State (VT) owned hangar ground leases doubled overnight. What's up with that?

Wannabe

Filing Flight Plan
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Scott
Imagine this scenario. You finally scrimp and save enough to buy an airplane. You’ve even convinced your family what a great idea this will be. Now that you have a plane, of course you want a place to keep it, say, a hangar, at the nearest airfield. ‘Lo and behold, there’s a hangar for sale! You look into buying it. Price seems fair. However, on top of the price you’ll need to pay state / local taxes, and carry an insurance policy for the building and liability. Oh, and the state owns the land underneath the hangar and can pull the land out from underneath you for a variety of reasons, or, as it seems, no reason at all! It is a ridiculously one-sided lease favoring the state. But it is a “take it or leave it” proposition. At least your attorney reviewed it and assures you it is cost-bounded in the way in which the lease rate can increase over time. So, deep breath and you get a 20-year lease during which the state can adjust that lease rate in accordance with increases in the CPI (no decreases are allowed!) and costs directly attributed to that airport, every 2 years during that 20-year period of the lease. You do all the arithmetic, and your dream still seems to be (barely) within reach, so you sign the lease, buy the plane, and life is good, until…

In less than two years, you get a letter from VTrans with a decree: the new land lease rate will now be 108% greater than your lease stated. Whoa! How can they do that? It says right here in my lease what the increase can be, and 108% is way out of line. The state’s answer? In a nutshell, it is this: “We forgot to raise the rate for so long before you signed your lease and we’re going to make it up all at once and at your expense.” Never mind that the lease says the increase in MY rate must be based on increases in the CPI index and costs at this specific airport within the last two years.

Do this "thought experiment" with me. You’re in line at McDonalds, and you get your hamburger and a Coke. The kid at the register says, “That’ll be $200.” “How much?”, you say incredulously. And the kid behind the register, says, “Yeah, I forgot to charge the 10 people before you, so I have to charge you to make up for it.” Welcome to my world. And every other hangar owner in the state of Vermont. We all got the shaft to varying degrees because of the malfeasance at worst, or the ineptitude at best, of a poorly administered Vermont Transportation Agency.

It was not always thus. In around 2017 and before, the Aviation Division was a separate organization under VTrans. It was run by a great team of folks who truly provided value to the stakeholders of the aviation resources in the state. The stakeholders are us – the residents of the state! We own most of the airports in this state. VTrans is supposed to run them for our benefit. Since around 2017, that has not been the perception or, as it turns out, the reality. The state has lost FBO services at important airports. They’ve lost fuel capability at other airports. They’ve allowed buildings to languish rather than to be re-purposed as FBO’s, passenger arrival lounges, CBP facilities, etc., with local, private money waiting to be poured into these projects. The state seems to ignore the potential within the state, across the border in Canada, and the potential goodwill of a very generous stakeholder base of pilots and interested community members.

This simple, contractual issue has been contested since the decree was promulgated in July 2019. There are now 13 hangars and 2 state airports in play. This issue is now, finally, on the docket to be heard by the board that oversees this state agency, the Transportation Board. Any other hangar owners in Vermont, feel free to contact us through this P of A forum to learn more about this process.

The checks and balances on this setup appear to be broken. The rubber stamp body called VAAC (Vermont Aviation Advisory Council) has almost no aviation savvy folks, and it has no “teeth” anyway, as it is “advisory” only. The real story is the lack of effective management at VTrans although piled high with titles, official sounding names and, perhaps even good intentions. Someone has to pull the curtain back on this crew! We’re surprised that AOPA, EAA, Seven Days, Vermont Digger, WCAX, PBS, local newspapers, etc. have not picked up on this yet.
 
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In less than two years, you get a letter from VTrans with a decree: the new land lease rate will now be 108% greater than your lease stated. Whoa! How can they do that? It says right here in my lease what the increase can be, and 108% is way out of line. The state’s answer? In a nutshell, it is this: “We forgot to raise the rate for so long before you signed your lease and we’re going to make it up all at once and at your expense.” Never mind that the lease says the increase in MY rate must be based on increases in the CPI index and costs at this specific airport within the last two years.

"Not my problem, I have a contract/lease that states..."

Better sent by a lawyer than yourself.
 
If your lease states otherwise and is a binding contract.....
 
It sounds like maybe how taxes ‘reset’ when you buy a home or property. The increase can be limited with the same owner, say 3% a year, then becomes ‘uncapped’ with a sale.
 
Before we all get upset at the injustice how about posting some actual numbers. When someone only posts a % number it starts setting off red flags. A 108% increase is completely different if the starting number is $5 vs $5000. Yes, your lease should take precident but it’s also possible that your lease was erroneously way below market rate for all the other airports or maybe even all the other leases at this particular airport and should not have been executed to begin with. If that’s the case then the airport could just cancel your lease all together and then offer it up to whoever wants it at the new rate. Pushing back could leave you without a hanger at all.
 
Adams County (owns KCFO) in Colorado did the same thing to us last year. Over the past 25 yrs or so, every time someone got into a county hangar, the contract was CPI. But last year, it was decided that it was much too difficult to manage the large number of differing contracts with differing increases, so everyone got put on the same cost. My county hangar (I rent) went up 25% to $406. Don't like it? Move to the ramp for $50/month. The folks who own hangars got the same increase in taxes on the land.

No one's happy but other than the ramp or selling the airplanes, no one has other options.
 
I'm biased, but if the lease terms are clear and they violated them, sounds like you have a lawsuit. And you already have a lawyer familiar with the lease terms.... Maybe he'll represent you and a few hanger neighbors for a group rate. That's assuming the rent increase justifies the cost.
 
It’s always the little guy they go after, they’re counting on your not being able to hire a lawyer to take them to court. With the a availability of hangers they know they have people waiting who will pay more.
 
When people run out of money, just increase bills and taxes because you have no choice. It’s getting out of hand, when will the people revolt?

Our hangar property taxes were raised several hundred percent, they have been low to be fair (typically costs are lower to offset the initial investment in building hangars), but I don’t understand the huge increases suddenly. And it was basically said if you want to fight it, then we will look at all of the previous years to see if you paid the correct amount. And with taxes, there’s never clear guidance, it’s subjective to the idiot working on them, and then subject to reevaluation by the next idiot who replaces idiot #1. Annoying, as I prefer transparency.

Now yes the new fees for each hangar owner are probably an increase by an additional $400-500 a year, they are affordable, but when you own your hangar, have increasing annual costs, then the game of whether or not your land lease will be renewed, it becomes a game of taking advantage of people.

You may compare other airports fees but each airport has a different offering and convenience or lack thereof, and thus fees do vary and I’m not sure how a blanket statement could apply.
 
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I don’t care if one owns a 1947 Champ, you’re looked on as a ‘2 percenter’ being an owner. It’s like the new ‘mansion tax’ in the L.A. area, no sympathy from the masses.
 
Drastically rising cost on anything aviation seems to be the norm right now. I've heard multiple stories of hangar rents doubling lately. My local tax office took it upon them selves to appraise everyone's airplane for them. I think they know we are over the barrel and will keep rolling it to see how long it takes to shake people off. I mean if you have 100+ people waiting list and hangars that have been rented for decades by the same people why not. I mean somehow people keep coming with the money for these crazy airplane prices and avionics upgrades. Why not complete the circle? haha
 
Our hangar monthly lease went up 10% last year, and another 10% this year. I heard they are looking at building some new hangars, so maybe the city wants to help finance it based upon the current tenants. The best part is they are bifold electric doors, completely slabbed, electricity, and only $245 per month currently. Not complaining, just adding to the conversation.
 
Imagine this scenario. You finally scrimp and save enough to buy an airplane. You’ve even convinced your family what a great idea this will be. Now that you have a plane, of course you want a place to keep it, say, a hangar, at the nearest airfield. ‘Lo and behold, there’s a hangar for sale! You look into buying it. Price seems fair. However, on top of the price you’ll need to pay state / local taxes, and carry an insurance policy for the building and liability. Oh, and the state owns the land underneath the hangar and can pull the land out from underneath you for a variety of reasons, or, as it seems, no reason at all! It is a ridiculously one-sided lease favoring the state. But it is a “take it or leave it” proposition. At least your attorney reviewed it and assures you it is cost-bounded in the way in which the lease rate can increase over time. So, deep breath and you get a 20-year lease during which the state can adjust that lease rate in accordance with increases in the CPI (no decreases are allowed!) and costs directly attributed to that airport, every 2 years during that 20-year period of the lease. You do all the arithmetic, and your dream still seems to be (barely) within reach, so you sign the lease, buy the plane, and life is good, until…

In less than two years, you get a letter from VTrans with a decree: the new land lease rate will now be 108% greater than your lease stated. Whoa! How can they do that? It says right here in my lease what the increase can be, and 108% is way out of line. The state’s answer? In a nutshell, it is this: “We forgot to raise the rate for so long before you signed your lease and we’re going to make it up all at once and at your expense.” Never mind that the lease says the increase in MY rate must be based on increases in the CPI index and costs at this specific airport within the last two years.

Do this "thought experiment" with me. You’re in line at McDonalds, and you get your hamburger and a Coke. The kid at the register says, “That’ll be $200.” “How much?”, you say incredulously. And the kid behind the register, says, “Yeah, I forgot to charge the 10 people before you, so I have to charge you to make up for it.” Welcome to my world. And every other hangar owner in the state of Vermont. We all got the shaft to varying degrees because of the malfeasance at worst, or the ineptitude at best, of a poorly administered Vermont Transportation Agency.

It was not always thus. In around 2017 and before, the Aviation Division was a separate organization under VTrans. It was run by a great team of folks who truly provided value to the stakeholders of the aviation resources in the state. The stakeholders are us – the residents of the state! We own most of the airports in this state. VTrans is supposed to run them for our benefit. Since around 2017, that has not been the perception or, as it turns out, the reality. The state has lost FBO services at important airports. They’ve lost fuel capability at other airports. They’ve allowed buildings to languish rather than to be re-purposed as FBO’s, passenger arrival lounges, CBP facilities, etc., with local, private money waiting to be poured into these projects. The state seems to ignore the potential within the state, across the border in Canada, and the potential goodwill of a very generous stakeholder base of pilots and interested community members.

This simple, contractual issue has been contested since the decree was promulgated in July 2019. There are now 13 hangars and 2 state airports in play. This issue is now, finally, on the docket to be heard by the board that oversees this state agency, the Transportation Board. Any other hangar owners in Vermont, feel free to contact us through this P of A forum to learn more about this process.

The checks and balances on this setup appear to be broken. The rubber stamp body called VAAC (Vermont Aviation Advisory Council) has almost no aviation savvy folks, and it has no “teeth” anyway, as it is “advisory” only. The real story is the lack of effective management at VTrans although piled high with titles, official sounding names and, perhaps even good intentions. Someone has to pull the curtain back on this crew! We’re surprised that AOPA, EAA, Seven Days, Vermont Digger, WCAX, PBS, local newspapers, etc. have not picked up on this yet.

It must be tough to scrimp and save to buy an airplane and have enough left over to buy a hangar too. I am crying for ya brother.
 
On the other hand...at my airport ALL hangars are privately owned including the ground. Each owner pays a percentage of their unit's property tax to the airport association for maintenance of the main runway and taxiway, AWOS, lighting, etc., . Other taxiways are "owned" (and maintained) by the adjoining property owners. So an individual in my "CONDO" hangar group can sell his/her unit for whatever they can get. Nice, eh? Not so fast! There is NOTHING to prevent a hangar owner from renting/selling their PRIVATE PROPERTY to any Tom, Dick or Harry car repair shop (MANY), for storage of junk (MANY), non-aviation commercial business (MANY), or massage parlor (none yet!). The county zoning laws (airport? what airport?) are so lax that almost anything goes. So, be careful what you wish for.
 
This issue is now, finally, on the docket to be heard by the board that oversees this state agency, the Transportation Board. To get to this point, we have been in two courts and utilized both private and AOPA panel attorneys. As reasonable Vermonters, we’d much prefer to settle this reasonably, but there seems to be a lack of genuine interest in developing aviation resources in the state with the goodwill of the stakeholders and true owners of theses assets.
Any other hangar owners in Vermont, feel free to contact us through this P of A forum to learn more about this process.
 
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It sounds like maybe how taxes ‘reset’ when you buy a home or property. The increase can be limited with the same owner, say 3% a year, then becomes ‘uncapped’ with a sale.
That is fair, when a hangar changes hands at a sale and a new lease is written, the State may re-state or re-write the lease any way they like. That happened, and THEN, less than two years, without a sale or other event to allow it, the State increased that same lease by 108% in violation of the lease terms for that same owner.
 
Before we all get upset at the injustice how about posting some actual numbers. When someone only posts a % number it starts setting off red flags. A 108% increase is completely different if the starting number is $5 vs $5000. Yes, your lease should take precident but it’s also possible that your lease was erroneously way below market rate for all the other airports or maybe even all the other leases at this particular airport and should not have been executed to begin with. If that’s the case then the airport could just cancel your lease all together and then offer it up to whoever wants it at the new rate. Pushing back could leave you without a hanger at all.
The lease went from $0.12/sq. ft. / year -> $0.25/sq. ft. / year. Some other hangar owners had even larger % increases.
In addition, one must note that the local taxes, state taxes, and mandatory “named insured” liability insurance all increased, too.
 
On the other hand...at my airport ALL hangars are privately owned including the ground. Each owner pays a percentage of their unit's property tax to the airport association for maintenance of the main runway and taxiway, AWOS, lighting, etc., . Other taxiways are "owned" (and maintained) by the adjoining property owners. So an individual in my "CONDO" hangar group can sell his/her unit for whatever they can get. Nice, eh? Not so fast! There is NOTHING to prevent a hangar owner from renting/selling their PRIVATE PROPERTY to any Tom, Dick or Harry car repair shop (MANY), for storage of junk (MANY), non-aviation commercial business (MANY), or massage parlor (none yet!). The county zoning laws (airport? what airport?) are so lax that almost anything goes. So, be careful what you wish for.
Not sure about the specifics of your airport/county/state, however the throttle that controls much of the abuse of use of these airport resources comes from the federal regulations and “guidance” that accompanies the federal money that often is used to enhance and develop our airports. It is complicated.
 
The lease went from $0.12/sq. ft. / year -> $0.25/sq. ft. / year. Some other hangar owners had even larger % increases.
In addition, one must note that the local taxes, state taxes, and mandatory “named insured” liability insurance all increased, too.

.25 cents a square foot still seems cheap for hanger space. That’s $250 for a typical t hanger. What is hanger space going for at the other local airports? Are you in alignment with those costs after the adjustment or are they all paying the 12 cent rate? What does your lease say about the county’s ability to cancel your lease? I would be concerned that if you try to use the lease terms to push back on the increase that they would just cancel you lease and rent the space to someone else. Would your lease terms allow that? What reasons can they terminate your lease under?
 
.25 cents a square foot still seems cheap for hanger space. That’s $250 for a typical t hanger.
Recall from the OP.
there’s a hangar for sale! You look into buying it. Price seems fair. However, on top of the price you’ll need to pay state / local taxes, and carry an insurance policy for the building and liability. Oh, and the state owns the land underneath the hangar

I think we do not have all the numbers to be able to compare this situation to T-Hanger rentals in other areas.
 
So... if they don't get their way, can they trigger the hangar-reverts-to-the-airport clause instead?

I am at a large class-C airport in the SF bay area and own a condo hangar. I just looked, I'm paying appx 21c/sqft for 1500 sqft.
 
.25 cents a square foot still seems cheap for hanger space. That’s $250 for a typical t hanger. What is hanger space going for at the other local airports? Are you in alignment with those costs after the adjustment or are they all paying the 12 cent rate? What does your lease say about the county’s ability to cancel your lease? I would be concerned that if you try to use the lease terms to push back on the increase that they would just cancel you lease and rent the space to someone else. Would your lease terms allow that? What reasons can they terminate your lease under?
Your points are well taken and appreciated. However in the context of what the lease actually says and allows about the amount and manner of the increases, the increase imposed in July 2019 is not allowed and in keeping with the lease terms. That is the ONLY issue before the Board. Not how does it compare to other airports, hangars, states, etc. Of course, given the one-sided nature of the State’s lease, the State could certainly find some flimsy reason to terminate my lease early OR wait another few years until my 20 year lease has expired, and then put ANY PRICE THEY LIKE in the new lease.
 
So... if they don't get their way, can they trigger the hangar-reverts-to-the-airport clause instead?

I am at a large class-C airport in the SF bay area and own a condo hangar. I just looked, I'm paying appx 21c/sqft for 1500 sqft.
That’s an interesting data point. One would expect that in the poorest corner of a tiny, rural, state like Vermont, the rate here would be less than that of a booming, cosmopolitan, market like anywhere near SFO. Thank you for your input.
 
That’s an interesting data point. One would expect that in the poorest corner of a tiny, rural, state like Vermont, the rate here would be less than that of a booming, cosmopolitan, market like anywhere near SFO. Thank you for your input.

Haha you made me look back out of suspicion. I'm paying that monthly, not annually. :D So perhaps no help to your cause.
 
Haha you made me look back out of suspicion. I'm paying that monthly, not annually. :D So perhaps no help to your cause.
Can I assume that you’re paying that $0.21/sq. ft. / month for your 1500sq.ft. hangar? That sounds like a good price, as it includes the hangar AND the land underneath it. In my case, I’m talking about just the lease for the LAND under the hangar. The hangar cost is quite a separate matter. So, we MAY not be comparing apples to apples in this case.
 
The only "property" the FAA controls via their $$ is the main runway and main taxiway. All adjoining land is privately owned by individuals or the airport association (ramp and nascent FBO).
 
The only "property" the FAA controls via their $$ is the main runway and main taxiway. All adjoining land is privately owned by individuals or the airport association (ramp and nascent FBO).
Or in this case, at this airport in VT, the State of VT.
 
Just another nail in the slow death of GA for working class people. It is getting to the point only the wealthy can enjoy it. And on top of that, all these towns, states, etc thing GA is a rich person hobby. So they think WTH, they can afford a 0lane, they can afford higher fees, and taxes.
 
The lease went from $0.12/sq. ft. / year -> $0.25/sq. ft. / year. Some other hangar owners had even larger % increases.
In addition, one must note that the local taxes, state taxes, and mandatory “named insured” liability insurance all increased, too.

So on a 4,000 sq foot hangar the rent was $480 a year ($40 a month) and now it’s $1,000 a year ($84) a month. Doesn’t seem unreasonable. Hell cable TV and internet cost more than that.
 
So on a 4,000 sq foot hangar the rent was $480 a year ($40 a month) and now it’s $1,000 a year ($84) a month. Doesn’t seem unreasonable. Hell cable TV and internet cost more than that.
The lease that is the explicit subject of this thread is only for the LAND under the hangar. The “ground lease”. The hangar cost is quite a separate matter. So, we MAY not be comparing apples to apples in this case.
 
Can I assume that you’re paying that $0.21/sq. ft. / month for your 1500sq.ft. hangar? That sounds like a good price, as it includes the hangar AND the land underneath it. In my case, I’m talking about just the lease for the LAND under the hangar. The hangar cost is quite a separate matter. So, we MAY not be comparing apples to apples in this case.

I paid 40 grand for the metal box, and I also bought the privilege of paying 327/mo for the ground lease it sits upon.

I am told this was a smoking deal. I'm not so sure, but just renting a small tee (instead of my 50' wide executive port-a-port) is just shy of 500/mo so it will pay off in 20 years. :D
 
Any other hangar owners in Vermont, feel free to contact us through this P of A forum to learn more about this process.

I'm interested, based in Middlebury. I don't think I got a notice, but maybe I missed something and just paid the bill. I'll have to check on that. Where are you based?
 
While perhaps your argument is completely valid and I genuinely wish you success, I find it hard to sympathize for a ground lease increase of $195 per year for a 1500 sq ft hangar. It doesn’t seem that unreasonable.
 
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