver of Subrogation in favor of the City of Corpus Christi. (2) Thirty (30) day written notice of cancellation or material change in favor of the City of Corpus Christi. (3) City of Corpus Christi listed as additional insured,form CG 2010, or its equivalent. (4) Independent Contractors coverage. (5) Blanket contractual liability coverage for liability assumed under the Lease or Permit. (6) Damage to Premises Rented to you in an amount not less than $250,000. (7) Medical Expense coverage with a limit of$5,000 any one person. (d) Environmental impairment liability to include remediation and spill/leakage clean-up with minimum limits of $2,000,000 each incident/ $2,000,000 policy aggregate limit issued on a claims made policy with extended reporting coverage of 24 months post-lease termination/expiration. By offer of Lessee and specific acceptance by City, Lessee shall provide the 24 months post-lease termination/expiration coverage of environmental impairment liability insurance by renewal of the policy in effect during the Term, with proof of renewal provided to the City's Risk Manager and Aviation Director upon each successive renewal for a period of 24 months following the expiration or earlier termination of the Lease. Page 10 of 36 This provision, providing for the environmental coverage post-lease, survives the expiration or earlier termination of this Lease. 7.03 Lessee Requirements. Environmental Commercial Aircraft Impairment General Liability Liability (Broad Liability (Bodily Injury Form Pollution (Bodily Injury Completed Hangar and Property Non Owned Liability and Property Operations Keepers Damage/ Aircraft Coverage/Third Damage/ party Clean up. Personal and including AST/UST Advertising Passengers coverage) Injury) $2MM each incident— limit /$2MM policy aggregate; if claims made $10MM/ $10MM/ policy needs $10MM $10,000,000 $2,000,000 $10MM $10MM twenty four(24) month extension period post termination date 7.04 Motor Vehicle Requirements. For Lessee's vehicles operated on the Leased Premises and in the AOA the following conditions apply: (a) Business Automobile Liability Insurance for all owned, non-owned, and hired vehicles with a minimum combined single limit of $5,000,000 for bodily injury and property damage. (b) City of Corpus Christi named as additional insured, Form TE 9901 B. (c) Thirty (30) day written notice of cancellation or material change in favor of the City of Corpus Christi, form TE 0202A. ARTICLE 8. PERFORMANCE GUARANTEE & LANDLORDS LIEN 8.01 Lessee shall deliver to the City, on or before the Commencement Date of this Lease, but at a minimum must show written evidence of performance guarantee commitment no later than the date of execution of this Lease, and shall keep in force throughout the Term hereof, an irrevocable standby letter of credit ("ISLC") in favor of Lessor, drawn upon a bank satisfactory to Lessor and payable to City of Corpus Christi, Aviation Department. The foregoing shall be in a form and content satisfactory to Lessor, shall be conditioned upon satisfactory performance of all terms, conditions and covenants, including maintenance requirements, contained herein during the Term hereof and shall stand as security for payment by Lessee of all amounts due by Lessee as a result of valid declarations of uncured default, as set forth herein, asserted by Lessor. The amount of the ISLC shall be adjusted, as necessary, so that it shall at all times equal at least one (1) year of the total estimated annual rentals, fees and charges payable by Lessee to Lessor hereunder. The ISLC shall not be subject to reduction in coverage or cancellation. If the available Page 11 of 36 balance on the ISLC falls below the amount required herein, Lessor agrees to replenish it to the full required amount within seven (7) days of it falling below the full required amount. Failure to replenish the ISLC as stated herein constitutes default of the Lease. The surety on the ISLC must, by appropriate notation thereon, stipulate and agree that no change, extension of time, alteration or addition to the terms of this Lease in any way affects its obligations under the ISLC and consents to waive notice of any such matters. An irrevocable letter of credit, as described above, must be valid for six (6) months or more and require, as sole documentation for payment, a statement in writing from the Aviation Director setting forth (i) the circumstances of a valid declaration of default giving rise to the call on the letter of credit or (ii) a statement of the failure to furnish proof of renewal or replacement of the letter of credit no less than thirty (30) days prior to the expiration of the then current letter of credit, and accompanied by a properly drawn draft in an amount not to exceed the face value of the letter of credit. 8.02 Lessee hereby gives to Lessor a lien upon all of its property now, or at any time hereafter, in or upon the Leased Premises, to secure the prompt payment of charges herein stipulated to be paid for the use of said Premises; all exemptions of such property, or any of it, being hereby waived. In the event that the amount of the performance guarantee provided by Lessee under the terms of this Lease, at all times during the term hereof, shall equal the greater of the rents, fees and charges payable by Lessee to Lessor for the current calendar year or double the amount of the performance guarantee set forth in Section 8.01 above, then the provisions set forth in Section 8.02 above, shall not apply hereto. 8.03 The performance guarantee required in Article 8 herein shall be in addition to the performance bond or irrevocable standby letter of credit required to exercise the Option, as described in Section 5.02 herein. ARTICLE 9. MINIMUM STANDARDS Lessor has adopted Minimum Standards ("Minimum Standards") and Rules and Regulations ("Rules and Regulations"), which shall govern Lessee in the use of the Leased Premises and all common facilities, a copy of each of which has been furnished to Lessee and are incorporated herein by reference. Lessee agrees to comply fully at all times with these governing documents. Lessor, in its sole discretion, shall have the right to amend, modify and alter these Minimum Standards and Rules and Regulations from time to time in a reasonable manner or may introduce other regulations as deemed necessary for the purpose of assuring the safety, welfare, convenience and protection of property of Lessor, Lessee and all other tenants and customers of the Airport; provided, however, that Lessor shall give Lessee reasonable advance notice of any such amendments, modifications or alteration of the Minimum Standards and/or Rules and Regulations. ARTICLE 10. FEES AND CHARGES 10.01 Fees and Charges. (a) Fuel flowage fees shall be paid by Lessee to the Lessor for all fuel delivered to the Leased Premises for dispensal by the Lessee to all categories of customers except any signatory airline paying a landing fee at the Airport, in the amount per gallon, subject to atmospheric adjustments, now or hereafter set by the Aviation Director, as may be adjusted periodically. The fees and charges in effect as of the Commencement Date of this Lease are set forth in EXHIBIT 5 attached hereto. Lessee agrees to keep accurate books, records and accounts of its purchase Page 12 of 36 and sale of aircraft fuel delivered to its customers on the Airport premises. Lessee agrees to remit to the Aviation Director payment and related delivery tickets provided by the various suppliers as to the amount of aircraft fuel delivered to the Leased Premises, by the 10th day of the month following such delivery. If no such delivery is made during a particular month, Lessee shall provide the Aviation Director with a written statement to that effect. (b) Any City controlled ramp related uses by Lessee that are not included in the Leased Premises shall be for public use and subject to a Ramp Fee, as set forth in EXHIBIT 5 attached hereto. The Ramp Fee shall be set annually by the City for use of City controlled ramp. Lessee or sub lessee shall remit to the City seventy-five percent (75%) of all revenues received for use of City controlled ramp or equivalent charges within ten (10) days following the end of the month in which the ramp was utilized, accompanied by an accounting of all City controlled ramp rental activity. Lessee shall retain the remaining twenty-five percent (25%) of such revenues as consideration for Lessee's management of said City controlled ramp rental and collection of resulting revenues. The City retains the right to enter upon City controlled ramp at any time and to take an inventory of any aircraft parked on the City controlled ramp, as well as a right to audit Lessee's or sub lessee's accounting of City controlled ramp rental activity. Lessee or sub lessee cannot charge any fees for use of the City controlled ramp other than the Ramp Fee set by the City for use of City controlled ramp and cannot waive any fees set by the City and due to the City for use of City controlled ramp without City's written approval. (c) Fees and charges for miscellaneous items and services provided by the City, including, but not limited to, employee badges, shall be assessed by the City in connection with the ordinary usage of Airport facilities (hereafter "City Fees," set forth in EXHIBIT 5 attached hereto). (d) All rentals, fees and charges payable by Lessee to Lessor under the terms hereof, whether or not expressly denominated as rent, shall constitute rent for all purposes, including, but. not limited to, purposes of the United States Bankruptcy Code. (e) For those services or functions listed in EXHIBIT 5 attached hereto, Lessee cannot charge fees to their customers that are in excess of the applicable fees and charges that are approved by the City, as amended from time to time, set forth in EXHIBIT 5 attached hereto. 10.02 Proceeds Rent. (a) Lessee covenants and agrees to pay as additional Rent hereunder an amount equal to three percent (3%) of any Gross Proceeds (as hereinafter defined) from a Sale (as hereinafter defined) of the Lessee's Leasehold Interest in the Leased Premises, or any portion thereof, as the case may be, at the times and in the manner hereinafter set forth (the "Proceeds Rent"). This section 10.02 applies only to the sale of Lessee's Leasehold Interest in the Leased Premises, or any portion thereof, at Corpus Christi International Airport and no other location. (b) Payments of the Proceeds Rent shall be paid immediately upon a Sale as follows: upon the Closing and payment of the total purchase price in a Sale, accompanied by a certificate of the chief financial officer of the Lessee as to the amount of Gross Proceeds of the Sale. At the election of the City, the City and the Lessee shall coordinate payment of the Proceeds Rent through an escrow. (c) Lessee shall, at the time of any such Sale, deliver to the City a statement certifying the amount of the Gross Proceeds for such Sale and the amount of the Proceeds Rent due and payable to the City. Such statement shall set forth in detail reasonably satisfactory to the City the Page 13 of 36 computation of Gross Proceeds, and Proceeds Rent therefor, together with such other information as the City may deem reasonably necessary for the determination of the Proceeds Rent, such as the purchase agreement and/or sale closing statement. Except for such changes as are necessary to calculate the Gross Proceeds from the Sale, the statements required above shall be prepared in accordance with generally accepted accounting principles on the accrual basis consistently applied and otherwise in such manner as the City shall have approved in writing. (d) For purposes of this Section, capitalized terms set forth below shall have the meanings ascribed to them below: "Beneficial Interest" shall mean the interest of the Beneficiary in any trust of which it is beneficiary, if the Lessee is ever a land trust. "Beneficiary" shall mean the Beneficiary under a trust which at any time the Lessee is a trustee under a land trust. "Gross Proceeds" shall mean the purchase price in a Sale (including, without limitation, (1) the principal and interest of any financing to which the Sale is subject or which is assumed by the Lessee and (2) the fair market value of any consideration consisting of property other than cash). "Leasehold Interest" shall mean the Lease between the City and Lessee and all resulting income streams and contracts resulting from Lessee's use of the Leased Premises, as defined herein. "Sale" shall mean (i) a sale, assignment, transfer or other conveyance of any portion of Lessee's interest under this Lease (including an assumption and assignment of the Lease by Lessee as debtor or debtor in possession or by a trustee in bankruptcy acting on behalf of Lessee) and/or in the Leased Premises or any portion of the Leased Premises; (ii) execution and delivery of a contract to convey any portion of Lessee's interest under this Lease upon payment of part or all of the purchase price which is accompanied by a transfer of possession and the risks and benefits of ownership to the purchaser; or (iii) a transaction or series of related transactions involving Lessee which has the economic equivalence to the owners of interests in Lessee as a transaction described as a Sale, regardless of the form of such transaction, whether by sales of direct or indirect interests in Lessee(including,without limitation, sales or other transfer of any membership interests in Lessee or in any constituent members of Lessee or in any corporate stock, partnership interests or Beneficial Interests in any future tenant organized as a corporation, partnership or trust, respectively, or in any constituent shareholders, partners or Beneficiaries thereof) or sales of assets by an entity which owns Lessee's interest under this Lease and other property. (e) The City shall not, as a result of the rights granted herein to receive Proceeds Rent, be considered as a co-owner, co-partner or co-adventurer with Lessee in the Leased Premises. (f) The Lessee shall not be required to pay Proceeds Rent on its receipt of proceeds from business interruption or loss of rents insurance payments. ARTICLE 11. PRIVILEGES AND CONDITIONS 11.01 Lessor hereby grants to Lessee and any assignees and/or sub lessees pursuant to Article 26 herein, the following general, non-exclusive privileges, uses and rights, subject to the terms, Page 14 of 36 conditions and covenants herein set forth: (a) The general use by Lessee, for commercial aviation activities, of all common aircraft facilities and improvements, which are now, or may hereafter be, connected with or appurtenant to said Airport, except as hereinafter provided. "Common airport facilities" shall include all necessary landing area appurtenances, including, but not limited to, approach areas, runways, taxiways, unleased aprons provided for in 10.01(b) of this Lease, public roadways, sidewalks, navigational and aviation aids, the airfield lighting facilities, terminal facilities or other common or public facilities appurtenant to said Airport. (b) The right of ingress to and egress from the Leased Premises, over and across common or public roadways serving the Airport for Lessee and sub lessees, its agents, contractors, employees, patrons, invitees, suppliers of service and furnishers of material. Said right shall be subject to such ordinances, rules and regulations as now, or may hereafter, apply at the Airport. (c) Lessee must remain in compliance at all times with all FAA, Department of Homeland Security and all other governmental organizations with jurisdiction over the Airport as well as all rules, laws and regulations as may be amended from time to time. 11.02 The granting and acceptance of this Lease is conditioned upon compliance with the covenant that the right to use said common Airport facilities, in common with others so authorized, shall be exercised subject to and in accordance with the laws of the United States, State of Texas and City of Corpus Christi, the rules and regulations promulgated by their authority with reference to aviation and navigation, and all reasonable and applicable rules, regulations and ordinances of Lessor, now in force or hereafter prescribed or promulgated by charter authority or by law, as may be amended from time to time. 11.03 Lessor reserves the right to enter the Leased Premises at any reasonable time for the purpose of inspecting same or verifying that fire, safety, sanitation regulations and other provisions contained in this Lease are being adhered to by Lessee. ARTICLE 12. AS IS ACCEPTANCE AND CONDITION OF PREMISES 12.01 The parties agree that this Lease is granted by Lessor, at Lessee's request, and that the Leased Premises were formerly and presently are leased to and occupied by Lessee . 12.02 Lessee has had full opportunity to examine the Leased Premises and to review the structural report prepared by engineering firm PGAL, dated November, 2010, attached hereto as EXHIBIT 3 and incorporated into this Lease. Except for environmental matters not caused by or reasonably discoverable by Lessee prior to the commencement of this Lease, Lessee's taking possession of the Leased Premises shall be conclusive evidence of Lessee's acceptance thereof in an "AS IS" condition, and Lessee hereby accepts same in its present condition as suitable for the purpose for which leased. 12.03 Lessee agrees that no representations respecting the condition of the Leased Premises and no promises to improve same, either before or after the execution hereof, have been made by Lessor or its agents to Lessee, unless contained herein or made a part hereof by specific reference. Page 15 of 36 ARTICLE 13. CONSTRUCTION/CAPITAL IMPROVEMENT BY LESSEE 13.01 Lessee shall have the right to erect, alter, remodel and renovate buildings and make other improvements as Capital Improvements on the Leased Premises, provided that it shall submit to the Aviation Director plans and specifications prepared by registered architects and engineers setting forth the renovations, construction, alterations or improvements that Lessee desires to perform, in such detail as may be reasonably required by the Aviation Director, and provided that approval of such plans and specifications by said Director is obtained as set forth below. In addition to the requirements herein, approval of any Capital Improvement Plan shall be pursuant to section 5.02 herein. 13.02 Lessor agrees to examine and approve or disapprove plans and specifications submitted in accordance with the provisions above, within thirty (30) calendar days after receipt thereof, and to give Lessee written notification of same. The approval by Lessor of such plans and specifications refers only to the conformity of same to the general architectural plan for the Leased Premises, as opposed to their architectural or engineering design. Lessor, by giving its approval, assumes no liability or responsibility therefor or for any defect in any work performed according to such plans and specifications. Lessee agrees not to commence any renovations, construction, alterations or improvements until Lessor, through the Aviation Director, has given written approval regarding Lessee's plans and specifications. 13.03 Further, prior to the commencement of any construction, Lessee shall procure any and all additional approvals of the plans and specifications for its buildings and improvements required by any federal, state or municipal authorities, agencies, officers and departments having jurisdiction thereof and shall obtain any and all requisite building or construction licenses, permits or approvals. Construction shall comply with applicable building code requirements and with applicable regulations promulgated by any federal, state or municipal agency or department having jurisdiction thereof. Lessee specifically agrees that it shall hold Lessor completely harmless from and against any and all claims, causes of action or liabilities, whether actual or potential, associated with any construction undertaken by Lessee hereunder. 13.04 The cost of any renovations, construction, alterations or improvements upon the Leased Premises shall be borne and paid for solely by Lessee. Except as may be otherwise set forth herein, Lessor has no financial or other obligation of any kind under this Lease, other than the renting to Lessee of the Leased Premises which are the subject hereof for the term and consideration hereinbefore set forth. 13.05 Upon completion of all renovations, construction, alterations or improvements, a conformed set of"as built" plans and a Certificate of Occupancy shall be provided by Lessee to the Aviation Director. 13.06 In undertaking any such renovations, construction, alterations or improvements, it is expressly understood that, where applicable, unless otherwise agreed to in writing by the parties, Lessee shall be responsible, at its sole expense, for any and all construction and maintenance of taxiways and connections to the Airport's runway and taxiway system, along an alignment and in accordance with designs and plans approved in advance, in writing, by the Aviation Director. It is further expressly understood and agreed that any improvements and access thereto constructed by Lessee on the Leased Premises shall be performed in such a manner that shall not cause flowage of surface drainage onto adjacent tracts or interrupt flow to the storm drainage system. Page 16 of 36 13.07 Any construction of a Capital Improvement pursuant to this Article 13 may, at the option of the Lessee be considered part of a Capital Improvement Plan and subject to the review and approval procedures in Article 5 hereof. ARTICLE 14. LIENS PROHIBITED 14.01 Lessee shall not suffer or permit any mechanics' or other liens to be filed against the fee of the Leased Premises, or against Lessee's leasehold interest in the land, buildings or improvements thereon, by reason of any work, labor, services or materials supplied, or claimed to have been supplied, to Lessee or to anyone holding the Leased Premises, or any part thereof, through or under Lessee. ARTICLE 15. MAINTENANCE AND REPAIR 15.01 Lessee shall pay or cause to be paid any and all charges for water, heat, gas, electricity, sewer and any and all other utilities used on the Leased Premises, throughout the term of this Lease, including, but not limited to, any connection fees and any and all additional costs related to utility connection, metering, maintenance, repair and usage. 15.02 Deferred Maintenance. Lessee shall complete all deferred Maintenance items identified on EXHIBIT 4, attached hereto and incorporated into this Lease ("Deferred Maintenance"), no later than eighteen (18) months from the Commencement Date of this Lease. In this respect, as a point of reference, Lessee shall refer to the structural report prepared by PGAL, dated November, 2010, attached hereto as EXHIBIT 3 and incorporated into this Lease, which shall be considered the base condition of the Leased Premises from which Deferred Maintenance requirements shall be measured. The Aviation Director shall have thirty (30) calendar days after Lessee's completion of all Deferred Maintenance items to object to any deficiencies thereof. If the Aviation Director does not object in writing within such 30-day period, Lessor shall be deemed to have approved such Deferred Maintenance. If, however, the Aviation Director objects within such 30-day period in writing as to any deficiencies of the Deferred Maintenance completed, the Aviation Director and Lessee agree to work together in good faith to resolve any such objections to the reasonable satisfaction of both parties. Deferred Maintenance completed pursuant to this Section 15.02 is in addition to the repair and maintenance required in Sections 15.01, 15.03 and 15.04 herein. 15.03 In addition to the Deferred Maintenance required in Section 15.02 above, except as may be otherwise provided herein, Lessee shall, throughout the term of this Lease, assume the entire responsibility, cost and expense for all repair and Maintenance of the Leased Premises and all buildings and improvements thereon, whether such repair or Maintenance be ordinary, extraordinary, structural or otherwise, normal wear and tear excepted. In this respect, as a point of reference, Lessee shall refer to the structural report prepared by PGAL, dated November, 2010, attached hereto as EXHIBIT 3 and incorporated into this Lease, which shall be considered the base condition of the Leased Premises from which any needed repairs shall be measured. Additionally, without limiting the foregoing, Lessee shall: (a) at all times maintain the buildings and improvements in a good state of repair and preservation, excepting ordinary wear and tear and obsolescence in spite of repair; and Page 17 of 36 (b) replace or substitute any fixtures and equipment which have become inadequate, obsolete, worn out, or unsuitable, with replacement or substitute fixtures and equipment, free of all liens and encumbrances, which shall automatically become a part of the buildings and improvements and revert to City ownership at termination of this Lease, as provided for herein; and (c) at all times keep the Leased Premises, its buildings, improvements, fixtures, equipment and personal property, in a clean and orderly condition and appearance; and (d) provide, and maintain in good working order, all obstruction lights and similar devices, fire protection and safety equipment, and all other equipment of every kind and nature required by applicable laws, rules, orders, ordinances, resolutions or regulations of any competent authority, including Lessor and Aviation Director; and (e) observe all insurance regulations and requirements as required in Article 7 herein concerning the use and condition of the Leased Premises,for the purpose of reducing fire hazards and insurance rates on the Airport; and (f) repair any damage caused by Lessee to paving or other surfaces of the Leased Premises or the Airport, in connection with the scope of the Lease, caused by any oil, gasoline, grease, lubricants, flammable liquids and/or substances having a corrosive or detrimental effect thereon, or by any other reason whatsoever; and (g) take measures to prevent erosion, including, but not limited to, the planting and replanting of grass on all unpaved or undeveloped portions of the Leased Premises; the planting, maintaining and replanting of any landscaped areas; the designing and constructing of improvements on the Leased Premises; and the preservation of as many trees as possible, consistent with Lessee's construction and operations; and (h) be responsible for the maintenance and repair of all utility services lines serving the Leased Premises, including, but not limited to, water and gas lines, electrical power and telephone conduits and lines, sanitary sewers and storm sewers; and (i) keep and maintain all vehicles and equipment operated by Lessee on the Airport in safe condition, good repair, properly licensed and insured, as required by this Lease; and (j) replace broken or cracked plate glass, repair roofing material as needed, paint/repaint structures upon the Leased Premises and, where applicable, mow the grass; and (k) provide and use suitable covered metal receptacles for all garbage, trash and other refuse; assure that boxes, cartons, barrels or similar items are not piled in an unsightly, unsafe manner, on or about the Leased Premises; promptly collect and remove all trash and foreign materials from parking lots and Leased Premises; provide a complete and proper arrangement, satisfactory to the Aviation Director, for the adequate sanitary handling and disposal (away from the Airport), of all trash, garbage and refuse generated as a result of the operation of Lessee's business; (I) at the expiration or termination of this Lease, deliver the Leased Premises to Lessor clean and free of trash and in good repair and condition, with all fixtures and equipment situated in the Leased Premises in good working order, reasonable wear and tear excepted; and Page 18 of 36 (m) within five (5) calendar days of receipt of Lessor's written request, Lessee shall provide documentation such as invoices, contracts, proof of payment and other records satisfactory to the Aviation Director as evidence of performance of major Maintenance. 15.04 Following consultation with Lessee, the adequacy of the performance of the foregoing Maintenance and repair by Lessee shall be determined by the Aviation Director, whose reasonably exercised judgment shall be conclusive. No more than thirty (30) days after determining the inadequacy of such Maintenance or repair, the Aviation Director shall provide Lessee a written request that Lessee remedy such inadequate Maintenance or repair. Should Lessee fail to undertake any such Maintenance or repair within ten (10) days of receiving written notice from the Aviation Director, or if Lessor performs any Maintenance or repair on behalf of and for Lessee necessitated by Lessee's failure to start or complete Maintenance or repairs, then the costs of such Maintenance or repair, plus any associated overhead reasonably determined by Lessor, plus a 15% administrative fee, shall be reimbursed by Lessee to Lessor no later than ten (10) days following receipt by Lessee of written demand from Lessor for same. In cases not involving Maintenance or repair requiring exigent action, Lessor shall provide Lessee a written request that Lessee perform such Maintenance or repair, at least thirty (30) days before Lessor affects such Maintenance or repair on behalf of Lessee. 15.05 Any Maintenance or repair performed pursuant to this Article 15 will not be part of a Capital Improvement plan. 15.06 The Capital Investment required to exercise an Option, as described in Section 5.02, shall be in addition to the Deferred Maintenance and other Maintenance required in Article 15 herein. ARTICLE 16. TITLE 16.01 It is expressly understood and agreed that any and all fixtures, furniture, equipment, and improvements that may be reasonably removed, placed or maintained by Lessee in the Leased Premises during the Term hereof shall be and remain Lessee's property, and the Leased Premises returned to its original condition at the sole expense of Lessee, normal wear and tear excepted. Provided that Lessee is not in default under this Lease, it may remove or cause to be removed all such items from the Leased Premises, with any damage caused by such removal repaired at the Lessee's sole expense. At Lessor's sole election, any such items remaining on the Leased Premises more than ten (10) days after the expiration or termination of the term hereof, shall then belong to Lessor without payment of consideration therefor. 16.02 Unless otherwise provided, all foundations, buildings, alterations, additions or improvements ("Improvements") made upon the Leased Premises by Lessee are and shall be the property of Lessee during the Term hereof. During said Term, absent the Aviation Director's written approval, such Improvements shall be conveyed, transferred or assigned, only to a person or entity to whom this Lease is being transferred or assigned, whereupon such Improvements shall become the property of the holder of the leasehold interest hereunder. Absent such written approval of the Director any attempted conveyance, transfer or assignment of Improvements, to any person or entity, whether voluntary, by operation of law or otherwise, shall be void and of no effect. 16.03 Title to Improvements made upon the Leased Premises by Lessee, and fixtures annexed thereto, shall vest in and become the property of Lessor, at no cost to Lessor and without any instrument of conveyance, upon the expiration of the Term of this Lease or upon earlier termination thereof. Notwithstanding the foregoing, Lessee covenants and agrees, upon Lessor's demand, on or after termination of the Lease, to execute any instruments requested by Lessor in Page 19 of 36 connection with the conveyance of such Improvements. Lessor shall notify Lessee whether or not Lessor intends take title to Improvements, or any portion thereof, as herein provided, at least sixty (60) days prior to the expiration of the Term of this Lease or earlier termination thereof. Lessor's failure to provide such notice, however, shall not act as a waiver of its rights hereunder; provided that Lessor, within a reasonable time after receipt of Lessee's written request, advises Lessee of its election hereunder. No obligations under this section herein are waived by the termination of this Lease. 16.04 Should Lessor elect not to take title to Improvements, or any portion thereof, as provided in Section 16.03 above, same shall be removed by Lessee, at its sole cost and risk, no later than midnight of the expiration or termination date of the Lease, in compliance with all applicable laws and regulations and, to the degree reasonably possible, the Leased Premises shall be restored to the condition that existed prior to the construction of same, provided however, that Lessee shall not be required to demolish or remove any building, structure or improvement that was the subject of a Capital Improvement Plan. Should Lessee fail to undertake such removal within ninety (90) days following the expiration or termination of this Lease, Lessor may undertake such removal at Lessee's expense. The performance guarantee, required under this Lease, may not be applied towards any costs incurred by Lessor for such removal. ARTICLE 17. ENVIRONMENTAL COMPLIANCE 17.01 Lessee agrees that it shall, at its sole expense, comply with all applicable federal, state and local statutes, laws, ordinances, rules and regulations concerning the use and operation of all fuel storage facilities presently existing upon the Leased Premises, including, but not limited to, regulations promulgated by the Environmental Protection Agency ("EPA") as well as all inspection, financial liability and inventory control recording requirements of the EPA, and that it shall provide Lessor with copies of certificates of registration from the Texas Commission on Environmental Quality("TCEQ")for any existing fuel storage facilities, together with copies of any required proof of financial responsibility and other documentation, such as an "Accord Form" certificate of insurance applicable to above ground fuel storage tanks, income statements or balance sheets, reasonably required by the Aviation Director or applicable regulatory agency. For purposes of this provision, "facilities" are defined as any mobile or fixed, onshore building, structure, installation, equipment, pipe, or pipeline used in fuel storage, fuel gathering, fuel transfer, or fuel distribution. 17.02 During the Term of this Lease and any extensions thereof, should changes in applicable statutes, laws, rules or regulations regarding fuel storage facilities and/or dispensing equipment necessitate the removal, modification or replacement of any component, piping, valves, or connections comprising part of the fuel storage facilities and/or dispensing equipment, potentially including the entire fuel storage facilities, in, on, upon or under the Leased Premises, then such removal, modification or replacement shall be timely undertaken and performed by Lessee, at its sole cost and expense. Furthermore, if requested by Lessor, Lessee shall, no later than Midnight of the termination or expiration of this Lease, at its sole cost, remove said fuel storage facilities, dispensing equipment and/or component(s) thereof from the Leased Premises, perform any required soil or other investigations, perform regulatory remediation and restore the Leased Premises in a condition that complies with all applicable statutes, laws, rules, or regulations governing fuel storage facilities. Provided, however, that if Lessee has made significant improvements to such fuel storage facilities and/or dispensing equipment, as part of a Capital Improvement Plan or as otherwise determined and approved by the Aviation Director, whose approval shall not unreasonably be withheld, such removal by Lessee upon termination or expiration shall not be required. Any such removal of Lessee's property shall be coordinated by Lessee so that there is no unreasonable interference with Airport customers' use of the Airport or Page 20 of 36 of other aeronautical service providers' use and occupancy of other areas at the Airport. In the event Lessee plans to conduct any environmental remediation work on the Leased Premises, Lessee shall give the Aviation Director and the aeronautical service providers adjacent to Lessee written notice of the same, with a general description of the work to be conducted, including if Lessee anticipates that such work will impact the use and occupancy of adjacent areas at the Airport and, if so, how Lessee intends to minimize such impact. Following the termination or expiration of this Lease, City will conduct a comprehensive environmental assessment to determine compliance with TCEQ and/or EPA standards, at Lessee's sole expense, to reasonably determine if any environmental pollution or contamination exists and, if so, an accepted contamination removal program shall be implemented at Lessee's sole expense. Lessee or any City approved sub lessee shall remain liable for any discharge if contamination is found at a future date if such discharge is the responsibility of Lessee or sub lessee. 17.03 Lessee shall, in conducting any activity or business on the Leased Premises, including environmental response or remedial activities, comply with all environmental laws, including, but not limited to, those regarding the generation, storage, use, transportation and disposal of solid wastes, hazardous materials, toxic chemicals, special wastes or other contaminants, and all laws, regulations and notice requirements pertaining to releases or threatened releases of hazardous materials, toxic chemicals, special wastes or other contaminants into the environment. Lessee shall not cause the release, or permit its employees, agents, permittees, contractors, subcontractors, sublessees, or others in Lessee's control, supervision, or employment, to release (whether by way of uncapping, pouring, spilling, spraying, spreading, attaching or otherwise), into or onto the Leased Premises or any other location upon or above the Airport (including the air, ground and ground water thereunder and the sewer and storm water drainage systems thereon), any quantity of hazardous substances (as defined or established from time to time by applicable local, state, or federal law and including, among other things, hazardous waste and any other substances that have been or may in the future be determined to be toxic, hazardous or unsafe). To the extent any such release may exceed quantities or volumes permitted by applicable federal, Texas or local law, Lessee shall immediately notify the Aviation Director, TCEQ, and Local Emergency Planning Committee, as may be required under the federal Emergency Planning and Community Right To Know Act. The Lessee, or any occupant of Leased Premises, shall be responsible for compliance with said Act, in the event of any such release. 17.04 Lessee shall remedy any release or threatened release caused by Lessee's operations at the Airport, as described above and, whether resulting from such release or otherwise, remove any hazardous materials, special wastes and any other environmental contamination caused by Lessee on, under or upon the Leased Premises, as may be required by a governmental or regulatory agency responsible for enforcing environmental laws and regulations. Such work shall be performed, at Lessee's sole expense, after Lessee submits to Lessor a plan, approved in writing by the appropriate governmental or regulatory agency(ies) responsible for enforcing such environmental laws and regulations, for completing such work. Lessor shall have the right to review and inspect all such work at any time, using consultants and representatives of its choice, at Lessor's sole cost and expense. Specific cleanup levels for any environmental remedial work shall be designed to meet all of the applicable environmental laws and regulations, to the satisfaction of the appropriate government or regulatory agency responsible for enforcing environmental laws and regulations. 17.05 Lessee agrees to defend, indemnify and hold harmless Lessor, its elected and appointed officials, officers, agents and employees, from and against any and all reasonable losses, claims, liability, damages, injunctive relief, injuries to person, property or natural resources, costs, expenses, Page 21 of 36 enforcement actions, actions or causes of action, fines and penalties, arising as a result of action or inaction of Lessee, its officers, employees, sublessees, guests, invitees, agents or contractors, in connection with the release, threatened release or presence of any hazardous material, contaminants, or toxic chemicals at, on, under, over or upon the Leased Premises or Airport, whether or not foreseeable. The foregoing indemnity includes, without limitation, all reasonable costs at law or in equity for removal, clean-up, remediation and disposal required to bring the Leased Premises or Airport to be in compliance with, all applicable environmental laws and regulations and all reasonable costs associated with claims for damages to persons, property or natural resources arising out of Lessee's use and occupancy of the Leased Premises or its operations at the Airport. In the event that Lessor is named in any enforcement action or lawsuit by any party in connection with the environmental condition of the Leased Premises caused by the action or inaction of the Lessee, its officers, employees, sublessees, guests, invitees, agents or contractors, Lessee shall defend Lessor and indemnify and hold harmless Lessor from any reasonable costs, damages, fines and penalties resulting therefrom. Nothing in this Lease shall prohibit Lessee from pursuing contribution or indemnity for such cleanup costs or remediation by other responsible parties and the Aviation Director shall provide reasonable cooperation and coordination in such endeavors. 17.06 In addition to any other rights of access herein regarding the Leased Premises, Lessor shall, upon reasonable notice, have access thereto in order to inspect and confirm that the Lessee is using same in accordance with all applicable environmental laws and regulations. Lessee shall, upon the Aviation Director's reasonable demand and at Lessee's sole expense, demonstrate to said Director (through such tests, professional inspections, samplings, or other methods as may be reasonably required by said Director) that Lessee has not caused or permitted any release of hazardous substances or contaminants in excess of quantities or volumes permitted by applicable federal, Texas or local law. Qualified independent experts, chosen by Lessee, subject to Lessor's approval, which approval shall not be unreasonably withheld, shall conduct any such tests and assessments. Lessee shall provide copies of reports from any such testing or assessments to Lessor upon receipt. Should Lessee not provide same to Lessor after Lessor's written request therefor, Lessor may conduct, or cause to be conducted, such tests, inspections, samplings and assessments, and Lessee shall reimburse Lessor for all costs of such actions, no later than thirty (30) days following receipt by Lessee of invoices therefor. Lessor reserves the right to conduct any of the above actions, at the Aviation Director's discretion, when in the opinion of same, additional or supplemental assessments are in Lessor's best interest. 17.07 Lessee, at Lessor's request, shall make available for inspection and copying, upon reasonable notice and at reasonable times, any or all of the non-privileged documents and materials Lessee has prepared pursuant to any environmental law or regulation, which may be retained by Lessor or submitted to any governmental regulatory agency; provided, such documents and materials relate to environmental regulatory compliance and pertain to the Airport or the Leased Premises. If any environmental law or regulation requires Lessee to file any notice or report of a release or threatened release of regulated materials on, under or about the Leased Premises or the Airport, Lessee shall promptly submit such notice or report to the appropriate Page 22 of 36 governmental agency and simultaneously provide a copy of such report or notice to Lessor. In the event that any written allegation, claim, demand, action or notice is made against Lessee regarding Lessee's failure or alleged failure to comply with any environmental law or regulation, Lessee, as soon as practicable, shall notify Lessor in writing and provide same with copies of any such written allegations, claims, demands, notices or actions so made. 17.08 The parties to this Lease, including the tenants or sublessees who may enjoy a future right of occupation through Lessee, acknowledge a right and a duty in Lessor, exercised by the Aviation Director, to review safety and potential environmental impacts of any proposed operation, business, maintenance or other activity of the Lessee and its sublessees. To this end, said Director shall have authority to disapprove an activity of the Lessee and/or any sublessee not otherwise expressly permitted under this Lease, on the basis of a risk assessment. The parties understand that Leased Premises are not intended for use involving refining, processing, manufacturing, maintenance (other than aircraft maintenance and repair permitted hereunder or as may be required by the Minimum Standards), overhaul, or similar heavy industrial activities entailing use, storage, manufacture, or transport of critical volumes of regulated or hazardous materials or toxic chemicals. For purposes of this Lease, "critical volumes" are those which pose or may pose an unreasonable risk to Airport property, its occupants, employees or the traveling public. ARTICLE 18. SIGNS Any signs installed on the Leased Premises shall be submitted to the Aviation Director for approval prior to installation. Lessee shall neither erect signs nor distribute advertising matter upon Airport Premises, without the prior written consent of the Aviation Director. All signage must be in compliance with applicable City code standards and restrictions. ARTICLE 19. REGULATIONS Lessee's officers, agents, employees, contractors, subcontractors, tenants and subtenants shall obey all rules and regulations promulgated by Lessor, its authorized agents in charge of the Airport, or other lawful authority, to insure the safe and orderly conduct of operations and traffic thereon. ARTICLE 20. QUALITY OF SERVICES Lessee shall, at all times, furnish good, prompt and efficient commercial aviation services, in compliance with the applicable Minimum Standards, adequate to meet demand for same at the Airport, furnish said services on a non-discriminatory basis to all users thereof, and charge non- discriminatory prices for each unit of sale or service; provided, however, that Lessee will be allowed to make reasonable and non-discriminatory discounts, rebates or other similar types of price reductions to volume purchasers. ARTICLE 21. TIME OF EMERGENCY During time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States for government use, and, if such lease is executed, the provisions of this Lease, insofar as they are inconsistent with those of the Government lease, shall be suspended. Page 23 of 36 ARTICLE 22. SUBORDINATION OF LEASE & RIGHT OF RECAPTURE 22.01 This Lease shall be subordinate to the provisions of any existing or future agreement between Lessor and the United States of America and/or the State of Texas regarding operation or maintenance of the Airport, the execution of which has been or may be required as a condition precedent to the expenditure of Federal or state funds for the development of the Airport. Should the effect of such agreement with the United States be to take any of the property under lease, or substantially alter or destroy the commercial value of the leasehold interest granted herein, Lessor shall not be held liable therefore, but, in such event, Lessee may cancel this Lease upon ten (10) days' written notice to Lessor. Notwithstanding the foregoing, Lessor agrees that, in the event it becomes aware of any such proposed or pending agreement or taking, Lessor shall utilize its best efforts to give the maximum possible notice thereof to Lessee.Any portion of the Leased Premises recaptured from Lessee under this provision shall result in a proportionate abatement of rent as of the date the recapture is effectuated. 22.02 Lessor shall have the right to recapture any or all of the Leased Premises to the extent that such are necessary for the City's development, improvement, and or maintenance of the Airport's runways and taxiways; for protection or enhancement of flight operations; or for other development in compliance with any current or future Airport Master Plan and Airport layout plan. In the event of any such recapture, Lessee and Lessor shall execute an amendment reflecting a corresponding adjustment to the Leased Premises and rent, according to the then applicable rental rates. In the event Lessee has made an investment in accordance with an approved Capital Improvement Plan during the Initial Term of this Agreement or any extension thereof and a portion or all of the Leased Premises are recaptured, the total Direct Construction Costs for the approved Capital Improvement Plan associated with said Option shall be amortized on a straight line basis over the term of that Option and a payment issued by the City to the Lessee for the unamortized amount of the Direct Construction Costs for the approved Capital Improvement Plan for the remaining balance of that Option term, with payment to be made within sixty (60) days of such amendment. ARTICLE 23. SECURITY 23.01 Lessee shall comply with all rules, regulations, statutes, orders, directives or other mandates of the United States or State of Texas, regarding Airport security requirements or measures. Additionally, Lessee shall comply with the Airport Security Program, as may be amended from time to time, a copy of which will be provided by Lessor to Lessee upon request. Lessor reserves the right to require Lessee to install access control system(s) and/or surveillance cameras at all points of access from public areas to security-restricted areas. Airport security officials must be able to access, inspect and monitor such access control system(s) and/or surveillance cameras required by Lessor. 23.02 Lessee shall comply with all current and future mandates of the Transportation Security Administration, or successor agency, for background investigations of its personnel. 23.03 Lessee shall indemnify and hold harmless Lessor, its officers, officials, employees, and agents from any charges, fines or penalties that may be assessed or levied by any department or agency of the United States or State of Texas, by reason of Lessee's failure to comply with any applicable security provision and/or requirement for compliance set Page 24 of 36 forth herein. Lessee is responsible for payment of all such fines and penalties. ARTICLE 24. DEFAULT AND REMEDIES 24.01 Each of the following shall constitute an event of default by Lessee or its parent company, successor company or related company(ies): (a) Lessee shall fail to pay any rent as provided for in this Lease and such failure shall continue for a period of ten (10) days after receipt by Lessee of written notice thereof. (b) Lessee shall neglect or fail to perform or observe any of the terms, provisions, conditions or covenants herein contained, and if such neglect or failure should continue for a period of thirty (30) days after receipt by Lessee of written notice of same, or if more than thirty (30) days shall be required because Of the nature of the default, if Lessee shall fail within said thirty(30) day period to commence and thereafter diligently proceed to cure such default. (c) Lessee shall become insolvent; take the benefit of any present or future insolvency statute; make a general assignment for the benefit of creditors; file a voluntary petition in bankruptcy or a petition or answer seeking a reorganization or the readjustment of its indebtedness under the federal bankruptcy laws, or under any other law or statute of the United States or of any state thereof; or consent to the appointment of a receiver, trustee or liquidator of all or substantially all of its property. (d) An Order of Relief shall be entered, at the request of Lessee or any of its creditors, under federal bankruptcy, reorganization laws or any law or statute of the United States or any state thereof. (e) A petition under any part of the federal bankruptcy laws, or an action under any present or future insolvency law or statute, shall be filed against Lessee and shall not be dismissed within thirty (30) days after the filing thereof. (f) Pursuant to, or under the authority of, any legislative act, resolution, rule, or any court, governmental, agency or board order or decree or officer, a receiver, trustee, or liquidator shall take possession or control of all or substantially all of the property of Lessee and such possession or control shall continue in effect for a period of fifteen (15) days. (g) Lessee shall become a corporation in dissolution or voluntarily or involuntarily forfeit its corporate charter. (h) The rights of Lessee hereunder shall be transferred to, pass to or devolve upon, by operations of law or otherwise, any other person,firm, corporation or other entity, in connection with or as a result of any bankruptcy, insolvency, trusteeship, liquidation or other proceeding or occurrence described in Paragraphs c through g of this Section 24.01. (i) Lessee shall voluntarily discontinue its operations at the Airport for a period of ninety (90) consecutive days. (j) If Lessee sells, transfers or assigns this Lease to or is sold, transferred or assigned a lease from any entity or organization that has an interest in any other FBO operating at the Airport. Page 25 of 36 24.02 In the event any default shall occur, Lessor then, or at any time thereafter, but prior to the removal of such condition of default, shall have the right, at its election, either to terminate this Lease and/or any sublease agreements that Lessee may have, by giving at least five (5) days written notice to Lessee, at which time Lessee will then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable as herein provided, or enter upon and take possession of the Leased Premises (or any part thereof in the name of the whole), without demand or notice, and repossess the same as of the Lessor's former estate, expelling Lessee and those claiming under Lessee, forcibly if necessary, without prejudice to any remedy for arrears of rent or preceding breach of Lease. 24.03 Lessor's repossession of the Leased Premises shall neither be construed as an election to terminate this Lease and/or any sublease agreements that Lessee may have nor shall it cause a forfeiture of rents or other charges remaining to be paid during the balance of the term hereof, unless a written notice of such intention be given to Lessee, or unless such termination is decreed by a court of competent jurisdiction. 24.04 Upon repossession, Lessor shall have the right, at its election, whether or not this Lease and/or any sublease agreements that Lessee may have shall be terminated, to relet the Leased Premises or any part thereof for such period(s), which may extend beyond the term hereof, at such rent and upon such other terms and conditions as Lessor may, in good faith, deem advisable. Notwithstanding any law or anything contained herein to the contrary, to the full extent permitted under applicable law, Lessee and Lessor agree that Lessor's duty to relet the Leased Premises or otherwise to mitigate damages hereunder shall be limited to those requirements set forth in the Texas Property Code, as amended. Lessor shall in no event be liable, and Lessee's and sub lessees' liability shall not be affected or diminished whatsoever, for failure to relet the Leased Premises, or in the event the Leased Premises are relet, for failure to collect any rental under such reletting, so long as the Lessor uses objectively reasonable efforts to comply with said Property Code. Lessor and Lessee agree that any such duty shall be satisfied and Lessor shall be deemed to have used objective reasonable efforts to relet the Leased Premises and mitigate Lessor's damages by: (a) posting a "For Lease" sign on the Leased Premises; (b) advising Lessor's lease agent, if any, of the availability of the Leased Premises; and (c) advising at least one (1) outside commercial brokerage entity of the availability of the Premises. 24.05 In the event that Lessor elects to relet, rentals received by same from such reletting shall be applied: first, to the payment of any indebtedness, other than rent due hereunder from Lessee under this Lease; second, to the payment of any cost of such reletting; third, to the payment of rent due and unpaid hereunder; and finally, the residue, if any, shall be held by Lessor and applied hereunder. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of rent hereunder, be less than the rent payable during that month by Lessee hereunder, then Lessee shall pay such deficiency to Lessor. Such deficiency shall be calculated and paid monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in such reletting not covered by the rentals received from such reletting of the Leased Premises. 24.06 If Lessor shall terminate this Lease or take possession of the Leased Premises by reason of a condition of default, Lessee and those holding under Lessee, shall forthwith remove their goods and effects from the Leased Premises. If Lessee or any such claimant shall fail to effect such removal forthwith, Lessor may, without liability to Lessee or those claiming under Lessee, remove such goods and effects and store same for the account of Lessee or of the owner thereof at any place selected by Lessor, or, at Lessor's election, and upon giving fifteen (15) days' written notice to Lessee of date, time and location of sale, Lessor may sell the same at public auction or private sale on such terms and conditions as to price, payment and otherwise, as Lessor in its Page 26 of 36 sole discretion may deem advisable. If, in Lessor's judgment, the cost of removing and storing, or of removing and selling any such goods and effects, exceeds the value thereof or the probable sale price thereof, as the case may be, Lessor shall have the right to dispose of such goods in any manner Lessor may deem advisable. 24.07 Lessee shall be responsible for all costs of removal, storage and sale, and Lessor shall have the right to reimburse the Airport from the proceeds of any sale for all such costs paid or incurred by Lessor. If any surplus sale proceeds remain after such reimbursement, Lessor may deduct from such surplus any other sum due to Lessor hereunder and shall pay over to Lessee any remaining balance of such surplus sale proceeds. 24.08 If Lessor shall enter into and repossess the Leased Premises as a result of Lessee's default in the performance of any of the terms, covenants or conditions herein contained, then Lessee hereby covenants and agrees that it will not claim the right to redeem or re-enter the said Premises to restore the operation of this Lease , and Lessee hereby waives the right, and the right of any party claiming through or under Lessee, to such redemption and re-entrance under any present or future law, and does hereby further, for any party claiming through or under Lessee, expressly waive its right, if any, to make payment of any sum or sums of rent, or otherwise, of which Lessee shall have made default under any of the covenants of the Lease and to claim any subrogation of the rights of Lessee under these presents, or any of the covenants thereof, by reason of such payment. 24.09 All rights and remedies of Lessor herein created or otherwise existing at law are cumulative, and the exercise of one or more rights or remedies shall not be taken to exclude or waive the right to the exercise of any other. All such rights and remedies may be exercised and enforced concurrently, whenever and as often as deemed desirable. 24.10 If proceedings shall, at any time, be commenced for recovery of possession, as aforesaid, and compromise or settlement shall be effected either before or after judgment whereby Lessee shall be permitted to retain possession of the Leased Premises, then such proceeding shall not constitute a waiver of any condition or agreement contained herein or of any subsequent breach thereof or to this Lease. 24.11 Any amount paid or expense or liability incurred by Lessor for the account of Lessee may be deemed to be additional rental and the same may, at the option of Lessor, be added to any rent then due or thereafter falling due hereunder. ARTICLE 25. HOLDING OVER It is agreed and understood that any holding over by Lessee or sub lessee, with Lessor's written consent, at sole discretion of Lessor, after the termination of this Lease, shall not renew and extend same, but shall operate and be construed as a tenancy from month-to-month, not to exceed six (6) months, upon all the terms and conditions set forth herein, except that rental shall be paid to Lessor by Lessee for all buildings on the Leased Premises at one hundred twenty-five percent (125%) the then current rents, fees and charges in effect as of the end of the primary term of this Lease or the ground rental rate established through appraisal, whichever is greater. Lessee shall be liable to Lessor for all loss or damage resulting from such holding over against Lessor's will after the termination of this Lease, whether such loss or damage may be contemplated at this time or not. It is expressly agreed that acceptance of the foregoing rental by Lessor, in the event that Lessee fails or refuses to surrender possession, shall not operate to give Lessee any right to remain in possession beyond the period for which such amount has been paid nor shall it constitute a waiver by Lessor of its right to immediate possession thereafter. Page 27 of 36 ARTICLE 26. ASSIGNMENT AND SUBLET 26.01 Lessee shall not transfer or assign this Lease or Lessee's interest in or to the Leased Premises, or any part thereof, without having first obtained Lessor's prior written consent, which may be given only by or pursuant to an ordinance enacted by the City Council of the City of Corpus Christi, Texas. Lessee may not assign or sublet this Lease to any other FBO operating at the Airport or to any entity or organization that has any financial, equity or ownership interest in any other FBO operating at the Airport. Notwithstanding the foregoing and for so long as any pledge or collateral assignment of Lessee's interest in the Lease shall be by instrument substantially in such form as shall have previously been approved by the City Council, the consent of Lessor to such pledge or collateral assignment may be given by Lessor acting by and through the Aviation Director. 26.02 Lessor acknowledges and agrees that the subletting of hangar, office, shop and ramp space comprises a routine and material part of Lessee's business operations. In the event Lessee subleases any such space, Lessee shall submit to the Director a copy of the applicable sublease agreement(s) and of all agreement(s) collateral thereto. The identity of the sublessee, the area or space to be subleased, the rental to be charged and the type of business to be conducted shall be specified in any such sublease. In the alternative, at the election of the Director, Lessee shall instead periodically submit to the Director a schedule of all subtenants occupying space upon the Leased Premises, with such other detail as may be reasonably requested. 26.03 Should the subletting of the Leased Premises be approved by Lessor, however, Lessee agrees and acknowledges that it shall remain fully and primarily liable under this Lease, notwithstanding any such sublease and that any such sublessee shall be required to attorn to Lessor hereunder. 26.04 The receipt by the Lessor of rent from an assignee, subtenant or occupant of the Leased Premises shall not be deemed a waiver of the covenant in this Lease against assignment and subletting or an acceptance of the assignee, subtenant or occupant as a tenant or a release of the Lessee from further observance or performance by Lessee of the covenants contained in this Lease. No provision of this Lease shall be deemed to have been waived by the Lessor, unless such waiver is in writing, signed by the Aviation Director. ARTICLE 27. FIRE AND OTHER DAMAGE 27.01 In the event the Premises shall be partially damaged by fire or other casualty through no fault of Lessee, Lessee shall give immediate notice thereof to Lessor and the same shall be repaired, at Lessor's expense, without unreasonable delay, unless Lessor determines that the damage is so extensive that repair or rebuilding is not feasible. From the date of such casualty until repair, monthly rents, fees and charges hereunder shall abate based on the proportion of the Premises destroyed, or rendered untenantable, bears to the total Premises; provided, however, that if said Premises shall be so slightly damaged in any such way so as to be rendered usable, the rent hereunder shall not cease or be abated during any repair period. In the event that the damage to the Premises, by fire or other casualty, is so extensive that the Premises is rendered wholly unusable, and such damage to the Premises, in the exclusive judgment of Lessor, makes occupancy and use to be impractical, then at the option of the Lessor, and upon notice to Lessee, this Lease, as it applies to said Premises, shall cease, and the rent hereunder shall be apportioned and paid up to date of such damage. If Lessor elects to restore the Premises, Lessor shall notify Page 28 of 36 Lessee of such intention within thirty (30) days of the date of the damage, otherwise the Lease, as applicable to said Premises, shall be deemed canceled and of no further force or effect. 27.02 Lessor's obligations to rebuild or repair under this Article shall, in any event, be limited to restoring said Premises to substantially the condition that existed prior to the commencement of improvements, if any, performed by Lessee and shall further be limited to the extent of the insurance proceeds available to Lessor for such restoration. Lessee agrees that if Lessor elects to repair or rebuild as set forth in this Article, then Lessee will proceed with reasonable diligence, at its sole cost and expense, to rebuild, repair and restore its improvements, signs, fixtures, furnishings, equipment and other items provided or installed by Lessee in or about the Leased Premises in a manner and to a condition at least equal to that which existed prior to the damage or destruction. ARTICLE 28. LAWS AND ORDINANCES Lessee agrees to comply promptly with all laws, ordinances, orders and regulations affecting the Leased Premises, including, but not limited to, those related to its cleanliness, safety, operation, security, environmental, use and business operations. Lessee shall comply with all Federal, State and local regulations concerning its operation on the Airport and shall indemnify and hold harmless Lessor, its officers and employees, from any charges, fines or penalties that may be assessed or levied by any department or agency of the United States, the State of Texas, or any other governmental agencies, or their successor agencies, with jurisdiction over the Airport by reason of Lessee's failure to comply with the terms of this Article or with any other terms set forth in this Lease. ARTICLE 29. TAXES AND LICENSES Lessee shall, at its sole cost and expense, pay on or before their respective due dates, to the appropriate collecting authority, all Federal, State and local taxes and fees, which are now or may hereafter be levied upon the Lessee, Leased Premises, the business conducted thereon or upon any of Lessee's property used in connection therewith including, but not limited to, any possessory interest taxes. Lessee shall also maintain and provide to the City upon request, in current status, all Federal, State and local licenses and permits required for the operation of its business. ARTICLE 30. NONDISCRIMINATION &AFFIRMATIVE ACTION REGULATIONS 30.01 Any discrimination by Lessee, its sublessees, agents or employees, based on race, color, creed, sex, age, religion, national origin or handicap, in employment practices, use of or admission to the Leased Premises, is prohibited. 30.02 Lessee for itself, its successors and assigns, as a part of the consideration hereof, does hereby covenant and agree, as a covenant running with the Lease, that in the event facilities are constructed, maintained or otherwise operated on the Leased Premises, for a purpose for which a DOT 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 49 CFR pt 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. Page 29 of 36 30.03 Lessee for itself, its successors and assigns, as a part of the consideration hereof, does hereby covenant and agree, as a covenant running with the Lease, that: (a) no person, on the grounds of race, color, creed, sex, age, religion, national origin or handicap, shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination, in the use of said facilities; (b) that in the construction of any improvements on, over or under such land and the furnishing of services thereon, no person on the grounds of race, color, creed, sex, age, religion, national origin or handicap shall be excluded from participation, denied the benefits of, or otherwise be subjected to discrimination; and (c) that Lessee shall use the Leased Premises in compliance with all other requirements imposed by or pursuant to 49 CFR pt 21, Nondiscrimination in Federally Assisted Programs of the Department of Transportation, and as said Regulations may be amended. 30.04 Lessee agrees that it will comply with applicable statutes, Executive Orders and such rules as are promulgated by applicable state, federal or municipal agencies to assure that no person shall be excluded from participating in any activity conducted with or benefiting from Federal assistance on the basis of race, creed, color, national origin, sex age, or handicap. Lessee, is successors and assigns, shall be obligated to comply with the provisions of this Section 30.04 for the period during which Federal assistance is extended to the Airport during the Term of this Lease, except where Federal assistance is to provide, or is in the form of personal property or real property or interest therein or structures of improvements thereon. In these cases, this Section 30.04 shall apply to Lessee, its successors and assigns, through the later of: (a) the period during which such property is used by Lessor, its successors and assigns for a purpose for which Federal assistance is extended, or for another purpose involving the provision of similar services or benefits; or (b) the period during which Lessor, its successors or assigns, retains ownership or possession of the Leased Premises. ARTICLE 31. WAGES and EMPLOYMENT Lessee shall comply with all federal, state and local wage and employment laws, ordinances, rules and regulations. All employees must be legally employable in the United States. ARTICLE 32. FORCE MAJEURE If either party shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor troubles, war, terrorism, inability to procure materials, restrictive governmental laws or regulations or other cause, without fault and beyond the control of the party obligated (the financial inability of the party excepted), performance of such act shall be extended by a period equal to the period of such delay; provided, however, that nothing in this paragraph shall excuse Lessee from the prompt payment of any rental except as may be expressly provided otherwise in this Lease; and further provided that the party relying on this paragraph shall provide written notice to the other party notifying such other party of the force majeure event promptly after such force majeure event, and shall proceed with all diligence to complete the performance of the act upon the cessation of the force majeure event. ARTICLE 33. ATTORNEYS' FEES Excluding an action to enforce the indemnification provisions of this Lease Agreement, in the event that Lessor or Lessee brings an action under this Lease to enforce this Lease, each party shall be responsible for their own attorneys' fees incurred in the defense or prosecution thereof. Page 30 of 36 ARTICLE 34.SEVERABILITY If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, it is the parties' intention that the remainder hereof not be affected. In lieu of each clause or provision that is illegal, invalid or unenforceable, the parties intend that there be added, as a part of this Lease, a clause or provision, as similar in terms to such illegal, invalid or unenforceable clause or provision, as may be possible, yet be legal, valid and enforceable. ARTICLE 35. AMENDMENT This Lease, together with its authorizing ordinance, constitutes the entire agreement between the parties. No amendment, modification or alteration of the terms of this Lease shall be binding, unless the same is in writing, dated subsequent to the date hereof and duly executed by the parties hereto. ARTICLE 36. NOTICES Notices to City provided for in this Agreement shall be sufficient if sent by registered or certified mail, postage prepaid, addressed to the Aviation Director, Corpus Christi International Airport, 1000 International Drive, Corpus Christi, Texas 78406; and notices to Lessee shall be sufficient if sent by registered or certified mail, postage prepaid, addressed to: Signature Flight Support Corporation Attn: General Manager 574 Hangar Lane Corpus Christi, Texas 78406 with a copy to: Signature Flight Support Corporation Attn: General Counsel 201 South Orange Avenue, Suite 1100 Orlando, Florida 32801 or to such other respective addresses as the parties may designate to each other in writing from time to time. ARTICLE 37. RELATIONSHIP OF PARTIES Nothing contained herein shall be deemed or construed by the parties hereto, or by any third party, as creating the relationship of principal and agent, partners, joint venturers or any other similar such relationship, between the parties hereto. It is understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties hereto, creates a relationship other than one of Lessor and Lessee. ARTICLE 38. CUMULATIVE REMEDIES NO WAIVER - NO ORAL CHANGE The specific remedies of the parties under this Lease are cumulative and do not exclude any other remedies to which they may be lawfully entitled, in the event of a breach or threatened breach hereof. The failure of either party ever to insist upon the strict performance of any covenant of this Page 31 of 36 Lease, or to exercise any option herein contained, shall not be construed as its future waiver or relinquishment thereof. Lessor's receipt of a rent payment, with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such breach. Further, no waiver, change, modification or discharge by either party of any provision of this Lease shall be deemed to have been made or be effective, unless in writing and signed by the party to be charged. In addition to other remedies herein, the parties shall be entitled to an injunction restraining the violation, or attempted violation, of any of the covenants, conditions or provisions hereof, or to a decree compelling performance of same; subject, however, to other provisions herein. ARTICLE 39. CONFLICT OF INTEREST Lessee warrants and certifies, and this contract is made in reliance thereon, that it, its officers, employees and agents are neither officers nor employees of the City. Lessee further warrants and certifies that is has tendered to the City a true and correct Disclosure Statement in compliance with Section 2-349 of the City's Ethics Code. ARTICLE 40. GENERAL PROVISIONS 40.01 Incorporation of Exhibits. All exhibits referred to in this Lease are intended to be and hereby are specifically made a part of this Lease. EXHIBIT 1: Leased Premises EXHIBIT 2: November 18, 2011 Appraisal EXHIBIT 3: PGAL Structural Report EXHIBIT 4: Deferred Maintenance Items and Budget EXHIBIT 5: Fees and Charges 40.02 Incorporation of Required Provisions. Lessor and Lessee incorporate herein by this reference all provisions lawfully required to be contained herein by any governmental body or agency. 40.03 Nonexclusive Rights. It is understood and agreed that nothing herein contained shall be construed to grant to Lessee any exclusive right or privilege within the meaning of Section 308 of the Federal Aviation Act, as amended, for the conduct of any activity on the Airport, except that, subject to the terms and provisions hereof, Lessee shall have the right to exclusive possession of the Leased Premises. 40.04 Removal of Disabled Aircraft. Lessee shall promptly remove any disabled aircraft that is in the care, custody, or control of Lessee from any part of the Airport (other than the Leased Premises) (including, without limitation, runways, taxiways, aprons, and gate positions) and place any such disabled aircraft in such storage areas as may be designated by the Aviation Director. Except as to aircraft subject to bailment and/or for which Lessee is owed money from a customer, Lessee may store such disabled aircraft only for such length of time and on such terms and conditions as may be established by Lessor. If Lessee fails to remove any of disabled aircraft promptly, the Aviation Director may, but shall not be obligated to, cause the removal of such disabled aircraft after written notice to Lessee (except in the event of emergency), provided, however, the obligation to remove or store such disabled aircraft shall not be inconsistent with federal laws and regulations and Lessee agrees to reimburse Lessor for all costs of such removal, and Lessee further hereby releases Lessor from any and all claims for damage to the disabled aircraft or otherwise arising from or in any way connected with such removal by Lessor unless caused by the negligence or recklessness of Lessor. Page 32 of 36 40.05 Airport Access License/Permit. Lessor reserves the right to establish a licensing or permit procedure for vehicles requiring access to the Airport operational areas and to levy directly against Lessee or its suppliers a reasonable regulatory or administrative charge (to recover the cost of any such program) for issuance of such Airport access license or permit. 40.06 Compliance with 14 CFR pt 77. Lessee agrees to comply with the notification and review requirements covered in Part 77, Title 14, Code of Federal Regulations, FAA 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 situated on the Leased Premises. 40.07 Reservations re: Airspace and Noise. There is hereby reserved to Lessor, its successors, and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Leased Premises. 40.08 Inspection of Books and Records. Each party hereto, at its expense and on reasonable notice, shall have the right from time to time to inspect and copy the books, records, and other data of the other party relating to the provisions and requirements hereof, provided such inspection is made during regular business hours and such is not prohibited by the U.S. Government. 40.09 Independent Contractor. Lessee is not an employee or agent of City by reason of this Lease, or otherwise. Lessee shall be solely responsible for its acts and omissions arising from or relating to its operations or activities at Airport, or lease of property herein. 40.10 Authority of Agreement. Lessee warrants and represents that it has the right, power, and legal capacity to enter into, and perform its obligations under this Lease, and no approvals or consents of any persons are necessary in connection with it. The execution, delivery, and performance of this Lease by the undersigned Lessee representatives have been duly authorized by all necessary corporate action of Lessee, and this Lease will constitute a legal, valid, and binding obligation of Lessee, enforceable in accordance with its terms. 40.11 Authority of the Aviation Director. The Aviation Director shall administer this Lease on behalf of Lessor. Whenever this Lease calls for approval by Lessor, such approval shall be evidenced, in writing, by either the Aviation Director or the City Manager of the City of Corpus Christi or his designee, in accordance with the requirements of the City Charter. In no event shall this language be considered a waiver by Lessee to object to decisions by the Aviation Director which it considers to be arbitrary, capricious or inconsistent with any express obligations to act reasonably set forth herein. 40.12 Consent. Unless stipulated otherwise herein, whenever the consent or approval of either party hereto is required or authorized hereunder, such consent or approval shall not be unreasonably withheld, unreasonably conditioned, or unreasonably delayed. 40.13 Net Agreement. It is the intent and purpose of the City and Lessee that all rental payable by Lessee herein shall be absolutely net to the City so that this Lease shall yield to City the entire rent specified, in each year of this Lease, free of any charges, assessments, impositions or deductions of any kind or character which may be charged, assessed, or imposed on or against Lessee or the Leased Premises, without abatement, deduction or set-off by Lessee. Page 33 of 36 40.14 Noise Control. Lessee, for itself and each of its officers, representatives, agents, employees, guests, patrons, contractors, subcontractors, licensees, subtenants, invitees, or suppliers shall not conduct any operation or activity on the Leased Premises, or elsewhere at the Airport, in which the sound emitting therefrom is of such volume, frequency or intensity at such time as to constitute a nuisance. The Aviation Director shall have the sole and exclusive authority to determine what constitutes a nuisance under the provisions of this Lease Agreement recognizing the permitted uses granted hereunder, except that operations and activities having noise levels not in violation of federal, State, or local governmental standards shall not be deemed a nuisance. 40.15 Time is of the Essence. Time shall be of the essence in complying with the terms, conditions and provisions of this Lease. 40.16 Vehicular Parking. Vehicular parking in the areas included in the Leased Premises shall be restricted to parking directly related to Lessee's operations on the Leased Premises by Lessee, its officers, representatives, agents, employees, guests, patrons, volunteers, contractors, subcontractors, licensees, and suppliers. Access to vehicular parking areas within the Leased Premises shall be coordinated through the Airport's overall parking management program. ARTICLE 41. AUDIT Lessee shall keep complete and accurate accounts, records and books pertaining to the lease of the Leased Premises and FBO services rendered in connection with the permitted uses under this Lease, including all expenses, costs and expenditures for the Leased Premises and other information reasonably necessary or pertinent to determine the amounts due and payable under this Lease. Such records may be kept by Lessee at its local office or at the management office for the Leased Premises for seven (7) years after each annual financial statement has been delivered to Lessor. Such books and records shall be made available to the City and its agents (or copies shall be furnished at the City's request) at all times, on not less than five (5) Business Days' notice, during regular business hours for examination and audit. If such books and records are located outside the City of Corpus Christi, Lessee shall make them available to the City within the City of Corpus Christi. If the results of such examination by the City establish a deficiency in Proceeds Rent payable to the City, Lessee shall within ten (10) days' pay to the City the deficiency. In the event that a deficiency in such Proceeds Rent of five percent (5%) or more is established for any calendar year, Lessee shall pay the full cost of any examination requested by the City if Lessee is responsible for such deficiency, and Lessee shall also pay interest at the Default Rate on said deficiency in Proceeds Rent from the time it should have been paid until the date paid. The inspection on behalf of the City may be made by an officer, employee or other designee of the City. Lessor shall have the right during each calendar or fiscal year to authorize an audit of Lessee's records pertaining to its operation on the airport. Such audits shall be undertaken by the Lessor's staff or a firm of certified public accountants, satisfactory to Lessor. Except with respect to an audit of Proceeds Rent as set forth above, the cost of such audit shall be paid by Lessor, unless the results of such audit reveal a discrepancy of more than three percent (3%) between the amounts that should have been paid under this Lease and the amounts actually paid during any calendar or fiscal year. In case of such discrepancy, the full cost of the audit shall be paid by Lessee. Any additional auditing expense resulting from Lessee's inability or refusal to provide records as required by the auditor shall be paid by Lessee. The Lessee shall forthwith pay to the Page 34 of 36 Lessor the full amount of fees due based upon the results of the audit if a discrepancy exists. This amount shall be paid within thirty(30) days of written notice by Lessor. ARTICLE 42. MOST FAVORED NATION CITY covenants and agrees not to enter into any agreement with any FBO which (i) makes substantially similar use of the Airport as set forth in Article 4 herein, and (ii) utilizes substantially similar facilities to that of Lessee, which contains more favorable terms than this Lease, or to grant to any such FBO rights or privileges with respect to the Airport which are not afforded to Lessee hereunder unless substantially the same terms, rights, privileges and facilities are concurrently made available to Lessee. ARTICLE 43. PARTIES BOUND This Lease shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns, as permitted hereby. ARTICLE 44. TEXAS LAW TO APPLY All obligations under this Lease are performable in Nueces County, Texas, and shall be construed pursuant to the laws of the State of Texas, except where state law shall be preempted by any rules, laws or regulations of the United States. ARTICLE 45. GENDER Words of either gender used in this Lease shall be held and construed to include the other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. ARTICLE 46. CAPTIONS The captions of the provisions contained herein are for convenience in reference and are not intended to define, extend or limit the scope of any provision of this Lease. ARTICLE 47. ENTIRE AGREEMENT This Lease comprises the final and entire agreement, including all terms and conditions thereof, between the parties hereto, and supersedes all other agreements, oral or otherwise, regarding the subject matter hereof, none of which shall hereafter be deemed to exist or to bind the parties hereto. The parties intend that neither shall be bound by any term, condition or representation not herein written. Page 35 of 36 IN WITNESS WHEREOF, the undersigned have duly executed this Lease as of the dates set forth below. CITY/LESSOR: LESSEE: CITY OF CORPUS CHRISTI SIGNATURE FLIGHT SUPPORT CORPORATION Y. e By: dakc-- Ronald L. Olso , City Manager Maria Sastre, Presi ent and Chief Operating Officer Date: Date: II/3//`q //4 - APPROVED AS TO FORMApproved as to legal form: izPi Ae..4 ii_2- 2O' LEGAL DEPT, Iza•e�" "un• ey Assist.' V ity Attorney on beh. of the City Attorney ccj .00qct ATTEST: 1I---.6"/C- 4 �`"`"'l `^ AU I riUK ILA.. COUNCIL..—.,�,,.i 134 REBECCA HUERTA IT CITY SECRETARY SECRET Page 36 of 36 rilr [ , y - a Htfitti f------g-- _ • I I 1,_ . +PAiZKINO►SLOTS* ::. _ 'O RG SLO1S,. r• •, -. .. 1 (1 O 1 1 1 1 1 1 I,, -. 1>r EGA Iwe Q 31 EXCLUDED FROM LEASE EGA "of 5 of 3 EGA H-2 c,1; _ =4+ EGA I11-3 m K (FOR AIRPORT USE) w nos/ 15,00051' starsi < `sr 30,80b J O GA d i 'I U .,., 4 4D1 SF APRON 62,000 SF EAST GA .: _-. . Description Area SF Acreage Rett PSF/YR Told East GA Apron EGA H-2 15,000 0.34 $1,500 22,500.00 EGA H-3 30,800 0.71 1.650 ,820.00 '�' � EGA of 1 (TERM) 4,900 0.11 .000 29,400.00 — EGA or 3 5,770 oa3 650 32,60b 50 EGA Fuel Farm - EGA of 4 ,5,032 0.11 9$5450 28,430.80 ny EGA of 5 7,464 0.17 5�55,650 171.60 Description (Gallons Pe^f/YR Total PARKING LOT 51,602 1.18 50.300 15,480.60 JET A 36,000 .750 427,000.00_ APRON 62,000 1.42 �8d0 325 20 150.00 AVGA$ 12 000 .750 49,000.00 UNDEVELOPED 22,944 0.53 40.300883.20 UNLEADED .••._.,06,883.20 .750 $1,500.00 FUEL FARM PAD _ 4,776 0.11 40.300 41,432.80 DIESEL 2,000 .750 41,500.00 Total 210.288 4.81 427.325 $249,869.50 1 Total , 52.000 439,000.00 7 CORPUS CHRISTI INTERNATIONAL AIRPORT 14, 4 ;1r►a,0`,tcroI A EAST FBO LEASED PREMISES Prepared ccvi :oft AND AREA CALCULATIONS Approved by EXHIBIT 1 FRED SEGUNDO 1, r , % Date: Sheet No. 1 of 5 07-03-2014 57'.0 CQI 1��� O ..i ri._ i 8t! fF' ,j�� AIR-LOCK LuliPilil: ] DICLUOED FROM 1 EA6f ^ L---.�..:- (FORAIRPORT IJIEI witti..---F‘ . ( -- FEMALE. )- NS&E Fq 8 ,. t I S Q ; SUPERVISOR • I- I . 1 .. . , Q.C. + . a g . o BLFCT. 1 04 Q ADMIN OFC. RM. _. _ ,..._ ...., 4,24 PILOT LOUNGE 1 ....14 "" J �., 1 ` vs 1 +0 1._,._F EGA I W I 1 OFFICEL2 PANTRY , • r�. ,,-, ; 4,900 q.FL IlkI Afir, Iss"'_ __ _ __ JAN. . I EXCLUDED FROM LEASE .gmpolo,..0 .r , (FOR AIRPORT USE) CLOW . ,Rg a._ ON / MAIL • BY• ,..�,,.. lit 3 , , OFFICE-I p MAIL _ 1 ,.........____ -LOCK : : 14,1 EGA of 1 FLOOR Area = 4,900 Sq.Ft. SITE PLAN 1 CORPUS CHRISTI INTERNATIONAL AIRPORT V�1► . Prepared j �� EAST GA of 1 AS-BUILT FLOOR PLAN CCSJ M z `7',Aaw�' EXHIBIT 1 Approved by FRED SEGUNDD O Date; Sheet No.: 2 of 07-01-2014 • 41'..4" iigll'u a 5ii,,�I},.. I'�i1�-t,a 1 +A t , do 1" ' BTORAOE 'f 41'•4' r'r V EXCLUDED FROIA LEASE { ,{ r• (FOR AIRPORT USE) A roil up door: Ill + 'V' r ., STO.1 ' J WARE(OUSE MEZZ./F PLAN ' • . ,„ ill)if\i„,-ti.._.i.. (---- �0.z • ' 790 Sq'Ft. • ' * S 8 i WAREHOUB8ri f,. i A : f•1 1 , 1 .• a 14 1 OFC. r Q • LOBBY \r/ ,N, T. ^ " , ,.,. EGA OF 0 0 o HALLWAY 'rj_ - �� 5,7708cI.Ft N ,,,,,A rior , i 1 c0 t INFO. i. ,L W 1�.,� I LOBBY ' % 7AIKRZ. ' 8170. I IEXCLUDED FROM LEASE . ` WHOUSE WAREHOUSE -J (FOR AIRPORT USE) I. �_ WORKING OFC. II WORKING z r-- AREA G/F PLAN 4,980 Sq.Ft. ItI i Lam SITE PLAN EGA of3 Floor Area = 5,770 SgFt. . . CORPUS CHRISTI INTERNATIONAL AIRPORT � r Prepared by: d, i ,� _, 1 _� EAST GA of 3 AS-BUILT FLOOR PLAN CCM 1 ~ lit x . 4110, i l / Approved by. EXHIBIT 1 FRED SEGUNDO .' T 1 ^.- Date: Sheet No.: 3 oF5 07-01-2014 J � � 1\ -. �'ja4 � t. I' r r 41•-b" A r r ', � l 4-, i.- ro 0Iutter �___,_� EXCLUDED FROM LEX ! 1 i OR AIRPORT Pi fir' t ( WAREHOUSE •. I • 1 s FAli \ i .4 Cw •• • EGA ai_ ' O ` 5,082 FL Qr • . . Q •}• rI ( j' N ' 1" ,1 W L___ _ ,.:_L., \ � co I � WAREHOUSE I EXCLUDED FROM LEASE (FOR AIRPORT USE) � t r„- ...f mi It /r $hU floor EGA of 4 SITE PLAN Floor Area = 5,032 SgFt. CORPUS CHRISTI INTERNATIONAL AIRPORT +'�4440 Prepared by � �� ril A EAST GA of 4 AS-BUILT FLOOR PLAN Approved by: CCOI ,ddb' 1/ � EXHIBIT I FRED SEGUNDO Date: - Sheet No,: 4()FS 07-01-20I4 30.-9" WY-IT CDREVUltilianISIRM ERN'1!.:I. 1 --<-71--.',. OFO$ EXCLUDED FROM LEASE __.... - OfC-4 FOR AIRPORT USE) A OFC$ 3 • �_ • I1 - P. • i)-I OFC-T OFf 9 WM EHOUBPt • } \\\ _ exN s .464 Ft J J $ OFO0 i ,C OFCA ss ORM 44 .'•4, . C7 y •• r y e } Cr. I 44 tC I OFO.10 i _ � i MANAGER OFO 2 mil �,�1/410 a EXCLUDED FROM LEASE NNW. ,.. Y „ (FOR AIRPORT USE) l PANTRY II vil L ,' OPd•1 do LOBBYji MANAO�R' -'r` r _ G/F PLAN 2/F PLAN 3,732 Sq.Ft. 3,732 Sq.Ft. SITE PLAN EGA of5 Floor Area = 7,464 SqFt. CORPUS CHRISTI INTERNATIONAL AIRPORT �p Piepared by:EAST GA of 5 AS-BUILT FLOOR PLAN CCW •IrApproved by: �" g5p`., �/ I EXHIBIT 1 FRED SEGUNDO Date. 5 o'5 07-03-2014 I Aviation Management Consulting Group Summary Appraisal R City of Corpus Christi Corpus Christi International Airport WEST GENERAL AVIATION FACILITY EAST GENERAL AVIATION FACILITY IMPROVED AND UNIMPROVED LAND EXHIBIT 2 November 18, 2011 SUMMARY APPRAISAL REPORT of: West General Aviation Facility East General Aviation Facility Improved and Unimproved Land 1000 International Drive Department of Aviation Corpus Christi, Texas 77406 Prepared For: Mr. Enrique H. Castillo Assistant Director of Aviation Corpus Christi International Airport 1000 International Drive Department of Aviation Corpus Christi, Texas 77406 Prepared By: David C. Benner Associate Consultant Aviation Management Consulting Group, Inc. 9085 East Mineral Circle, Suite 315 Centennial, Colorado, 80112-3499 Consultant Robert D. Decker, MAI Decker Associates, Inc. 1950 W. Littleton Boulevard, Suite 115 Littleton, Colorado, 80120-2000 Appraiser Date of Report: November 18, 2011 Date of Value: August 11, 2011 IN TM Aviation Management Consulting Group November 18, 2011 Mr. Enrique H. Castillo Assistant Director of Aviation Corpus Christi International Airport 1000 International Drive Department of Aviation Corpus Christi, Texas 77406 RE: Summary Appraisal Report West General Aviation Facility East General Aviation Facility Improved and Unimproved Land Corpus Christi International Airport Dear Mr. Castillo: In accordance with your request and authorization, this writing transmits our summary appraisal report for the above referenced properties (hereinafter referred to as the "Subject Properties"). The purpose of this assignment is to determine the market value and the market rent for the West General Aviation Facility (WGA) and the East General Aviation Facility (EGA) and to determine the market rent for certain parcels of improved and unimproved land located at Corpus Christi International Airport (Airport). The Subject Properties consists of the land and improvements (Hangar, General Aviation Terminal Building, Office — associated with Hangar, Storage — associated with Hangar, Apron, Vehicle Parking, and Fuel Storage Facilities) currently being leased by Atlantic Aviation and Signature Flight Support from the City of Corpus Christi (City) and certain parcels of land (identified as B1, Cl, and C2 areas) which are currently available for lease at the Airport. This summary appraisal report was prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) as set forth by the Appraisal Foundation in accordance with the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. In addition, this summary appraisal report has been prepared in conformance with Federal Aviation Administration (FAA) requirements. As a result of the analysis conducted and based upon our experience in the field of real property valuation, an opinion of market value of the Subject Properties, as the date of valuation and contingent to the attached Limiting Conditions and Certifications, has been derived, as follows: 9085 East Mineral Circle, Suite 315 ■ Centennial, Colorado 80112 • Phone 303 792 2700 • Fax 303 792 2751 www.aviationmanagement.corn Mr. Enrique H. Castillo November 18, 2011 Page 2 "As Is" Value (August 11, 2011) West General Aviation Facility $3,750,000 East General Aviation Facility $3,500,000 The market rental rates (by component) for the Subject Properties are conveyed in the Executive Summary. The following summary appraisal report contains the descriptive data and analyses upon which our opinion was predicated. Should you have any questions concerning the contents of this report, please feel free to call us. Thank you for the opportunity to serve you. Respectively submitted, aj David C. Benner Robert D. Decker, MAI Associate Consultant Decker Associates, Inc. Aviation Management Consulting Group, Inc. Texas Temporary Permit No. TX-2528 Consultant Appraiser 9085 East Mineral Circle, Suite 315 ■ Centennial, Colorado 80112 • Phone 303 792 2700 ■ Fax 303 792 2751 www.aviationmanagement.corn Aviation Management Consulting Group TABLE OF CONTENTS I. CERTIFICATIONS iii II. LIMITING AND CONTINGENT CONDITIONS iv III. EXECUTIVE SUMMARY 1 A. Market Value — West General Aviation Facility (WGA) 1 B. Market Value — East General Aviation Facility (EGA) 1 C. Market Rent— Subject Properties 2 D. Definitions 4 E. Subject Properties — Identification Map 5 IV. INTRODUCTION 6 A. Intended Use and Intended User of the Appraisal 6 B. Definition of Market Value 6 C. Definition of Market Rent 6 D. Property Rights Appraised 7 E. Scope of the Appraisal 7 F. Date of Report and Value 8 G. Area of Influence 8 1. Community Overview 8 2. Population 9 3. Residential Real Estate 9 4. Resale Housing 10 5. Commercial Real Estate 11 6. Employment 12 7. Port of Corpus Christi 13 8. Tourism 14 9. Climate 14 10. Utilities 14 V. AIRPORT OVERVIEW 15 A. Airport Description 15 B. Aircraft Operations 15 C. Based Aircraft 16 D. Fuel Volumes 17 E. Commercial Operators 18 F. Non-Commercial Aeronautical Tenants 19 G. Non-Aeronautical Tenants 19 H. Zoning 19 1. Zoning Map 20 I. Assessor's Data 20 VI. SUBJECT PROPERTIES 21 A. History of Property/Owner of Record 21 B. Legal Description 21 C. Property Description 21 D. Description of the Subject Properties 24 Summary Appraisal Report i City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group TABLE OF CONTENTS 1. Non-Aeronautical Improved Land 24 2. Non-Aeronautical Unimproved Land 24 3. Aeronautical Improved Land 25 4. Aeronautical Unimproved Land 25 5. Hangar 26 6. General Aviation Terminal Building 27 7. Office (associated with Hangar) 28 8. Storage (associated with Hangar) 29 9. Apron (Asphalt and Concrete) 30 10. Vehicle Parking (Asphalt and Concrete) 31 11. Fuel Storage Facilities 31 VII. HIGHEST AND BEST USE 33 A. Physically Possible Uses 33 B. Legally Permissible 33 C. Financially Feasible and Most Profitable Uses 34 D. Highest and Best Use -As Vacant 34 E. Highest and Best Use - As Improved 34 VIII. VALUATION 35 A. Introduction 35 1. Ground Leasehold Analysis 36 B. Cost Approach 36 1. Replacement Cost of Improvements 36 2. Estimate of Accrued Depreciation 37 3. Cost Approach Summary 40 C. Income Approach 42 1. Rental Discussion 42 2. Study Findings 43 3. Market Rent Summary 48 4. Vacancy and Collection Loss 62 5. Expense and Reserves 62 6. Overall Capitalization Rate 63 7. Income Approach Summary 64 D. Reconciliation and Final Market Value Estimate 66 E. Prospective Marketing and Exposure Time 67 IX. APPENDIX 68 A. Mathematical Definitions 68 B. Subject Properties — Identification Map 69 C. Subject Properties — Component Identification Map 70 D. Subject Properties — Photographic Survey 72 E. Subject Properties — Metes and Bounds Descriptions 96 F. Consultant/Appraiser Qualifications 99 Summary Appraisal Report ii City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 111 Aviation Management Consulting Group CERTIFICATIONS I. CERTIFICATIONS We certify that, to the best of our knowledge and belief... - the appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or approval of a loan. - we did not base (either partially or completely) and/or estimate value predicated upon the race, color, religion, sex, handicap, familial status, health or national origin of the present or prospective owners, occupants or users of the Subject Properties, or of the present or prospective owners, occupants or user of the properties in the vicinity of the Subject Properties. - the statements of fact contained in this report are true and correct. - the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and represent our personal, impartial, unbiased professional analyses, opinions, and conclusions. - we have no present or prospective interest in the Subject Properties and we have no personal interest with respect to the parties involved. - we have no bias with respect to the Subject Properties or to the parties involved with this assignment. - our engagement in this assignment was not contingent upon developing or reporting predetermined results. - our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. - our analyses, opinions, and conclusions were developed and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice. - Robert D. Decker(Appraiser) and David Benner(Consultant) have made personal inspections of the Subject Properties. - as of the date of this report Robert D. Decker, MAI has completed the voluntary requirements under the continuing education program of the Appraisal Institute. - we have not performed previous appraisal services related to these Subject Properties. - the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. - the following opinion of value has been derived for the Subject Properties as of August 11, 2011: "As Is" Value (August 11, 2011)—West General Aviation Facility $3,750,000 "As Is" Value (August 11, 2011) — East General Aviation Facility $3,500,000 0,,J (. e.............„ _______ _,.....4 David C. Benner Robert D. Decker, MAI Associate Consultant Decker Associates, Inc. Aviation Management Consulting Group, Inc. Texas Temporary Permit No. TX-2528 Consultant Appraiser Summary Appraisal Report iii City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group LIMITING AND CONTINGENT CONDITIONS II. LIMITING AND CONTINGENT CONDITIONS This report is made expressly subject to the following conditions and stipulations: 1. Our compensation is not contingent upon the reporting of a predetermined value that favors the cause of the client, the amount of value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event, and the appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or approval of a loan. 2. This report is made for the client to whom it is addressed and is delivered to the client on the condition that it is to be used by said client only for the purpose stated in the report. No reliance is to be placed on this report for any other purposes nor shall it be published, distributed or shown to other parties except to the party to whom the report is addressed. 3. No responsibility is assumed for matters legal in character. We render no opinion as to the title, but assume that it is marketable. The Subject Properties are appraised as though free and clear of all liens and encumbrances, except as otherwise indicated. Management and ownership are presumed to be competent and responsible. 4. All drawings, diagrams, and photographs in this report are included to assist the reader in visualizing the Subject Properties. These drawings do not represent the product of any professional survey performed by us or any other individual or firm. We are not professional engineers; therefore, we have not completed any engineering survey of the Subject Properties nor are we reporting on structural adequacy. 5. No right to expert testimony, attendance in court, or publication is indicated with possession of this report. We will be available for expert testimony in court at the request of the client at a rate of $200.00 per hour (for Robert Decker, Appraiser) and $180.00 per hour (for David Benner, Consultant) plus incidental (out-of-pocket) expenses. 6. We have no present or contemplated future interest in the Subject Properties. 7. The property information included in this report was provided by the client and assumed to be correct. Market data is based upon information reported by lessors and sellers, lessees and buyers, and/or by other people knowledgeable about the individual transactions. Since not all transactions are reported and some information may be incorrect, the available information may not accurately reflect the status of the market. 8. Our opinion assumes that the existing improvements comply with building and zoning codes of the municipality in which it is located, unless otherwise noted. 9. In the current market, real estate price levels for income-producing properties are dictated by the present value of future expectations. Under the circumstances, appraisers must quantify market estimates which are, by their character, imprecise. Property earnings and financial estimates contained in this report represent our informed judgment as to present and anticipated market trends as of the date of value. Any aberrations and/or dramatic changes in segments of the local and national economy may impact the property's capacity to generate the earnings set forth herein with a concomitant impact on value. 10. This analysis assumes the Subject Properties are free of hazardous materials and toxic wastes. The presence of hazardous materials or toxic wastes on the Subject Properties can substantially impact value. A variety of materials, including chemicals, metals and minerals, has been determined to be hazardous or toxic under local, state and/or federal laws and regulations and can be required to be specially handled and removed from the Subject Properties at the expense of the property owner. Certain materials which may have been used in the construction of the premises or in building components may be hazardous. Asbestos, for example, can be hazardous and has been included in a number of building components such as fire proofing, insulation, linoleum, floor tiles, ceiling panels and acoustical ceiling coatings. Summary Appraisal Report iv City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group LIMITING AND CONTINGENT CONDITIONS Appraisers are not experienced in identifying potential toxic waste and hazardous material problems nor estimating the cost of resolving such problems. In order to identify the nature and extent, if any, of toxic waste and hazardous material problems of the Subject Properties, the appropriate experts should be selected and retained. 11. Except as noted, this analysis assumes the land to be free of adverse soil conditions which would prohibit development of the Subject Properties to highest and best use. We assume no liability as to the soils condition of the Subject Properties. This analysis is of surface rights only, and no analysis has been made of the value of subsurface rights, if any. 12. The United States Congress has enacted the Americans with Disabilities Act. Among other things, this act is intended to make many business establishments equally accessible to persons with a variety of disabilities; modifications to real property may be required. State and local laws also may mandate changes. We are not qualified to advise you as to what, if any, changes may be required now, or in the future. As such, you should consult your attorneys and qualified design professionals for information regarding these matters. We cannot determine which attorneys or design professionals have the appropriate expertise in this area for your needs. Therefore, unless otherwise stated herein, this report and any estimate of value or other evaluation contained herein does not include any allowance for any cost which may be necessary now, or in the future, to bring the Subject Properties into compliance with the requirements, if any, of the Americans with Disabilities Act. 13. We assume that all the building systems, including electrical, mechanical, and plumbing, are in good operating condition. We have not inspected these systems nor are we qualified to comment on the condition of the systems. An expert in these fields should be retained for an inspection. Except as otherwise noted in this report, the Subject Properties are appraised as though there are no structural, mechanical or other defects or problems associated with it. 14. Neither all nor any part of this report (nor any findings, opinions, and/or conclusions contained in this report) shall be disseminated to the news media or to the general public without prior written consent and approval of the authors of this report. 15. Only the subject real estate was appraised. No personal property was included or appraised. The going-concern value of the business was not included or appraised. Summary Appraisal Report v City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 111 Aviation Management Consulting Group EXECUTIVE SUMMARY III. EXECUTIVE SUMMARY Subject Properties: West General Aviation Facility (WGA) East General Aviation Facility (EGA) Improved and Unimproved Land Corpus Christi International Airport 1000 International Drive Corpus Christ, Texas 77406 Date of Report: November 18, 2011 Date of Value: August 11, 2011 Zoning: IH, Heavy Industrial, City of Corpus Christi A. Market Value—West General Aviation Facility (WGA) Improvement Description: Consists of Aeronautical Improved Land (Commercial), Hangar, General Aviation Terminal Building, Office (associated with Hangar), Storage (associated with Hangar), Concrete Apron, Asphalt and Concrete Vehicle Parking, and a Fuel Storage Facility Highest and Best Use: As Vacant: Aeronautical Use As Existing: Commercial Aeronautical Use (aviation business) Market Value Indication: "As Is" Cost Approach (rounded): $4,250,000 Income Approach (rounded): $3,500,000 Final Conclusion (rounded) $3,750,000 B. Market Value — East General Aviation Facility (EGA) Improvement Description: Consists of Aeronautical Improved Land (Commercial), Hangar, General Aviation Terminal Building, Office (associated with Hangar), Storage (associated with Hangar), Asphalt Apron, Asphalt and Concrete Vehicle Parking, and a Fuel Storage Facility Highest and Best Use: As Vacant: Aeronautical Use As Existing: Commercial Aeronautical Use (aviation business) Market Value Indication: "As Is" Cost Approach (rounded): $2,500,000 Income Approach (rounded): $4,250,000 Final Conclusion (rounded) $3,500,000 This Executive Summary represents only a portion of this summary appraisal report and is invalid outside the context of the entire document. Summary Appraisal Report 1 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting Group EXECUTIVE SUMMARY C. Market Rent— Subject Properties Improvement Description: Consists of Aeronautical Improved Land (Commercial and Non-Commercial), Aeronautical Unimproved Land (Commercial and Non-Commercial), Non-Aeronautical Improved Land (Commercial and Non-Commercial), Non- Aeronautical Unimproved Land (Commercial and Non- Commercial), Hangar, General Aviation Terminal Building, Office (associated with Hangar), Storage (associated with Hangar), Asphalt and Concrete Apron, Asphalt and Concrete Vehicle Parking, and Fuel Storage Facilities Market Rent Conclusion: The following table conveys the recommended market rent for each component of the Subject Property. Subject Property Name Total Square Feet Market Rent Component B1-1 219,465 $0.080 B1-2 248,851 $0.080 B1-3 476,988 $0.100 B1-4 244,475 $0.120 B1-5 383,583 $0.110 Non-Aeronautical Improved Land B1-7 511,3 $0.120 61-7 46,3110 0 $0.120 B1-8 359,518 $0.100 B1-9 190,177 $0.100 B1-10 231,820 $0.120 B1-13 355,245 $0.110 B1-15 315,388 $0.110 C1-2 184,292 $0.060 C1-4 285,412 $0.050 C1-6 258,830 $0.050 C1-8 160,057 $0.050 01-10 351,656 $0.050 Non-Aeronautical Unimproved Land C1-12 259,889 $0.050 C1-14 360,505 $0.050 C2-2 262,725 $0.050 C2-4 258,655 $0.050 C2-6 256,669 $0.050 C2-8 242,385 $0.050 0—200,000 SF $0.275 200,000— 1,000,000 SF $0.250 Greater than 1,000,000 SF $0.225 B1-11 251,244 $0.250 Aeronautical Improved Land B1-12 546,039 $0.250 (Commercial) B1-14 78,358 $0.275 B1-16 1,149,553 $0.225 B1-17 74,565 $0.275 WGA Undeveloped Land 170,087 $0.300 EGA Undeveloped Land 140,048 $0.300 Summary Appraisal Report 2 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group EXECUTIVE SUMMARY 0—200,000 SF $0.300 200,000— 1,000,000 SF $0.275 Greater than 1,000,000 SF $0.250 Aeronautical Improved Land B1-11 251,244 $0.275 (Non-Commercial) B1-12 546,039 $0.275 B1-14 78,358 $0.300 B1-16 1,149,553 $0.250 B1-17 74,565 $0.300 0—200,000 SF $0.175 200,000— 1,000,000 SF $0.150 Greater than 1,000,000 SF $0.125 C1-1 231,392 $0.150 C1-3 388,058 $0.150 C1-5 399,154 $0.150 Aeronautical Unimproved Land C1-7 394,432 $0.150 (Commercial) C1-9 389,710 $0.150 C1-11 384,988 $0.150 C1-13 380,266 $0.150 C2-1 480,951 $0.150 C2-3 208,588 $0.150 C2-5 267,870 $0.150 C2-7 209,262 $0.150 0—200,000 SF $0.200 200,000— 1,000,000 SF $0.175 Greater than 1,000,000 SF $0.150 C1-1 231,392 $0.175 C1-3 388,058 $0.175 C1-5 399,154 $0.175 Aeronautical Unimproved Land C1-7 394,432 $0.175 (Non-Commercial) C1-9 389,710 $0.175 C1-11 384,988 $0.175 C1-13 380,266 $0.175 C2-1 480,951 $0.175 C2-3 208,588 $0.175 C2-5 267,870 $0.175 C2-7 209,262 $0.175 WGA H-1 14,000 SF $1.500 WGA H-2 14,000 SF $1.500 WGA H-3 11,500 SF $1.650 WGA H-4 13,325 SF $1.350 Hangar EGA H-1 25,600 SF $1.650 EGA H-2 15,000 SF $1.500 EGA H-3 30,800 SF $1.650 EGA H-4 5,000 SF $1.650 General Aviation Terminal Building WGA OF-1 3,105 SF $6.000 EGA OF-1 4,900 SF $6.000 WGA OF-2 4,680 SF $5.650 WGA OF-3 2,300 SF $6.250 WGA OF-3 2,300 SF $6.250 Office (associated with Hangar) EGA OF-2 2,500 SF $6.250 EGA OF-3 5,000 SF $5.650 EGA OF-4 5,000 SF $5.650 EGA OF-5 5,700 SF $5.650 EGA OF-6 2,000 SF $6.250 Summary Appraisal Report 3 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group EXECUTIVE SUMMARY Storage (associated with Hangar) WGA OF-2 4,680 SF $1.250 EGA OF-5 1,900 SF Asphalt Apron EGA Apron 354,765 SF $0.325 Concrete Apron WGA Apron 466,514 SF $0.350 WGA Apron—FSF 11,246 SF Asphalt Vehicle Parking WGA Vehicle Parking 56,543 SF $0.300 EGA Vehicle Parking 39,500 SF Concrete Vehicle Parking WGA Vehicle Parking 5,280 SF $0.300 EGA Vehicle Parking 47,266 SF Fuel Storage Facility WGA FSF 24,000 gallon Jet Fuel $0.750 10,000 gallon Avgas 500 gallon Unleaded EGA FSF 36,000 gallon Jet Fuel $0.750 12,000 gallon Avgas 2,000 gallon Unleaded 2,000 gallon Diesel All rental rates (excluding the Fuel Storage Facility) are"per square foot per year" (psf/yr) Rental rates for the Fuel Storage Facility are"per gallon of capacity per year" (pg/yr) D. Definitions Aeronautical Improved Land, Airport land having access (airside and landside) and utilities to the property boundary. Aeronautical Unimproved Land, Airport land without access (airside or landside) or without utilities to the property boundary Commercial, An activity undertaken with the intent to generate and/or secure earnings, income, or compensation (including exchange or barter of goods or services), and/or profit, whether or not such objectives are accomplished. Itinerant, Aircraft operations terminated at the Airport which (1) arrive from outside the Airport area or (2) depart the Airport and leave the Airport area. Local, Aircraft operations which (1) remain in the local traffic pattern, (2) execute simulated instrument approaches or low passes at the Airport, or (3) operate to or from the Airport and a designated practice area within a 20 mile radius of the Air Traffic Control Tower. Non-Aeronautical Improved Land, Airport land having landside access and utilities to the property boundary, but no airside access. Non-Aeronautical Unimproved Land, Airport land without landside access or utilities to the property boundary and no airside access. Non-Commercial, An activity undertaken for a purpose other than securing earnings, income, compensation (including exchange or barter of goods or services), and/or profit. Undeveloped Land, Airport land which is currently under lease without improvements constructed upon the land. Summary Appraisal Report 4 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) EliAviation Management Consulting Group EXECUTIVE SUMMARY E. Subject Properties — Identification Map CORPUS CHRISTI INTERNATIONAL AIRPORT— A B„,,,,,; ,--:,,,--- - ,,, • :,....ee:is 'At-. =AI...... � ,"). , ::-.., .' ,f:1 )-,'I ,. ,1 ,0,00 � ,,41,..101,',(,,,/ � ♦,� . ' 711(ll , .;,,,,,,... / i� iION. i � iiiiieo , „..:.,,_, 4 :ft: it t r -r/r//) /101 I, e ii , ' 1 ' -'- . - � --J • lAr.'; I • /C r k'''.. ,_ ' I'4,' I s' ' ri: "Ir'* ,I r. j ,.. : ' „.• .,_ 4, / ,,,,,, . , ,,:.: ., .: ... 4, ,.. r' P.' ':, %,”,//rAZZr . ,, jail'L , '.44,... WiPIJS CHRISTI IKTERWTION.AL AIIWORT '^4' „xA, uum.: osynsptes j�7/,t F. AIRPORT PROPERTY OVERVIEW tt• ` ATrACHMENT`D-2" waw na:wne rccnsm�n v '1 CIT]'OE CORP.[S CHRISTI DEPARTMENT OF AVIATION 201 I ,. Summary Appraisal Report 5 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) IIAviation Management Consulting Group INTRODUCTION IV. INTRODUCTION A. Intended Use and Intended User of the Appraisal The purpose of this summary appraisal report is to set forth the investigations and analyses leading to our opinion of the market value and the market rent for the Fixed Base Operation (FBO) improvements and the market rent for certain land, both improved and unimproved, located at the Corpus Christi International Airport, Corpus Christi, Texas. The intended user of this report is the Aviation Department and the intended purpose of this report is for establishing market rents for the FBO improvements and for certain parcels of improved and unimproved land. B. Definition of Market Value Market value means "the most probable price which a specified interest in real property is likely to bring under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, assuming the price is not affected by undue stimulus". Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: a) buyer and seller are typically motivated; b) both parties are well informed or well advised and both acting in what they consider their best interest; c) marketing efforts were adequate and a reasonable time was allowed for exposure in the open market; d) payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; e) an open and competitive market exists for the property interest appraised; and, f) the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.2 C. Definition of Market Rent Market rent is defined as "the rental income a property would probably command in the open market; indicated by the current rents that are either paid or asked for comparable 2 Dictionary of Real Estate Appraisal,Appraisal Institute, Fourth Edition, Page 177. Summary Appraisal Report 6 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group INTRODUCTION space as of the date of appraisal."3 The market rent conclusions are representative of the rental rates recommended for the City to charge lessees (not the rental rates lessees should charge customers or end users). D. Property Rights Appraised The leasehold interest of the property rights is being appraised. Leasehold interest is defined as "the interest held by the lease (tenant or renter) through a lease transferring rights of use and occupancy for a stated term under certain conditions."4 E. Scope of the Appraisal The scope of this appraisal is to gather appropriate market data, utilize appropriate or applicable appraisal techniques, and arrive at an indication of the market value for the Subject Properties. To complete this assignment, an investigation of highest and best use of the Subject Properties as though vacant and as improved was completed and neighborhood trends were analyzed. Information regarding Improved Land (Aeronautical/Non-Aeronautical and Commercial/Non-Commercial), Unimproved Land (Aeronautical/Non-Aeronautical and Commercial/Non-Commercial), General Aviation Terminal Building (GATB), Office (associated with Hangar), Storage (associated with Hangar), Hangar, Apron (Asphalt and Concrete), and Vehicle Parking (Asphalt and Concrete) rental rates were gathered through survey efforts and confirmed with airport owners/operators. Based upon an analysis of the research findings, conclusions were drawn and two approaches to value (Cost and Income Approaches) were completed. The Sales Comparison Approach was not performed since this approach is not considered appropriate or applicable in this case. The Sales Comparison Approach is not a good indicator of value in this case since sales of FBOs include business enterprise which is very difficult to separate from the real estate. A final market value estimate was derived and the results are conveyed in this summary appraisal report. 3 Ibid, Page 83. 4 !bid, Page 162. Summary Appraisal Report 7 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group INTRODUCTION F. Date of Report and Value This report is dated November 18, 2011 which generally corresponds to the completion date of the report. The effective date of value is August 11, 2011 which generally corresponds to the date the Subject Properties were inspected. G. Area of Influence 1. Community Overview The Subject Properties are located in the City of Corpus Christi (City), Texas. The City is located in the extreme southern portion of the State of Texas, in the area known as the Coastal Bend, approximately 207 miles southwest of Houston, 143 miles south of San Antonio, 150 miles east of Laredo, and 159 miles north of Brownsville (and the United States/Mexico Border). The Spanish explorer, Alonso Alvarez De Pineda, named the City's bay Corpus Christi which translates to "Body of Christ" in Latin. Founded in 1838 as a small trading post, the City later became a major center for the petrochemical industry. The Port of Corpus Christi is the seventh busiest port in the United States in terms of tonnage. The City is the county seat of Nueces County and serves as the governmental, economic, and cultural center of the region. While Nueces County dominates the statistical and demographic information of the region, the Corpus Christi Metropolitan Statistical Area (MSA) also includes the counties of San Patricio and Aransas. Occasionally, statistical information is provided for the Seven County Region which includes Bee, Jim Wells, Kleberg, and Refugio counties. Summary Appraisal Report 8 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) SiAviation Management Consulting Group INTRODUCTION The location of the City is depicted in the following map. Three IQers ,, `...:_..V., C A L H 0 U N N Gallivan B, n1„i j Tm°a seerd,rt \}l f AWwd B E E ei D -:' - REFUGIO L I V E 0'A K Q smm ee Aransas 0. MaleAransasRef B / ARANSAS ..s� 77, -o pamlar.A7ettes ..,.: C gay __ nSaien Roclooit Sen SAN PATR1 IO Si Joseph PaMdo ,:- TSR Island - _ fOtlem °Qa9orY - .Aransas Pass . ",. Portlata `__,hglesde tat Rabstown —..( ... Port Aransas Lyell p0D7 - .fie PAca ° -_Vr nSil 50.0 Ni J -M a Corers Ghost Bay Abuawg ___ 359 Island AA Driscal Galt o f NUECES Andes >vr. M e x c o i i, ,Bishop! ........ 7 -.r.. Kigs:Me° '? H L E B E R G ° ,--' :.. Sena p: Falfurnas6 ,:.:a .. _ ,iw. m 0 R 0 0 K .X E ' D V ❑ z ❑ 2. Population The City experienced a gradual increase in population between the 2000 and 2010 United States Census. The annual compounded rate of increase was 1.0% per year and the overall percentage increase was 10.1% over the period studied. While the overall percentage increase for the City exceeded the increase for the overall MSA (6.2%), it was approximately one-half of the increase for the State of Texas (20.0%) and slightly higher than the United States (9.4%). 3. Residential Real Estate Residential construction and price appreciation in the Corpus Christi area generally increased between 2000 and 2006 before decreasing significantly in 2007. The reason for the active housing growth was due primarily to historically low interest rates, which also provided an Summary Appraisal Report 9 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group INTRODUCTION impetus for commercial real estate transactions throughout the country. The slightly larger increase in the population growth rate (between 2004 and 2006), when coupled with the area's desirability as a second home location, resulted in strong demand for housing. However, as the Federal Reserve increased interest rates during 2006 and homebuilder profit margins declined, the housing market flattened. In 2007, the national housing market was rocked by the "sub-prime crisis" and in Corpus Christi, single family residential construction activity continued to decrease. From 2009 to 2010, however, total residential permit volume in the City increased 13.3%. The 2010 dollar-value of residential construction was up 5.8% (compared to 2009); although, volume was down 19.1% (compared to 2008) and 33.6% (compared to 2007). While 2010 single-family dollar-value decreased from 2009, the average price per single-family unit increased 10.8% to $131,664. This may be a misleading indicator in the market as construction of mansion-style residences distorts the average. Most permits in the market fall within the $75,000 to $125,000 range. 4. Resale Housing The Multiple Listing Service (MLS) statistics for the City were strong between 2003 and 2006 with both sale prices and the number of houses sold increasing. While the average and median prices continued to increase, sales activity dropped 13.1% in 2007 and 16.3% in 2008. Average and median prices remained about the same until early 2009 when prices began to decline. The data suggests a bottoming in the market as 2010's activity was largely unchanged from 2009. The 2010 data indicated 10.3 months worth of inventory compared to an average of 7.2 months (since 2000) and approximately 5.0 months (between 2002 and 2006). Summary Appraisal Report 10 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) gi Aviation Management Consulting Group INTRODUCTION Corpus Christi Single-Family Residential SalesActivity YearNkrnber of Percent Median Percent A',erage Percent Properties Change Sales Price Change Sales Price Change 2000 3,441 N/A $ 85,900 N/A $ 103,100 N/A 2001 3,517 2.2% $ 89,100 3.7% $ 107,600 4.4% 2002 3,770 7.2% $ 93,100 4.5% $ 110,800 3.0% 2003 4,198 11.4% $ 101,4(X) 8.9% $ 120,700 8.9% 2004 4,745 13.0% $ 113,800 12.2% $ 132,100 9.4% 2005 4,894 3.1% $ 125,2(X) 10.0% $147,300 11.5% 2006 5,192 6.1% $ 130,400 4.2% $ 153,300 4.1% 2037 4,510 -13.1% $ 136,500 4.7% $ 162,030 5.7% 2038 3,773 -16.3% $ 138,900 1.8% $ 162,900 0.6% 2009 3/M4 -8.7% $ 134,803 -3.0% $ 155,500 -4.5% 2010 3,/145 0.0% $ 136,500 1.3°/0- $ 152,300 -2.1% Source: U.S. Census Bureau and Burbach &Associates, Inc. The overall apartment vacancy rate for the Corpus Christi Region has typically ranged between 4.0% and 5.0%. The lowest vacancy rate was 3.7% in 2001. The vacancy rate was 2.9% in 2008, 5.6% in 2009, and 6.8% in 2010. 5. Commercial Real Estate The overall commercial property vacancy rate increased to 10.2% in the fourth quarter of 2010, up from 9.0% in 2009 and 8.0% in 2008. The average quoted full-service rental rate was $13.80 per square foot (Q4, 2010). The industrial market fourth quarter vacancy rate was 4.8% in 2010. This rate is down from 6.2% in 2009 and 5.2% in 2008. The warehouse market vacancy rate was 4.7% while the flex market vacancy rate was 7.4% (Q4, 2010). The average quoted rental rate was $5.95 per square foot (Q4, 2010). The retail market had a fourth quarter 2010 vacancy rate of 6.6%. This rate is down from 6.9% in 2009, but still above the rate of 6.0% in 2008. The average net rental rate was $12.33 per square foot (Q4, 2010). Commercial permit volume increased 35.7% in 2010 over 2009. The 2010 dollar-volume of total project costs ($118.98 million) was 95.5% higher than the 2009 level ($60.85 million) and the highest since 2006. The proposed construction details for the permits were not readily available from the City. As such, a determination could not be made regarding the extent of private versus public sector funding. Regardless, the significant increase in the number of new permits suggests that private sector construction is increasing. Summary Appraisal Report 11 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group INTRODUCTION Commercial Real Estate Market-Fourth Quarter 2010 Component SF (000) Vacancy Rate/SF Office Market Total Market 9,280 10.2% $13.80 Class A 1,189 10.3% $17.34 Class B 6,063 8.7% $13.85 Class C 2,028 14.7% $10.45 CBD Market 4,427 7.7% $15.04 South Side Market 2,205 8.7% $13.27 Mid-City Market 1,357 20.4% $12.55 West Side Market 557 10.9% $10.17 Industrial Market Total Market 18,405 4.8% $5.95 Warehouse Space 17,456 4.7% $5.55 Flex Space 949 7.4% $8.82 CBD Market 1,257 4.9% $4.75 West Side Market 7,998 3.8% $5.32 Northwest Market 3,334 3.8% $6.08 South Side Market 1,543 6.6% $7.55 Southwest Market 1,723 3.7% $5.91 Retail Market Total Market 22,248 6.6% $12.33 General Retail 11,922 6.7% $10.17 Mall Market 3,177 3.4% $13.54 Power Center 346 0.0% $8.00 Shopping Center 6,770 8.3% $14.48 CBD Market 1,938 5.5% $10.29 Mid-City Market 6,281 6.9% $11.21 South Side Market 5,885 6.3% $15.63 West Side Market 1,692 5.4% $6.98 Northwest Market 1,560 11.6% $10.93 Flour Bluff/Padre Is. 1,581 4.2% $16.75 Portland/Ingleside 1,748 7.1% $11.01 Source: U.S. Census and Burbach &Associates, Inc. 6. Employment The economy of the MSA is rooted in a number of industries including convention and tourism, energy, government, military, manufacturing, construction, consumer goods and services, ranching, fishing, and agriculture. Summary Appraisal Report 12 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group INTRODUCTION Several multimillion dollar retail projects have been completed in recent years including new national restaurants, retail strip centers, two new H.E.B. Plus Supermarkets, and three new Walmart stores. South Padre Island Drive is the City's high-volume retail corridor. There are three large shopping centers located along the corridor including: a) Sunrise Mall — 800,000 square foot regional mall constructed in 1981, anchored by Sears, Burlington Coat Factory, Wilcox Furniture, and Discount Cinema; b) Moore Plaza — 560,000 square foot power center constructed in 1989, anchored by a H.E.B. Supermarket, Target, Hobby Lobby, Marshalls, and Office Depot; and c) La Palmera Mall — 1.2 million square foot regional center, opened in 1970, expanded in 1985, and anchored by Bealls, Dillards, Macys, and JC Penny. As of December 2010, the total non-agricultural employment in the MSA was 179,800 which represented an increase of 3,000 jobs (or 1.7%) compared to December 2009. In addition, at that time, the unemployment rate in the MSA was 8.3% which was up from 2009 (7.7%) and 2008 (5.5%) compared to 8.0% in the State of Texas and 9.1% in the United States (12/2010). In 2010, the highest rates of employment growth occurred in the following sectors: Natural Resources, Mining & Construction (5.4%), Manufacturing (3.2%), Other Services (2.9%), Education & Health Services (2.8%), and Professional & Business Services (2.7%). All other sectors were unchanged or had growth rates of less than 1.0%. None of the sectors declined from the prior year. Since 2005, the largest increases in employment occurred in the following sectors: Other Services (12.7%), Education & Health Services (12.3%), and Natural Resources, Mining, & Construction (8.9%). The Leisure & Hospitality (6.3%) and Government (8.2%) sectors increased as well. The sectors experiencing significant declines included Information (- 12.0%), Manufacturing (-10.9%), and Professional & Business Services (-5.5%). 7. Port of Corpus Christi The Port of Corpus Christi, which was the seventh busiest port in the United States in 2010, is the heart of international trade activity in South Texas. In 2008, 85.9 million tons of cargo moved through the Port, down 3.8% from 2007. In 2009, volume continued to decrease with 76.5 million tons of cargo moving through the Port, down 10.9% from 2008. In 2010, Summary Appraisal Report 13 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) in Aviation Management Consulting Group INTRODUCTION however, volume increased 7.4% to 82.2 million tons indicating improvement in economic conditions. Petroleum products represented 84% of the tonnage handled in 2010. 8. Tourism The growth in the region's tourism industry can be attributed to a number of area attractions including the Padre Island National Seashore, Convention Center, USS Lexington Museum, Texas State Aquarium, and Corpus Christi Hooks—a minor league baseball team. In 2009, the Texas State Aquarium was the top tourist destination (attracting 523,432 visitors) followed by the USS Lexington (attracting 264,927 visitors). It is estimated that the tourism industry generates approximately 12,000 jobs and accounts for approximately 20% of the total wages and salaries in the community. 9. Climate The City, which is located on the Texas coastline near the Gulf of Mexico, enjoys warmer than average temperatures for the United States, higher than average humidity, rainfall, and sunshine. While the area's tornado activity is below the Texas state average, the area is subject to other natural disasters such as storms, hurricanes, and floods. 10. Utilities Electrical service in Texas is deregulated. As a result, seven companies provide electrical service in the City. At least five companies offer telephone/television/cable services. The City provides natural gas, trash removal, water, and sewer service. Summary Appraisal Report 14 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) II Aviation Management Consulting Group AIRPORT OVERVIEW V. AIRPORT OVERVIEW A. Airport Description The Airport, which consists of approximately 2,457 acres, has two runways (Runway 13/31 which is 7,508 feet long and 150 feet wide grooved asphalt in good condition and Runway 17/35 which is 6,080 feet long and 150 feet wide grooved asphalt in good condition). The Airport has an Air Traffic Control Tower (which operates from 4:00 a.m. to 12:30 a.m. local) and is served by an Instrument Landing System (ILS) for Runways 13 and 35. The Airport is designated a Primary Small Hub Airport in the Federal Aviation Administration (FAA) National Plan of Integrated Airport Systems. Runway 13/31 and Runway 17/35 will be extended over the next two years (2012 and 2013). Upon completion, Runway 13/31 will have a declared distance of 9,100 feet and Runway 17/35 will have a new length of 6,680 feet. Upgrades to all navigational aids are part of the multi-million dollar investment which will be complete by 2014. Recently, the Department and FAA have invested approximately $3.2 million to rehabilitate the Federal Inspection Services (FIS) area to process up to 250 passengers per hour. The users are pleased with the outcome and have labeled it as a "Hassle-Free" facility. B. Aircraft Operations The following graphic depicts the general aviation aircraft operations (by category — local, itinerant, and total) at the Airport from 2006 to 2010, as reported by the Air Traffic Activity System (ATADS). Summary Appraisal Report 15 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 A Management Consulting Group AIRPORT OVERVIEW I General Aviation Aircraft Operations 30,000 N 0 25,000 Y f0 L Oa 20,000 in iillril u 15,000 at . • ■ ■ Local a 6 10,000millik Itinerant c Ili ■ ■ .Total 5,000 z 0 I,; I 2006 2007 2008 2009 2010 Year Total general aviation aircraft operations at the Airport have fluctuated from a high of 24,923 (2006) to a low of 18,920 (2007) to 22,704 (2010). This represents an overall decrease of 8.90% which represents an average annual decrease of 3.06% over the five- year period studied. General Aviation Operations (2006 -2010) Year Local Itinerant Total % Change 2006 3,170 21,753 24,923 N/A 2007 2,160 16,760 18,920 -24.1% 2008 794 20,200 20,994 11.0% 2009 1,560 19,354 20,914 -0.4% 2010 4,067 18,637 22,704 8.6% C. Based Aircraft The majority of aircraft based at the Airport are single-engine aircraft. However, there is a significant number of multi-engine aircraft and jets based at the Airport as well. The following graphic depicts the number of based aircraft at the Airport from 2006 to 2010, as reported by Airport management. I Summary Appraisal Report 16 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) laAviation Management Consulting Group AIRPORT OVERVIEW General Aviation Based Aircraft 90 80 c<a 70 u a 60 •Single-engine -a m 50 Multi-engine m 6 40 t Jet 30 , III , ■ Helicopter 20 , III 1 ■Other 10 Total 0 -_111. 2006 2007 2008 2009 2010 Year A total of 68 aircraft are currently based at the Airport of which, 32 (or approximately 47.0%) are single-engine aircraft. From 2006 to 2010, the number of based aircraft at the Airport decreased a total of 10.53% which represents an average annual decrease of 3.64%. General Aviation Based Aircraft (2006 - 2010) Single- Multi- o Year engine engine Jet Helicopter Other Total /o Change 2006 40 26 5 5 N/A 76 N/A 2007 37 34 6 1 N/A 78 2.6% 2008 35 32 4 3 N/A 74 -5.1% 2009 36 37 5 1 N/A 79 6.8% 2010 32 22 13 1 N/A 68 -13.9% D. Fuel Volumes The following graphic depicts the total general aviation fuel volumes at the Airport from 2006 to 2010, as reported by Airport management. Summary Appraisal Report 17 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group AIRPORT OVERVIEW 1 General Aviation Fuel Volumes 2,500,000 2,000,000 o0 c7 1,500,000 46 d E 1,000,000 ■Total o z 500,000 0 2006 2007 2008 2009 2010 Year Total general aviation fuel volumes decreased from 2,018,503 gallons (2006) to 1,404,963 gallons (2010). Over the five-year period studied, total general aviation fuel volumes decreased 30.40% which represents an average annual decrease of 11.38%. General Aviation Fuel Volunnes (2006-2010) Year Total °10 a rd ye 2006 2,018,503 N(A 2007 1,433,421 -40.8% 2008 1,497,428 4.3% 2009 1,478,136 -1.3% 2010 1,404,963 -5.2% E. Commercial Operators There are seven general aviation commercial aeronautical operators at the Airport. There are two FBOs (Atlantic Aviation and Signature Flight Support) providing aircraft fueling (Jet Fuel and Avgas), line services, and aircraft parking (hangar and tiedown). There are five SASOs, operating as sublessees of the FBOs, providing aircraft maintenance and repair, avionics and instrument repair, aircraft management and charter, flight training and aircraft rental, and aircraft sales. Summary Appraisal Report 18 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group AIRPORT OVERVIEW F. Non-Commercial Aeronautical Tenants There are four non-commercial aeronautical tenants (individual or corporate flight departments) based at the Airport (Berry Aviation, L.J. Aviation, Law Office of Allan Potter, and Tubing Rentals). In addition, there are two governmental agencies (National Weather Service and Civil Air Patrol) operating at the Airport. Additionally, the Airport is utilized by all branches of the United States military. G. Non-Aeronautical Tenants FedEx Ground is currently located in the Airport's International Business Center. H. Zoning The Corpus Christ Airport is zoned IH, Heavy Industrial (see zoning map below). The permitted uses under the IH Zone are extensive and include caretaker's quarters, childcare, parks and open areas, passenger terminals, utilities, crematoriums, self-service storage, truck stops, vehicle service, light industrial uses, warehouse and freight movement, waste related uses, wholesale trade, and heavy industrial. The WGA and EGA represent legal conforming uses under the current zoning. The Airport has a Joint Airport Zoning Board that was authorized in 1980 and the Appraiser assumes the improvements in existence, and under appraisal, meet the criteria set forth in the Airport Zoning Ordinance. Since the Subject Properties are located at the Airport, as stipulated in 14 CFR Part 77, a variety of setback and clear (obstacle-free) zone requirements relating to the Airport's runways and taxiways (e.g., horizontal, transitional, and conical zones) apply as well. It is assumed that the improvements conform to FAA standards. The City has adopted Leasehold Development Criteria which governs leasehold development at the Airport. It is beyond the scope of work to provide an opinion as to whether or not the existing FBO improvements conform to the City's development criteria or any other standards established by the City. Summary Appraisal Report 19 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) IIAviation Management Consulting Group AIRPORT OVERVIEW 1. Zoning Map Sedwick'Rd ti� • \ 058044 057044 056044 055044 054044 053044 0520 `05804305 43 056043 065 43 0 054043'2 053043 052043" In ernarional a Airport 058042 J057042 056042 055042 054042 053042 052042 ---Bear�L•n- 05804 057041 `056041 05504 054041 053041 052041 056040 055040 054040 053040 052040 6 0‘ J` I. Assessor's Data The improvements at the Airport are part of the Nueces County Appraisal District and accessed accordingly. The improvements, which have various parcel numbers, are assessed separately. A summary of the assessments of the West and East General Aviation Facilities follows: Improvement Parcel Number Status Signature Aviation 75-46-0000-00-22 Exempt Atlantic Aviation 75-46-0000-00-21 Exempt The land at the Airport is exempt from property taxes; therefore, there are no assessor parcel numbers for the land. Summary Appraisal Report 20 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) II Aviation Management Consulting Group SUBJECT PROPERTY VI. SUBJECT PROPERTIES A. History of Property/Owner of Record The Airport is owned by the City of Corpus Christi. The original site, which consisted of 470 acres, was purchased by the City in 1957 and several parcels of land have been added over the years. Currently, the Airport consists of 2,457 acres. B. Legal Description A legal description of the Airport was requested, but not provided. However, metes and bounds descriptions are provided in the Appendix section of this report. C. Property Description West and East General Aviation Facilities Street Address: Atlantic Aviation (West General Aviation Facility) and Signature Flight Support (East General Aviation Facility) have the following addresses: Atlantic Aviation 355 Pinson Drive Corpus Christi, Texas 78406 Signature Flight Support 506 International Drive Corpus Christ, Texas 78406 Location: Atlantic Aviation is located on the west side of the Airport and Signature Flight Support is located on the east side of the Airport. Please refer to the Subject Properties Identification Map provided in the Appendix. Site Area: WGA: approximately 774,880 square feet (17.79 acres) EGA: approximately 683,079 square feet (15.68 acres) Topography: The sites are level at street grade with a slight slope in a southeasterly direction. Soil Conditions: The Appraiser was not furnished with a soils report for review. It is assumed there are no soil conditions which would adversely impact the Subject Properties. Easements: The Appraiser was not provided with a title report for review. It is assumed there are no easements or encumbrances which would adversely impact the Subject Properties. Summary Appraisal Report 21 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting Group SUBJECT PROPERTY Utility Availability: All usual and necessary public utilities are available to both sites and are provided by the following agencies: Water: City of Corpus Christi Sewer: City of Corpus Christi Natural Gas: City of Corpus Christi Electrical Service: Multiple providers Trash Removal: City of Corpus Christi Telephone/television/cable Multiple providers Access to Street Improvements: Both sites are accessible from International Drive — the main commercial arterial to the Airport. International Drive connects with State Highway 84 to the north, which, in turn, connects with Interstate 37. On-Site Improvements: The West General Aviation Facility consists of Aeronautical Improved Land (Commercial), Hangar, General Aviation Terminal Building, Office (associated with Hangar), Storage (associated with Hangar), Concrete Apron, Asphalt and Concrete Vehicle Parking, and a Fuel Storage Facility. The East General Aviation Facility consists of Aeronautical Improved Land (Commercial), Hangar, General Aviation Terminal Building, Office (associated with Hangar), Storage (associated with Hangar), Asphalt Apron, Asphalt and Concrete Vehicle Parking, and a Fuel Storage Facility. Environmental Hazards: The Appraiser reviewed and considered the Phase I report. However, the Appraiser has not quantified the impact of the findings for the Subject Properties as this is beyond the scope of work. Wetlands: During inspection of the sites, no wetlands were observed. Vegetation: With the exception of the runways, taxiways, apron, roads, and other developed portions of the Airport, the undeveloped portions of the Airport are natural grass, which is mowed periodically, and farmland which is managed by contract farmers. Functional Utility: The sites are large, slightly irregular in shape, and improved with various facilities. As a result of the size and shape of the sites, a wide variety of uses including, but not limited to, FBOs can be accommodated. Summary Appraisal Report 22 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group SUBJECT PROPERTY Aeronautical and Non-Aeronautical Land Street Address: Street addresses have not been assigned to any of the land parcels due to lack of development. Location: The land parcels are located to the north of the Airport passenger terminal building, both east and west of International Drive. Site Area: The total land area under appraisal is 277.71 acres identified as B-1, C-1, and C-2. Topography: The sites are level at street grade with a slight slope in a southeasterly direction. Soil Conditions: The Appraiser was not furnished with a soils report for review. It is assumed there are no soil conditions which would adversely impact the Subject Properties. Easements: The Appraiser was not provided with a title report for review. It is assumed there are no easements or encumbrances which would adversely impact the Subject Properties. Utility Availability: B-1 parcels are ready for development and have all usual and necessary public utilities available. C-1 and C-2 parcels do not have all the usual and necessary public utilities installed as of the date of appraisal. Access to Street Improvements: The subject land available for development is located on both the east and west sides of International Drive. On-Site Improvements: All of the land parcels are current vacant and available for development. Environmental Hazards: The Appraiser reviewed and considered the Phase I report. However, the Appraiser has not quantified the impact of the findings for the Subject Properties as this is beyond the scope of work. Wetlands: During inspection of the sites, no wetlands were observed. Vegetation: With the exception of the runways, taxiways, apron, roads, and other developed portions of the Airport, the undeveloped portion of the Airport are natural grass, which is mowed periodically, and farmland which is managed by contract farmers. Functional Utility: The sites are large, generally rectangular in shape, and the size of the sites can be adjusted as the demand dictates. Such potential uses include C-store, hotel, office, hangar (and associated office and shop areas), and warehouse. Summary Appraisal Report 23 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) El Aviation Management Consulting Group SUBJECT PROPERTY D. Description of the Subject Properties 1. Non-Aeronautical Improved Land There are approximately 3,583,298 square feet (82.26 acres) of Non-Aeronautical Improved Land available for lease at the Airport. The following table, which utilizes the parcel names provided by Airport management, identifies the Non-Aeronautical Improved Land areas and associated use(s): Non-Aeronautical Improved Land Area Use Lessee Square Feet B1-1 Commercial/Non-Commercial N/A 219,465 B1-2 Commercial/Non-Commercial N/A 248,851 B1-3 Commercial/Non-Commercial N/A 476,988 61-4 Commercial/Non-Commercial N/A 244,475 61-5 Commercial/Non-Commercial N/A 383,583 B1-6 Commercial/Non-Commercial N/A 511,479 B1-7 Commercial/Non-Commercial N/A 46,310 B1-8 Commercial/Non-Commercial N/A 359,518 B1-9 Commercial/Non-Commercial N/A 190,177 B1-10 Commercial/Non-Commercial N/A 231,820 B1-13 Commercial/Non-Commercial N/A 355,245 B1-15 Commercial/Non-Commercial N/A 315,388 Total 3,583.298 2. Non-Aeronautical Unimproved Land There are approximately 2,754,075 square feet (63.22 acres) of Non-Aeronautical Unimproved Land available for lease at the Airport. The following table, which utilizes the parcel names provided by Airport management, identified the Non-Aeronautical Unimproved Land areas and associated use(s): Non Aeronautical Unimproved Land Area Use Lessee Square Feet C1-2 Commercial/Non-Commercial N/A 184,292 C1-4 Commercial/Non-Commercial N/A 258,412 C1-6 Commercial/Non-Commercial N/A 258,830 C1-8 Commercial/Non-Commercial N/A 160,057 C1-10 Commercial/Non-Commercial N/A 351,656 C1-12 Commercial/Non-Commercial N/A 259,889 C1-14 Commercial/Non-Commercial N/A 260,505 C2-2 Commercial/Non-Commercial N/A 262,725 C2-4 Commercial/Non-Commercial N/A 258,655 C2-6 Commercial/Non-Commercial N/A 256,669 C2-8 Commercial/Non-Commercial N/A 242,385 Total 2,754,075 Summary Appraisal Report 24 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group SUBJECT PROPERTY 3. Aeronautical Improved Land There is approximately 2,409,895 square feet (55.32 acres) of Aeronautical Improved Land leased from the City or available for lease at the Airport. Approximately 170,087 square feet of the Aeronautical Improved Land associated with WGA is utilized for commercial purposes by Atlantic Aviation and approximately 140,048 square feet of Aeronautical Improved Land associated with the EGA is utilized for commercial purposes by Signature. The remaining 2,099,760 square feet of Aeronautical Improved Land is available for lease for Commercial or Non-Commercial purposes. The following table, which utilizes the parcel names provided by Airport management, identifies the Aeronautical Improved Land and associated use(s): Aeronautical Improved Land Area Use Lessee Square Fed B1-11 Corrmerdal/dial NVA 251,244 B1-12 Comrmrercial/Non-Corn ial NYA 546,039 B1-14 Commercid/Nn-Commercial NYA 78,358 B1-16 Carrnercial/NxrCorrmercial NVA 1,149,553 B1-17 Com ercial/N -01mmercial NVA 74,565 \AGA,Undeveloped Lad Commercial Atlantic Auation 170,087 EGA,Ur cped Land Commercial Sigiature 140,048 Total 2,409,895 4. Aeronautical Unimproved Land There is approximately 3,734,668 square feet (85.74 acres) of Aeronautical Unimproved Land available for lease at the Airport for Commercial or Non-Commercial purposes. The following table, which utilizes the parcel names provided by Airport management, identifies the Aeronautical Unimproved Land and associated use(s): Aeronautical Unimproved Land Area Use Lessee Square Feet C1-1 Commercial/Non-Commercial N/A 231,392 C1-3 Commercial/Non-Commercial N/A 388,058 C1-5 Commercial/Non-Commercial N/A 399,154 C1-7 Commercial/Non-Commercial N/A 394,432 C1-9 Commercial/Non-Commercial N/A 389,710 C1-11 Commercial/Non-Commercial N/A 384,988 C1-13 Commercial/Non-Commercial N/A 380,266 C2-1 Commercial/Non-Commercial N/A 480,951 C2-3 Commercial/Non-Commercial N/A 208,588 C2-5 Commercial/Non-Commercial N/A 267,870 C2-7 Commercial/Non-Commercial N/A 209,262 Total 3,734,668 Summary Appraisal Report 25 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) le Aviation Management Consulting Group SUBJECT PROPERTY The Aeronautical Unimproved Land classification is based upon the assumption that the City will provide airside access (to the Airport) from the properties by constructing a parallel taxiway east of Runway 17/35. 5. Hangar There is approximately 129,225 square feet of Hangar space being leased from the City by Atlantic Aviation (approximately 52,825 square feet) and Signature (approximately 76,400 square feet) at the Airport. The following table identifies the Hangar space being leased by both FBOs utilizing Airport management's naming structure: Hangar Area Use Lessee Square Feet Door Coristn#ion Width Haight Date WGA H-1 Commercial Atlantic A'ation 14,000 120 20 1962 WGA H-2 Commercial Atlantic Aaiation 14,000 120 20 1962 WGA H-3 Commercial Atlantic Aviation 11,500 110 20 1990 WGA H-4 Commercial Atlantic Auation 13,'05 60 14 1962 EGA H-1 Commercial Signature 25,600 100 32 1962 EGA H-2 Commercial Signature 15,000 90 22 1975 EGA H-3 Commercial Signature 30,900 110(2) 20(2) 1992 EGA H-4 Commercial Signature 5,000 60 20 —1990 Total 129,295 WGA H-1 (leased by Atlantic Aviation) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains. The hangar tail door is out of service. WGA-H1 has fluorescent lighting, electrical service, and is considered to be average condition. WGA H-2 (leased by Atlantic Aviation) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains. The hangar tail door is out of service. WGA-H2 has a mix of halide and fluorescent lighting, electrical service, and is considered to be average condition. WGA H-3 (leased by Atlantic Aviation) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains. The hangar tail door is out of service. WGA-H3 has halide lighting, electrical service, and is considered to be average condition. WGA H-4 (leased by Atlantic Aviation) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains. WGA-H4 has fluorescent lighting, electrical service, and is considered to be fair condition. WGA-H4 is considered to be in fair condition due to the quality of doors, concrete floor, as well as interior and exterior finish. Summary Appraisal Report 26 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group SUBJECT PROPERTY EGA H-1 (leased by Signature) is a clear span, concrete shell structure with a metal door and concrete floor without drains. EGA-H1 has halide lighting, electrical service, and is considered to be average condition. EGA H-2 (leased by Signature) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains. EGA-H2 has halide lighting, electrical service, and is considered to be average condition. EGA H-3 (leased by Signature) is a steel frame metal hangar (roof, siding, and door) with a concrete floor with drains. EGA-H3 has two doors which are 110 feet wide and 20 feet tall, halide lighting, electrical service, and is considered to be average condition. EGA H-4 (leased by Signature) is clear span, steel frame, metal hangar (roof, siding, and door) with a concrete floor with drains, and concrete block fire-wall. EGA-H4 has halide lighting, electrical service, and is considered to be average condition. 6. General Aviation Terminal Building There is approximately 8,005 square feet of General Aviation Terminal Building (GATB) space being leased from the City by Atlantic Aviation (approximately 3,105 square feet) and Signature (approximately 4,900 square feet) at the Airport. The following table identifies the GATB space being leased by both FBOs utilizing Airport management's naming structure: General Aviation Terminal Buliding Area Use Lessee Square Feet WGA OF-1 Commercial Atlantic Aviation 3,105 EGA OF-1 Commercial Signature 4,900 Total 8,005 WGA OF-1 (leased by Atlantic Aviation) is a steel structure with brick veneer and a metal roof. The interior is a combination of ceramic and vinyl tile and carpeted floors with painted drywall and carpeted walls, drywall ceiling, with fluorescent lighting. The building, which has central air conditioning, was constructed in 1962 and renovated in 2003. There is a common lobby/waiting area, restroom facilities, kitchen area, office spaces, conference room, pilot's lounge, and service counter/work area. The GATB is considered to be in good condition. Summary Appraisal Report 27 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) li Aviation Management Consulting Group SUBJECT PROPERTY EGA OF-1 (leased by Signature) is a steel structure with metal exterior (roof and siding). The interior is a combination of ceramic tile and carpeted floors with painted and wallpapered drywall walls, acoustic ceiling, and integrated fluorescent lighting. The building, which has central air conditioning, was constructed in the 1990s and remodeled in 2000. There is a common lobby/waiting area, restroom facilities, kitchen area, office spaces, conference room, pilot's lounge, and service counter/work area. The GATB is considered to be in good condition. 7. Office (associated with Hangar) There is approximately 29,480 square feet of Office space being leased from the City by Atlantic Aviation (approximately 9,280 square feet) and Signature (approximately 20,200 square feet) at the Airport. With the exception of EGA OF-4, all the Office space has central air conditioning. The following table identifies the Office space utilizing Airport management's naming structure: Office Area Use Lessee Square Feet WGA OF-2 Commercial Atlantic Aviation 4,680 WGA OF-3 Commercial Atlantic Aviation 2,300 WGA OF-4 Commercial Atlantic Aviation 2,300 EGA OF-2 Commercial Signature 2,500 EGA OF-3 Commercial Signature 5,000 EGA OF-4 Commercial Signature 5,000 EGA OF-5 Commercial Signature 5,700 EGA OF-6 Commercial Signature 2,000 Total 29,480 WGA OF-2 (leased by Atlantic Aviation) is a steel structure with metal exterior (roof and siding). The interior is a combination of vinyl tile, carpet, and concrete floors with painted drywall walls, acoustic and painted plywood ceiling, and fluorescent lighting. The office, which was constructed in 1962, is considered to be in average condition. WGA OF-3 (leased by Atlantic Aviation) is a steel structure with metal roof and brick veneer exterior. The interior is a combination of ceramic tile, carpet, and concrete floors with painted drywall walls, acoustic ceiling, and fluorescent lighting. The office, which was constructed in 1962, is considered to be in average condition. WGA OF-4 (leased by Atlantic Aviation) is a steel structure with metal exterior (roof and siding). The interior is a combination of ceramic tile, carpet, and concrete floors with Summary Appraisal Report 28 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) leAviation Management Consulting Group SUBJECT PROPERTY painted drywall walls, acoustic ceiling, and fluorescent lighting. The office, which was constructed in 1962, is considered to be in average condition. EGA OF-2 (leased by Signature) is a concrete shell structure. The interior is a combination of vinyl tile, with painted drywall walls, acoustic ceiling, and fluorescent lighting. The office, which was constructed in 1962, is considered to be in average condition. EGA OF-3 (leased by Signature) is a steel structure with metal exterior (roof and siding). The interior is a combination of painted concrete floors with painted drywall walls and ceiling and fluorescent lighting. The office, which was constructed in the 1975, is considered to be in average condition. EGA OF-4 (leased by Signature) is a steel structure with metal exterior (roof and siding). The interior is a combination of concrete floors, unfinished walls, and fluorescent lighting. The office, which has no central air conditioning or heat, was constructed in 1975. The office is considered to be in average condition. EGA OF-5 (leased by Signature) is a steel structure with metal exterior (roof and siding). The interior is a combination of vinyl tile and carpet with painted drywall walls, acoustic ceiling, and integrated fluorescent lighting. The office, which was constructed in 1982, is considered to be in average condition. EGA OF-6 (leased by Signature) is a steel structure with metal exterior (roof and siding). The interior is a combination of ceramic tile, vinyl flooring, and concrete floors with painted drywall walls, acoustic ceiling, and integrated fluorescent lighting. The office, which was constructed in 1982, is considered to be in average condition. 8. Storage (associated with Hangar) There is approximately 6,580 square feet of Storage space (associated with a Hangar) being leased from the City by Atlantic Aviation (approximately 4,680 square feet) and Signature (approximately 1,900 square feet) at the Airport. The following table identifies the Storage space (associated with a Hangar) utilizing Airport management's naming structure: Summary Appraisal Report 29 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) leAviation Management Consulting Group SUBJECT PROPERTY Storage Area Use Lessee Square Feet WGA OF-2 Commercial Atlantic Aviation 4,680 EGA OF-5 Commercial Signature 1,900 Total 6,580 WGA OF-2 (leased by Atlantic Aviation) is a steel structure with metal exterior (roof and siding). The interior of the Storage space is unfinished with plywood floors and skylights. The Storage space, which is located on the second floor, was constructed in 1962 and is considered to be in average condition. EGA OF-5 (leased by Signature) is a steel and concrete block structure with metal exterior (roof and siding). The interior of the Storage space is unfinished with concrete floors. The Storage space, which is located on the second floor, was constructed in the 1982 and is considered to be in average condition. 9. Apron (Asphalt and Concrete) There is approximately 832,525 square feet of Apron space (concrete and asphalt) being leased from the City by Atlantic Aviation (approximately 354,765 square feet) and Signature (approximately 477,760 square feet) at the Airport. The following table identifies the Apron space (concrete and asphalt) utilizing Airport management's naming structure: Apron Area Use Lessee Square Feet Type WGA Apron Commercial Atlantic Aviation 466,514 Concrete WGA Apron-FSF Commercial Atlantic Aviation 11,246 Concrete EGA Apron Commercial Signature 354,765 Asphalt Total 832,525 WGA Apron and the WGA Apron associated with the Fuel Storage Facility (FSF) are concrete, constructed in 2008, and considered to be in excellent condition. EGA Apron is asphalt and is considered to be in average condition. Summary Appraisal Report 30 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) /I Aviation Management Consulting Group SUBJECT PROPERTY 10. Vehicle Parking (Asphalt and Concrete) There is approximately 148,589 square feet of Vehicle Parking space (concrete and asphalt) being leased from the City by Atlantic Aviation (approximately 61,823 square feet) and Signature (approximately 86,766 square feet) at the Airport. The following table identifies the Vehicle Parking space (concrete and asphalt) utilizing Airport management's naming structure: Vehicle Parking Area Use Lessee Square Feet Type WGA Vehicle Parking Commercial Atlantic Aviation 5,280 Concrete Commercial Atlantic Aviation 56,543 Asphalt EGA Vehicle Parking Commercial Signature 47,266 Concrete Commercial Signature 39,500 Asphalt Total 148,589 WGA Vehicle Parking consists of approximately 5,280 square feet of concrete and 56,543 square feet of asphalt. The WGA Vehicle Parking, which was constructed in 1962, is considered to be in average condition. EGA Vehicle parking consists of approximately 47,266 square feet of concrete and 39,500 square feet of asphalt. The EGA Vehicle Parking is considered to be in average condition. The construction date of the EGA Vehicle Parking area is unknown. 11. Fuel Storage Facilities There is approximately 86,500 gallons of fuel storage capacity (jet fuel, avgas, unleaded, and diesel) being leased from the City by Atlantic Aviation (approximately 34,500 gallons) and Signature (approximately 52,000 gallons) at the Airport. The following table identifies the Fuel Storage Facilities (jet fuel, avgas, unleaded, and diesel) utilizing Airport management's naming structure: Fuel Storage Facilities(FSF) Area Use Lessee Gallons Type Commercial Atlantic Aviation 24,000 Jet Fuel WGA FSF Commercial Atlantic Aviation 10,000 Avgas Commercial Atlantic Aviation 500 Unleaded Commercial Signature 36,000 Jet Fuel EGA FSF Commercial Signature 12,000 A.gas Commercial Signature 2,000 Unleaded Commercial Signature 2,000 Diesel Total 86,500 Summary Appraisal Report 31 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management NConsulting 't Group SUBJECT PROPERTY The WGA Fuel Storage Facility is above ground and considered to be in average condition. Two 12,000 gallon Jet Fuel tanks were installed in 1998 and one 10,000 gallon Avgas tank and one 500 gallon Unleaded tank were installed in 2007. The EGA Fuel Storage Facility is below ground and all of the tanks (three 12,000 gallon Jet Fuel tanks, one 12,000 gallon Avgas tank, one 2,000 gallon Unleaded tank, and one 2,000 gallon Diesel tank) were installed in 1962. Due to the below ground construction of the EGA Fuel Storage Facility, an opinion of condition was not derived. Summary Appraisal Report 32 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group HIGHEST AND BEST USE VII. HIGHEST AND BEST USE Highest and best use is defined as "the reasonable, probable, and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value."5 The highest and best use of land if vacant and available for use may be different from the highest and best use of improved property. This will be true when the improvement is not an appropriate use and yet makes a contribution to total property value in excess of the value of the site. In estimating highest and best use of the site as if vacant and as improved, the uses are submitted to four different analyses. The analyses are: a) Physically Possible Uses — Which proposed uses are physically possible to put on the subject site; b) Legally Permissible Uses — Which of the possible uses are legally permissible by current or probable zoning and deed restrictions on the subject site; c) Financially Feasible Uses — Of the selected uses based upon the prior criteria, which uses will produce a net return to the owner of the site; d) Most Profitable Uses — Which of the economically feasible uses provides the highest net return or the highest present worth. These tests are applied first to the land as if vacant and ready for development. A. Physically Possible Uses The first constraint imposed on the highest and best use of the Subject Properties is that dictated by the physical aspects of the site. In general, the larger the site, the greater the potential for achieving economies of scale and flexibility in development. For the Subject Properties, the principle of conformity suggests the most logical uses would be aeronautical and aeronautical-related. B. Legally Permissible Generally, there are two types of legal restrictions applicable to property: private restrictions (deed restriction easements) and public restrictions (primarily zoning). The Appraiser was not provided with a title report for review. The Appraiser assumes there are no legal public 5 The Appraisal of Real Estate, Ninth Edition,American Institute of Real Estate Appraisers, Chicago, II., 1987. Summary Appraisal Report 33 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting Group HIGHEST AND BEST USE or private deed restrictions which would impact the current or future improvements on the site with the following exceptions: the Subject Properties are zoned IH, Heavy Industrial and are also regulated under the Airport Zoning Ordinance of 1980 and therefore, the use must be in compliance with these requirements. C. Financially Feasible and Most Profitable Uses The Appraiser understands the Subject Properties will continue to be utilized as part of the Airport. Although land values indicate a use other than an airport use could be supported as the highest and best use, for the purposes of this analysis, the Appraiser has analyzed the Subject Properties as a part of the Airport without addressing the potential to redevelop the Subject Properties for a use other than an aeronautical or aeronautical-related. The Appraiser anticipates the Subject Properties will continue to operate as a part of the Airport over the long-term and therefore the most profitable uses would be aeronautical or aeronautical-related uses. D. Highest and Best Use - As Vacant Based upon the preceding analysis, the highest and best use of the Subject Properties, as vacant, would be for an aeronautical or aeronautical-related use. Allowed uses may be restricted under the legal constraints imposed by the IH Zone, the Airport Zoning Ordinance, and the FAA. The Appraiser has not addressed the redevelopment of the land for uses other than aeronautical or aeronautical-related. E. Highest and Best Use - As Improved Given the sizes of the various aeronautical improvements, the Appraiser anticipates the facilities would best be utilized for the servicing, maintenance, and/or storage of general aviation aircraft. As such, the existing building improvements provide a reasonable return to the land. Summary Appraisal Report 34 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION VIII. VALUATION A. Introduction In theory, there are three approaches to value: the Cost, Sales Comparison, and Income Approach. Central to each approach is the principle of substitution: an astute real estate investor will pay no more than the value of an equally desirable alternative property or investment. The Cost Approach considers the current cost of replacing the building and site improvements on a property less depreciation plus the market value of the land assumed vacant. Depreciation affecting the property can occur from three sources: physical deterioration, functional obsolescence, and economic obsolescence. This approach is most effective in valuing relatively new (or even proposed) developments or special purpose properties such as the Subject Properties. This approach is included in the analysis due to the special purpose nature of the Subject Properties. The Sales Comparison Approach involves direct comparisons of similar properties which have sold in the same or similar markets. The data from these comparables is then analyzed and adjustments are made for differences that are considered significant. These adjusted sales are then weighted to provide an indication of value. The Sales Comparison Approach is not a good indicator of value since sales of FBOs include business enterprise which is very difficult to separate from the real estate. As such, the Sales Comparison Approach was not considered appropriate or applicable to derive a value conclusion in this case. The Income Approach is based upon an estimate of the Subject Property's possible net income and measures the present worth of anticipated future benefits derived from property ownership. In order to derive the anticipated future benefits, the net income is capitalized to arrive at an indication of value from the standpoint of an investment. By the use of the capitalization process, the net income is converted to its present value. Provision for the investor's recapture of invested capital, as well as return on capital, is built into this capitalization procedure. Typically, there are two methodologies for determining value by the Income Approach; the Direct Capitalization technique and Discounted Cash Flow. The Summary Appraisal Report 35 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) SI Aviation Management Consulting Group VALUATION Discounted Cash Flow method is best suited for larger, multi-tenant properties with divergent leases since the income streams being generated can vary significantly from year to year. After completing the various approaches to value, the methods utilized are then compared for appropriateness and applicability to the Subject Property. The quantity and quality of the data available for examination under each approach and the inherent dangers and advantages in each approach is considered and weighed to derive a final estimate of value. The process of evaluating the alternative conclusions is outlined in the Reconciliation Section of this report. 1. Ground Leasehold Analysis Atlantic Aviation is on a month-to-month lease. Signature Aviation's lease is scheduled to terminate in 2012. Due to the short-tern nature of these leases, there is no measurable leasehold interest in either property. Also, the B1 , Cl, and C2 land areas have not been leased; therefore, no leasehold interest exists. B. Cost Approach It is the Appraiser's opinion that the Cost Approach is appropriate and applicable in this case. A land valuation/sales analysis was not deemed necessary, however, as leasehold interest (as opposed to fee simple interest) is being appraised. 1. Replacement Cost of Improvements In order to estimate a replacement cost for the subject improvements, the Marshall & Swift, Marshall Valuation Service (MVS) Publication, a national cost publication, was utilized. Additional indirect costs (permanent loan fees, property taxes during construction, etc.) which are not included in the MVS base cost were calculated separately. After adjusting for current and local multipliers, replacement costs range from $4.00 per square foot (psf) for Asphalt Apron and Vehicle Parking to $83.50 psf for General Aviation Terminal Building. Indirect costs have been estimated based upon a survey of the marketplace. There are no interim real estate taxes since the property is exempt from property taxes. Summary Appraisal Report 36 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting IM Group VALUATION Advertising/lease-up costs for WGA and EGA are estimated at $50,000. Permanent loan fees are estimated for WGA and EGA at $100,000. Legal, title insurance, and miscellaneous fees have been estimated at $150,000 for WGA and $140,000 for EGA. Entrepreneurial profit has not been estimated given the airport-related nature of the subject improvements. 2. Estimate of Accrued Depreciation Accrued depreciation is the difference between the cost of new improvements and the present value of those improvements measured as of the date of the appraisal. Depreciation includes loss in value from three basic categories: physical deterioration, functional obsolescence, and external obsolescence. Physical deterioration is the loss in value caused by deterioration or impairment of condition as a result of normal wear and tear and the actual aging of the physical components. It may be curable or incurable. While it is the opinion of the Appraiser that there appears to be some limited curable physical depreciation in the Subject Properties, for the purposes of this analysis, no curable physical depreciation has been calculated. Regarding the economic life, given the design and quality of the Subject Properties and based upon the age-life histories indicated in the MVS, it is the Appraiser's opinion that the Subject Properties have the following economic lives: Subject Property Economic Life Hangar 35 years General Aviation Terminal Building 45 years Office (associated with Hangar) 40 years Storage (associated with Hangar) 40 years Concrete Apron 20 years Asphalt Apron 15 years Concrete Vehicle Parking 20 years Asphalt Vehicle Parking 15 years Fuel Storage Facility 20 years Physical depreciation ranges from 25% to 88% depending upon the component of the Subject Properties. Please refer to the Depreciation Schedules that follow. Summary Appraisal Report 37 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group VALUATION West General Aviation Area Depredation Schedule Effecti'e Economic Estimate Replacement Estimated Bolting Age Life Physical Cost(New) Depreciation Depreciation WGA H-1 30 35 86% $ 516,320 $ 4144,035 W3A H-2 30 35 86% $ 516,320 $ 444,035 WGA H-3 25 35 71% $ 427,275 $ 303,330 WGA H-4 30 35 86% $ 483,431 $ 415,751 WGA OF-1 15 45 33% $ 259,268 $ 85,558 WGA OF-2 35 40 88% $ 258,991 $ 227,912 WGA OF-3 35 40 88% $ 131,905 $ 116,076 WGA OF-4 35 40 88% $ 130,755 $ 115,064 WGA OF-2 Storage 35 40 88% $ 95,893 $ 84,386 WGA Apron-Concrete 3 20 15% $ 3,732,112 $ 559,817 WGA Apron-FSF 3 20 15% $ 89,968 $ 13,495 WGA Parking-Concrete 10 20 50% $ 26,400 $ 13,200 WGA Parking-Asphalt 10 15 67% $ 226,172 $ 151,535 10 20 50% $ 180,000 $ 90,000 WGA FSF 5 20 25% $ 75,000 $ 18,750 5 20 25% $ 3,750 $ 938 Total $ 7,153,510 $ 3,083,883 East General Aviation Area Depredation Schedule Estimate Effective Econcnic Replacement Estimated Building Age Life Physical Cost(Nei✓) Depreciation Depreciation EGA H-1 30 35 86% $ 1,003,520 $ 863,027 EGA H-2 30 35 86% $ 600,450 $ 516,387 EGA H-3 20 35 57% $ 1,069,684 $ 609,720 EGA H-4 20 35 57% $ 188,750 $ 107,588 EGA OF-1 10 35 29% $ 396,557 $ 115,002 EGA CF-2 35 45 78% $ 206,775 $ 161,285 EGA OF-3 30 40 75% $ 251,550 $ 188,663 EGA CF-4 30 40 75% $ 251,550 $ 188,663 EGA OF-5 25 40 63% $ 286,767 $ 180,663 EGA OF-6 25 40 63% $ 110,680 $ 69,728 EGA OF-5 Storage 25 40 63% $ 38,931 $ 24,527 EGA Apron-Asphalt 10 15 67% $ 1,419,C60 $ 950,770 EGA Parking-Concrete 10 20 50% $ 2'6,330 $ 118,165 EGA Parking-Asphalt 10 15 67% $ 158,000 $ 105,860 10 20 50% $ 270,000 $ 135,000 EGA FSF 10 20 50% $ 90,000 $ 45,000 10 20 50% $ 15,000 $ 7,500 10 20 50% $ 15,000 $ 7.500 Total $ 6,608,604 $ 4,395,046 Summary Appraisal Report 38 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION Functional obsolescence is the adverse effect on value resulting from defects in design which may impair utility. It can be caused by changes occurring over the years making some aspect of the structure, material, or design obsolete by current standards. External obsolescence is the adverse effect on value resulting from influences outside (or beyond) the property itself. This includes changing property or land use patterns, shifting zoning districts, or adverse economic climate. Economic impact (or obsolescence) is measured by the difference between a return on cost and estimated net operating income. While it is the opinion of the Appraiser that there appears to be some limited functional and external obsolescence in the Subject Properties, for the purposes of this analysis, no obsolescence has been calculated. Summary Appraisal Report 39 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting Group VALUATION 3. Cost Approach Summary West General Aviation Area COST APPROACH SUNVIARY DIRECT COSTS Component Square Fed Gallons Cost per Wit Total Cost WGA F-1' 14,000 - $ 36.88 $ 516,320 WGA H-2' 14,000 - $ 36.88 $ 516,320 WGA 1+3' 11,500 - $ 37.15 $ 427,225 WGA I-1-4* 13,'75 - $ 36.28 $ 483,431 WGA OF-1" 3,105 - $ 83.50 $ 259,268 WGA OF-2"` 4,680 - $ 55.34 $ 258,991 WGA OF-3" 2,303 - $ 57.35. $ 131,905 WGA OF-4 2,300 - $ 56.85 $ 130,755 WGA OF-2 Storage' 4,680 - $ 20.49 $ 95,893 WGA Apron-Concrete"` 46B,514 - $ 8.00 $ 3,732,112 WGA Apron-FSF"' 11,246 - $ 8.00 $ 89,968 WGA Parking-Concrete"' 5,280 - $ 5.00 $ 26,400 WGA Parking-Asphalt"' 56,543 - $ 4.00 $ 226,172 24,000 $ 7.50 $ 180,000 WGA FSP**** - 10,000 $ 7.50 $ 75,000 503 $ 7.50 $ 3,750 Total Direct BuiIcing and Site Improvement Costs $ 7,153,510 INDIRECT COSTS Component Cost Interim Real Estate Taxes $ - AcKertising/Lease up Costs $ 50,000 Permanent Loan Fees $ 100,000 Legal,Title Insurance, and Misc. Fees $ 150,000 Tota I Indirect Cons $ 300,000 Total Direct and Indirect Costs $ 7,453,510 LESS:DQAT1ON Component Cost Physical (see Depreciation Schedule) $ 3,083,883 Functional $ - External $ - Total Depreciation $ 3,083,883 Depreciated Replacement Cost $ 4,369,627 ADD: LEASEHOLD VALUE FOR LAND $ - INDICATED VALUE BY THE COST APPROACH $ 4,369,627 ROMDEIk $ 4,250,000 ' Marshall Valuation Service, Section 14, Page 29. " Marshall Valuation Service, Section 15, Page 17. Marshall Valuation Service, Section 66, Page 3. "" Marshall Valuation Service, Section 61, Page 4. Summary Appraisal Report 40 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group VALUATION East General Aviation Area COST APPROACH SUMMARY DIRECT 00675 Comp a,erl Square Feet Gallons Cost per Unit Total Cost EGA H-1* 25,600 - $ 39.20 $ 1,003,520 EGA H-2" 15,000 - $ 40.03 $ 600,450 EGA F1-3" 30,800 - $ 34.73 $ 1,039,684 EGA H-4* 5,000 - $ 37.75 $ 188,750 EGA OF-1** 4,900 - $ 80.93 $ 396,557 EGA OF-2** 2,500 - $ 82.71 $ 206,775 EGA OF-3** 5,000 - $ 50.31 $ 251,550 EGA OF 4*" 5,000 - $ 50.31 $ 251,550 EGA OF-5*" 5,700 - $ 50.31 $ 286,767 EGA OF-6** 2,000 - $ 55.34 $ 110,680 EGA OF-5 Storage* 1,900 - $ 20.49 $ 38,931 EGA Apron-Asphalt*** 354,765 - $ 4.00 $ 1,419,060 EGA Parking-Concrete*"" 47,265 - $ 5.00 $ 236,330 EGA Parking-Asphalt"** 39,500 - $ 4.00 $ 158,000 36,000 $ 7.50 $ 270,000 EGA FSP*** - 12,000 $ 7.50 $ 90,000 - 2,000 $ 7.50 $ 15,000 2,000 $ 7.50 $ 15,000 Total Direct F3uiIding and Site Improvement Costs $ 6,608,604 INDIRECT COSTS Component Cost Interim Reel Estate Taxes $ - AdkertisingI se up Costs $ 50,000 Permanerrt Loan Fees $ 100,000 Lam,Title Insurance, and Misc. Fees $ 140,000 Total Indirect Costs $ 290,000 Total Direct and Indirect Costs $ 6,898,604 LEGS:DEPREPA71CN Component Cast Physical (see Deprecation Schedule) $ 4,395,046 Functional $ - Exterr $ - Total Depreciation $ 4,395,046 Depredated Replacement Cost $ 2503,558 ADD:LEASEHOLD VALUE FOR LAND $ - I NDI CAT®VALUE BY TF E COST APPROACH $ 2,503,558 ROUNDED. $ 2,500,000 * Marshall Valuation Service, Section 14, Page 29. ** Marshall Valuation Service, Section 15, Page 17. *** Marshall Valuation Service, Section 66, Page 3. **** Marshall Valuation Service, Section 61, Page 4. Summary Appraisal Report 41 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION C. Income Approach The Income Approach to real property value considers a relationship between the estimated net income the property could generate and the sale price or value. This net income is translated into a value estimate using a market driven capitalization rate appropriate to meet the market demands for investment returns. The two commonly used capitalization methods are the Direct Capitalization and Discounted Cash Flow analysis. These methods are summarized, as follows. Direct Capitalization is "used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, either by dividing the income estimate by an appropriate rate or by multiplying the income estimate by an appropriate factor.i6 Discounted Cash Flow analysis is "the procedure in which a discount rate is applied to a set of projected income streams and a reversion. The analyst specifies the quantity, variability, timing, and duration of the income streams as well as the quantity and timing of the reversion and discounts each to its present value at a specified yield rate."' Under the Income Approach, leasehold interest is dictated by market rent which is the rental income the Subject Properties would likely command in the open market. As such, the Direct Capitalization approach finds application in this case and the Discounted Cash Flow analysis does not. 1. Rental Discussion In order to estimate market income potential, AMCG conducted a survey of: (a) comparable airports located throughout the United States, (b) comparable Small Hub airports located in Texas and surrounding states, and (c) competitive airports located within 50 nautical miles of the Airport. AMCG also considered information contained in its proprietary database for regional and national airports as a supplement to the results of the survey and as a validation of the conclusions reached. 6 The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, 1993, Page 100. Ibid. Page 102. Summary Appraisal Report 42 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) gzAviation Management .. Consulting Group VALUATION 2. Study Findings In order to derive the market rent for the Subject Properties, information/data from similar properties at national, regional, comparable, Small Hub, and competitive airports was analyzed. The results of the analysis are summarized in this section. Definitions of the Minimum, Maximum, Mean, Standard Deviation, Median, and Range (utilized in the following tables) are provided in the Appendix section of this report. a. National Data As a supplement to the comparable airport data, rents obtained from over 350 airports located throughout the United States were analyzed. A summary and statistical analysis of the findings for national airports is provided in the following table. National Airport oata Type Component fvirirrim Maxirnm Mean Medan Range Dekiation Aeronautical Improved Lad(Commercial) 0.009 1.190 0.240 0.187 0.198 1.181 Aeronautical Irrpro ed taxi(Non-CormTial) 0.050 0.790 0.262 0.147 0.225 0.740 Aeronautical Lk irrproved Land(Cormx rrcial) 0.010 0.503 0.165 0.109 0.140 0.493 Aeronauticel Unirrpn,,ed Land(Wn-Oca r ercial) 0.020 0.740 0.220 0.156 0.140 0.720 Nautical Improved Land(Commercial) 0.210 0.450 0.315 0.091 0.320 0.240 Nb-i,Aectnajticel Inproked Lard(f onCa'nr rcial) 0.098 0.720 0.315 0.2(/ 0.777 0.677 Non-Aeronautical Unimproved Land(Commercial) 0.040 1.000 0.520 0.6/9 0.520 0.960 Win-Aeronautical Lhr proed Lad(Nay-Commercial) 0.040 0.040 0.040 NA 0.040 0.000 Aeronautical Hangar 0.008 6.050 1.768 1.679 1.208 6.042 Aeronautical General Auation Terminal Building 0.070 10210 4.()7 3.064 3.900 10.140 Aeronautical Office(associated with Hangar) 0.100 27./60 6.756 6.004 4.500 27.660 Aeronautical Storage(associates with Hangar) 0.246 11.070 2500 3.221 1.055 10.830 Aeronautical Concrete Apron 0.030 0.850 0.259 0.205 0.260 0.820 Aeronautical Asphalt Apron 0.050 1.070 0.345 0.285 0.240 1.020 Aeronautical Concrete Vehicle Parking 1.330 2650 1.990 0.933 1.990 1.320 Aeronautical Asphalt Vehicle Parking 0.115 0.650 0.202 0.183 0.180 0.67-"( All rental rates are "per square foot per year" (psf/yr) b. Regional Data As an additional supplement to the comparable airport data, rents obtained from 33 airports in the FAA Southwestern Region (consisting of Arkansas, Louisiana, Texas, New Mexico, Oklahoma) were analyzed. A summary and statistical analysis of the findings for regional airports is provided in the following table. Summary Appraisal Report 43 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) SiAviation Management Consulting Group VALUATION Regional Airport Data Type Component Nirirrun Macirrtm Min Madan Range Deviation Aeronautical Irrproei Lail(Commercial) 0.010 0.580 a 189 0.124 0.150 0.570 Aeronautical Irrproed Lad(Non-Carmarcial) 0.050 0.480 0.240 0.149 0.220 0.430 Aeronautical Unimproved Lard(Commercial) 0.045 0.400 0.176 0.114 0140 0355 Aeronautical Unimproved ed Lad(Nan-Commercial) 0.030 0.385 0.153 0.136 0.116 0.355 Nan-Aeronautical Improved Lad(Co m ercial) 0.210 0.210 0.210 NA 0.210 0.020 Nan-Aeronautical Irrpro‘e1 Lard(N n-( rneroial) N/A f YA f YA NA NA NA Nan-Aeronautic N Uninprovad Lad(Camercial) NA NA N'A NA NA NA Nan-Aeronautical UNrrpro i Lad(Nan-Camercia) NA NA NA NA NA Aeronautical Hangar 0.100 3.860 1.395 1.100 1.137 3.760 Aeronautical Ct feral Auation TerrrinA Building 0.227 10.210 6.354 3.785 7.315 9.983 Aeronautical Office(associated with Hangar) 0.100 8.000 3.6S6 2.635 3.500 7.900 Aeronautical Storage(associated with liengar) 0.066 10.000 3.118 3585 2100 9.934 Aeronautical Concrete Apron 0.030 0.300 0.103 0.100 0.060 0.270 Aeronautical Asphalt Apron 0.089 0.650 0.256 0207 0193 0.551 Aeraax.tical Concrete Vehicle Palcing NA NA N'A NA NA N'A Aeronautical Asphalt Vehcle Perking 0.140 0.140 0 140 NA 0.140 0.000 All rental rates are "per square foot per year" (psf/yr) c. Comparable Airport Data Rental rates and related information from 12 airports considered comparable to the Subject Airport (identified in this section) were obtained and analyzed. ➢ Bradley International Airport (BDL) - Windsor Locks, CT ➢ Charleston International Airport (CHS) - Charleston, SC ➢ Gerald R. Ford International Airport (GRR) - Grand Rapids, MI ➢ Key Field Airport (MEI) - Meridian, MS ➢ Lubbock Preston Smith International Airport (LBB) - Lubbock, TX ➢ Midland International Airport (MAF) - Midland, TX ➢ Mobile Regional Airport (MOB) - Mobile, AL ➢ Newport News/Williamsburg International Airport (PHF) - Newport News, VA ➢ Piedmont Triad International Airport (GSO) - Greensboro, NC ➢ Port Columbus International Airport (CMH) - Columbus, OH ➢ Syracuse Hancock International Airport (SYR) - Syracuse, NY ➢ Tallahassee Regional Airport (TLH) - Tallahassee, FL The following table provides a summary and statistical analysis of the findings for the comparable airports. Summary Appraisal Report 44 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) :Egl Aviation Management Consulting Group VALUATION Comparable Airport Data Standard Type Corrport Virir rn Maxirnm Meal Medan targe Dation Aeronautical Inpc ed Lard(Corrrr ercial) 0.011 0.900 0.359 0.245 0.305 0.889 Aeronautical Irrpro Laid(Nbn-Om ercial) 0.160 0.900 0.542 0.269 0.800 0.740 Aeronautical UnirrFxved Laid(Caniercial) N/A PYA PYA N/A PYA n/A Faonautical Unirrpro\ed Laid(Nbn-Cormnercial) PYA PYA N/A PYA NA N'A Non-Aeronautical Improved land(Commercial) PYA PYA wA PYA PYA NA Non-Aeronautical Improved Laid(PbrrCarrnerrial) PYA PYA PYA PYA PYA PYA PbrrAernnautical Unimxved Laid(Corrrercial) PYA PYA PYA PYA PYA PYA Non-Aeronauticr utical Unimproved Land(Nor-Umr rcial) PYA PYA PYA PYA PYA NA Aeronautical Hangar 0.250 2710 0.996 0.775 0.920 2.460 Aeronautical General Auatim Terminal Building 7.475 10.210 8.843 1.934 8.843 2.735 Aeronautical Office(associated with Hamar) 0.250 5.250 2750 3.536 2750 5.000 Aeronautical Storage(associated with Hangar) 0.480 222u 1.350 1.230 1.350 1.740 Aeronautical Concrete Apron 0.310 0.840 0.625 0232 0.675 0.530 Aeronautical Asphalt Apron 0.310 2650 1.075 0.972 0.750 2.340 Aeronautical Concrete Vehicle Parking 1.330 2650 1.990 0.933 1.990 1.320 Aeronautical Asphalt Vehicle Parking 0.140 0.140 0.140 PYA 0.140 0.000 All rental rates are"per square foot per year" (psf/yr) d. Competitive Airport Data Typically, an airport is considered competitive if it: (a) is located in relatively close proximity, (b) has similar infrastructure, (c) offers similar products, services, and facilities, and (d) has similar activity levels (i.e., aircraft operations, based aircraft, and fuel volumes). For the purposes of this study, airports within 50 nautical miles of the Subject Airport were identified as being potentially competitive airports. Although none were Small Hub Primary Commercial Service Airports, a total of seven airports were considered, as follows: D Alfred C. "Bubba" Thomas Airport (T69) - Sinton, TX D Alice International Airport (ALI) -Alice, TX D Aransas County Airport (RKP) - Rockport, TX D Beeville Municipal Airport (BEA) - Beeville, TX D. Brooks County Airport (BKS) - Falfurrias, TX D Kleberg County Airport (IKG) - Kingsville, TX D T.P. McCampbell Airport (TFP) - Ingleside, TX The following table identifies the key criteria utilized to make this assessment. Summary Appraisal Report 45 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION CRP City CORPUS ROCKPORT KINGSVILLE SINTON INGLESIDE ALICE BEEVILLE FALFURRIAS CHRISTI Tower Yes No No No No No No No Acreage 2,457 600 295 186 231 556 391 169 Longest 7,508 5,608 6,000 4,323 5,000 5,997 4,551 6,002 Runway Local GA 1,324 16,500 4,000 6,400 7,400 4,400 3,000 600 Operations Itinerant GA 21,996 33,000 2,000 3,200 3,700 2,200 1,500 4,500 Operations Total Based 78 66 14 39 23 7 13 1 Aircraft Last Inspection 07/16/09 03/04/11 03/20/11 03/05/11 03/04/11 03/05/11 03/04/11 03/20/11 Date(5010) For these airports, the data is depicted for the most recently reported 12 month cycle (as indicated in the table) — not per calendar year. As previously indicated (in the Aircraft Operations and Based Aircraft sections of this report), total aircraft operations and based aircraft for the Subject Airport are depicted as of December 31, 2010 (as reported by Airport management and/or the FAA TAF). No relevant and/or useable information pertaining to the Subject Properties from the competitive airports was obtained. e. Small Hub Primary Commercial Service Airports In addition to the competitive airport analysis, the following Small Hub Primary Commercial Service airports located in Texas and surrounding states (Arkansas, Louisiana, New Mexico, and Oklahoma) were considered comparable: > Adams Field Airport (LIT) — Little Rock, AR ➢ Baton Rouge Metropolitan Airport (BTR) — Baton Rouge, LA ➢ El Paso International Airport (ELP) — El Paso, TX > McAllen-Miller International Airport (MFE) — McAllen, TX ➢ Midland International Airport (MAF) — Midland, TX Summary Appraisal Report 46 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) /1 Aviation Management Consulting Group VALUATION ➢ Northwest Arkansas Regional Airport (XNA) - Fayetteville/Springdale, AR ➢ Rick Husband Amarillo International Airport (AMA) - Amarillo, TX ➢ Tulsa International Airport (TUL) - Tulsa, OK ➢ Valley International Airport (HRL) - Harlingen, TX ➢ Will Rogers World Airport (OKC) - Oklahoma City, OK Rental rates and related information from nine Small Hub airports considered comparable to the Subject Airport was obtained and analyzed. The following table provides a summary and statistical analysis of the findings for the Small Hub airports. Small Hub Airport data Type Component Minimum Maximum Mean Standard Median Range Cetiiation Aeronautical Improved Lard(Commercial) 0.050 0.340 0.169 0.098 0.149 0.290 Aeronautical Inpra',ed Lard(Non-Commercial) 0.130 0.240 0.193 0.057 0.210 0.110 Aeronautical uninprc ed Lard(Commercial) N/A N/A N/A N/A N/A N/A Aeronautical Unirnprrwd Lard(NonCommerciaI) N/A N/A N/A N/AN/A N/A Non-Aeronautical Imprc ed Lard(Commercial) N/A N/A N/A N/A N/A N/A Non-Aeronautical Improved Lard(Non-Commercial) N/A N/A N/A N/A N/A N/A Non-Aeronautical UnirrproN.ed Lard(Commercial) N/A N/A NIA N/A N/A N/A No-Aeronautical unirnpraed Lard(Non-Commercial) N/A N/A N/A N/A N/A N/A Aeronautical Hangar 0.300 2.400 1.049 0.836 0.940 2.100 Aeronautical General A\.iation Terrnina Building N/A N/A NIA N/A N/A N/A Aeronautical Office(associated with Hangar) N/A N/A N/A' N/A N/A N/A Aeronautical Storage(associated with Hangar) 0.658 0.658 0.658 N/A 0.658 0.000 Aeronautical Concrete Apron 0.020 0.130 0.075 0.078 0.075 0.110 Aeronautical Asphalt Apron 0.020 0.725 0.253 0.319 0.133 0.705 Aeronautical Concrete Vehicle Parking N/A NIA NIA N/A WA N/A Aeronautical Asphalt Vehicle Parking N/A N/A N/A N/A N/A N/A All rental rates are"per square foot per year" (psf/yr) Summary Appraisal Report 47 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group VALUATION f. Non-Aeronautical Land To derive conclusions for Non-Aeronautical use Land (including Improved and Unimproved land), a survey of land sales and listings in the Corpus Christi area was conducted. A summary of the sales and listing data is provided in this section. It is significant to note there is a substantial amount of land currently available in the market which has an adverse impact the supply/demand ratio. While demand appears to be increasing slightly, land sale values have remained fairly low over the past three years. Land Sales and Listings Summary Sale Location Date Sale Price Zoning Size perce SF SWC Bear Lane and Navigation 07/2008 $405,625 12 324,522 SF $1.25 Boulevard (7.45 acres) • E/S Cliff Maws Drive 600 feet S/O Bear 01/2010 $221,500 12 161,360 SF $1.37 Lane (3.70 acres) W/S Navigation Boulevard 90 feet NW Listing $162,000 12 108,464 SF $1.49 Old Brownsville Road (2.49 acres) SEC NPID and Bates Road Listing $1,989,780 I-2/B-4 A-2 1,333,372 SF $1.49 (30.61 acres) 4822 Bear Lane 03/2009 $174,999 1-2 534,481 SF $0.33 (12.27 acres) Highway 44 and Clarkwood Road Listing $261,360 Commercial 144,184 SF $1.81 (3.31 acres) Highway 44 and Agnes Street Listing $290,000 Commercial 144,184 SF $2.01 (3.31 acres) 3. Market Rent Summary a. Market Rent Conclusions (By Component) The following table identifies the base market rental rate conclusions for the Subject Properties (by component). The following market rental rate conclusions are based upon the analysis of the Subject Properties and the rents being charged for similar properties at national, regional, comparable, Small Hub, and competitive airports. Summary Appraisal Report 48 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION Subject Properties Base Rental Rates Component Conclusion Non-Aeronautical Improved Land $0.080 -$0.120 Non-Aeronautical Unimproved Land $0.050-$0.060 Aeronautical Improved Land (Commercial) $0.275 Aeronautical Improved Land (Non-Commercial) $0.300 Aeronautical Unimproved Land (Commercial) $0.175 Aeronautical Unimproved Land (Non-Commercial) $0.200 Hangar $1.500 General Aviation Terminal Building $6.000 Office(associated with Hangar) $6.250 Storage(associated with Hangar) $1.250 Asphalt Apron $0.325 Concrete Apron $0.350 Asphalt Vehicle Parking $0.300 Concrete Vehicle Parking $0.300 Fuel Storage Facility $0.750 All rental rates (excluding the Fuel Storage Facility) are"per square foot per year" (psf/yr) Rental rates for the Fuel Storage Facility are"per gallon of capacity per year" (pg/yr) Non-Aeronautical Land The results of the study indicate land sales/listings in the area range from $0.330 psf to $2.010 psf. It is significant to note that the parcels studied do not have immediate access to the Airport; however, the land is located within reasonable proximity to the Airport. To derive rental rate conclusions for Non-Aeronautical use Land, the following areas were analyzed: 1. Zoning — five of the land sales/listings are zoned IH (Heavy Industrial); two are zoned for commercial uses. The sales/listings located closest to the Airport are zoned commercial. 2. Size — it is significant to note as size increases, the unit rate generally decreases, although, this not always the case. It is the Appraiser's opinion that land sales/listings located closest to the main entrance to the Airport (e.g., B1-10, B1-13, etc.) are more valuable than those parcels located to the east of the Airport's main entrance (e.g., C1-2, C1-4, etc.) 3. Utilities — (B1 land has utilities in place and is classified as Improved Non- Aeronautical Land. Cl and C2 land do not have utilities in place and are classified as Unimproved Non-Aeronautical Land). Summary Appraisal Report 49 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group VALUATION Airport land, utilized for aeronautical or non-aeronautical purposes, demonstrate only partial rights of ownership as the lessee does not have fee simple rights. The lessor has the right to receive income during a certain period of time, but gives up the right of the use of the land during the time of the lease. On a fee simple basis (i.e., for off-airport land), all property rights are included with the land. Airport land is restricted to certain types of uses, by 14 CFR Part 77 requirements and subject to additional restrictions of the Airport sponsor. Based upon the Appraiser's experience analyzing land sales/listings for non- aeronautical use of airport land, it is the Appraiser's opinion that a discount of 40% to 60% of value is appropriate for Airport versus off-airport land. As such, for purposes of this analysis, a discount of 50% was applied to off-airport land sales/listings. Finally, a rate of return is necessary to establish a rental rate based upon off-airport land sales/listings. The rate of return is applied to the discount value (psf) to determine a rental rate (psf). A survey of airports revealed the following rate of return expectations. Rates of Return Rate of Airport Return Hartsfield-Jackson Atlanta International Airport(ATL) 9.0% Chicago O'Hare International Airport(ORD) 10.0% Dallas/Fort Worth International Airport(DFW) 9.0% - 10.0% McCarran International Airport(LAS) 10.0% Los Angeles International Airport(LAX) 8.0% -9.0% Houston/George Bush Intercontinental Airport(IAH) 10.0% Minneapolis-St. Paul International Airport(MSP) 10.0% Orlando International Airport(MCO) 10.0% Seattle-Tacoma International Airport (SEA) 9.5%- 10.0% Philadelphia International Airport(PHL) 8.5% Long Beach/Daugherty Field (LGB) 8.5% Norman Y. Mineta San Jose International Airport(SJC) 10.0% Metropolitan Oakland International Airport (OAK) 8.0% Sacramento International Airport(SMF) 10.0% San Francisco International Airport(SFO) 6.0% Honolulu International Airport (HNL) 7.0% John Wayne Airport-Orange County(SNA) 10.0% San Diego International Airport(SAN) 8.5% Summary Appraisal Report 50 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting Group VALUATION As indicated, rate of return expectations range from 6% to 10% with most in the range of 8% to 10%. It is significant to note that at Dallas/Fort Worth International Airport, a rate of return of 9% to 10% is utilized and at Houston/George Bush Intercontinental Airport, a rate of return of 10% is utilized. It is the Appraiser's opinion that a rate of return toward the lower end of the range is reasonable and appropriate for the Subject Airport. Predicated upon the preceding criteria the following conclusions were derived. Non-Aeronautical Land Rental Rate Off- Adjustments Parcel Type airport Discount Rate of Conclusion Base Return Value B1-1 Improved $2.00 50% 8% $0.080 B1-2 Improved $2.00 50% 8% $0.080 B1-3 Improved $2.50 50% 8% $0.100 B1-4 Improved $3.00 50% 8% $0.120 B1-5 Improved $2.75 50% 8% $0.110 B1-6 Improved $2.50 50% 8% $0.100 B1-7 Improved $3.00 50% 8% $0.120 B1-8 Improved $2.50 50% 8% $0.100 B1-9 Improved $2.50 50% 8% $0.100 B1-10 Improved $3.00 50% 8% $0.120 B1-13 Improved $2.75 50% 8% $0.110 B1-15 Improved $2.75 50% 8% $0.110 C1-2 Unimproved $1.50 50% 8% $0.060 C1-4 Unimproved $1.25 50% 8% $0.050 C1-6 Unimproved $1.25 50% 8% $0.050 C1-8 Unimproved $1.25 50% 8% $0.050 C1-10 Unimproved $1.25 50% 8% $0.050 C1-12 Unimproved $1.25 50% 8% $0.050 C1-14 Unimproved $1.25 50% 8% $0.050 C2-2 Unimproved $1.25 50% 8% $0.050 C2-4 Unimproved $1.25 50% 8% $0.050 C2-6 Unimproved $1.25 50% 8% $0.050 C2-8 Unimproved $1.25 50% 8% $0.050 The leasehold size for these properties may change. However, the parcels were analyzed based upon a maximum of 1 million square feet. Parcels with square footage greater than 1 million square feet exhibit a differential (approximately 10% discount) based upon size. Summary Appraisal Report 51 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) IIAviation Management Consulting Group VALUATION Aeronautical Improved Land (Commercial) The results of the study indicate that average rental rates for Aeronautical Improved Land (Commercial) range from $0.170 psf/yr at Small Hub airports to $0.360 psf/yr at comparable airports. The average rental rate at regional airports was $0.190 psf/yr and $0.240 psf/yr at national airports. The calculated midpoint and weighted average between comparable, Small Hub, regional, and national airports was $0.240 psf/yr. Giving consideration to the comparable average rental rate ($0.360 psf/yr), a base rental rate of$0.275 psf/yr was derived. The average size of Aeronautical Improved Land (Commercial) in the national database is approximately 200,000 square feet. Parcels with less square footage than the national average do not exhibit a differential based upon size. Parcels with square footage greater than 1 million square feet exhibit a significant rent differential (approximately 20% discount) based upon size. Utilizing the base rental rate and discount for size, the following conclusions were derived: Aeronautical Improved Land (Commercial) Rental Rate Square Feet Conclusions Conclusion 0—200,000 square feet $0.275 200,000— 1,000,000 square feet $0.250 Greater than 1,000,000 square feet $0.225 The leasehold size and use of certain B1 parcels (including B1-11, B1-12, B1-14, B1-16, and B1-17) may change. As such, the rent per square foot for each parcel may change as well. However, the rent per square foot conclusions derived for the B1 properties is presented in the preceding Aeronautical Improved Land (Commercial) Conclusions table. Predicated upon the leasehold size of the WGA Undeveloped Land and EGA Undeveloped Land, a rent per parcel for each of these properties can be determined. An adjustment for size was not deemed necessary. The base rental rate of $0.275 psf/yr was utilized (consistent with the Aeronautical Improved Land — Commercial Square Feet Conclusions table) and a premium of 10% was applied to the base rental rate for superior location to derive a conclusion of$0.300 psf/yr. Summary Appraisal Report 52 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION Aeronautical Improved Land (Non-Commercial) The results of the study indicate that average rental rates for Aeronautical Improved Land (Non-Commercial) range from $0.190 psf/yr at Small Hub airports to $0.540 psf/yr at comparable airports. The average rental rate at regional airports was $0.240 psf/yr and $0.260 psf/yr at national airports. The calculated midpoint between comparable, Small Hub, regional, and national airports was $0.340 psf/yr and the weighted average was $0.270 psf/yr. Due to the limited data available from comparable and Small Hub airports, a base rental rate of $0.300 psf/yr was derived. The leasehold size and use of certain B1 parcels (including B1-11, B1-12, B1-14, B1-16, and B1-17) may change. As such, the rent per square foot for each parcel may change as well. However, a discount for size was applied to the base rental rate to derive the following conclusions: Aeronautical Improved Land(Non-Commercial) Rental Rate Square Feet Conclusions Conclusion 0—200,000 square feet $0.300 200,000— 1,000,000 square feet $0.275 Greater than 1,000,000 square feet $0.250 Aeronautical Unimproved Land (Commercial) The results of the study indicate that average rental rates for Aeronautical Unimproved Land (Commercial) range from $0.170 psf/yr at national airport to $0.180 psf/yr at regional airports. It is significant to note that useable rental rates for Aeronautical Unimproved Land (Commercial) were not available from comparable and Small Hub airports. The average between the regional and national airports was $0.175 psf/yr. Due to the limited data available from comparable and Small Hub airports, a base rental rate of $0.175 psf/yr was derived. Utilizing the base rental rate and discount for size (identified for Aeronautical Improved Land — Commercial), the following conclusions were derived: Summary Appraisal Report 53 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION Aeronautical Unimproved Land (Commercial) Rental Rate Square Feet Conclusions Conclusion 0—200,000 square feet $0.175 200,000—1,000,000 square feet $0.150 Greater than 1,000,000 square feet $0.125 The leasehold size and use of certain Cl and C2 parcels (including C1-1, C1-3, C1-5, C1- 7, C1-9, C1-11, C1-13, C2-1, C2-3, C2-5, and C2-7) may change. As such, the rent per square foot for each parcel may change as well. However, rent per square foot conclusions are presented in the preceding Aeronautical Unimproved Land (Commercial) Conclusions table. Aeronautical Unimproved Land (Non-Commercial) The results of the study indicate that average rental rates for Aeronautical Unimproved Land (Non-Commercial) range from $0.150 psf/yr at regional airports to $0.220 psf/yr at national airports. It is significant to note that useable rental rates for Aeronautical Unimproved Land (Non-Commercial) were not available from comparable and Small Hub airports. The average between the regional and national airports was $0.185 psf/yr. Due to the limited data available from comparable and Small Hub airports with consideration given to the national average as significantly more data was available, a base rental rate of $0.200 psf/yr was derived which is consistent with the 10% premium for Non-Commercial use ($0.300 psf/yr) compared to Commercial use ($0.275 psf/yr). The leasehold size and use of certain C1 and C2 parcels (including C1-1, C1-3, C1-5, C1- 7, C1-9, C1-11, C1-13, C2-1, C2-3, C2-5, and C2-7) may change. As such, the rent per square foot for each parcel may change as well. However, a discount for size was applied to the base rental rate to derive the following conclusions: Aeronautical Unimproved Land (Non-Commercial) Rental Rate Square Feet Conclusions Conclusion 0—200,000 square feet $0.200 200,000— 1,000,000 square feet $0.175 Greater than 1,000,000 square feet $0.150 Summary Appraisal Report 54 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) liAviation Management Consulting Group VALUATION Hangar The results of the study indicate that average rental rates for Hangar range from $1.000 psf/yr at comparable airports to $1.770 psf/yr at national airports. The average rental rate at Small Hub airports was $1.050 psf/yr and $1.390 psf/yr at regional airports. The calculated midpoint between the comparable, Small Hub, regional, and national airport rental rates was $1.280 psf/yr and the weighted average was $1.610 psf/yr. Giving consideration to the national average rental rate ($1.770 psf/yr), a base rental rate of $1.500 psf/yr was derived. The average size of Community Hangars in the national database is approximately 15,000 square feet. Similarly sized Community Hangars (ranging from 12,500 square feet to 17,500 square feet) exhibit no differential based upon size. The average rental rate for Community Hangars less than 12,500 square feet in the national database exhibit a premium of approximately 10% based upon size. The average rental rate for Community Hangars greater than 17,500 square feet in the national database also exhibit a premium of 10% based upon size. Utilizing the base rental rate, a premium for size (as appropriate), and adjusting for condition (Hangars WGA H-1, H-2, H-3 and EGA H-1, H-2, H-3, H-4 are considered average and Hangar WGA H-4 is considered fair), the following conclusions were derived for Hangar space. Hangar Rental Rate Hangar Adjustments Name Size Condition Size Condition Conclusion WGA H-1 14,000 Average - - $1.500 WGA H-2 14,000 Average - - $1.500 WGA H-3 11,500 Average + 10% - $1.650 WGA H-4 13,325 Fair - - 10% $1.350 EGA H-1 25,600 Average + 10% - $1.650 EGA H-2 15,000 Average - - $1.500 EGA H-3 30,800 Average + 10% - $1.650 EGA H-4 5,000 Average + 10% - $1.650 Summary Appraisal Report 55 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group VALUATION General Aviation Terminal Building The results of the study indicate that average rental rates for General Aviation Terminal Building range from $4.530 psf/yr at national airports to $8.840 psf/yr at comparable airports. The average rental rate at regional airports was $6.350 psf/yr. It is significant to note useable rental rates for General Aviation Terminal Building were not available from Small Hub airports. The average rental rate (at national airports) for similarly sized General Aviation Terminal Buildings (ranging from 2,000 square feet to 6,000 square feet) was $5.230 psf/yr. The calculated midpoint between the comparable, regional, and national airports was $7.580 psf/yr and the weighted average was $5.010 psf/yr. Based upon this analysis, similarly sized General Aviation Terminal Buildings (at national airports) and the condition of the General Aviation Terminal Buildings (both are considered to be in good condition), a conclusion of$6.000 psf/yr for each General Aviation Terminal Building was derived. Office (Associated with Hangar) The results of the study indicate that average rental rates for Office (associated with Hangar) range from $2.750 psf/yr at comparable airports to $6.760 psf/yr at national airports. The average rental rate at regional airports was $3.700 psf/yr. It is significant to note useable rental rates for Office (associated with Hangar) were not available from Small Hub airports. The average of the regional and national airports was $5.230 psf/yr and the weighted average was $6.420 psf/yr. Giving consideration to the national average rental rate ($6.760 psf/yr), a base rental rate of$6.250 psf/yr was derived. The average size of Office (associated with Hangar) in the national database is approximately 2,250 square feet. As such, similarly sized Office — associated with Hangar (less than 3,500 square feet) exhibit no adjustment based upon size. The average rental rate for Office (associated with Hangar) ranging from 3,500 square feet to 10,000 square feet exhibit a discount of approximately 10% based upon size. Summary Appraisal Report 56 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting Group VALUATION All Offices (associated with Hangars) are considered to be in average condition. As such, an adjustment based upon condition is not necessary. Utilizing the base rental rate and discount for size, the following conclusions were derived: Office(Associated with Hangar) Rental Rate Office Adjustment Office Conclusion Size For Size WGA OF-2 4,680 - 10% $5.650 WGA OF-3 2,300 - $6.250 WGA OF-4 2,300 - $6.250 EGA OF-2 2,500 - $6.250 EGA OF-3 5,000 - 10% $5.650 EGA OF-4 5,000 - 10% $5.650 EGA OF-5 5,700 - 10% $5.650 EGA OF-6 2,000 - $6.250 Storage (Associated with Hangar) The results of the study indicate that average rental rates for Storage (associated with Hangar) range from $0.660 psf/yr at Small Hub airports to $3.120 psf/yr at regional airports. The average rental rate at comparable airports was $1.350 psf/yr and $2.500 psf/yr at national airports. Due to the limited data available from comparable, Small Hub, and regional airports, a comparative analysis of statistically significant data in the national database of airports was conducted. This analysis included airports where Hangar and Storage (associated with Hangar) are being leased. Through this analysis, it was determined that a discount of approximately 25% for Storage (associated with Hangar) exists at such airports. Applying this discount to the Hangar base rental rate conclusion ($1.500 psf/yr) yields a Storage (associated with Hangar) rental rate of$1 .150 psf/yr. Based upon the comparative analysis with consideration given to the national average rental rate, a conclusion of $1 .250 psf/yr was derived. All storage (associated with Hangar) is considered to be in average condition. Summary Appraisal Report 57 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) alAviation Management Consulting Group VALUATION Asphalt Apron The results of the study indicate that average rental rates for Asphalt Apron range from $0.250 psf/yr at Small Hub airports to $1.080 psf/yr at comparable airports. The average rental rate at regional airports was $0.260 psf/yr and $0.350 psf/yr at national airports. Due to the limited data available from comparable, Small Hub, and regional airports, a comparative analysis of statistically significant data in the national database of airports was conducted. This analysis included airports where Aeronautical Improved Land (Commercial) and Asphalt Apron are being leased. Through this analysis, it was determined a premium of approximately 32% for Asphalt Apron exists at such airports. Applying this premium to the Aeronautical Improved Land (Commercial) rental rate conclusion ($0.275 psf/yr) yields an Asphalt Apron rental rate of $0.360 psf/yr. Based upon the average rental rate for national airports (and the availability of data in the national database) and the results of the comparative analysis, and the current condition (average) of the Asphalt Apron, a conclusion of $0.325 psf/yr was derived. It is significant to note that this relational analysis was based upon an evaluation of triple net lease rental rates (wherein the lessee pays all maintenance, utilities, insurance, and taxes associated with the leasehold). As such, the rental rate for Asphalt Apron may need to be adjusted if the City is responsible for maintaining and repairing such areas at the Airport. Additionally, if Airport Improvement Program (AIP) funds were utilized to construct the Asphalt Apron, the rental rate for this improvement may need to be adjusted as well. Concrete Apron The results of the study indicate that average rental rates for Concrete Apron range from $0.080 psf/yr at Small Hub airports to $0.630 psf/yr at comparable airports. The average rental rate at regional airports was $0.100 psf/yr and $0.260 psf/yr at national airports. Due to limited data available from comparable, competitive, and regional airports, a comparative analysis of statistically significant data in the national database of airports was conducted. This analysis included airports where Aeronautical Improved Land (Commercial) and Concrete Apron are being leased. Through this analysis, it was determined that a premium of approximately 38% for Concrete Apron exists at such Summary Appraisal Report 58 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION airports. Applying this premium to the Aeronautical Improved Land (Commercial) rental rate conclusion ($0.275 psf/yr) yields a Concrete Apron rental rate of $0.380 psf/yr. Based upon the average rental rate for national airports (and the availability of data in the national database) and the results of the comparative analysis, and the current condition (excellent) of the Concrete Apron, a conclusion of$0.350 psf/yr was derived. It is significant to note that this relational analysis was based upon an evaluation of triple net lease rental rates (wherein the lessee pays all maintenance, utilities, insurance, and taxes associated with the leasehold). As such, the rental rate for Concrete Apron may need to be adjusted if the City is responsible for maintaining and repairing such areas at the Airport. Additionally, if AIP funds were utilized to construct the Concrete Apron, the rental rate for this improvement may need to be adjusted as well. Asphalt Vehicle Parking The results of the study indicate that average rental rates for Asphalt Vehicle Parking range from $0.140 psf/yr at comparable and regional airports to $0.260 psf/yr at national airports. It is significant to note useable rental rates were not available from Small Hub airports. Due to limited data available from comparable, Small Hub, and regional airports, a comparative analysis of statistically significant data in the national database of airports was conducted. This analysis included airports where Aeronautical Improved Land (Commercial) and Asphalt Vehicle Parking are being leased. Through this analysis, it was determined that a premium of approximately 10% for Asphalt Vehicle Parking exists at such airports. Applying this premium to the Aeronautical Improved Land (Commercial) rental rate conclusion for the Airport ($0.275 psf/yr) yields an Asphalt Vehicle Parking rental rate of $0.300 psf/yr. Based the average rental rate for national airports (and the availability of data in the national database), the results of the comparative analysis, and the current condition (average) of the Asphalt Vehicle Parking, a conclusion of $0.300 psf/yr was derived. It is significant to note that this relational analysis was based upon an evaluation of triple net lease rental rates (wherein the lessee pays all maintenance, utilities, insurance, and taxes associated with the leasehold). As such, the rental rate conclusion for Asphalt Summary Appraisal Report 59 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) le Aviation Management Consulting Group VALUATION Vehicle Parking may need to be adjusted if the City is responsible for maintaining and repairing such areas at the Airport. Concrete Vehicle Parking The results of the study indicate that the average rental rate for Concrete Vehicle Parking at comparable and national airports was $1.990 psf/yr. Useable rental rates were not available at regional and Small Hub airports. Due to the mix of surface types, similar functional utility of Asphalt and Concrete Vehicle Parking, and limited data available from comparable, Small Hub, regional, and national airports, a conclusion of $0.300 psf/yr was derived (which is consistent with the conclusion for Asphalt Vehicle Parking). While a differential was derived between Asphalt and Concrete Apron due to functional utility and condition, no differential was determined for the Asphalt and Concrete Vehicle Parking. Additionally, all Asphalt and Concrete Vehicle Parking in the WGA and EGA areas are considered to be in average condition. It is significant to note that this relational analysis was based upon an evaluation of triple net lease rental rates (wherein the lessee pays all maintenance, utilities, insurance, and taxes associated with the leasehold). As such, the rental rate conclusion for Concrete Vehicle Parking may need to be adjusted if the City is responsible for maintaining and repairing such areas at the Airport. Fuel Storage Facilities The Fuel Storage Facilities consist of the following: 1. WGA Fuel Storage Facility consists of four above ground tanks (Tank 1 — 12,000 gallon Jet Fuel, Tank 2 — 12,000 gallon Jet Fuel, Tank 3 — 10,000 gallon Avgas, and Tank 4 — 500 gallon Unleaded) which totals 34,500 gallons. 2. EGA Fuel Storage Facility consists of six below ground tanks (Tank 1 — 12,000 gallon Jet Fuel, Tank 2 — 12,000 gallon Jet Fuel, Tank 3 — 12,000 gallon Jet Fuel, Tank 4 — 10,000 gallon Avgas, Tank 5 — 2,000 gallon Unleaded, and Tank 6 — 2,000 gallon Diesel) which totals 52,000 gallons. To derive a rental rate, AMCG analyzed the Fuel Storage Facility on a return on investment (or cost) basis. Based upon industry knowledge and survey results, the cost to develop a fuel storage facility typically ranges from $7.500 to $12.500 per gallon. For example, the cost to develop a 12,000 gallon fuel storage tank (similar to Tank 1) would typically range Summary Appraisal Report 60 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) iiAviation Management Consulting Group VALUATION from $90,000 to $150,000. For the purposes of this report, AMCG estimated the cost to develop a Fuel Storage Facility (at the Airport) at $7.500 per gallon or $258,750 for WGA (based upon 34,500 gallons and $390,000 for EGA (based upon 52,000 gallons). A 10% return on investment (or cost) has been applied to the estimated cost to develop the Fuel Storage Facilities to derive the rental rate. A 10% return on investment (or cost) has been utilized given the risk and level of returns on alternative investments. Based upon the estimated cost of $258,750 (WGA) and $390,000 (EGA) with a 10% return on investment (or cost), a rental rate of $25,875 per year (or $0.750 per gallon) was derived for WGA and a rental rate of$39,000 per year (or $0.750 per gallon) was derived for EGA. Key Underlying Assumptions It is significant to note the current rental rates being charged at the Subject Airport were not included in the national, regional, comparable, and Small Hub average market rents and as such, were not utilized to calculate the averages. It is also significant to note the market rental rate conclusions are based upon the tenant having full (unrestricted) and continued access (from the Subject Properties) to the Subject Airport infrastructure. Market rents are driven by the amount a willing buyer (lessee) pays to a willing seller (lessor). To the extent that local economic factors affect rental rates at the national, regional, comparable, Small Hub, and competitive airports, these economic factors will be reflected in the market rental conclusions. To derive the market rent conclusions for the Subject Properties, AMCG has identified and analyzed (on a comparative basis) the rents being charged (and paid) for similar properties (by component) at a cross-section of airports (and markets) that are considered most comparable (similarly situated) to the Subject Airport (and market). AMCG recognizes there are differences between the Subject Airport and the comparable airports. Some of the comparable airports exhibit superior characteristics and some exhibit inferior characteristics. In an effort to identify airports that were considered most comparable to the Subject Airport and to draw conclusions which reflect the conditions at the Subject Airport, the comparable airports were compared with the Subject Airport using a number of aeronautical activity and infrastructure indicators. Summary Appraisal Report 61 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting Group VALUATION In AMCG's experience, aeronautical activity and infrastructure indicators at airports typically run parallel to local market (economic) indicators. Therefore, it is reasonable to assume the airports identified as being comparable to the Subject Airport (based upon the selection criteria) will be located in communities (markets) having economic and demographic characteristics similar to the subject community (market). As such, a separate analysis of local market activity indicators was not deemed necessary (or undertaken) in this case. 4. Vacancy and Collection Loss In standard real estate appraisal practice, an allocation for vacancy and collection losses would be deducted to reflect the potential loss of income resulting from tenant turnover, late or unpaid rent, or other factors. For the purposes of this report, vacancy and collection loss was estimated at 5.00% 5. Expense and Reserves As indicated previously, "net" rents are typically paid to the lessor, which in most cases is the airport owner (or sponsor) or other governmental entity. All expenses are typically the responsibility of the lessee. The only expenditures incurred by the lessor would be related to administrative and/or legal expense associated with organizing and maintaining the various lease contracts as well as operating expenses (collectively referred to as "management expenses") and reserves for replacement of short lived physical components such as concrete or asphalt paving and various building components (e.g., roof). In this case, the Appraiser has utilized 2.00% of effective gross income for management expenses, $0.050 psf for reserves for replacement of asphalt and concrete paving, and $0.100 psf for reserves for replacement of building components. Summary Appraisal Report 62 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) li Aviation Management Consulting Group VALUATION 6. Overall Capitalization Rate The Income Capitalization Approach involves the direct capitalization of the projected net operating income by an overall capitalization rate. This rate is usually selected based upon an analysis of sales of similar facilities. However, as previously discussed, airport-based properties are typically leased from airport owners (or sponsors) or other governmental entities and are rarely sold on the open market. Therefore, the Appraiser has derived an overall capitalization rate through an analysis of alternative source of rates published by Burbach & Associates and Price Waterhouse Coopers (PWC) Real Estate Investor Survey. Burbach & Associates published the results of a regional survey that includes southern Texas. Rates in this survey ranged from 8.0% to 10.0% with most rates between 9.0% and 9.5%. PWC rates range between 6.0 to 12.0% for the National Warehouse Market and average of 7.4%. In addition to the survey of rental rates, the Appraiser has obtained and considered rates of return for airport based properties. Those airport owner/operators surveyed indicated that a rate of return in the range of 8% to 12% is typically desired for commercial use properties located on-airport with rates of return in the 9% to 10% being most common. With consideration to the physical characteristics of the Subject Properties and economic conditions in the area, an overall rate of 9% was selected as being most appropriate for the Subject Properties. This rate is also consistent with regional and national trends in the aviation industry. Summary Appraisal Report 63 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) MI Aviation Management Consulting Group VALUATION 7. Income Approach Summary West General Aviation Area INCOME APPROACH SUVMARY IMOOIVE Component* Square Feet Gallons Market Rent Total Cost WGA H-1* 14,000 - $ 1.500 $ 21,000 WGA H-2* 14,000 - $ 1.500 $ 21,003 WGA H-3* 11,500 - $ 1.650 $ 18,975 WGA H-4* 13,325 - $ 1.350 $ 17,989 WGA OF-1** 3,105 - $ 6.000 $ 18,630 WGA OF-2' 4,680 - $ 5.650 $ 26,442 WGA OF-3** 2,300 - $ 6.250 $ 14,375 WGA OF-4** 2,303 - $ 6.250 $ 14,375. WGA OF-2 Storage* 4,630 - $ 1.250 $ 5,850 WGA Apron-Concrete*** 466,514 - $ 0.350 $ 163,280 WGA Apron-FSF*** 11,246 - $ 0.350 $ 3,926 WGA Parking-Concrete*** 5,280 - $ 0.300 $ 1,584 WGA Parking-Asphalt*** 56,543 - $ 0.300 $ 16,963 24,000 $ 0.750 $ 18,000 WGA FSP"'** - 10,000 $ 0.750 $ 7,5C10 500 $ 0.750 $ 375 Total Gro Income $ 370,274 LESS:Vacancy and Collection Loss $ 18,514 Effective G oss Income $ 351,760 LESS: Component Assumption Square Feet Total Management(%of Effective Gross Income) 2.000% N'VA $ 7,035 Reserves for Replacement(Asphat/Concrete) $ 0.050 539,583 $ 26,979 Resales for Replacement(Buildings) $ 0.100 69,890 $ 6,989 Total Expenses and Reserves $ 41,003 Net Operating Income $ 310,757 Capitalization(9.0 ) $ 3,452,856 TOTAL VALUE BY THE I NCONE APPROACH $ 3,452,856 ROUNDED: $ 3,500,000 * No leasehold value exists for the Improved Land (Commercial) due to the month-to-month nature of the lease. Summary Appraisal Report 64 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION East General Aviation Area I NCOIVE APPROACH SUVMAR( INX NE Component* Square Feet Gallons Market Rent Total Cost EGA H-1* 25,600 - $ 1.650 $ 42,240 EGA H-2* 15,000 - $ 1.500 $ 22,500 EGA H-3* 30,800 - $ 1.650 $ 53,820 EGA H-4" 5,000 - $ 1.650 $ 8,250 EGA OF-1** 4,900 - $ 6.000 $ 29,400 EGA OF-2** 2,500 - $ 6.250 $ 15,625 EGA OF-3** 5,000 - $ 5.650 $ 28,250 EGA OF 4*` 5,000 - $ 5.650 $ 28,250 EGA OF-5** 5,700 - $ 5.650 $ 32,205 EGA OF-6 2,000 - $ 6.250 $ 12,500 EGA OF-5 Storage* 1,900 - $ 1.250 $ 2,375 EGA Apron-Asphalt*** 354,765 - $ 0. 75 $ 115,299 EGA Parking-Concrete*** 47,266 - $ 0.300 $ 14,180 EGA Parking-Asphalt**` 39,500 - $ 0.300 $ 11,850 36,000 $ 0.750 $ 27,000 EGA FSF""** 12,000 $ 0.750 $ 9,000 2,000 $ 0.750 $ 1,500 2,000 $ 0.750 $ 1,500 Total Gross Income $ 452,744 LESS:Vacancy and Collection Loss $ 22,637 Effect ve Cross Income $ 430,107 LESS: Component Assumption Square Feet Total Management(%of Effecti',e Gross Inane) 2.00% NYA $ 8,602 Resenes b-Replacement(Asphalt/Concrete) $ 0.050 441,531 $ 22,077 Resenes b-Replacement(Buildings) $ 0.100 103,400 $ 10,340 Total Expenses and Reserves $ 41,019 Net Operating Income $ 389,088 Capitalization(9.0°/4 $ 4,323,200 TOTAL VALUE BY THE I NCONE APPROACH $ 4,323,200 ROUNDED: $ 4,2.50,000 * No leasehold value exists for the Improved Land (Commercial) due to the short-term nature of the lease. Summary Appraisal Report 65 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting Group VALUATION D. Reconciliation and Final Market Value Estimate This analysis has resulted in the following value conclusions as of August 11 , 2011: WGA EGA Cost Approach $4,250,000 $2,500,000 Income Capitalization Approach $3,500,000 $4,250,000 The Cost Approach was supported by the MVS. There was some judgment involved in estimating accrued depreciation due to the age of the improvements (the exact dates of construction or age of each improvement is not known and/or could not be ascertained in all cases). The Sales Comparison Approach was not performed since it was not considered appropriate or applicable in this case. There was no leasehold value in the FBO Improved Land (Commercial) due to the month-to-month and short-term nature of the leases. Additionally, when FBO sales occur, it is difficult to ascertain separate business enterprise and real estate values. The Cost Approach supported the Income Approach and vice versa. While there was subjectivity involved in estimating market rents for each component of the Subject Properties, a survey of comparable and competitive airports was conducted and regional and national data provided additional credibility in establishing rental rates for each component of the Subject Properties. Since the Subject Properties would be leased on a "net" basis, the expenses incurred would be limited. The capitalization rate was supported by a national and regional investor survey as well as conversations with airport owners/operators. In summary, while the value derived using the Income Approach was different than the value derived using the Cost Approach for both WGA and EGA, in this case, the values derived using both approaches were given (generally) similar weight overall. As such, the Appraiser concluded between the two approaches. The final value conclusion as of August 11 , 2011 is as follows: "As Is" Value (August 11, 2011) West General Aviation Facility $3,750,000 East General Aviation Facility $3,500,000 Summary Appraisal Report 66 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 111 Aviation Management Consulting Group VALUATION E. Prospective Marketing and Exposure Time Part of an appraisal assignment is to report a typical marketing period for the Subject Properties based upon the value conclusion. Generally, the marketing period is tied to the definition of Market Value which, in this case, states that "A reasonable time is allowed for exposure in the open market." Therefore, the research must focus on what would be a reasonable marketing and exposure time in the market for this type of property being appraised. As such, the marketing time estimate is based upon the known and expected characteristics of the property, its environs, and the conditions of the current real estate market to the point of reaching a negotiated sales contract. There is a difference between exposure time and marketing period and this is an important distinction that needs to be made. Within this context, an analysis of market transactions is integral to the appraisal process. For example, comparable properties which are under contract on the effective date of value are not usually adjusted for time (date of sale), whereas options that call for a future closing date are generally adjusted back to the date of appraisal. In other words, it is the "meeting of the minds" as to price and terms that influences the appraisal. Therefore, in this report, "reasonable exposure time" is viewed as an historical event ending on the valuation date. Conversely, the "marketing period" is the Appraiser's estimate of the length of time necessary to secure a binding sales contract on the property in the future (i.e., prospective marketing time). The responses to the PWC Real Estate Investor Survey have also been reviewed and considered by the Appraiser. This survey is published at quarterly intervals and summarizes the responses of developers and investors. In the most recent survey, the average marketing time for industrial properties nationally was 7.69 months and regionally was up to 12 months for 82% of the responders. Given the current market conditions in the area and the uniqueness of the Subject Properties, the Appraiser believes a reasonable marketing time for the Subject Properties would be 12 months at the estimated market value assuming a compatible aviation use. Essential to this conclusion is the marketing of the property by competent professionals. The exposure period is also estimated at 12 months. Summary Appraisal Report 67 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX IX. APPENDIX A. Mathematical Definitions The "Minimum" and "Maximum" columns represent the minimum and maximum values present in the data range. The "Mean" column represents the arithmetic average of all data in the data range. The "Standard Deviation" column represents the standard deviation of all data points in the range. Standard deviation is a statistical method designed to mathematically measure the variability in a set of data points. The calculated figure for standard deviation is indicative of the relative distance between the mean and every data point. For a normally distributed population, approximately 68% of the data points would fall within 1 standard deviation of the mean, as illustrated by a normal bell curve. Similarly, approximately 95% of the data points would fall within two standard deviations while approximately 99.7% of the data points would fall within three standard deviations of the mean. Assuming the collected sample data from the comparable airports is representative of the population and the population follows a normal bell curve, the calculated standard deviation values would illustrate the relative variability in data points (i.e., how close these data points are to the mean). The figure in the "Median" column is the median of the data range. Essentially, half of the data points in the number series are below the median value while half of the data points in the number series are above the median value. The figure in the "Range" column is the difference between the maximum and minimum values of the data range. The "Midpoint" is an analysis which utilizes the Mean and Median values of the data set to determine a representative "average." Utilization of the Mean and Median values are incorporated in an effort to identify and eliminate the influence of outliers on the representative "average." Summary Appraisal Report 68 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation 1: Management Consulting GroupAviation APPENDIX B. Subject Properties - Identification Map CORPUS CHRISTI INTERNATIONAL AIRPORT— A a iii t _- a:• �r 1 0 o r--- __. .. . . ..... . ,.: ....... , ,,, 11, . .4):,,, ...,„..: .,. , ,..,, , . „..„ . .„ \ ., , s : cm r.= , - i 1 1-1 1 ,= aq -,,,,' -" ,„„ �. I it /000” .,. ,,;r0 \,..,.444.'4\ 1 4;,'.,,1.7 11 ' I! I 4'4 ,,"Air .. . a ' 'f$ su 31:n/ge '' 1I 1 1 0"111° , I E.ME ..:',/,'HIT:1-,.' .:',7*.':'' 1... /111, .t\ tier.:;,,rr y ,... \\\\, :.-....„,- . \ .,1 sir (3" . ''' ' I..,''''''Illi /// -gig 4 =I z4;:',/ '''''. i''' . ' lit \.-, ' �i _ ,.per.__ wto Orr I"rri r/r./r.ffAiZr.4/r, AZ A/A/ ' c . !_., $;.. I #10,,ii: fA 71/ Wisp s r,4 sTI mrvJ 'no? LAWORT *.." AIRPORT PROPERTY OVERVIEW ��,£ ertiVASMEZ �t• i'^+F' �-- AITACI DI ENT"D-2" nm: /MUM w.CAM I, s i•f�P,... CITY OF CORPUS CHRISTI DEPARTMENT OF AVIATTON 20I I '•,R ,s, Summary Appraisal Report, City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 69 Aviation Management Consulting GroupAviation APPENDIX C. Subject Properties — Component Identification Map 1. West General Aviation Facility CORPUS CHRIST[INTERNATIONAL AIRPORT ? ..c n x.. . ... ... .. . f29'� • • 1. 118' _--12U'. •• 39' —120' -4• 10}• ,• 01 x - ••`.. '• v\\-\\\ _ ` ! 2� .: •. Iv ' `6 r •:• N.'. WGA H-2 t. \W \I .1b . WGA H\Q11 - y. Il{�i 1• ....:." WGA H•S 14,000 SP p 14,000 SF\'1'� s _ ' 11,500 SF -\\\..\\ '� \\\ .1 °0 13,325 Si' s3 C wGBIB \\\\\\\\\ \ \ 1" ... ' cu to r•�. \♦ �? v, ou•�xc w vx.,„,eao t'grw + ,p WGA OF A11, WGA OF \ WGA OF-2 WGA OF-1 2,300 SF 2,300 SP \ 4,b80 SF 3,105 SF K `T �t: t .r• , a T r— �- 1 L _ L • T \ \ NOT T T T T T T T ` T T - BUILDING TOTAL 64,521 PARKING LOT:61,523 SF t APRON:466,514 SF THICKNESS.10"PCC ` FUEL FARM APRON:11,246 SFFUEL TANK.S: DEPARTMENT OP AVIATION ÷154, 416:IC • 2-12,000 GALLON JET-A • 1•10,000 GALLON AV•GAS WESTVITACK IE AVIATION ....: 04,01,11 WTII, • 1.500 GALLON UNLEADED ,.:RPu S I:iRrsT I ATI A(2L\IB1VT"B" .is TIC DOWN SPACES:57f..• f CORPUS CHRISTI GRASS:170,057 SF tie b INTERNATIONAL AIRPORT Z)1 I ^^'" ..wi Summary Appraisal Report, City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 70 liAviation Management Consulting GroupAviation APPENDIX 2. East General Aviation Facility • \ CORPUS CHRISTI INTERNATIONAL AIRPORT IIIIIIIIIIT19 :II illlllllll • : • • ...i„..••• ' .•s.':.�y S.219.6' i : .. -. . • ..- • 1 : },uCa • • SYP • ••IOW 41'.3" 119'-0, drs",. .gm.. u . :;::.: •' 4d .‘P'- \a•..::yil�r' EGA H-3 \;r:a"`wa, ', ( W. EGA H-1 o.-s. EGA H-2 'tw-• \'t:'"e•`': _ .$ 25 600 SF "°' 15,000 SF '`� - 30,800 SF\ v t• \�. \m �' s •..r. ... fir,•:•:.;. iii_ li, ,..,:,,,,, ...a ,iiii:'.Z.::?....4:::::'11: 1111h, •:!!!.L,,r ::-.L " '11116. ..:.:.:.::::::.::::::::::::: K iiii I-1_ 111‘4. \ rl , ..:7P:g:::::::::::::..1:4:....:::::::::::.:..:::.:::::.:::::,:::::::::::.: ast A'Apr• -r - \hill& T\ .............. . ' . ‘"s\ -- NOTES: J BUILDING TOTAL:99,600 SF PARKING 1.0'C:b6,766 SF UNIMPROVED:140,048 ` APRON:354,765 THICKNESS•UNKNOWN4:::C +u �i FUEL.TANKS: UCPAR'IMFNfUI AVIATION xra "`�G 3-I2 000 GALLON JEC•A PAST GENERAL.AVIATION ..4 „a,A r 011110 I•12,000 GALLON AV-GAS A'rrACHMFN r"C.' TIE DOWNS:30 FIXED WING cosPt's c.,:). u+.,, m 2 HFJ,IPAD CORPUS cwusr[ " INTERNATIONAL AIRPORT 20I1 for Summary Appraisal Report, City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 71 Aviation Management Consulting GroupAviation APPENDIX D. Subject Properties — Photographic Survey 1. West General Aviation Facility r,.t ' F l P. WGA OF-1 — Exterior (� i ir._ i , e x ., ....................... -firi ........._.......... _ , ., _, . , b.A - . _ ' ,j r........-7=.....1! 1. s- .I .. er WGA OF-1 — Interior Summary Appraisal Report 72 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX , WGA OF2 — Exterior 4 i - if ii . 1 ii ` nit, y .S IM filMi II 1111011 `�1 1 A, " i 11111 �U�IIIIIiI�k �� - ' ' 11111 �: _ - --- 0% _ Aro i ___ . ___ a IAli. i* WGA OF2 — Interior Summary Appraisal Report 73 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX _,1,, 1 - Hiigitli'itil __ libilliaL,1 ,,_ I 4 , , I . _ _ ., . . A . , _ . __ . - --.__ , , ,.... , rit* .. . . _ . _ . WGA OF3 - Exterior 4 . t 4fr - .. . . ,, ., . , ,__. . „. ,, - /, a WGA OF3 — Interior Summary Appraisal Report 74 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) inAviation Management Consulting GroupAviation APPENDIX ii volor WGA OF4 — Exterior .4.4, 1 kj ,..., , . 0 1 „........ ,....., _........ ,x,,,.. . „, ,,, x , ., h �ry WGA OF4 — Interior Summary Appraisal Report 75 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 111 Aviation Management Consulting GroupAviation APPENDIX • i 4 ....._ . • • / = . WGA Apron Mfr a _. ti • . ... . WGA Vehicle Parking Summary Appraisal Report 76 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) liAviation Management Consulting GroupAviationn APPENDI.4;1,,, t,..ii.„ .., ,;,.:-..-,_ ,..,,,,. __ _ ... 4 , _ . _ • , fi ,.*. a rill WGA H-1 Exterior i r i l tahOligtui; 'll lii k � IS ®..r Mair x. \ i 7. , J `��Y(� t . : :i - 0 1 .,,, 4 , % sp 1- mot_. i- r _ ' , at- - $ t WGA H-1 Interior Summary Appraisal Report 77 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) siAviation Management Consulting GroupAviation APPENDIX 10 ya. , N. WGA H-2 Exterior 'W\\\\%\\\*tV„ ANNI111111 ,III I ', i / tAkIBU111MMMMM M r '/'vtfto ' \ A\ 'N\ 1%111 �, `\1�\\1\A, \\\\\ ,,,,i 1111 \ \\ \\\\AM vv t' ♦_ \.a�a\ r Nr. stainallih. @ , •,,, al t . fir=110) i ' iiiiitlIMPIV i ,, r., WGA H-2 Interior Summary Appraisal Report 78 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting GroupAviation APPENDIX ilk i Pr t a WGA H-3 Exterior 11 1 11"'x► RI r --.....;__----. - — 16""""1", ' r .L Et ___ *pa t WGA H-3 Interior Summary Appraisal Report 79 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX WGA H-4 Exterior , iiiii‘b __ s ,iirt,* 11111111 le �..rr! �' _ .-- _ % ,... 11111.ji v p. r....... „ _. r r_ � rk WGA H-4 Interior Summary Appraisal Report 80 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX o - 1 Iltl) 1 emi ---jr- • i , 1 ,fir y .= w�'"_ -, fir„ _ > WGA Storage • L'I R E jt • iminir WGA Fuel Storage Facility Summary Appraisal Report 81 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 111 Aviation Management Consulting GroupAviation APPENDIX 2. East General Aviation Facility 1 s:AI: , , 1111 .....it ,i,,,,,... _ :moI. i# , t EGA OF1 — Exterior _ ,, :,/ .,. { So,r-roe, 11•I1 IW PPPI S' ,e,1 1111 Y •' t A t ; r ,.... ,... .... .... ... .s __ ..------____ ..-, , _ _ EGA OF1 — Interior Summary Appraisal Report 82 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) 11 Aviation Management Consulting GroupAviation APPENDIX lluivir _ i EGA OF2— Exterior 111 hill I I 40464)"14r, 164firritliNgt Segfest ND Farms to SSegrest NV Farms .,,,.meq NAM-SERVICE• DEPENDARNTY em 9 14.Z.0 V3I7 8/1 hi 46 I` ~` *WO.FairnS EGA OF2 — Interior Summary Appraisal Report 83 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX 1, ; t Sa -3 . < L, . . .. . . � 1.: i row I , ,,,, , . .. .. ,...; EGA OF3 - _=xter or 2. 4 RP r3 ,, - . ,_,,a Fill __ _ . .,.___:, ....,____ .. \-- '411111riji Y‘fw EGA OF3 — Interior Summary Appraisal Report 84 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX likitia...........__________,..........001116800 AIRCit/{F7 M,JN EM+1NCE i {. 2 �f f G r } 4 I t :f t _ Matta!! t_.. a wwr lit . ,...eek.,. _- -.....z. -- _ ,a; _ , .-..,..# 1 ee*tee----Y T'*.'lF.:--,-:^ ✓,^r: ,e rr 4- EGA OF4 — Exterior iiiii '1 S 11 - ,1 ._ ''.‘'It. '''"'it's' 1 \\ \ 1 Irk ,,, „.. , JILL 1 . lh �`4 — EGA OF4 - Interior Summary Appraisal Report 85 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) milli Aviation Management 11111Consulting 111111 GroupAviation APPENDIX • • I � AMA vo ay EGA OF5 - Exterior Tr EGA OF5 - Interior Summary Appraisal Report 86 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX I x "� - IF ■ � tQ r� - ' z . c EGA OF6 — Exterior , rt r • ,sr,:- 01 moi ..+ I EGA OF6 — Interior Summary Appraisal Report 87 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX .- `> ,, � .e tm = l . ` . +' at ?& ''*,.,':. *-'-::-'-'—'''''''''414**14'srlk:°;):6"....''' ...411°: °'...6.;;'°."I*'''''''''-'- -'1' '''''''''''''''''''t' EGA Apron i .moi . -, ., EGA Vehicle Parking Summary Appraisal Report 88 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management Consulting GroupAviation APPENDIX p 4 ., _ ._ _ t ___ ,_ f, .....:,, , _ _.... , r ... EGA H-1 Exterior Yom ,. A x r EGA H-1 Interior Summary Appraisal Report 89 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) SiAviation Management Consulting GroupAviation APPENDIX 2 EGA H-2 Exterior • �. F:7 n m EGA H-2 Interior Summary Appraisal Report 90 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) IIAviation Management Consulting GroupAviation APPENDIX 4 E s ofi,„ , i EGA H-3 Exterior .e, ,,.��• . ^��: -;%.....- Ott .. ift 1111,1ri "MI IIII ��j` i i�ip, . i�� 1111111111 lam' ! r ii 5 ` � - EGA H-3 Interior Summary Appraisal Report 91 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting GroupAviation APPENDIX , f f f IIIIiki _ ! ., • ' 1 , 1 1 3 3 ; ' t . 3 ' - ',... ,-;,.. .„-:, .........„. . , , . : ....„-- , EGA H-4 Exterior ‘ . .,... I '- - • -.. - .... . -- •, ' - ': ... - , LI . - ...ti I •ii -.° . .. • - .., , ... 5 - EGA H-4 Interior Summary Appraisal Report 92 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) siAviation Management Consulting GroupAviation APPENDIX iii Milk,•15 1 t. I , 1 \\ \ \ \, j t 1 `�. ial y; 4 P • y- - 9Z EGA Storage k 5 __-- lip ,. ,,� . - a EGA Fuel Storage Facility Summary Appraisal Report 93 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Aviation Management 1111Consulting 111 GroupAviation APPENDIX 3. Improved and Unimproved Land B1 Land B1 Land Summary Appraisal Report 94 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) IIAviation Management Consulting GroupAviation APPENDIX ;r4 _ 4‘ , ,,,- 4. -, ^ p .. .^.�- . 'L( Cl Land f • C2 Land Summary Appraisal Report 95 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) IIAviation Management Consulting GroupAviation APPENDIX E. Subject Properties — Metes and Bounds Descriptions corner of the tract of land described in Article I, Paragraph A, of the Contract and Lease Agreement between the Greensboro-High Point Airport Authority and Atlantic Aero, Inc., bearing date of 24 May 1971, and running thence from said beginning point North 44 deg. 49 min. 30 sec. West 198.06 feet to a point in the margin of Perimeter Road; thence , running with the southeastern margin of Perimeter Road as it curves to the right a chord and chord distance of North 40 deg. 38 min. 29 sec. East 47.22 feet; thence continuing with said margin of Perimeter Road North 60 deg. 20 min. 58 sec. East 2C4.60 feet; thence continuing with said margin of Perimeter Road as it curves to the right a chord and chord distance of North 68 deg. 16 min. 15 sec. East 140.76 feet; thence continuing with said margin of Perimeter Road North 76 deg. 10 min. 25 sec. East 180.53 feet; thence South 45 deg. 10 min. 30 sec. East 528.73 feet to the ooint of Beginning, containing 67,374 square feet and being colored in purple on the plat of survey attached to this Fourth Amendment and marked "Exhibit B." The above-described tract of land shall be added to and become a part of the demised premises effective 1 Sc61.-cn6f4 1989. C BEGINNING at the northernmost corner of the tract of land described in Article I, Paragraph A, of the Contract and Lease Agreement between the • Greensboro-High Point Airport Authority and Atlan • - tic Aero, Inc. , bearing date of 24 May 1971, and running from said beginning point North 44 deg. 49 min. 30 sec. West 154.93 feet to a point in the margin of Perimeter Road; thence with said margin • of Perimeter Road North 76 deg. 10 min. 25 sec. East 51.42 feet; thence with said margin of Perimeter Road as it curves to the right a chord and chord distance of South 74 deg. 18 min. 59 sec. East 68 feet; thence continuing with the margin of Perimeter Road South 44 deg. 49 min. 30 sec. East 68.44 feet; thence South 45 deg. 10 min. 30 sec. West 78.00 feet to the point of Beginning, contain- ing 10,006 square feet and being colored in brown on the plat of survey attached to this Fourth Amendment and marked "Exhibit 8." The above-described tract of land shall be added to and become a part of the Demised Premises effective 1 SEATEei 6•Si'1989. D BEGINNING at a point located North 45 deg. 10 min. 30 sec. East 8 feet from the northernmost corner of the tract of land described in Article I, Paragraph A, of the Contract and Lease Agreement between the Greensboro-High Point Airport Authority and Atlan- tic Aero, Inc. , bearing date of 24 May 1971, and running thence from said beginning point North 45 deg 10 min. 30 sec. East 70 feet to a point in the margin of Perimeter Road; thence with Perimeter Road South 44 deg. 49 min. 30 sec. East 411.68 feet; thence continuing with said margin of Summary Appraisal Report 96 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) li Aviation Management Consulting GroupAviation APPENDIX Perimeter Road as it curves to the left a chord and chord distance of South 60 deg. 42 min. 10 sec_ East 71.12 feet; thence continuing with said margin • of Perimeter Road as it curves to the right a chord and chord distance of South 37 deg. 16 min. 01 sec. East 25.34 feet to a point in General Aviation Loop Road; thence with said road as it curves to the left a chord and chord distance of South 08 deg. 42 min. 12 sec. East 85.79 feet; thence continuing ' with said access road as it curves to the left a chord and chord distance of South 60 deg. 37 min. 55 sec. West 20.07 feet; thence continuing with said road as it curves to the right a chord and chord distance of South 19 deg. 30 min. 05 sec. West 26.33 feet to a point in the margin of a spur off said General Aviation Loop Road; thence with the margin of said spur south 50 deg. 37 min. 55 sec. West 20.07 feet; thence with the margin of said spur as it curves to the left a chord and chord distance of South 52 deg. 54 min. 27 sec. West 97.64 feet; thence North 44 deg. 49 min. 30 sec. West 19.48 feet; thence North 45 deg. 10 min. 30 sec. East 95.00 feet; thence North 44 deg. 49 min. 30 sec. West 550.00 feet to the point of Beginning, containing 47,873 square feet and being colored in red on the plat of survey attached to this Fourth Amendment and marked "Exhibit B. The above-described tract of land shall be added to and become a part of the demised premises effective 1 Sce-remdtic 1989. E BEGINNING at a =oint lccared North 45 dcg. 10 min. 30 sec. East 500.00 feet from the southernmost corner of the tract of land described in Article I, , Paragraph A, of the Contract and Lease Agreement between the Greensboro-Sig,: Point Airport Authority and Atlantic Aero, Inc., bearing date of 24 May 1971, and running from said beginning point North 00 deg. 10 min. 30 sec. West 247.49 feet; thence North 44 deg. 49 min. 30 sec. West 190.52 feet to _ the margin of a spur off General Aviation Loop Road; thence with said margin of said spur as it curves to the right a chord and chord distance of North 52 deg. 54 min. 30 sec. East 81.50 feet; thence continuing with the margin of said spur North 60 deg. 37 min. 55 sec. East 23.22 feet; thence continuing with said margin of said spur as it curves'to the right a chord and chord distance of South 80 deg. 06 min. 34 sec. East 25.31 feet to the margin of said General Aviation Loop Road; thence with the margin of said General Aviation Loop Road as it curves to the left a chord and chord distance of South 54 deg. 10 min. 25 sec. East 90.10 feet; thence continuing with said margin of said General Aviation Loop Road as it curves to the right a chord and chord distance of South 27 deg. 23 min. 02 sec. East 25.83 feet to a point in the margin of another spur off said Loop Road; thence South 12 deg. 48 rein. 28 sec. West 168.82 feet; thence continuing with the margin of said spur as it curves to the left a chord and chord distance of South 06 deg. 31 min. 29 sec. West 119.28 feet; thence South 44 deg. 49 min. 30 sec. Summary Appraisal Report 97 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Ill Aviation Management Consulting GroupAviation APPENDIX East 14.49 feet to the point of Beginning, contain- ing 26 ,109 square feet and being colored in blue on the plat of survey attached to this Fourth Amend- ment and marked "Exhibit B." • The above-described tract of land shall be added to and become a part of the demised premises effective. 1 (i PT6- 5E/(' 1989. F BEGINNING at a point located North 45 deg. 10 min. 30 sec. East 500.00 feet from the southernmost corner of the tract of land described in Article I, Paragraph A, of the Contract and Lease Agreement between the Greensboro-High Point Airport Authority and Atlantic Aero, Inc. , bearing date of 24 May 1971 , and running thence from said beginning point South 44 deg. 49 min. 30 sec. East 14.49 feet to the margin of a spur off General Aviation Loop Road; thence with said spur South 00 deg. 14 min. 30 sec. West 146 .52 feet; thence South 89 deg. 18 . min. 30 sec. West 85.45 feet; thence North 44 deg. 49 min. 30 sec. West 58.44 feet to the point of Beginning , containing 12,275 square feet and being colored in yellow on the plat of survey .attached to this Fourth Amendment and marked "Exhibit B." The above-described tract of land was added to became a part of the demised premises effective 1 April 1985. G . BEGINNING at a point located North 45 deg. 10 min. • 30 sec. East 250 .00 feet from the southernmost corner of the tract of land described in Article I, Paragraph A, of the Contract and Lease Agreement between the Greensboro-High Point Airport Authority and Atlantic Aero, Inc. , bearing date of 24 May 1971, and running thence from said beginning point North 45 deg. 10 min. 30 sec. East 85.00 feet to a point; thence South 44 deg. 49 min. 30 sec. East 58.44 feet; thence North 89 deg. 18 min. 30 sec. . East 85.45 feet; thence South 00 deg. 14 min. 30 sec. West 119. 23 feet; thence South 89 deg. 14 min. 00 sec. East 30 .16 feet; thence South 00 deg. 14 min. 30 sec. West 425.41 feet; thence North 89 deg. 23 min. 45 sec. West 45.39 feet; thence North 44 deg. 49 min. 30 sec. West 341.81 feet; thence North 45 deg. 10 min. 30 sec. East 250.00 feet; thence North 44 deg . 49 min. 30 sec. West 150.00 feet to the point of Beginning, containing 94,899 square feet and being colored in gray on the plat of sur- vey attached to this Fourth Amendment and marked "Exhibit B." The above-described tract of land shall be added to and become a part of the demised premises effective 1 .vri-Em6l,c 1989 . Summary Appraisal Report 98 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX F. Consultant/Appraiser Qualifications 1. David Benner(Consultant) Associate Consultant (Aviation Management Consulting Group, Inc.) Experience David Benner has more than 10 years of aviation, management, and customer service experience including airport operations, flight instruction, business operations, and aviation (airports and aviation businesses) management consulting. Education David has a Bachelor of Science degree in Business Administration from Bethel College and a Master of Business Administration degree in Aviation with a concentration in Airport Management from Embry-Riddle Aeronautical University (ERAU). Additionally, David has a commercial pilot license with instrument and multi-engine ratings, and he is a Certified Flight Instructor. Expertise Airport Business • Appraisals and Valuations • Appraisals and Valuations • Leasing Policies • Due Diligence • Rents and Fees Policies • Strategic/Business Planning • Minimum Standards • Operational and Financial • Rules and Regulations Assessments • Development Guidelines • RFP Response Development • Lease/Use/Operating Agreements (Proposal) • Strategic/Business Planning • Market Assessments and • Rent Studies Feasibility Studies • Fee Studies • RFP Development and Response Evaluations • Market Assessments and Feasibility Studies • Operational and Financial Assessments Summary Appraisal Report 99 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) 11 Aviation Management Consulting GroupAviation APPENDIX Background Prior to joining Aviation Management Consulting Group, David was a full-time student pursuing his Master's degree at ERAU in Daytona Beach, Florida. While at ERAU, he served as a graduate assistant and completed a number of high profile research projects including an Aviation Forecast Study (San Diego International Airport), a Security Study (San Francisco International Airport), and a Customer Satisfaction Survey (Daytona Beach International Airport). In addition, while pursuing his Master's degree, David completed an internship with Daytona Beach International Airport focused on airport administration, operations, and management. Summary Appraisal Report 100 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) Ill Aviation Management Consulting GroupAviation APPENDIX 2. Robert Decker(Appraiser) Principal (Decker Associates, Inc.) Experience Robert (Appraiser) has over 35 years of commercial appraisal and consulting experience including a variety of aviation assignments encompassing the valuation of airport land and building improvements (both leased fee estate and leasehold interest). In addition, Robert has completed a number of rent studies involving airport (and aviation-related) properties. Education Robert has an undergraduate degree in Business Administration from Colorado State University in Ft. Collins, Colorado. In addition, he has completed the following Appraisal Institute Courses: Capitalization Theory and Techniques IA and IB, Case Studies in Real Estate Valuation II, Investment Analysis VI, and Litigation Valuation, Standards of Professional Practice and numerous appraisal seminars. Robert is a Certified General Appraiser in the state of Colorado and has performed appraisal assignments in thirteen other states. Expertise Airport/FBO/General Aviation Non-Aviation (Commercial) • Appraisal • Sale/Purchase • Valuation • Financing • Rent Studies • Estate Tax • Strategic/Business Planning • Condemnation • Market Assessment • Feasibility Study Summary Appraisal Report 101 City of Corpus Christi, Corpus Christi International Airport (11/18/2011) Aviation Management Consulting GroupAviation APPENDIX 3. James Burbach (Appraiser) President (Burbach & Associates) Experience James (Jim) Burbach (MAI and President of Burbach & Associates) has approximately 35 years of appraisal and consulting experience including: appraisal and investment analysis of residential PUDs; absorption studies for residential demand projections; pricing recommendations for proposed office, industrial, and residential PUDs; and, the valuation of office buildings, multi-family projects, regional malls, hotel/motels, industrial properties, and major land assemblages. Education Jim has an undergraduate degree in Finance from the University of Wisconsin in Whitewater, Wisconsin and a graduate degree in Real Estate Appraisal and Investment Analysis from the University of Wisconsin in Madison, Wisconsin. Jim is a Certified General Appraiser in the state of Texas. Expertise Non-Aviation (Commercial) • Financing • Feasibility Studies • Estate Tax • Litigation Support • Strategic and Business Planning • Market Assessments • Condemnation Summary Appraisal Report 102 City of Corpus Christi, Corpus Christi International Airport(11/18/2011) „____ CORPUS C ,., o`er INTERNA.TI ONAL Al RP ORT East General Aviation Hangars Structural Condition Assessment Prepared by: . . -OF T• r PGAL ... A,— , . o e JEFFREY A.UL8O1T �1� 88653 ; �e -..lftv.4,0...0 JAN 28,2011 January 2011 EXHIBIT 3 East GA Hangars 1-3 Structural Condition Assessment January 2011 Structural Condition Assessment for CCIA East General Aviation Hangars EXECUTIVE SUMMARY The existing East General Aviation Hangars located at 506 International Drive at Corpus Christi International Airport were inspected with regard to establishing structural condition and serviceability. The original drawings for these structures were not available at the time of inspection. The East General Aviation Hangars 1, 2 and 3 are currently in use for Fixed Base Operations (Signature Flight Support) serving the general aviation community.Visual field inspections were performed to assess the structural adequacy of these buildings. No destructive testing, invasive inspections or capacity analysis was performed as it was beyond the scope of the investigation. Based on the observations made during the visual inspections, Hangars I and 2 have adequate structural integrity to support the original intended design loads although buildings have building envelope issues that will require certain repairs to remain in serviceable condition. The Signature Flight Support office building is in generally good condition needing only minor maintenance work. Hangar 3 is in need of immediate repairs and will not support its full intended design load in its current condition. All of the East GA Hangar recommendations for such repairs are provided and a conceptual cost estimate for those repairs is included in this report. Page 1 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 INTRODUCTION The East GA Hangar buildings are typically of commercial metal building type construction with the exception of Hangar 1 which is a hyperbolic paraboloid concrete shell structure.On December 5th, 2010 a site visit was undertaken for the purpose of establishing the general structural condition of the existing CCIA East General Aviation Hangars. The structural condition assessment performed is intended to address the serviceability of the existing buildings for general aviation hanger type use and generally conforms to the guidelines of ASCE Standard 11-99, "Guideline for the Structural Condition Assessment of Existing Buildings." The assessment and report provided are NOT intended to be a "Property Condition Assessment" per ASTM E2018-08 although similar items are discussed. The inspection was limited to visual methods only and no destructive examinations were performed. The assessment provided is based solely on those items that could be observed directly and may not include all existing structural deficiencies, if any are present. While the primary focus of this report is the structural adequacy of the hangar buildings there is also discussion of the building envelope integrity as it relates to structural issues and certain recommendations are offered. Please note that the hangar numbers and building names used in this report are based on input from Signature Flight Services and may not correspond to the hangar numbers as commonly used by CCIA. FIELD OBSERVATIONS East GA Hangar 1 The first portion of the structural condition assessment consisted of inspection of the hyperbolic paraboloid concrete shell structure designated as Hangar 1. Structures of this type are interesting in that bending forces within the shell are very low and only a minimal amount of reinforcing is needed. Structures such as this can support large loads for a given mass of concrete. 1i . .a rV East GA Hangar 1 —Aircraft Bay East GA Hangar 1 —SWA Office Area In general it was noted that concrete spalling has occurred in some of areas the structure and pop-outs are evident. Cracking has occurred in limited areas. All of the fiberglass infill panels and wood support framing are not weather tight and are in need of replacement. There is evidence of water infiltration through the concrete shell. The water infiltration has caused numerous areas to receive water damage to walls,ceilings and floor finishes. Secondary framing for metal wall panels is also corroded. Page 2 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 � _ # YF . ` '.r ' tt * orf 't + 1' \ ; *.). , -fx, ' .`Y#y fi t +,,4',. Sad �• ,. t "'. .r, ,,,. \ , eb r t .a Fiberglass Infill w/Rotted Framing Water Infiltration w/Spalling 5 -� ,, L. a { • y Cracking in Concrete Shell Water Infiltration w/Spalling .. r t 1 ' t .i u,' r i c Water Damage to Walls and Wood Framing Water Damage to Ceilings Page 3 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 No signs of significant foundation movement or distress were noted for Hangar 1. However there has been movement of the floor slab causing water to run towards an office area. This situation can be addressed with the installation of in floor drains if conditions warrant. Several locations on the exterior of the shell have experienced corrosion of the reinforcing and are spalling. Water infiltration has also damaged electrical conduits. In general there is poor drainage between Hangar I and the adjacent Signature offices.This has allowed water to build up and damage a portion of the wall panels. .� " ,.--- 1 Floor Slab Cracking Exterior Spalls—Previously Patched �,. Fy 1411 : if t' l' + Iii 11P:4 �: 1 Water Damaged Electrical Conduit Steps added due to poor drainage It is recommended that the roof of this building be treated by application of a white elastomeric coating system to prevent further water infiltration. Any required concrete repairs should be performed in conjunction with the roof repairs as well as replacement of the translucent infill panels and support framing. Concrete repairs should include chipping out deteriorated concrete and blast cleaning the substrate. The repair material should be a high strength mixture containing a corrosion inhibitor such as "SikaTop 123 Plus" or equivalent. Once the shell is weather tight, repairs to the interior can be undertaken. Interior repairs should include demolition and replacement of all water damaged framing and finished surfaces. The storefront at the Southwest Airlines Cargo office has broken glazing panels which need to be replaced. It should be noted that most of the observed damage is due to water infiltration and lack of continuous maintenance of the roof coating is the primary cause. Page 4 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 ipp - iiiii '3000") ;',,....,1.1" --...-'4,.... -t ; -� # ; r .. 4 t' ` Damaged Glazing @ SWA Cargo Poor Drainage @ SWA Storefront A complete structural analysis of the building to determine compliance with current building codes is beyond the scope of this report. However,with the exception of those areas specifically noted, Hangar 1 appears to have adequate structural integrity to carry the original intended design loads. There are building envelope and maintenance issues that need to be addressed and which affect the general serviceability of the building. East GA Signature Offices The East General Aviation Signature Office Building is a commercial metal building type structure approximately 55 feet wide by 85 feet deep with a metal panel roof. t Signature Office Building—Air Side Signature Office Building—Land Side The exterior of the structure was inspected first. The overall condition of this building is good and no damage was noted on wall cladding panels. The building envelope appears to be intact with no deficiencies noted at the windows and doors. However, several maintenance items need to be addressed for this building. The gutters are filled with debris and should be cleaned to prevent corrosion. In Page 5 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 addition, the gutter downspouts place water directly adjacent to the building foundation. Gutter extensions and splash blocks should be provided. If not corrected, this condition will cause damage to the foundation due to heaving of the underlying soils. General improvements to grading adjacent to the building should be performed to prevent the buildup of water adjacent to the foundation. - ' . • i , / ThPt� `' i' 1, , t a q Plants Growing in Gutter @ Signature Offices Downspout @ Signature Offices An inspection of the remainder of the interiorof the Signature Offices revealed the interior structure to be in good condition.No heaving of the floor slab was noted and no evidence of roof leaks was found. A complete structural analysis of the building to determine compliance with current building codes is beyond the scope of this report. However, the Signature Offices Building appears to have adequate structural integrity to carry the original intended design loads. East GA Hangar 2—Ocean Air Center The East General Aviation Hangar#2 is a commercial metal building type structure approximately 205 feet wide by 130 feet deep with lean-to structures attached to the both sides of the hangar.The south side structure is an administrative office area and is separated from the hangar space by a CMU partition wall. The building is framed in steel and has corrugated steel wall and roof panels. t *4'4%,, y1C ' � ' "� s r.. xf _ :......':V''''ll*'''':::.-:...-i;;;"-'1'ill.'c- „` Y r:'...111;*'7-ki*L.124:44" dux" - --'-+-i..� East GA Hangar 2—Ocean Air Center—Air Side East GA Hangar 2—Ocean Air Center—Land Side Page 6 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 An inspection of the exterior portions of the building revealed some damage to the corrugated steel wall panels although this damage is not extensive.No other structural distress was noted from the outside of the building in this area at the time of inspection although building envelope issues are apparent. The eave trim and gutters are corroded and should be replaced. Downspouts were missing as well. Cladding Damage @ Ocean Air Center Missing Downspout @ Ocean Air Center 4 41.40 • —1111111W •4 Downspout Damage @ Ocean Air Center Cladding Damage @ Ocean Air Center A few of the building cladding panels are perforated due to corrosion and the base angle is also corroded. There is generally poor drainage in some areas around the building. An inspection of the interior of Hangar 2 revealed the interior structure to be in fair condition. The primary structural members appeared to be in fair condition. There are several locations where the main baseplates have moderate to severe corrosion and which exhibit moderate section loss. These locations should be cleaned and repaired as needed. Secondary framing members adjacent to the doors are severely corroded with an estimated 50%section Loss and should be repaired as soon as possible.The protective coating on these secondary members has reached it service life limit and painting should be considered. It is anticipated that the rate of corrosion will increase since the existing protective coatings are no longer fully functional. An inspection of the hangar doors revealed corrosion to the secondary door framing members. The hangar door tracks, both upper and lower, are corroded. There is minor mechanical damage to the hangar door frames and bumpers. All of the interior framing is in need of cleaning and painting to prevent further damage and this work should be integrated into an ongoing maintenance program.Failure to address these issues now will likely result in higher repair costs later. Page 7 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 u b tt (�gw # t It t rk1i . . .i: : k a J :i: ti.,. .3 Zg , I t'1%,',4; al ,. ., ,,- t ,, .. , .: 1.1-.; 1 1,Corroded Door Tracks @ OAC Panel and Base Angle Corrosion @ OAC ' t,is- ` 3 e' x , r, ■i 4 ....Ns.. 4 , fl 3/41IiiitIOIW4 • r T r rrC[ k_•a Primary Member Corrosion @ OAC Baseplate Corrosion @ OAC ,e } 9 Door Damage @ OAC Severe Corrosion Damage @ OAC Doors Page 8 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 The floor stab of the Ocean Air Center Hangar appears to be in fair condition. There is minor to moderate cracking but the floor is generally serviceable at this time. There is poor drainage between the Ocean Air Center Hangar and the adjacent building although area drains are located here. These drains should be kept clean to prevent accumulation of water adjacent to the building foundations. N — �7 f' E '' i ‘,..\ gra, . , i k. —..--1....,-,41... ' Partially Blocked Drain @ OAC Drain in Good Condition @ OAC A complete structural analysis of the building to determine compliance with current building codes is beyond the scope of this report. However, with the exception of the items specifically listed above, the Ocean Air Center Hangar appears to have adequate structural integrity to carry the original intended design loads. Page 9 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 East GA Hangar 3—Signature Flight Services,Dodd Aviation and Corpus Christi Flight School The East General Aviation Hangar#3 is a commercial metal building type structure approximately 260 feet wide by 130 feet deep with a lean-to structure attached to the south side of the hangar. The south side structure is an administrative office area and separated from the hangar space by a metal partition wall.The building is framed in steel and has corrugated steel wall and roof panels. j I(/f({{riti j 4 % s �'`"� r,i!.ail 1 •,af .4 _ '. 1I,+�l'!' 1 1 r. - 7. East GA Hangar 3—Air Side(East) East GA Hangar 3—Air Side(North) The exterior inspection of Hangar 3 revealed mechanical damage to wall panels although this damage is not extensive. There is moderate to severe damage to the gutters and downspouts and some downspouts are missing. There is inadequate caulking around the windows. All of the fan louvers are in need of replacement and it appears that the fans are inoperable as well. There is some evidence of water infiltration in the area where Dodd Aviation is located as indicated by staining of the ceiling tiles in the restroom areas. It could not be determined if this staining was caused by rainwater infiltration or other moisture sources. :' + .i4 is .«t` ^r` 'i t''''''"Ii #' ' * II v :r ,�, `V / Stained Ceiling Tiles @ Dodd Aviation- I Stained Ceiling Tiles @ Dodd Aviation-2 Page 10 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 4 t t . ' * \ .„ 111 ,} i i r 13 : r i, it. Panel Damage @ EGA 3 Gutter Damage @ EGA 3 ,,....i t 1.,..,, w g '� .,r * fix, at fi ..,t. : .:, ,„.- „ ,,, , _ , .,, f ,y g } 44 c c rr r Fan Louver Damage @ EGA 3 Caulking Around Windows is Missing The hangar door system is in moderate to poor condition. The doors cannot be operated normally and require the use of an aircraft tug to open and close them. There is minor mechanical damage to the hangar door frames and bumpers and corrosion damage to the doors and door pockets as well as corrosion of the door tracks and running gear. The secondary door framing is corroded although with minimal section loss observed. The protective coating on these secondary members has reached it service life limit and painting should be considered. It is anticipated that the rate of corrosion will increase since the existing protective coatings are no longer fully functional. The problems with the hangar door system do not appear to affect the overall structural integrity of the building but do present a serious serviceability issue. Page 11 of 17 East GA Hargan 1-3 Structural Condition Assessment January 2011 Fr,..,. -::„.ii, -1,....:. '- . . . r f • i� L' io ., i ..v , Door Track Corrosion e EGA 3 Door Pocket Corrosion , EGA 3 r -4 t ,sa t .?'H it 1 ti 3ari{ i ii‘... r;...1):;'11444gr,::j.li • ti , 1' w t; T Door Pocket Corrosion @ EGA 3 Upper Door Track Corrosion @ EGA 3 ''''r.8'.. r Vir.--.aSy" , 7-'! Ir• • ':G r -_ ` L-7.-- . . ,,r, . ,sj tr�?,ti$4gym.- !At,,_ ,..:.z•'^,:^;'.7' •!-.;....4 iiiA i 4111110tt ik fY, z .v- 57 y r " ��`-... , f k j • 4 r, _ .tom YJ " +'t• ' ..;f, Running Gear Corrosion @ EGA 3 Doors Lower Door Track Corrosion @ EGA 3 Page 12 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 An inspection of the interior portion of the building showed the structural steel framing to be in generally good condition with the exception of the column baseplates. All of the primary and secondary framing is experiencing corrosion and the original coating system has failed.Only minor section loss has occurred so far.All of the interior framing is in need of cleaning and painting as well as replacement to the corroded items to prevent further damage and this work should be integrated into an ongoing maintenance program. Failure to address these issues now will likely result in higher repair costs later. The floor slab for this hangar is in fair condition. There are cracks in the floor slab but heaving is minimal and the floors are serviceable in their current condition. The baseplate and column base corrosion is the most serious issue observed during the structural condition assessment. There are three out of six baseplates on the south wall that have more than 50% section loss and two of six baseplates along the west wall which have more than 50%section loss. A full structural load and capacity analysis is beyond the scope of this report. However, based on the observed condition of these baseplates and due to their location in proximity to one another, it is our opinion that the building in its current condition will not be able to withstand its full original intended design loads. These baseplates should be repaired as soon as possible. Failure of one of the column locations would likely cause damage to propagate further into the structure potentially leading to costly repairs. witig 1 r . Severe Corrosion Damage @ EGA 3 South Wall Severe Corrosion Damage @ EGA 3 South Wall � 'irZ: ar�,t a '1 ar xy t it. Severe Corrosion Damage @ EGA 3 South Wall Severe Corrosion Damage @ EGA 3 West Wall Page 13 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 The interior inspection also revealed corrosion damage to the fire sprinkler riser pipe. The lower portion of this 6 inch line is corroded and is currently leaking. The supports for the remaining riser piping are also inadequate. This riser supplies all of the sprinkler piping and is under constant pressure. An accidental bump from a tug or other equipment could cause this line to fail. Such a failure could lead to damage to the structure or to the aircraft stored within the structure in addition to leaving the building and its contents unprotected from fire. It is also possible that this corrosion damage extends below the floor slab as well and failure there could undermine the floor slab leading to costly repairs. It is recommended that this fire sprinkler riser be thoroughly inspected and then repaired as soon as possible due to the potential consequences of a failure of this system. . ."' lo ' ' . ' i► .$ ,� r .: ' ' s., ll .t j 1, -s t I i { d E , yam( � ms. \ i w .,. e Support Fire Sprinkler Riser Damage @ EGA 3 Fire Sprinkler Riser Damage @ EGA 3 Yl. a ,}q i s i i Fire Sprinkler Riser Damage @ EGA 3 Overflow Corrosion Damage @ EGA As stated above,there repairs to the column bases and fire sprinkler riser should be completed as soon as possible to prevent further and more costly damage. Failure of these components has the potential to cause injury or property damage. Page 14 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 RECOMMENDATIONS East GA Hangar 1 For repairs and updates to the East GA Hangars 1, focus should be given to maintenance of the building envelope. Leaks through the concrete shell as well as repairs to the shell should take priority. The building shell needs to be water tight prior to any interior renovations. The existing interior partitions and ceilings on the north side should be completely demolished. A decision on future build out in this area can be made after this demolition work is completed. General re-grading of the area between Hangar 1 and the Signature Office will help improve drainage. A conceptual cost estimate is included below. A 20% contingency has been included. No additional costs such as design fees or permitting have been included. It is possible that quantities or unit costs could vary as repairs plans are developed. East GA Hangar 1 Renovation Estimate Recommended items 1-7 # ITEM QUANTITY UNITS COST TOTAL 1 Elastomeric Roof Coating 32250 SF $2 $64,500 2 _Patch Concrete 400 SF $50 $20,000 3 Repair Girts/Purlins as needed 1 LS $5,500 $5,500 4 _Demo Exsiting Walls&Ceilings 1 LS $7,500 $7,500 5 Haul out load&haul off demo materials 1 100 CY $35 $3,500 6 Replace exterior windows 150 SF $85 $12,750 7 _Skylight panels and framing 1 LS $3,500 $3,500 Subtotal $117,250 20%Contingency $23,450 Optional Items 8-9 8 Reconstruct Interior walls&Ceilings 1 LS $12,000 $12,000 9 Electrical rough in 1 LS $7,500 $7,500 Subtotal $19,500 20%Contingency $3,900 TOTAL $164,100 Page 15 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 East GA Hangar 2 (Ocean Air Center) For repairs and updates to the East GA Hangar 2, focus should be given to cleaning and painting the building's steel framing, repair of gutters and downspouts and repair of the doors and door tracks.These items will continue to deteriorate unless maintenance is performed and future repair costs will likely be higher. A conceptual cost estimate is included below. A 20% contingency has been included. No additional costs such as design fees or permitting have been included. It is possible that quantities or unit costs could vary as repairs plans are developed. East GA Hangar 2(OAC)Renovation Estimate Recommended items 1-7 ITEM QUANTITY UNITS COST TOTAL 1 Replace all gutter and trim 830 LF $15 $12,450 2 Replace Base Angle 150 LF $8 $1,200 3 Repair/Replace Bottom Wall Panels 300 SF $12 $3,600 4 Replace Rolling Door Tracks 1 LS $8,000 $8,000 5 Repair Rolling Doors 1 LS $9,000 $9,000 6 Clean and Paint Structural Framing 1 LS $15,000 $15,000 7 Structural Framing Repairs 1 LS $4,000 $4,000 Subtotal $53,250 20%Contingency $10,650 TOTAL $63,900 East GA Hangar 3 For repairs and updates to the East GA Hangar 3, focus should be given to the immediate structural deficiencies with the column bases and base plates and also the fire line riser. These are serious deficiencies which, if not addressed, could result in further damage to the structure and subsequently higher future repair costs. After the immediate structural issues are taken care of, attention can be given to cleaning and painting the building's steel framing, repair of gutters and downspouts and repair of the doors and door tracks. These items will continue to deteriorate unless maintenance is performed and future repair costs will likely be higher. A conceptual cost estimate is included below. A 20% contingency has been included. No additional costs such as design fees or permitting have been included.It is possible that quantities or unit costs could vary as repairs plans are developed. East GA Hangar 3(Signature) Renovation Estimate Recommended items 1-8 ITEM QUANTITY UNITS , COST TOTAL 1 Replace all gutter and trim 1260 LF $15 $18,900 2 Replace Base Angle 200 LF $8 $1,600 3 Repair/Replace Bottom Wall Panels 200 SF $12 $2,400 4 Replace Rolling Door Tracks 1 LS $12,000 $12,000 5 Repair Rolling Doors 1 LS $12,000 $12,000 6 Clean and Paint Structural Framing 1 LS $19,000 $19,000 7 Structural Framing Repairs 1 LS $12,000 $12,000 8 Fire line riser repairs 1 LS $8,000 $8,000 Subtotal $85,900 20%Contingency $17,180 TOTAL $103,080 Page 16 of 17 East GA Hangars 1-3 Structural Condition Assessment January 2011 Limitations and Closing The observations and recommendations provided herein are based on limited visual inspections and no destructive testing or invasive inspections were performed. These observations and recommendations are therefore limited to those features which could be directly observed through such techniques and all deficiencies(if present)may not be noted. PGAL appreciates the continued opportunity to serve the needs of Corpus Christi International Airport and we look forward to working with you in the future. Sincerely, 17‘ °Z44—. Jeffrey A.Talbott Director of Structural Design Page 17 of 17 EXHIBIT 4 Deferred Maintenance Items and Budget Terminal/Offices and Hangars 2, 3 and 4 Items Budgetary Cost Terminal/Offices: All rain gutters and damaged siding panels. TBD Repair offices roof damage if any. (Not visible) TBD Anchor A/C condensers to the slab. TBD Hangar#2: Structural Condition Assessment Report -Replace all gutters and trim $12,000 -Replace Base Angle $1,200 -Repair/Replace Bottom Wall Panels $3,600 -Replace Rolling Doors $8,000 -Clean and Paint Structural Framing (floor to ceiling) $15,000 -Structural Framing Repairs $4,000 Walk Through Inspection -Remove wild palm tree in parking lot and building siding panels. TBD -Repair hangar roof including offices. TBD -Corrosion control and paint hangar doors track railings. TBD -Replace/paint all damaged side paneling floor support railings. TBD -Replace all damaged panels between Dan GSE/Ocean Air and hangar. (Damaged at floor) TBD Hangar#3 & CCSA: Structural Condition Assessment Report -Replace all gutters and trim $18,900 -Replace Base Angle $1,600 -Repair/Replace Bottom Wall Panels $2,400 -Replace Rolling Door Tracks $12,000 -Repair Rolling Doors $12,000 -Clean and Paint Structural Framing (from floor to ceiling) $19,000 -Structural Framing Repairs $12,000 -Fire Line Riser Repairs $8,000 Walk Through Inspection -Repair hangar roof including offices. TBD -All doors and hinges need painting. TBD -Anchor A/C condensers to the slab TBD -Corrosion control and paint all side paneling support railings. TBD -Replace and paint all damaged side paneling floor support railings. TBD -Replace all stained ceiling tiles in office area 1st& 2nd floors. TBD -Repair and paint all damaged drywall in office area 1st& 2nd floors, stair well and restrooms. TBD -Repair Janitorial door and trim. TBD Page 1 of 2 EXHIBIT 4 Deferred Maintenance Items and Budget Terminal/Offices and Hangars 2, 3 and 4 -Repair or replace ceiling insulation at Civil Air Patrol offices. TBD -Replace lighting covers on light fixtures in offices and hallways. TBD -Replace all broken exterior light covers. TBD -Remove all wild growing plants that are not maintained. TBD -Fire Sprinkler header needs corrosion control, backflow device and bollards installed. TBD -Comply with NFPA 409 for Group II Facility pertaining to sprinkler System requirements TBD NOTES: (1) All Budgetary cost are estimates provided by PGAL Engineering at the time of Structural Condition Assessment. The Director or his designee will approve repair workmanship for all items. (2) Items corresponding to PGAL Structural Condition Assessment report are appended to this Lease as Exhibit 3. (3) Walk Through Inspection items were identified and agreed to by Lessee and Lessor as needing repairs or replacement. Page 2 of 2 EXHIBIT 5 Fees and Charges (as of Commencement Date*) Fuel Flowage Fee: $0.0625/gal Ramp Fees: Tie-Down (all aircraft): $25.00/day Remain Overnight (per night. On Ramp after 9 p.m.): Single Engine $20.00 Light Twin $25.00 Heavy Twin $30.00 Turbo Prop $40.00 Light Jets $50.00 Heavy Jets $100.00 Super Heavy Jets $125.00 Helicopter $30.00 Cabin Class Charter $250.00 "City Fees" Security Identification Badge Deposit: $100.00 Security Identification Badge Fee: $20.00 - $100.00 Security Identification Badge Replacement Fee: $100.00 reissue fee plus $20 ($120.00) Rental Car— not rented at Airport: ** $3.50/transaction day *All Fees and Charges may be adjusted by the Aviation Director periodically. ** Not applicable if a CFC has been assessed.