FAYETTEVILLE — Airport Board members could raise rates for 81 tenants who rent T-hangars at the Fayetteville Executive Airport for the first time in four years.
Airport policy calls for the board to review T-hangar rent every two years. Increases are typically based on changes to the Consumer Price Index, which measures the cost of consumer goods. A T-hangar refers to the shape of the space for small airplane storage.
Board members in 2011 decided not to increase rent in the aftermath of a recession. That could change this year.
At A Glance
Rental Rates
The Fayetteville and Springdale airports offer a variety of enclosed T-hangars. The closest comparable sizes and monthly rents are:
Fayetteville Executive Airport*Springdale Municipal Airport
1,050 square feet: $160*940 square feet: $131
1,392 square feet: $190*1,020 square feet: $143
1,440 square feet: $195*1,217 square feet: $161
Sources: Fayetteville, Springdale
“A modest increase would be appropriate,” Ray Boudreaux, airport director, said in a Sept. 11 memo to the board. Boudreaux said Thursday he didn’t think board members had the appetite to raise rates in a still recovering economy.
According to the formula airport administrators use to calculate T-hangar rent, rates would go up $15 per month. For a 1,392-square-foot hangar, rent would increase from $190 to $205, a 7.9 percent increase.
James Nicholson, Drake Field’s financial coordinator, said administrators expect to collect $178,600 in T-hangar rent this year. That’s about one-third of the airport’s income from rents and leases and less than 10 percent of the overall $2.4 million operating budget.
The city-owned airport also receives rental income from corporate tenants and businesses leasing space in the airport terminal. Nicholson said Friday corporate tenants see automatic rent increases based on lease agreements.
Board members were divided last month on how to proceed.
Mike Gibbs said it’s hard to justify a rent increase when several of the T-hangars aren’t being used for aircraft storage. “We don’t have the demand for those hangars,” Gibbs said.
According to Boudreaux, four of the 81 T-hangars are being used for general storage. As people sign leases for their airplanes, tenants who use hangars for general storage are given 30 days to move out.
Bob Nickle, board chairman, said, with hangar space full at Drake Field’s main competitor, the Springdale Municipal Airport, he wasn’t sure a modest rent increase would cause tenants to leave.
Nickle said raising rent would help pay for airport maintenance and to match state and federal grants. Operating revenue fell $9,105 short of expenses in 2012, according to financial reports, and a $91,683 shortfall is budgeted for this year. Nicholson told board members last month the airport’s cash-on-hand dropped below $500,000 for the first time in months.
“Obviously, our operating costs have not gone down here,” Nickle said.
Pat Ross, who runs a flight training and aircraft sales company and has leased space at Drake Field since 1994, said rent increases would be tough to swallow, especially with the price of fuel at the airport.
“I think the Airport Board needs to think seriously about what they’re about to do,” Ross said.
According to a Sept. 11 report from Nicholson, the price for Drake Field’s full-service 100-octane, low lead gasoline was second-highest among eight airports in the region. At $6.85 per gallon, it trailed only the Northwest Arkansas Regional Airport in Highfill. The price of jet fuel, $6.22 per gallon, was the highest in the region, according to Nicholson’s report.
The Airport Board is scheduled to meet at 1:30 p.m. Thursday.