The 4-acre parcel of property at the southeast end of Auburn’s Municipal Airport might not seem a big deal to the guy on the street who, if he thinks about the subject at all, may consider the airport a mere noise maker.
But that bit of vacant land, the last readily developable parcel on the airport’s southeast end, is now being considered as the site for a future 35,000-square-foot enclosed hangar.
The most recent Washington State Department of Transportation (WSDOT) Aviation Economic Impact Study reported the Auburn Municipal Airport as generating 232 jobs, and adding $43 million to the local economy. And hangar leases alone bring in 90 percent of the self-sustaining airport’s revenue.
“I’ll toot that horn as much as I can to anyone who’ll listen,” Airport Manager Tim Mensonides declared to the Auburn City Council during its study session on Monday, July 22.
It was a potential lease with S50 Hangars LLC that brought Mensonides and Josh Arndt, the city’s real property analyst, to that Auburn City Council work session.
S50 Hangars LLC operates varying lines of businesses, most of them in the aeronautical industry. The lease would see it either owning the 4-acre parcel of land or leasing it from the airport and then building the enclosed hangar itself.
Here are the requirements of the potential land lease as provided by Arndt.
Approximately 4-acres for a maximum 50-year term — a 5-year preliminary term and a 45-year remaining term;
A minimum development requirement of 35,000 square feet of hangar development by the end of the preliminary term. But if that minimum development is not achieved, the lease may be terminated, and control of the land returned to the airport;
Initial rent of $11,284, payable within 15 days of lease commencement, constituting a pre-paid rent of the first three years of the lease;
Minimum $113,000 annual rent beginning in the fourth year;
Rent adjustments — annual CPI adjustments — Fair Market Value (“FMV”) adjustments in calendar years ending in “0” or “5.”
Auburn’s is not the only airport, local or national, with a 15-year wait list for enclosed hangar space.
The airport owns and operates hangars via building leases and land leases, Mensonides noted. When the airport leases a hangar and retains ownership, the FAA provides funds. Indeed, the FAA funded 90 percent of the recent $4 million airport runway project. The caveat is that when an entity like the airport takes federal money, the federal government attaches purse strings, known in the aviation industry as federal grant assurances.
Part of the deal with land leases is the FAA doesn’t allow an airport to lease property longer than 50 years. It does that because it wants the airport /city to retain its ownership of the airport, Mensonides said.
“They (the FAA) think that after 50 years, you’re losing power, you’re losing ownership of the airport, and they don’t want to turn into non-aeronautical, non-aircraft storage of cars, etc., and sooner or later, part of a deal for receiving funds is to keep that airport open as an airport supporting the national air space system,” Mensonides said.
Of course, there are additional caveats. One of these is that the FAA requires the airport to charge fair market value, and it’s on the airport/city to determine how fair market value is assessed. It accomplishes this feat through an appraisal of the land every five years, and then every year in between it requires a CPI update.
“We have done extensive research over the years, and while it would be ideal for the airport to build, we do not have the budget to do so, to develop the hangar ourselves, whether that’s through a low-interest loan or bond. It just isn’t feasible. We have looked at multiple ways and spent extensive time trying to do that. So we believe the second best thing is to do a long-term lease. It’s possible we could take over the building at the end of the lease, extend a new lease, or third remove the hangar and turn back into vacant land,” Mensonides said.
File photo The City of Auburn on Monday voted to accept FAA grant funding for the upgrading of existing hangars at the Auburn Municipal Airport to enclosed T-hangars to address an outsized waiting time for the structures.
