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Hangar lease renewals in city’s best interest

As a 28-year Boulder City resident, 35-year pilot and six-year Airport Advisory Committee member, I feel it is important that Boulder City residents understand what’s going on at our airport with regard to hangars and land leases nearing expiration.

The hangars at the airport were built by, and are the property of, the owners. Back in the early 1990s, the city offered low ground lease rates in order to entice people to invest in the (then) new airport, build hangars and promote growth. This is common with Federal Aviation Administration-subsidized airports, as the FAA’s mission is to promote aviation. Most of these leases were for 30 years.

The language in the leases is very unclear as to what happens to the hangars at the end of the lease period. Some owners understood generally that if the city chooses not to renew leases, they might lose their hangar. Others understood (and still do) that the city expected that the hangars would reach the end of their useful life in 30 years and were to be removed at the end of the lease. I can assure you that no one planned on “giving” their hangar to the city.

Airport tenants, city staff, the Airport Advisory Committee and others have been meeting for at least the last 12 years to develop new lease agreements with longer terms and clearer language. In every instance, the city has been positive about extending or renewing leases. I can’t recall a single meeting wherein the city has expressed a desire to “take over” the hangars.

In 2015, the city hired a consulting firm to develop an “Airport Master Plan,” a requirement for continued funding from the FAA. Their plan, adopted by the city, calls for private hangar ownership. In late 2019, the city hired another consulting firm to provide another study regarding continued hangar ownership. This firm also concluded that it was in the city’s best interest to create a new lease agreement including fee increases and safety enhancements. The city even advertised this on its website and hired an attorney to draft a new lease agreement.

The city’s positive message has encouraged many owners to invest in upgrades to their hangars, and many newcomers have recently purchased hangars. If the city chooses now to “take over” the hangars, most owners will lose their investment. Had the city been clear all along that it did not intend to extend the leases, these folks would never have made these investments.

It is important to understand that our airport is funded largely by grants from the FAA, which has standards the airport must live by (look them up; they’re called grant assurances). One of the requirements is that the airport be as self-sustaining as possible. In other words, expenditures should not exceed income. The airport is also prohibited from charging fees, rentals, etc., amounting to more than what is required to operate the airport.

Luckily, our airport is self-sustaining. Income from land leases, fuel storage fees, fuel flowage fees, tie-down fees, etc., are sufficient to keep our airport in the black. This being the case, why would the city want to take over responsibility for owning, maintaining and renting 139 hangars?

There are future improvements requiring funding above and beyond the airport’s normal income. Most of these upgrades will be funded by the FAA, but some (around $250,000 over the next 10 years) will require funding from airport revenues. The city has been advised by Airport Advisory Committee and others that the best way to fund these projects is to renew private hangar land leases at double the current rate, which would put nearly $1 million into its airport improvement fund over the next 10 years.

This is a win-win for everyone. The hangar owners enjoy continued pride of ownership and airport community involvement. The city enjoys continued compliance with FAA grant assurances, a substantial increase in revenues and a better-cared-for airport, without all the liabilities and headaches associated with owning and renting dozens of 30-plus-year-old hangars.

Most airports in our region (California, Utah, Nevada, Arizona) — and all over the country — are choosing to renew leases with hangar owners in order to preserve and promote the aviation community. They see airport users as valuable contributors, proudly serving the community with medical flights, veterans flyovers, parade flyovers, Young Eagle flights, youth training, Scouting activities, air shows, etc. We hope Boulder City also makes the right choice.

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