cover
TO: The Mayor and City Council
FROM: The Mayor's Office
The Law Department
The Airport Division
DATE: July 23, 2021
SUBJECT:
The acquisition of the assets of Lumanair, Inc. ("Lumanair") by Carver Aero, LLC. ("Carver").
PURPOSE:
To grant the City's consent of the assignment of Lumanair lease at the Aurora Municipal Airport to Carver.
BACKGROUND:
Lumanair is a long-time tenant at Aurora Municipal Airport and one of its two fixed base operators (FBOs) providing fuel to customers.
In the summer of 2020, the City and Lumanair amicably resolved years-long litigation arising from the City's insistence that Lumanair replace its existing below-ground fuel farm with an above-ground fuel farm in compliance with regulations known as "Minimum Standards" adopted by the City Council. Lumanair, for its part, had argued that because the City adopted its Minimum Standards after Lumanair's existing lease was already in effect, the City could not use these Minimum Standards to effectively and unilaterally modify its lease.
To resolve this issue, the City and Lumanair entered into an Amended and Restated Ground Lease in August 2020, which mirrors the provisions of the City's lease with the other airport FBO and required Lumanair to replace its existing fuel farm by August 1, 2022 and comply with all other Minimum Standards in place at the airport. Lumanair was also required to make a minimum of $1,200,000 in capital improvements at the airport during the first five-year term of the new lease, including $1,000,000 in the first year.
For the past year, Lumanair has been in negotiations to sell its assets (including its rights under the lease) to Carver, which operates as an FBO at four other airports in the Midwest. Those negotiations have concluded, and both parties would like to close the sale as soon as possible. Under the terms of Lumanair's lease, the City's approval of an assignment is required, but the City may not unreasonably withhold its consent.
DISCUSSION:
As a condition of the City granting its consent to the assignment, Carver, must, within ninety (90) days of the assignment, negotiate a new lease with the City and comply with all of the conditions set forth in the Minimum Standards. In the unlikely event a new lease cannot be negotiated, Carver will need to fully comply with all of the conditions of the existing lease it is assuming and be liable to the City for all of Lumanair's existing duties and obligations under the lease by 2024. During the ninety-day negotiation period, the City would not deem Carver to be in breach of the Lease's capital expenditure requirement. This period could be extended at the City's option for good cause and if necessary to finalize details of a new lease.
As of this date, both the City and Carver anticipate that a new lease will contemplate a substantial upgrade and modernization of the existing Lumanair facilities and that Carver will make a significant capital investment to accomplish these improvements.
IMPACT STATEMENT:
Approval of the assignment is consistent with the City's obligations under its lease with Lumanair and should not be unreasonably withheld.
RECOMMENDATIONS:
That the City Council approve Lumanair's proposed assignment of its lease to Carver.
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution consenting to the assignment of an Amended and Restated Ground Lease of Real Estate at the Aurora Municipal Airport.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City owns real property located in the Village of Sugar Grove and in the unincorporated area of Kane County which it operates as an airport known as the Aurora Municipal Airport ("Airport"); and
WHEREAS, on or about August 1, 2020, the City entered into an amended and restated ground lease of real estate for certain property at the Airport with Lumanair, Inc. ("Lease"). A copy of said Lease is attached to this Resolution as Exhibit A; and
WHEREAS, pursuant to Section 18 of the Lease, Lumanair, Inc. is authorized to assign its obligations and rights thereunder if the City provides its prior written consent; and
WHEREAS, Lumanair, Inc. has notified the City that it desires to exercise its rights under Section 18 of the Lease to assign all of its obligations and rights thereunder to Carver Aero, LLC.; and
WHEREAS, Carver Aero, LLC. is amenable to such assignment, and has agreed, as a condition of the City granting its approval of the assignment, to negotiate a new lease with the City within ninety (90) days and be bound by all of the requirements of the existing lease as well as the Minimum Standards promulgated by the City Council in effect at the Airport;
WHEREAS, the City Council finds that the obligations of Carver Aero, LLC. upon assignment as set forth in Exhibit B of this Resolution are appropriate, reasonable, adequately justify the City's consent to said assignment;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the assignment of the rights and obligations of Lumanair Inc, to Carver Aero, LLC. under the lease shall be and hereby is approved; and further
BE IT RESOLVED, that the Mayor shall be and hereby is directed to execute Exhibit B on behalf of the City and deliver the same to Lumanair, Inc. and Carver Aero, LLC.; and further
BE IT RESOLVED, that the Corporation Counsel shall be and hereby is authorized and directed to commence negotiations with Carver Aero, LLC. forthwith as to the formation of a new lease consistent with Paragraph 7 of Exhibit B.