Ontario International Airport will lease nearly 200 acres of surplus property

The land, not suitable for airport purposes, will be the site of a major industrial project, according to airport officials. An environmental matter must be dealt with first.

 

 

Ontario International Airport’s governing body will lease nearly 200 acres of surplus property to a joint venture company that reportedly plans to build warehouses on the parcel.

The move is expected to generate millions of dollars for the airport, which is undergoing a renaissance as it enters it sixth year of local control.

But before the agreement becomes official it may have to overcome an environmental hurdle: the area proposed for development is home to a rare group of nesting, burrowing owls considered by state and federal agencies to be a threatened species, according to a local environmental group.

Despite that unresolved matter, the Ontario International Airport Authority has agreed to lease the land to CanAm Ontario LLC, a venture formed by USAA Real Estate Co. in San Antonio, Texas and McDonald Property Group of Newport Beach, according to airport officials.

That agreement, reached in December, is one of several major real estate transactions the airport has entered into since ownership of the 1,700-acre was transferred from Los Angeles World Airports – owner of Los Angeles International Airport – to Ontario.

The authority’s five-member board of commissioners 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,” according to a statement released by the authority.

The 55-year lease is expected to generate about $275 million during its first 10 years, money that will be used to pay for improvements to the airport, specifically safety, security and infrastructure projects.

That in turn, will help keep airline costs in check and make it easier for Ontario International to attract more domestic and and international flights, according to the statement.

“The property is zoned for industrial use, which means it can’t really be part of the airport,” said Alan D. Wapner, board president. “This issue existed when [Los Angeles World Airports] owned the airport.”

The deal calls for the developers to make a non-refundable $10 million deposit to the airport authority, which oversees day-to-day operations at Ontario International, including its development and marketing.

CanAm Ontario was one of 17 companies that bid on the project, all which were managed by CBRE Group Inc. in Los Angeles.

Both companies that make up the partnership buy, develop and manage high-end commercial properties. USAA Real Estate manages about $30 billon in assets worldwide, including e-commerce logistics and distribution centers.

McDonald Property Group has developed an estimated 12 million square feet of industrial properties in Southern California, including three million square feet in the Inland Empire. Its local “signature project” is Thoroughbred Business Park, a two-million-square-foot development in Ontario, according to the statement.

The airport authority will receive about $25 million in rental revenue during the first year of the agreement, which will begin once CanAm Ontario secures local entitlement and environmental approvals for their project.

The pact is expected to increase in five-year increments, to a $90.6 million per year in the final five years of the agreement.

Right now, the lease agreement’s estimated value is $625 million.

Airports selling property they can’t use for aviation is not new, but the the practice has gained notoriety within the aviation industry when the pandemic caused airports to start losing passengers and revenue.

COVID-19 reduced commercial airline traffic by more than one billion passengers in 2020, a decline of 63.3 percent compared with 2019, according to Airports Council International, a trade group in Montreal that represents 1,950 airports in 185 countries.

A January, 2021 study by CBRE defines “non-aeronautical land development” as developing and leasing airport-owned land that can’t be used for aviation for commercial uses.

The five most common forms of that practice are industrial/distribution centers, light manufacturing, aerospace/defense, professional and technical services and hotel and retail amenities, according to CBRE.

Worldwide, about 40 percent of all revenue generated by commercial airports comes from sources not associated with aviation, according to 2019 study by the airports council.

To remain profitable, all commercial airports, regardless of their size, should have a plan for developing non-aeronautical land that can be implemented quickly, according to Karlen Beitman, mountain-northwest regional manager with CBRE.

Airport property can become unsuitable for aviation use for many reasons. Land may have been purchased for a runway that isn’t needed, or a change in landing patterns might cause some property to become unusable.

“Airports need [revenue sources] that aren’t related to aviation, because sometimes flights slow down,” said Beitman, a co-author of last year’s report. “When that happens, you still have to be able to turn the lights on.”

The agreement between the airport authority and CanAm Ontario has hit a possible snag with burrowing owl habitat, Wapner admitted.

“That issue will be resolved,” said Wapner, who in addition to his place on the authority’s board is also Ontario’s Mayor pro tem. “It will not keep this project from happening.”

Burrowing owls live in dry, open areas with little vegetation, and land development is threatening their habitats is some places, according to the Urban Bird Foundation & Burrowing Owl Conservation Network

The U.S. Fish and Wildlife Service has classified them a “bird of conservation concern” nationally and a “species of concern” in nine states, including California.

The Pomona Valley Audubon Society believes the issue at Ontario International Airport can be resolved, perhaps without lawsuits being filed, said Michael Klein, spokesman for the organization.

“Something needs to be done,” Klein said. “They are definitely a threatened species.”