75 Year hangar lease

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

"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

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

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?

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: 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?

" ...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.

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?

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...

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

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.