Those who thought that discussion of the contentious issue of leases for general aviation hangars at the Boulder City Municipal Airport was over, at least until the latter part of 2024 (including staff of the BCR), were disabused of that notion when an item relating to the 28 city-owned hangars appeared on the agenda for this week’s city council meeting.
To review, in a series of actions over the past several months, the council voted to flatten rates and extend low-cost ground leases for most of the hangars rather than exercise their contractual rights to reversion under which those hangars —all of which were the subjects of leases which had expired —would have become property of the city and eligible for much higher cost building lease rates.
However, complicating the issue is the fact that in 2020, a previous version of the City Council voted to exercise reversion rights on a group of 28 hangars whose leases had expired.
This leaves the city with a novel situation in which almost all of the hangars are (or will be when they expire) subject to extended ground leases for a period of 10 years plus an option for an additional 10 years but there is a small group of city-owned hangars which are all subject to month-to-month rental.
Councilmember Cokie Booth requested that the council consider and discuss a plan to convert the month-to-month hangars into a lease for a longer period after she said she had been approached by those renting the city-owned hangars who expressed a desire for a longer-term arrangement.
When discussion was opened, Councilmember Sherri Jorgensen said that she was supportive of an arrangement in which those hangar leases could be extended on a basis of a three-year lease with a two-year option for extension. She expressed that the time limit she was interested in would negate the need for a request-for-proposal procedure which would open the leases up for being taken over by another party who might be willing to pay more.
After City Manager Taylour Tedder said that the process would be easier if all 28 hangar owners requested an extension as a block, Jorgensen said she would be interested in a meeting between the city and all 28 of the people currently leasing the city-owned hangars.
The reason for a meeting would be to educate those leasing the 28 hangars that opening the process would entail a new appraisal, which might actually result in an increase in the cost of the current rents.
After Councilmember Steve Walton asked for, and received, clarification from Tedder that these hangars are a separate issue from the ones discussed over the past several months as they are already city property and are rented out on a month-to-month basis.
Tedder also confirmed that, as alluded to by Jorgensen, there is an exception in the Nevada Revised Statutes that would allow the city to avoid putting the potential hangar leases out to competitive bid as long as the leases were for no more than three years with a two-year option for renewal.
Walton said that he would like to see an appraisal as the first step, saying that if the appraisal called for a lease rate that was higher than the current month-to-month rent, then those currently renting the hangars might be less than interested in a longer-term lease.
Tedder noted that an appraisal from 2022 suggested a rate of $5.71 cents per square foot for a gross lease in which the city was responsible for maintenance and $4.63 per square foot for a triple-net lease under which the lease holder would be responsible for maintenance. By way of comparison, the ground lease rate for the rest of the hangers is less than 70 cents per square foot. The 28 city-owned hangars are currently rented at a rate of $4.56 per square foot.
Walton lent his support for a town-hall-style meeting with those renting the 28 city-owned hangars currently to gauge interest in changing the arrangement.
The council voted unanimously to direct city staff to get a new appraisal. While Booth suggested getting an appraisal and only after that came back, reach out for a town hall meeting, Mayor Joe Hardy noted that any appraisal would be public record and that having input from those currently renting the hangars would be helpful before the council considered making any changes. Staff was directed to begin outreach to those currently renting the hangars as well as seeking a new appraisal.