Aviation related....I don't think its a Spin Zoner...very long

SkyHog

Touchdown! Greaser!
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Everything Offends Me
I got a letter in the mail today from Steve Pearce, United States Congressman in New Mexico (I have to admit, I don't know who he is).

Here is the contents:

Dear Nick,

Hangars are being confiscated from hangar owners at an alarming rate. If your hangar hasn't been taken from you yet, it will be.

Here's the scheme: General aviation airports across the country are requiring hangar owners to sign renewal leases for the land on which their hangar sits. These renewal leases contain mandatory provisions that transfer ownership of your hangars to the airport at the end of a specified period of time - which can be as short as 5 years and no longer than 15 years.

Think about it for a moment. In America...where we cherish private property rights and promote risk taking...you are being systematically and inexorably deprived of the fruit of your investment and a vital source of your livelihood.

I have sponsored legislation in the United States House of Representatives that uniquely addresses this matter. H.R. 1117 requires a 75-year minimum on lease terms while mandating the compensation of hangar owners whose investment is confiscated by the airport before the end of that term. Estimates indicate that properly protecting the private property of hangar owners could result in $10 million of additional investment in hangars on the East Coast.

As a general aviation pilot myself, with over 30 years experience and some 10,000 hours flying, I understand the frustrations and obstacles you endure day after day.

Thus, I have worked diligently to bolster private aviation in America through other means, such as my sponsorship of H.R. 488 (entitles the "Serving Economie through Aviation and Technology in the 21st Century (SEAT 21) Act"). This creative measure is designed to expand air service to rural regions by allowing the commercial "on-demand" use of planes having nine or fewer seats.

During the three years that I have enjoyed the honor of serving in the United States Congress, the aviation industry has endured...andovercome...a number of difficult challenges, particularly as our nation has adjusted to the post-9/11 imperative to enhance air safety and security. Often, independent pilots and small carriers have borne a disproportionate share of the economic burden resulting from new laws and regulations.

We won a significant victory in May 2005 when the U.S. Department of Homeland Security reopened Washington, D.C.'s Ronald Reagan Washington National Airport to general aviation, nearly four years after the 9/11 attacks. Having co-sponsored legislation to compel this action under "reasonable" security regulations, I was pleased that the Department finally removed this onerous burden upon individual pilots and small businesses.

Working together, we have achieved additional progress on behalf of independent pilots and small carriers. We successfully fought for increased aviation safety funding while holding the line on airline ticket taxes. We have enacted legislation that requires more efficient regulatory coordination between agencies on the costly and potentially dangerous matter of secondary containment. Moreover, the House and Senate have passed critical pilot safety measures, which enact criminal sanctions for those who use laser pointers against airplanes.

In July 2005, the House approved H.R. 525, the "Small Business Health Fairness Act of 2005," which would enable small businesses to lower their insurance costs through pooled Association Health Plans. During the previous year, the House passed H.R. 1084, the "Volunteer Pilot Organization Protection Act of 2004," which was designed to enhance the ability of pilots to engage in charitable and humanitarian work without the fear of costly lawsuits as their reward for a good heart.

I used the word "progress" above because we remain far from victorious on many of the issues that matter to you and the people you serve. Big airlines and major metropolitan areas receive the lion's share of attention in Washington, D.C. -- while mid-size and small carriers and communities continue to suffer. That's why I'm fighting so hard for you.

As I continue my battle to ensure that your voice is heard amidst the special interest din that far too often dominated the agenda in Washington, D.C., I need your help. I'm up for re-election this November and there will be a flood of out-of-state money coming into New Mexico in support of my opponent.

Your campaign contributions for $25, $50, or $100...or, if you're able, $250, $500, or $1000...will help me fight back against these out-of-state special interests and continue my efforts in Washington.

Together, we can save and improve the industry we cherish - preserving the skies for future generations of men and women who simply love to fly.

Sincerely,
Steve Pearce

Sound reasonable to anyone?
 
judypilot said:
Where do I send the money?

Judy

Heh - if you're serious, its

Pearce for Congress
Po Box 2696
Hobbs, NM 88241
 
I don't get it. Leases aren't ownership rights so how could you fork over something you don't own?
 
Hi, I'm from the government and I'm here to help. Now send me your money.

This is an incrediblly narrow issue to be a plank in someone's campaign. This guy is doing what all congresscritters are doing - looking out for their own self interest. Wanna bet that he or someone in his family bought a leased hangar, not realizing that it has an expiration date?

-Skip
 
Don Jones said:
Brian, only the land which the hanger sits on is leased.

Don
Don is right. It is common for you to be able to lease the land and then spend your own money to construct a building - in this case a hangar. The key is for you to have a long enough lease term to amortize the cost of construction. In a commercial operation, this means IRS-deductible depreciation. For a non-commercial operation, it means that your all-in costs on an annual basis should be somewhere near the cost of renting the same facility. If it is far less than rental cost, it is a bad deal for the landlord. If it is far more, it is a bad deal for the lessee. And, as usual, YMMV.

-Skip
 
Skip Miller said:
Don is right. It is common for you to be able to lease the land and then spend your own money to construct a building - in this case a hangar. The key is for you to have a long enough lease term to amortize the cost of construction. In a commercial operation, this means IRS-deductible depreciation. For a non-commercial operation, it means that your all-in costs on an annual basis should be somewhere near the cost of renting the same facility. If it is far less than rental cost, it is a bad deal for the landlord. If it is far more, it is a bad deal for the lessee. And, as usual, YMMV.

-Skip
That makes sense but it's plain stupid to think you're owning that hangar forever if you don't hold the title to the land it sits on.

Read the fine print and be prepared to lose your investment at someone else's whim. I don't see a need for Congressional interference here, I guess.
 
Each situation needs to be evaluated on its financial merits by both parties. When both agree to it before the hangar is built (or bought) then it is a mutually agreeable deal and every one is happy. Standard grant assurances (conditions agreed to by the airport when accepting federal money) require the airport to provide long term leases to people when they agree to build a hangar. I don't see any need for change.
 
This is common.

For many public airports, you lease the land upon which the hangar sits from the airport. When you build a hangar, the original lease agreement for the land specifies that the ownership of the hangar reverts to the airport at the end of the term - or upon your sale of the structure (sometimes it specifies that you shall remove the hangar). Often there is a concession (read: discount) on the land lease in exchange for your making the capital improvements on the land... in other words you recoup the cost of the hangar through a lower lease payment.

It is also common in those agreements for you to have the right to continue leasing the hangar from the city for some period after the original lease expires.

At SAT, the private T-Hangars were built about 20 years ago. The original lease was 15 years, after which the hangars reverted to airport ownership. At the end of the 15 year lease, you had an assignable right to continue leasing the hangar for another 15 years (and I think there is another renewal option at the end of that period). At the end of 15 years, the lease went from near zero to a couple of hundred bucks a month. Because of the assignable right to lease, the current hangar occupants are able to charge up to $ 30,000 to someone who wants a hangar at the airport. So, if I now wanted one of the hangars, I'd fork over $25,000 - $30,000 to the current lessee, and the lease ($250 a month) would be mine for the duration, including renewal periods.

By the way, this is not an uncommon arrangement for structures built on municipal or state land. Things like bus shelters, concession stands in parks, billboards, even toll roads in some cases, and parking lots are typically done under these types of contracts. Sports facilities, too, where they are built with some/all private money on public land.

The devil is in the details. If there is no long-term lease right at the end of the base contract, or the base contract is not long enough to recoup, then it's a bad deal. If the lease is long enough, and it has exclusive renewal options, then it may be a good deal - as close to full ownership as you can get.
 
The item that caught my eye was the comments regarding legislation needed to allow on-demand charter in 9 seats or less aircraft. I guess I never knew such wasn't legal today. Wow. Better run out to the airport and tell the Part 135 operator that his Aztec, Aerostars, and Navajo aren't legal air taxi aircraft. Gonna be a bad day at the airport today.;)

"Thus, I have worked diligently to bolster private aviation in America through other means, such as my sponsorship of H.R. 488 (entitles the "Serving Economie through Aviation and Technology in the 21st Century (SEAT 21) Act"). This creative measure is designed to expand air service to rural regions by allowing the commercial "on-demand" use of planes having nine or fewer seats."
 
We were fighting the same thing here.
When the airport is struggling, they will do anything to increase their numbers, including limitless leases (which I have).

Then when it has grown a bit and they discover there is some money to be made there, they try to take it over and kick out the small guys who started everything. This is one of the tactics.

I have a contract with the county for my hangar on their land with no time limit specified. Years later, they want me to sign a new contract in which I hand over the hangar that I build with my sweat and money... to them....free & gratis.

I know they will probably find some legal maneuver to eventually get it but 'that just aint raght' - ie so much for their original agreement.
For now I am holding out. I happily pay my taxes and lease $$ but I won't freely hand it over to them til I'm done with it.

I think a lot of airport authorities interpret the FAA's word "control" way too severely.
 
Nick, write a response brininging up the points mentioned here. See if you get a reply before the next election.
 
wsuffa said:
This is common.

SNIP
By the way, this is not an uncommon arrangement for structures built on municipal or state land. Things like bus shelters, concession stands in parks, billboards, even toll roads in some cases, and parking lots are typically done under these types of contracts. Sports facilities, too, where they are built with some/all private money on public land.

The devil is in the details. If there is no long-term lease right at the end of the base contract, or the base contract is not long enough to recoup, then it's a bad deal. If the lease is long enough, and it has exclusive renewal options, then it may be a good deal - as close to full ownership as you can get.

In Alaska, many homes are built upon leased state land. Imagine the same situation, except it is your house where your children sleep :eek:
 
alaskaflyer said:
In Alaska, many homes are built upon leased state land. Imagine the same situation, except it is your house where your children sleep :eek:
I'm sorry but with the track record of any government organization, regardless if it's US or anything (we have similar issues with Native American reservations here in AZ), why do people do this? It's just plain stupid.
 
And most pilots wonder why I require folding wings...? (or at least quickly detachable)
 
Brian Austin said:
why do people do this? It's just plain stupid.
No, not stupid. The land is where they really want to live and it is not for sale. Secondly, they believe in the rule of law, and they have a contract that is enforceable.

What is stupid is not getting a thorough expert review of the contract before signing it. How many here have read your mortgage documents closely and asked questions of your attorney, prior to buying/mortgaging your house? :hairraise:

-Skip
 
Well I don't believe this is a Federal issue it can be a problem.

It isn't exactly a free market when the airport is the only one for miles. If you want a hangar you take what they offer. I've heard of turn backs in as little as 10 years. Then you can rent from the county. I agree with others that you work the number out up front. But being put over the barrel by local government does feel good.
 
Another way to think about this. If you lease a house or apartment (or office/office building) the typical lease contains provisions that state that any capital improvements you make to the premesis become property of the landlord. At the end of the lease, you don't own 'em.
 
Skip Miller said:
No, not stupid. The land is where they really want to live and it is not for sale. Secondly, they believe in the rule of law, and they have a contract that is enforceable.
When you make a pact with a law creating and enforcing entity that has a proven record of changing the rules based on lobbying special interests, you're just asking for trouble in the long run.

"Rule of law" is whatever they want at the time. When they don't like it, they simply change the law. Look at the whole eminent domain situation and how out of control it's been getting. And the idea of an "enforceable contract" only holds true if you're Goliath and not David.
 
Brian Austin said:
When you make a pact with a law creating and enforcing entity that has a proven record of changing the rules based on lobbying special interests, you're just asking for trouble in the long run.

That same entity also has a proven record of NOT doing what you say. I know of an organization that has owned land in downtown Manhattan for over 300 years, under three different national flags (Dutch, British, American), and through hotly contested territory in the Revolutionary war. Pretty impressive that they still have good title to the land.

"Rule of law" is whatever they want at the time. When they don't like it, they simply change the law. Look at the whole eminent domain situation and how out of control it's been getting. And the idea of an "enforceable contract" only holds true if you're Goliath and not David.

I'm looking at it. In the case of ED, there is compensation. In the case of New London, CT I do agree that we have bad law running rampant and I believe that it will get changed due to popular opinion, sooner or later.

-Skip
 
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Brian Austin said:
That makes sense but it's plain stupid to think you're owning that hangar forever if you don't hold the title to the land it sits on.

Read the fine print and be prepared to lose your investment at someone else's whim. I don't see a need for Congressional interference here, I guess.

The lease on the land under my hangar specifically states that I must be compensated at fair value if the leasor (airport owner) confiscates my building under most circumstances. Even if I default on the lease, they are required to return to me the difference between the buildings value less what is owed on the lease. IOW it's a pretty fair contract.

My father owned a hangar in Venice Florida and the lease he had on the land specifically stated that the building became city property (the city of Venice owns the airport) after 20 years from the start of the lease. I thought that kinda sucked, but since the city owned all the land, that was the only choice if you wanted to own a hangar.
 
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