Okaloosa County BOCC — November 15, 2016 — Hangar Buy Down — agenda request

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: November 15, 2016 TO: Honorable Chairman and Members of the Board FROM: Tracy Stage SUBJECT: Hangar Buy Down DEPARTMENT: Airport BCC DISTRICT: 5 STATEMENT OF ISSUE: The Airports Department requests the Board of County Commissioners approve the Hangar Rate Buy Down Program for all leases at the Destin Executive Airport (DTS) with Board approved rates in excess of the current Market Rent approved rates. BACKGROUND: The recommended Market Rent for unimproved, aeronautical use land at Destin Executive Airport is $1.50 per square foot per year. The appraisal and rate was approved by the Board on October 18, 2016 retroactive to October 1, 2016. We currently have forty-three (43) hangar leases with Board approved rates ranging from $0.41 to $2.75 and three (3) storage rooms with rates ranging from $2.15 to $2.50. Twenty-seven (27) leases have Board approved rates over the current approved rate. Two (2) of the twenty-seven (27) leases will be adjusted accordingly without the requirement to participate in the program (KRS Express and HBG Holding, LLC). A Hangar Rate Buy Down Program was developed to help offset the impact of those leases with previous approved rates over the current rate. We recommend a tiered program based on the amount of time remaining on the current lease term. The option would be offered to each of the affected leases to reduce to the approved October 1, 2016 rates upon receipt of a one-time fee. Below is a table that reflects the proposed fee schedule and the number of leases affected: Time One Time Payment # Impacted 0-5 years $1,000 15 6-10 years $2,500 6 11-20 years $5,000 4 We have developed a form that will be prepared and provided to each of the twenty-five (25) leaseholders. This form will contain the current Board approved rate, current escalated rate and the remaining lease term. In addition, it will provide program details and the fee required to buy in or opt in to the program. The form will be required to be returned with the fee to start the process. Below is the proposed timeline: 12/5/2016 - Mail Statements with financial outline specific to the applicable lessee. Statement will have an opt in/opt out choice and require signature upon return. Check payment will be required to start the amendment process (45 Day Option Period). Form and financial data attached as described. 1/9/2017-1/13/2017 - Follow up Calls for any not received - document all contact attempts 1/19/2017 - All Forms must be received by noon with payment. 1/24/2017 - Amendments prepared started in Purchasing Coordination 1/30/2017 - Amendments mailed to lessee for signatures with refund options, if applicable. 2/27/2017 - Amendments must be received by noon for preparation for 3/7 BCC meeting. 3/7/2017 - BCC Board Item with Program Summary OPTIONS: Approve, Reject or Table. RECOMMENDATIONS: It is Staff's recommendation that the Board approve the recommended Hangar Rate Buy Down Program for all hangar leases with Board Approved ground rates that exceed the market rent rates approved on October 18, 2016. RECOMMENDED BY: APPROVED BY: John Hofstad, County Administrator