BENTONVILLE -- The manager of the Bentonville Municipal Airport says the standardized 45-year lease for developers essentially short-sells the airport's real estate value for the city.
The length of the lease should depend on the amount of infrastructure the developer is going to build for the airport, Chuck Chadwick told the Airport Advisory Board and city staff members Jan. 4. Any improvements, including buildings, made on city property become the airport's after the lease ends.
Most developments at the airport are hangars, but they could also be commercial buildings or self-fueling stations. Developers build projects they own on airport land leased from the city.
Lease lengths should fluctuate, Chadwick said.
"The [Federal Aviation Administration] doesn't agree with anything over 50 years, because by that time, the value of the improvements on the land have probably already been worn out. And they also say that 30 to 35 years is needed for an investor to get a reasonable rate of return on his investment," Chadwick said.
Officials discussed a new procedure in which the developer and Chadwick would negotiate financial and lease-length terms. The airport board would vet it for fairness for both the developer and city. It would then be sent to the Bentonville City Council for final approval.
The meeting Jan. 4 was a work session. Nothing was formally approved.
Chris Townsley, a pilot with 12 years of experience, said the proposed changes could hinder development because the standards for developers to meet are already high.
He started planning a 7,200-square-foot hangar about three years ago and spent about $60,000 for engineering documents, architectural drawings and other development documents prior to applying for a lease, he explained.
He obtained a standardized 45-year lease agreement in March 2017 for land on the west side of the runway. He hopes to break ground in mid-February.
"I had to put a lot of skin in the game to get to the place where I could ask to be qualified for that lease," he said in a phone interview Friday morning.
Brian Baldwin, board chairman, said the Airport Advisory Board needs to calculate the return for the investor and the return for the city.
"All the city is looking for is a balance in equity there," he said.
Townsley wouldn't "begin to have confidence" to do what he's done with the changes being discussed, he said. He said that under the changes, he would have to make the same investment, but then have to negotiate for a lease.
"It's like working all your life to build a nest egg, then going to Vegas and throwing it on the roulette table," Townsley said. "The bar is already so high, if you really add anything else to it, you're essentially stepping on the throat of development."
The airport's east side has 13 hangars and little room left to develop. The 600 feet of taxiway on the northwest side of the 4,426-foot runway is being extended south on the west side, which opens up land.
The west side has the airport's 14th hangar and three more in various stages of construction.
People began inquiring on how to reserve land on the west side as the taxiway expansion plans became more concrete a few years ago. The thinking then, from board members and city staff, was how to expedite the land-lease process, officials said.
The process policy was approved by the Airport Advisory Board in August 2016, but not by the Bentonville City Council, and it was never signed by Mayor Bob McCaslin, Chadwick said. Therefore, it's not a binding obligation, he said.
"With that said, I know there was a lot of people who put a lot of hard work into this, and others started relying on this being the process," he said. "But in fact, it never was a completed process."
Metro on 01/15/2018
Print Headline: Airport chief calls for flexible leasing