Title
Consider a memorandum/resolution approving the Build-To-Suit Lease Agreement with CSI Aviation, Inc.
Body
DATE: May 6, 2025
TO: Kent Cagle, City Manager
FROM: Mike Wilson, Executive Director of Aviation
SUBJECT: Build-To-Suit Lease Agreement with CSI Aviation, Inc.
BACKGROUND AND FINDINGS:
CSI Aviation, Inc. (CSI) has been a tenant of the Killeen Regional Airport (KRA) since 2018, and currently leases two (2) corporate aircraft hangars at KRA. Over the past three (3) years, CSI has gradually moved various elements of their company from Albuquerque, New Mexico to the Killeen Regional Airport. CSI currently has sixty-four (64) full time employees working on-site at KRA, with several other employees assigned to Killeen but working remotely and/or splitting time between Killeen and their Albuquerque office. During this time, Aviation staff began negotiating with CSI concerning relocating their corporate headquarters from Albuquerque, New Mexico to the City of Killeen, contingent on the construction and availability of adequate office space near Killeen Regional Airport. CSI Aviation anticipates that the relocation will permit the creation of at least thirty-five (35) full-time additional positions with an average salary of $95,000 within two years from occupying the new building. CSI Aviation is a vital asset to the Killeen Regional Airport by providing essential aviation services and a significant amount of revenue through hangar rent and fuel sales. Additionally, the City of Killeen would benefit from the creation of over thirty-five (35) high to medium salary jobs.
Based on these discussions with CSI, the Aviation Department developed an RFQ for Design and Construction Services for a Design/Build Project at the Killeen Regional Airport. The RFQ first advertised on October 13, 2024, and closed on November 7, 2024. Synergy Commercial Construction was selected to begin the discussions for a design/build project for an Office Building for the Killeen Regional Airport.
Synergy Construction held several meetings with CSI and Aviation staff to determine the design requirements of the building and the various site requirements. Several conceptional plans were presented and discussed with CSI and Aviation staff. Based on these meetings and discussions, Synergy developed and proposed a price for the building of $5,184,833.30.
Based on Synergy’s proposal, staff has negotiated a lease agreement with CSI Aviation, Inc. to lease a build-to-suit, 9,000 square foot office building, located on a City-owned three (3) acre site adjacent to the Killeen Regional Airport.
The term of the lease agreement is for a period of 10 years and will automatically renew for an additional 10 years.
THE ALTERNATIVES CONSIDERED:
N/A
Which alternative is recommended? Why?
N/A
CONFORMITY TO CITY POLICY:
This item conforms with state and local policies.
As required by Section 145 of the City Charter, if authorized, the lease shall not be effective until thirty (30) days have elapsed from the date of this resolution.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
The revenue for fiscal year (FY) 2025 is $0.00.
Beginning on the Commencement Date, June 1, 2026, the Minimum Guaranteed Rent will be $22,500 per month. Beginning on the first anniversary, and on every anniversary for the duration of the Initial Term, the amount will increase by 3%.
Is this a one-time or recurring revenue/expenditure?
Recurring
Is this revenue/expenditure budgeted?
No. Revenues will be deposited in the KRA enterprise fund account 525-46720-600-601-000000 - Office Space Lease in FY 2026.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
Revenue for the lease will be included in the FY 2026 budget.
RECOMMENDATION:
City Council approve the Build-to-Suit Lease Agreement with CSI Aviation, Inc. and authorize the City Manager to execute same. Additionally, authorize the City Manager to execute all addendums and lease actions to the agreement, including termination, to the extent allowed by the City Charter and the laws of the State of Texas.
DEPARTMENTAL CLEARANCES:
Purchasing
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Lease Agreement
Certificate of Interested Parties
Presentation