Airport follows FAA rules as it serves the entire community
By Tom LaCroix
The Grand Junction Regional Airport and its management have been unfairly criticized regarding our airport leases and wildlife fence. The following summary seeks to set the record straight:
Airport Leases: Grand Junction Regional Airport does not receive any general tax revenue. It is a self-sufficient entity. The airport is operated for the benefit of all citizens, not just those who lease airport property. Sound fiscal management of airport property helps keep landing fees and other charges down — for all airport tenants, the airlines and, ultimately, the passengers.
Ground leases at the airport typically have a 20-year term, with a 10-year lessee renewal option. This term allows the lessee to recoup improvement costs. The leases often offer tenants the option at the end of the term to turn over the improvements to the airport or remove the improvements and restore the property to its original state.
The charge that the vast majority of airports do not take improvements at the end of the lease term is incorrect. This is not only normal at most U.S. airports, it is also recommended by the Federal Aviation Administration.
The FAA’s “Guidebook for Developing and Leasing Airport Property” states: “Land leases are routinely set at 20- to 30-year terms” and that “best practices for leasing and developing airport property include reversion of improvements back to the airport sponsor at the termination of the lease.”
The FAA recommends that leases without a significant capital improvement be limited to no more than three to five years.
We conducted a leasing-practices survey of 20 commercial-service and large general aviation airports in the Northwest Mountain Region. It found:
✓ 17 (85 percent) have a land-leasing structure similar to Grand Junction’s.
✓ 18 have end-of-lease clauses that require a reversion of all structures back to the airport.
✓ Zero airports allowed unlimited lease terms.
Furthermore, federal grant assurances do not allow airports to sell property.
The allegation that the lease clause is a “de facto confiscation of millions of dollars in improvements” is inaccurate. The lease term and rental rates are specifically set, and typically reflect the service life of a commercial facility, which allows the lessee to fully amortize and recover the investment. Many 30-plus-year-old facilities are ready for significant rehabilitation or destruction. These lease terms allow the property to be available for future use.
The argument that hangar leases should be renewed, presumably with the same terms and conditions, is not realistic. Furthermore, this may constitute a “gift,” which would violate state law.
Claims that hangars owned by the Airport Authority and leased to operators will not be taxed is inaccurate. When there is a private lease on publicly owned, non-taxable real property, the “possessory interest,” of the lessee is typically taxed. The Colorado Supreme Court has ruled that such taxation is necessary to accomplish uniformity required by law.
Grand Junction Regional Airport is a half-billion dollar public facility. To create an automatic lease renewal would create a perpetual lease that constitutes transferring public airport property to private ownership. The transfer would take place for pennies on the dollar and would create a windfall to 27 owners because they would control 100 percent of the leasable land at the airport … forever. This action would violate the airports’ grant assurance that it not subjugate its rights and responsibilities.
The renewal of an airport lease is not a right guaranteed to any tenant, unless specified in a lease. It would not be fair, nor in line with the FAA’s grant assurances, for an airport to automatically renew a lease without a substantial capital investment into the property.
In all but one case, the ground leases at the airport were entered into prior to the current board or airport management were in place. There has never been a routine renewal of leases, and all terms and conditions of the lease are known to the lessee from the beginning.
Wildlife Fence: The “less-intrusive” security option, to leave the gates open during business hours, was previously proposed to the TSA, but was verbally rejected. The expert hired by the airport to investigate the issue suggested that the airport and its tenants deserved a written response from the TSA, so a formal amendment was submitted. Numerous other options were explored. However, all were far more costly to airport tenants — costs that cannot legally be covered by federal funds.
The expert’s report further determined that the FAA was properly notified of all necessary information related to the project, and that sufficient public hearings were held throughout the fence project.
Statements have been made that the wildlife fence is turning into a security fence, which is essentially true. Using a wildlife fence for multiple uses, such as public protection and security, is considered cost-effective, as compared to multiple fences for separate purposes.
When an airport such as Grand Junction’s receives grant money, it is tied to “grant assurances” or promises that the airport makes to the FAA. The airport has followed the FAA’s grant assurances, good property management principles and practices and federal law related to airport leasing, security and safety.
The airport is responsible for operating to the benefit of all the citizens, not just a few. Airport management will continue to look for ways to maintain airport revenue at a level that does not require funding by the taxpayers to operate, and will continue to strive toward a safe and secure public facility.
For a more detailed explanation, visit http://www.gjairport.com or call 970-244-9100.
Tom LaCroix is the chairman of the Grand Junction Regional Airport Authority.