West Star expansion inching forward
If all goes as planned, West Star Aviation and Grand Junction Regional Airport will inch forward Tuesday on a complicated deal that could bring as many as 150 new, good-paying jobs to the city.
Several land and financing agreements must be completed in the proper order before West Star can break ground on its new facility, airport attorney Michael Morgan said.
Approval of documents that would allow the deal to move forward is expected Tuesday at a special meeting of the Grand Junction Regional Airport Authority, but completion of the entire transaction is still weeks away.
Expansion plans of West Star’s operations, announced in May, call for the construction of a 45,500 square-foot hangar on or near land controlled by several other companies, including the airport authority, Colorado Division of Wildlife and GJT Storage, Morgan said.
An additional 48,900 square feet of existing airport space is to be leased by West Star, including parts of the airport tower, which was vacated by the Federal Aviation Administration due to sequestration, an airport authority news release said.
The hangar will allow West Star to paint and perform maintenance on large aircraft, work it does not currently have the capability to handle.
Up to 150 new jobs could be created over the project’s 5-year build out, including 40 jobs in the first year at an average annual salary of $52,000, the airport authority said.
Construction of the hangar can’t start, however, until the land involved is configured and several million dollars of financing are arranged.
Configuring the land deal required several existing ground leases to be modified, Morgan said.
A stretch of land was shaved from one lease and added to another. Easements allowing access to the newly configured parcel had to be purchased, documents show.
Finally, after nearly six months of negotiations prolonged primarily by the division of wildlife, ground leases and easements between West Star, Grand Junction Regional Airport Authority, the division of wildlife and the storage company are complete and appear ready to sign, Morgan said.
The airport authority board is expected to approve the documents at a special meeting set for 5:15 p.m. Tuesday at the Grand Junction Police Department, 555 Ute Ave.
Completing all ground leases satisfies one of the conditions for the deal to proceed, Morgan said.
Meanwhile, both the airport authority and West Star continue to negotiate with Wells Fargo Bank to complete terms of financing for the project, yet another condition of the deal, Morgan said.
West Star must borrow to construct the paint hangar, a specialized building that requires custom specifications to meet the aircraft maintenance company’s needs, he said.
The airport authority plans to issue $8.5 million in revenue bonds to purchase the hangar from West Star once it is built. It will then lease the building back to West Star, Morgan said.
At the top of the list of issues yet to be finalized is the interest rate that will be paid on the loans.
Morgan said the transaction was structured this way for several reasons.
It will relieve West Star of long-term financing required to build the hangar.
Also, it will allow the airport authority to receive income from the hangar lease while, in essence, financing the cost of West Star’s construction at a lower interest rate.
And finally, the parties will also enjoy certain tax benefits. West Star, for example, could deduct lease payments as a business expense.