Report Prepared by: Rhett Williams, Airport Manager
Title
SUBJECT: Approval of Lease Agreement, in Form, Between General Services Administration on Behalf of the Transportation Security Administration and City of Merced for Use of Approximately 711 Rentable Square-Feet in the Merced Yosemite Regional Airport Terminal
REPORT IN BRIEF
Considers approving Lease Agreement between the City of Merced and General Services Administration (GSA). The GSA is representing the Transportation Security Administration (TSA) who is wanting to lease approximately 711 Rentable Square-Feet in the Merced Yosemite Regional Airport.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Lease Agreement between the General Services Administration and City of Merced, in form; and,
B. Authorizing the City Manager and City Attorney to make changes to the Lease Agreement without changing the base rates in the Agreement; and,
C. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve the agreement, as recommended by the Regional Airport Authority; or
2. Approve the agreement, subject to modification by City Council (identify specific items to amend in the motion); or
3. Deny; or,
4. Continue to a future City Council meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
City of Merced FY 2025-2026 Budget, Section 7, Economic Development - AIRPORT, GOALS, “Enter into new leases and agreements for provision of aviation related services to generate additional operating revenues.”
DISCUSSION
GSA/TSA presence is important for Merced Yosemite Regional Airport. The Department of Transportation (DOT) awarded Contour Airlines a four-year contract to provide commercial air service to Merced Yosemite Regional Airport as part of the Essential Air Service (EAS) program.
GSA/TSA functions as an essential airport tenant alongside the airline operator supporting annual growth and ensuring Merced Yosemite Regional Airport can meet federal aviation standards and maintain continued air service.
The presence of TSA positively reinforces airline partnerships, such as the DOT-awarded Contour Airlines service contract, by ensuring the airport can support secure, federally compliant commercial operations. The proposed term of the lease is for up to 10 years beginning July 1, 2026.
To operate from the new terminal, a Lease Agreement is required by the City of Merced and General Service Administration. A copy of the Lease Agreement, in form, is provided.
Key Term - Rent Schedule
Rentable Square Feet - 711
Uses - Information technology closet, storage, break room, training room, and office space.
10-Year Rent Schedule
|
Year |
Term Type |
Shell Rate (RSF) |
Operating Costs (RSF) |
Full Service Rate (RSF) |
Shell Annual Rent |
Operating Annual Rent |
Total Annual Rent |
|
1 |
Firm Term |
46.27 |
23.50 |
69.77 |
32,893.97 |
16,712.50 |
49,606.47 |
|
2 |
Firm Term |
47.66 |
23.50 |
71.16 |
33,878.26 |
16,712.50 |
50,590.76 |
|
3 |
Firm Term |
49.09 |
23.50 |
72.59 |
34,893.99 |
16,712.50 |
51,606.49 |
|
4 |
Firm Term |
50.56 |
23.50 |
74.06 |
35,941.76 |
16,712.50 |
52,654.26 |
|
5 |
Firm Term |
52.08 |
23.50 |
75.58 |
37,022.88 |
16,712.50 |
53,735.38 |
|
6 |
Non-Firm Term |
53.64 |
23.50 |
77.14 |
38,137.94 |
16,712.50 |
54,850.44 |
|
7 |
Non-Firm Term |
55.25 |
23.50 |
78.75 |
39,288.75 |
16,712.50 |
56,001.25 |
|
8 |
Non-Firm Term |
56.91 |
23.50 |
80.41 |
40,475.01 |
16,712.50 |
57,187.51 |
|
9 |
Non-Firm Term |
58.61 |
23.50 |
82.11 |
41,697.71 |
16,712.50 |
58,410.21 |
|
10 |
Non-Firm Term |
60.37 |
23.50 |
83.87 |
42,958.07 |
16,712.50 |
59,670.57 |
Passenger Benefit: Passengers flying on Contour Airlines from Merced Yosemite Regional Airport to Los Angeles International Airport (LAX) or Harry Reid International Airport (LAS) will be screened by the TSA. This will allow flyers to make connecting flights at LAX and LAS without going through the TSA again. GSA/TSA screening enables passengers to make seamless connections through major hubs such as LAX and LAS, improving the overall travel experience and increasing the airport’s attractiveness to travelers.
The ability to offer screened, connectable flights helps raise total passenger counts, which directly influences the level of FAA funding the airport may potentially qualify for. Elevating passenger numbers strengthens the airport’s long-term financial position.
Background
During its May 19, 2026, meeting, the Regional Airport Authority reviewed the proposed General Services Administration Lease Agreement and unanimously recommended approval of the agreement to the City Council.
IMPACT ON CITY RESOURCES
The lease revenue amount was included in the proposed FY 26-27 Fund 6003 Airport Operations budget.
ATTACHMENTS
1. Lease Agreement, in form, with GSA