Council Approves Aviation Co. Lease
Council Approves Aviation Co. Lease
At its Sept. 5 meeting, the Alameda City Council approved a lease agreement with Pyka Inc. for Building 39 located at 950 West Tower Ave. at Alameda Point. The ordinance passed with a 4-1 vote. Councilmember Trish Herrera Spencer represented the lone dissenting vote.
Pyka designs and manufactures of autonomous electric airplanes. With the lease, Pyka will develop electric aircrafts out of the vacant 106,000-square-foot building. The lease is for eight years, with a three-year extension option. Pyka will pay $100,700 per month ($1,208,400 per year) for the first two years. The rent will increase 3.5 percent by year three. In total, Pyka will pay $14 million if the three-year extension is used.
“The revenues from these leases are critical to our ability to maintain Alameda Point, increase security and all the other needs at Alameda Point, said Andrew Thomas, City of Alameda Planning, Building and Transportation director, who also served as the interim Base Reuse and Economic Development Department director during negotiations and planning with Pyka.
Thomas said Pyka was the perfect fit for Alameda Point.
“This airplane hangar was developed by the U.S. Navy to use, develop and maintain aircraft. So, [Pyka] is pretty appropriate for this building,” said Thomas.
The lease agreement includes approximately 50-foot-wide areas to each side of the building. The area can be fenced for secure storage. The area, one side adjacent to Saratoga Street, the other next to Lexington Street, will be used to load aircrafts onto shipping containers for transport.
Spencer was concerned with the potential number of containers and how they might obstruct views. Representatives from Pyka said they did not know how many containers they would have at the site but said the company would try to move containers promptly.
“We would be renting containers so the longer we have them the more we would pay,” said Pyka COO Chuma Ogunwole. “We don’t want them just sitting around.”
Thomas said that storage areas would not block the view corridors on Lexington and Saratoga streets.
Another concern for the council was how Pyka aircrafts are used by its customers. Pyka planes are used by customers in Latin America for aerial application or crop dusting, spraying products on agricultural. This can release harmful toxins into the atmosphere.
Councilmember Tracy Jensen said one Pyka customer has been reported to spray a product that includes Mancozeb, a fungicide that is banned by the European Union. Though Pyka does not work with pesticides, the company said their mission is to lessen the number of harmful chemicals used by farmers.
“Producers came to us and told us that they needed a precision tool, to reduce the amount of inputs they use for their products,” said Ogunwole. “Making it cheaper is so key to allowing them to use more organics versus synthetics. Organics are cost prohibitive for a lot of producers around the world. Unfortunately, organics, while effective, need to be sprayed more frequently. Electric aviation that are much cheaper to operate and that are autonomous will allow producers to use organics more frequently than synthetics.”
Mayor Marilyn Ezzy Ashcraft wanted assurance from Pyka that they would use their research and development (R&D) budget for more non-agricultural purposes. In the original lease agreement, one provision included that by the sixth and seventh years of the agreement, Pyka could not use more than 50 percent of their research and development spending on agricultural purposes or they would not be eligible for the three-year extension. Ashcraft wanted an assurance that 25 percent of that 50 percent R&D budget be on organic agricultural.
Pyka could not guarantee that because they do not stipulate to customers what type of crop spray they use. So they offered to make 60 percent of their R&D budget spend on nonagricultural purposes by year seven of the lease, which the council agreed.
Pyka makes autonomous electric planes for agriculture and cargo transportation. They plan to make aircraft for mosquito abatement, firefighting and passenger transportation in the future, according to Ogunwole. Pyka will build three cargo and agricultural spray planes each by the end of the year. Their goal is to make about 24 planes next year. Their ultimate goal is to make and transport 200 to 300 planes a year.
Pyka will build planes at the Alameda site but will not test or fly the planes in Alameda.