75 Year hangar lease

[Kent Ashton]

RAHers
Representative Steve Pearce (R-NM) introduced a bill in March (HR1117)
to require that federally-assisted airports grant a 75 year lease to a
person willing to construct a hangar on the airport. Current federal law
states that the lease must be a "long-term" lease but doesn't specify any
term. It's in our interest to get the longest lease we can obtain.
Pearce has no co-sponsors for the bill, yet.
Urge your representative to support HR1117. You can find out how to
write/fax your representative at http://www.house.gov/writerep/

--Kent Ashton

[Kyle Boatright]

"Kent Ashton" > wrote in message
...
> RAHers
> Representative Steve Pearce (R-NM) introduced a bill in March (HR1117)
> to require that federally-assisted airports grant a 75 year lease to a
> person willing to construct a hangar on the airport. Current federal law
> states that the lease must be a "long-term" lease but doesn't specify any
> term. It's in our interest to get the longest lease we can obtain.
> Pearce has no co-sponsors for the bill, yet.
> Urge your representative to support HR1117. You can find out how to
> write/fax your representative at http://www.house.gov/writerep/
>
> --Kent Ashton

I'd be very concerned if my only option was to sign a 75 year lease. 75
years is well beyond the remaining life expectancy of anyone who would have
the wherewithal to sign such a lease. It seems to make more sense to have a
20 year lease with successive 5 or 10 year renewal options.

KB

[Kent Ashton]

You may not understand the situation. We're talking about leasing
ground, constructing a hangar and being able owning a hangar for 75 years,
or sell it to another person after say, 25 years. If you sold it after 25
years, you'd get a substantially higher price.
As it is now in many places, after 20-25 years the whole thing belongs
to the airport. You built the hangar but all you have left after 25 years
is the right to lease it from the airport.
With Rep. Pearce's bill, you get 75 years to amortize your investment.
You'd probably make money on the deal.
--Kent

> From: "Kyle Boatright" >
>> Representative Steve Pearce (R-NM) introduced a bill in March (HR1117)
>> to require that federally-assisted airports grant a 75 year lease to a
>> person willing to construct a hangar on the airport
>
> I'd be very concerned if my only option was to sign a 75 year lease. 75
> years is well beyond the remaining life expectancy of anyone who would have
> the wherewithal to sign such a lease. It seems to make more sense to have a
> 20 year lease with successive 5 or 10 year renewal options.
>
> KB
>
>

[abripl]

I just purchased a hangar from anothe person with remaining 2 year
"ground" lease from the city. The city simply renegotiates a new lease
at the end of the term. They can theoretically take the hangar over at
any time if need be but have to compensate me at a reasonable rate for
the "improvements". The hangar is about 30 years old and there is no
reason the city would take over the space unless they need to
re-construct the whole airport and in that case would likely compensate
me for a relocation.

Are there any situations where normal 5-10 year leases have caused
problems?

[Kent Ashton]

You are not looking at it from the viewpoint of the original builder of
the hangar.
What's better for the original hangar-builder: to build a hangar that
becomes the property of the airport after 30 years, or to build a hangar
that becomes the property of the airport after 75 years?
Clearly, the right to own the hangar for 75 years is preferable. If the
original builder chooses to sell it after 10, or 30 years with 60 or 40
years remaining on the land lease, it still has considerable value as a
structure.
What did you pay the hangar builder in your case? I would guess that
you paid a relatively low price to the original hangar builder because, with
only two years before the hangar becomes the property of the airport, he no
longer had much of a building to sell you. You simply bought the right to
lease space in this airport-owned hangar. That's OK for you, but the
builder lost a lot of money. That's why the right to lease space for 75
years is important.
Moreover, if the airport needed to relocate you, the airport could
likely move you out at the end of your lease term and not owe you a thing.
They would be fools to pay you for a hangar and land that THEY now own.
--Kent



> From: "abripl" >
> Subject: Re: 75 Year hangar lease
>
> I just purchased a hangar from anothe person with remaining 2 year
> "ground" lease from the city. The city simply renegotiates a new lease
> at the end of the term. They can theoretically take the hangar over at
> any time if need be but have to compensate me at a reasonable rate for
> the "improvements". The hangar is about 30 years old and there is no
> reason the city would take over the space unless they need to
> re-construct the whole airport and in that case would likely compensate
> me for a relocation.
>
> Are there any situations where normal 5-10 year leases have caused
> problems?
>

[abripl]

" ...I would guess that
you paid a relatively low price to the original hangar builder because,
with only two years before the hangar becomes the property of the
airport, he no longer had much of a building to sell you...."

Thats not the case at all. This hangar has had several owners already
and never became the property of the city (over its 30 year life) nor
do they intend to acquire it. It explicitly says in the lease that if
they did they would have to compensate the leasee at a fair value for
the "improvements". There is no intention here by the city to sieze any
hangar for "profit". The hangar strucure owners are taxpayers and would
raise a rucus if that was the case.

[abripl]

BTW. I did ask for one real example of a problem with normal 5-10 year
leases. Are we trying to fix a problem that does not exist?

[Darrel Toepfer]

abripl wrote:

> Are there any situations where normal 5-10 year leases have caused
> problems?

With and airport receiving support funding from the FAA, the feds frown
on leases over 25 years...

[W P Dixon]

Hawkins County Airport, TN. was doing a thing that you built a hangar and
you used it for 20 years, then it becomes property of the airport....which
is county owned. Yep, they do get the hangar after 20 years ! I guess it's
not to bad a deal. You get free land rent for 20 years, and the airport then
gets a 15,000-20,000 dollar hangar.

Patrick

[Kent Ashton]

If your airport doesn't takeover ownership of your hangar after 20-30
years, they you're lucky. A lot of them do, that's why the right to own the
hangar and lease the land for 75 years (Republican Steve Pearce's (R-NM)
proposed legislation) is good.
Does your lease permit the airport to terminate your land lease without
taking your hangar? That's also possible. They don't buy the improvements
from you. They simply say, your land lease is terminated and you have 60
days to remove your improvements.
--Kent

> From: "abripl" >
>
> " ...I would guess that
> you paid a relatively low price to the original hangar builder because,
> with only two years before the hangar becomes the property of the
> airport, he no longer had much of a building to sell you...."
>
> Thats not the case at all. This hangar has had several owners already
> and never became the property of the city (over its 30 year life) nor
> do they intend to acquire it. It explicitly says in the lease that if
> they did they would have to compensate the leasee at a fair value for
> the "improvements". There is no intention here by the city to sieze any
> hangar for "profit". The hangar strucure owners are taxpayers and would
> raise a rucus if that was the case.
>

[Kent Ashton]

Here in Salisbury, NC, the owners of portable hangars were just told they
had 30 days to remove their hangars. They leased land without the right to
a long term lease. For the moment the County has relented but without that
long-term lease, the County is just being nice.

At McClellan-Palomar, California, the airport owner told some 100 hangar
leasees that the hangars they leased were going to be torn down and they had
to find some other airport to operate from. These people may not have built
these hangars but the lesson is the same. Unless you have a long term lease
to airport property, your lease can, and might be terminated.

http://www.palomarairportassociation.com/index.php?module=pagemaster&PAGE_us
er_op=view_page&PAGE_id=13&MMN_position=19:19

--Kent


> From: "abripl" >
> Organization: http://groups.google.com
> Newsgroups: rec.aviation.homebuilt
> Date: 30 Mar 2005 17:54:37 -0800
> Subject: Re: 75 Year hangar lease
>
> BTW. I did ask for one real example of a problem with normal 5-10 year
> leases. Are we trying to fix a problem that does not exist?
>

[Kent Ashton]

Vision 100 - Century of Aviation Reauthorization Act enacted last year,
requires

(21) if the airport owner or operator and a person who
owns an aircraft agree that a hangar is to be constructed at the
airport for the aircraft at the aircraft owner's expense, the
airport owner or operator will grant to the aircraft owner for
the hangar a long-term lease that is subject to such terms and
conditions on the hangar as the airport owner or operator may
impose.''
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_public_la
ws&docid=f:publ176.108

Problem is, the act doesn't say what a long-term lease is.
Representative Pearce (R-NM) proposed a new law to say that a long-term
lease is 75 years. I'm suggesting we should support that.
--Kent

> From: Darrel Toepfer >
>
>> Are there any situations where normal 5-10 year leases have caused
>> problems?
>
> With and airport receiving support funding from the FAA, the feds frown
> on leases over 25 years...

[Kent Ashton]

Patrick, Patrick. It's a good deal--for the Airport. You build a hangar at
your expense, then you give it to the government after 20 years. If you
could own it for 75 years, you would have an opportunity to sell it to
somebody after you lost your medical. ;-)
--Kent

> From: "W P Dixon" >
> Organization: Internet News Service
> Newsgroups: rec.aviation.homebuilt
> Date: Wed, 30 Mar 2005 22:43:10 -0500
> Subject: Re: 75 Year hangar lease
>
> Hawkins County Airport, TN. was doing a thing that you built a hangar and
> you used it for 20 years, then it becomes property of the airport....which
> is county owned. Yep, they do get the hangar after 20 years ! I guess it's
> not to bad a deal. You get free land rent for 20 years, and the airport then
> gets a 15,000-20,000 dollar hangar.
>
> Patrick
>

[W P Dixon]

"Kent Ashton" > wrote in message
...

> Patrick, Patrick. It's a good deal--for the Airport.

Oh I don't really think it is a good deal either, but it is the deal you
get. Myself I do not have that kind of money just to give the local
government,...they should build hangars from all the taxes they raise, and
pilots should be able to use them for free; since our taxes paid for them in
the first place. But that would be to much like a perfect world wouldn't it?
;)

Patrick

[TaxSrv]

Terms of a ground lease is a factor, but not the major problem. A
building merely housing airplanes is not the "highest and best use" of
airport property, as they say in the business. The reason is that we
don't like paying much in rents, even if we own a $400K airplane.
C-172, forget it. Investors thus shy away.

Sufficient length on the ground lease can attract commercial lenders,
meaning much less put up by investors. Problem there is the need to
assure the lender you'll be able to charge enough to make at least a
little money.

At our field, we worked with a commercial developer who donated his
services to do various workups in full professional format. Rents,
condo, combination, private money, banks. The cheapast one was still
so costly a survey of all aircraft owners in a large area produced
little interest. This even included an assumption of bays big enough
for the corporate jet set, so as to subsidize the small bays. They
later built three big hangars...for themselves. Two other groups of
well-to-do people with planes worked up T-Hangar and community hangar
proposals. Both abandoned the idea.

Fred F.

[Rich S.]

"TaxSrv" > wrote in message
...
> Terms of a ground lease is a factor, but not the major problem. A
> building merely housing airplanes is not the "highest and best use" of
> airport property, as they say in the business. The reason is that we
> don't like paying much in rents, even if we own a $400K airplane.
> C-172, forget it. Investors thus shy away.
>
> Sufficient length on the ground lease can attract commercial lenders,
> meaning much less put up by investors. Problem there is the need to
> assure the lender you'll be able to charge enough to make at least a
> little money.
>
> At our field, we worked with a commercial developer who donated his
> services to do various workups in full professional format. Rents,
> condo, combination, private money, banks. The cheapast one was still
> so costly a survey of all aircraft owners in a large area produced
> little interest. This even included an assumption of bays big enough
> for the corporate jet set, so as to subsidize the small bays. They
> later built three big hangars...for themselves. Two other groups of
> well-to-do people with planes worked up T-Hangar and community hangar
> proposals. Both abandoned the idea.
>
> Fred F.

I have no idea what you just said.

Rich "That's why I'm poor, I guess" S.

[Kent Ashton]

Maybe the problem is "minimum standards". The FAA permits an airport to
set "minumum standards", ostensibly to prevent plywood and tarpaper aircraft
hangars, however the FAA lets airports set the minimum standards too high.
At my local airport, the minimum aircraft hangar that can be built is a
60 X 80 foot hangar with full foam-water fire suppression, taxiway paving,
car park paving, etc.; about a $300,000 project.
A light aircraft owner seeking to build his own T-hangar is shut out.
This airport will not even permit operators to share a hangar unless both
own an equal interest in the hangar.
--Kent

> From: "TaxSrv" >
> Terms of a ground lease is a factor, but not the major problem. A
> building merely housing airplanes is not the "highest and best use" of
> airport property, as they say in the business. The reason is that we
> don't like paying much in rents, even if we own a $400K airplane.
> C-172, forget it. Investors thus shy away.
>
> Sufficient length on the ground lease can attract commercial lenders,
> meaning much less put up by investors. Problem there is the need to
> assure the lender you'll be able to charge enough to make at least a
> little money.
>
> At our field, we worked with a commercial developer who donated his
> services to do various workups in full professional format. Rents,
> condo, combination, private money, banks. The cheapast one was still
> so costly a survey of all aircraft owners in a large area produced
> little interest. This even included an assumption of bays big enough
> for the corporate jet set, so as to subsidize the small bays. They
> later built three big hangars...for themselves. Two other groups of
> well-to-do people with planes worked up T-Hangar and community hangar
> proposals. Both abandoned the idea.
>
> Fred F.
>

[Montblack]

("Darrel Toepfer" wrote)
> With and airport receiving support funding from the FAA, the feds frown on
> leases over 25 years...


Huh? The two are related how? Curious.

Montblack
Sitting on a 99 year land lease in our Townhose Association paperwork.
Wonder what will happen in 60-75 years when all of these Townhome
Association leases come due?

[Darrel Toepfer]

Montblack wrote:
> ("Darrel Toepfer" wrote)
>
>> With and airport receiving support funding from the FAA, the feds
>> frown on leases over 25 years...
>
> Huh? The two are related how? Curious.

Thats what we were told when we approached the airport board with our
construction request. Previous constructors were given 50 or more year
land leases. Nothing new has been built in over a decade though... 4R7

Since they are generous with the taxpayers dollars, the feds now want
proof of performance from the locals airports before kicking in
additional funding. ie. for new fueling systems and additional hanger
construction, they wanna see budgets and operation information...

Its been making me seriously consider something that easily folds,
instead of having a fixed wing/location based plane...