[bouldercouncilhotline] HOTLINE: Item 3E

[kohls at bouldercolorado.gov]

Sender: Tim Head

From: Head, Timothy
Sent: Tuesday, August 16, 2011 4:32 PM
To: Kohl, Susan
Cc: PW PDS Communications; Rait, Maureen; Winfree, Tracy; Sweeney, Michael; Newcomb, Doug; Haddock, Kathy
Subject: FW: CAC Summary; August 16, 2011

Please post to Hot Line

Dear Council Members:

Three questions came up throughout today in regards to consent item 3.E..  I have paraphrased those questions below with a short response:


1.       Is Brungard Aviation's facility a full-service building?
Yes.  This hangar is an executive style hangar with two large hangar doors, polished concrete floor, office, bathroom, water and sewer service, and fire sprinkler system.


2.       Does the history of ownership make a difference, since Brungard Aviation was not the original lease holder?
In many cases, the original financier and lease holder does not possess the building for the entire term.  This does not alleviate the need for the current lease holder to benefit from a typical 30-year amortization.  For instance, although the building was built by Coonts Aviation, Brungard Aviation paid $225,000 for it in 2003.  The amount financed is simply passed on to the new assigned lease holder.


3.       It appears that this lease is not Triple Net after July 21, 2021. Is that correct? Is that standard practice for the city or for the airport, that we cover all maintenance and upkeep (in this lease, starting in 2021?). What are anticipated costs for this, then, and what is the rationale? Commercial leases are almost always Triple Net. I know that the lease rate goes up from .36 per foot to $3.23 but I thought that was because the tenant would have recouped building expenses by then, and so then the lease becomes "market rate" (for the airport anyway) at that point.
For years 2021-2031, the lease will be a partial Triple Net.  The tenant will be responsible for rent, taxes and utilities, while the airport will provide maintenance and insurance.  Maintenance costs are difficult to predict, but the airport spends approximately $2,500 per building each year.  In 2021 (when maintenance becomes airport responsibility) the tenant will be paying approximately $40,000/year in rent, so maintenance will account for 6% of revenue.  This type of lease is standard for other airports in the region, as is our lease rate.  During the 2007 master plan update and again in 2009, a market analysis showed that Boulder Municipal Airport rates were in line with other airports in Colorado (see page A.29 of the master plan).  The $3.23/ft2 rate is used for hangars only and $5.92/ft2 is used for office space.  Brungard Aviation's actual rate in 2021 will be adjusted for inflation so that it remains near the market rate for equivalent facilities at other airports in Colorado.

Tim Head
Airport Manager
Boulder Municipal Airport
(303) 441-3108
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