Southern California’s Ontario International Airport Authority authorizes major ground lease and development agreement for surplus property

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The Boot Property at Ontario International Airport, highlighted in blue. | Courtesy Photo of Ontario International Airport

55-year lease will provide revenue stream for airport projects while maintaining low costs for airlines

The Ontario International Airport Authority (OIAA) Commission voted unanimously on December 23rd to authorize a Development and Entitlement Agreement that will lead to a ground lease for approximately 198 acres of surplus property at the Southern California airport. The 55-year lease will generate approximately $275 million over the first 10 years, which will support ongoing airport improvements while keeping costs down for airlines.

The OIAA determined the property, located east of Haven Avenue, north of Jurupa Avenue, south of Airport Drive and west of Carnegie Avenue, is unsuited for typical airport use, making it surplus to the airport’s aviation/aeronautical needs. (See accompanying ONT aerial photo showing surplus property to be leased).

“We are pleased and proud to move forward with the first of several major real estate transactions to monetize vacant property since the airport was transferred to local control in November 2016,” said Alan D. Wapner, Mayor pro Tem of the City of Ontario and President of the OIAA Board of Commissioners.

“As envisioned in the OIAA strategic business plan, the ongoing revenue stream will help ONT fund vital safety, security and infrastructure projects while keeping airport costs to airlines low. As a result, ONT will become even more attractive for airlines to inaugurate and increase flight schedules.”

CanAm Ontario LLC, a venture formed by San Antonio, TX-based USAA Real Estate Company and McDonald Property Group of Newport Beach, CA, will develop the vacant property for industrial use in compliance with the Airport Compatibility Plan required under State Law.

Steven Ames, Managing Director-Investments, USAA Real Estate Company, sounded a note of optimism following the Board’s action.

“USAA is excited to enter into another large-scale industrial project in the Inland Empire with McDonald Property Group. Given our long track record of success with McDonald, it is our vision that the Ontario International Airport project will continue in that tradition and become one of the most prominent industrial/logistics developments in the region,” Ames said.

CanAm Ontario was selected following a competitive process which began with 17 bidders managed by CBRE Group, Inc., a global leader in real estate services and investment headquartered in Los Angeles.

The deal calls for a non-refundable $10 million deposit to OIAA. After allowing time for CanAm Ontario to obtain local jurisdictional entitlement and environmental approvals, rental revenue to the OIAA will start at $25 million in the first year, increasing in five-year increments, resulting in revenue of $90.6 per year in the final five years. The net present value of the agreement is $625 million.

“The air carriers at Ontario support efforts that keep operating costs low, which benefits anyone who uses the airport,” said Trey Hettinger, Chair of the ONT Airline Affairs Committee representing the Signatory passenger and cargo airlines operating at ONT. “This is an example of the Authority’s continued efforts to provide funding for airport improvements while reducing airline costs”.

Airport officials noted that special consideration was given to ensure the transaction complies with applicable federal laws and Federal Aviation Administration policies and provide lease revenue exceeding fair market value as determined by three independent appraisals. Federal law requires that revenues generated by the airport be used for airport purposes.

Ontario International Airport | Contributed

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