Airport hangar owners fight confiscation, again

Airport hangar owners warn that city decisions could lead to business closures, flight delays, and even loss of the tower. Before the city council on Sept. 11:

[00:00:10] Steven Boulton: Steven Boulton, I am addressing the issue of hangars at Eugene Airport.

[00:00:15] As a background, the hangar owners own the buildings. But we lease the ground upon which the hangars sit. We renew or get extensions on our leases on that ground; that’s been happening for decades. At the urging of a consultant hired by the airport administration, this administration created a plan by which they intend to confiscate most of our hangars.

[00:00:38] It’s based on a misreading of the FAA’s guidance on hangar leases and grant assurances. In their latest move, the airport administration is planning to break legal, binding, current contractual leases and replace them with leases that authorize the airport to confiscate our hangars.

[00:00:58] Now, as to my own personal circumstances, I own a small building that houses a total of six small aircraft. I rent out five of those, and in the sixth spot, I have my business, which is mostly flight instruction. I train people who are going to be commercial pilots. It’s not unlikely that when you fly in and out of Eugene, somebody up in the cockpit is someone I trained. Military pilots, firefighter pilots, and many others.

[00:01:27] I do flight reviews required of pilots, and instrument proficiency checks, and sometimes remedial training that I’m asked to do by the FAA. These are people that cannot be accommodated by the LCC flight tech program. So I fill a needed gap, and I’m the only business on the airport that does this.

[00:01:50] When I bought my building five years ago, I met with the airport administration and asked about the building’s future. My concern was the upcoming master plan in which Concourse C initially was scheduled to go right through where my hangar is. Since then, it has been moved 45 degrees west and is not going to take out my hangar.

[00:02:10] I explained that my wife and I are not wealthy and it would be financially devastating if we don’t have at least 20 years of ownership and use of the hangar building. I was told explicitly I would not have to worry about this for 25 to 30 years.

[00:02:24] Benjamin Grubb: My name is Benjamin Grubb. I’m a member of the Experimental Aircraft Association, and I chose to build an aircraft because it was something I could afford to do. And I chose to use a Volkswagen engine because I could afford to do that.

[00:02:35] And I’m also a licensed mechanic for my aircraft. So it keeps all my costs very low. And as I was building my airplane, I assumed I would not be able to afford a hangar, it just would be too expensive. But I saw Bruce Lamont’s ad in Craigslist and his hangars were within my budget.

[00:02:50] So here’s what the airport, like Steve (Boulton) mentioned, the airport administration is doing. They’re going to change the square foot calculation in the rents. And that could potentially double or triple my rates there. And, including the dirt, which is not usable, because the dirt has to be cleared for the airplane wings to go by. So we can’t use the dirt.

[00:03:10] Last year, the airport administration sent out a fee schedule for comment. The fee schedule just had a price increase, but it did not address the rumor of a recalculation of square footage. So it was a little hard to comment on the price change when they didn’t discuss everything that was included in that price change. Also, as a side note the fee change included a per person decrease for commercial flights at the gate charges.

[00:03:32] And then the other rumor I heard was that Bruce’s hangar is so old that the airport is just going to repossess it. So it would probably exclude me from being part of that.

[00:03:41] The airport had the consultants give a presentation and their findings and regarding the square footage rumors is that the leases are not consistent on the airport. So the consultant said this could be grounds for complaints to the FAA. But the consultant also said if the airport has a plan in place to remedy the situation, then the FAA is satisfied.

[00:04:03] So my suggestion is: Rents always go up, but instead of doing it all at once, perhaps there’s a way to do a few percent a year until the number reaches the fair and equitable point. So I hope the vision for the city airport still includes general aviation at Eugene Airport.

[00:04:20] City of Eugene: Next, we will hear from David Yeakel.

[00:04:22] David Yeakel: All my life, my wife and I have sacrificed and worked hard to make a dream come true, which is to own our own maintenance facility here at Eugene Airport, thinking that we would have some retirement in selling the business and/or hangar.

[00:04:42] You may or may not have heard, the airport administration has for us personally broken in the middle of a 10-year lease and have been kind of unscrupulous in their dealings with us. And I could go into detail with that at some other time, but I just want you to know that there’s some stuff going on with general aviation at the Eugene Airport that needs to really be looked into.

[00:05:10] They’re still trying to get the city attorney to force us into this new land lease and we’re not going to do it. And you’re going to see a lot of money spent out at the airport with the airport administration having to try to defend their stance on general aviation there.

[00:05:32] Niles Hanson: My name is Niles Hanson. Eugene is a general aviation airport. The aviation traffic in Eugene is primarily general aviation. Only 34 percent can be attributed to commercial aviation.

[00:05:42] This is important because the FAA uses air traffic volume figures to inform themselves on the need for air traffic flow and its safety enhancements and the amount it will make available through grants to facilitate these improvements.

[00:05:53] An airport cannot significantly increase the level of commercial activity. That’s really up to the carriers and they will only take established routes where they can carry people and hopefully full planes.

[00:06:04] However, airports can greatly influence the presence of general aviation on their property. Eugene elected to do this many years ago, more than 50 years ago, they started offering ground leases with incentives to get people to base airplanes there and increase the amount of general aviation traffic.

[00:06:21] Right now, there’s about 700,000 feet of hangar space and business space in Eugene that has all been privately funded on ground leases that were provided by the airport. The incentives that are provided in the leases is that the terms and the footprint of the leases will remain stable. They will be continuously renewed subject to the airport standards, which have to do with appearance and safety. And, if the ground is needed for use by the airport, the airport will purchase the structure at market value.

[00:06:47] This set of stipulations created an investment opportunity and an ongoing market for the structures that preserve the investment. The airport benefited greatly from that decision, the level of general aviation traffic created, and subsequently enjoys the FAA traffic control and safety enhancements second to none.

[00:07:05] But now the current airport administration is contriving to act as if it had made the former decision, which is building their own hangars and leasing them out, by confiscating the privately-funded structures that facilitate the overwhelming general aviation traffic at the airport. The administration justifies this action by stating that it is being compelled to do so by the FAA.

[00:07:25] This statement is factually incorrect. They further cite best practice in airport management. Best practice is never an absolute. It is always contextual on the environment that is being placed upon. And I submit that the confiscation of private property is not the best practice for the management at the Eugene Airport.

[00:07:44] This course of action must not be allowed to continue. The presence of business and general aviation will be reduced. There will be no motivation for any future private investment to expand the airport facilities and the airport will be compromised.

[00:07:56] Leslie Robinette: Hello, I’m Leslie Robinette. My husband and I own a hangar at the airport, real near Niles’s hangar. And the first thing I want to say is that everything that Niles said was 100% accurate.

[00:08:09] The administration at the airport right now is set on a path to destroy the airport. What is going to happen if you run off the general aviation tenants, which will happen? Because before I let them have my hangar for no compensation, I will tear it down, and you need only read my lease to say that they can have the ground back under reversion, but there is nothing that says that they can have my building, which we built, and all of the hangars out at that airport were built with private funds, and all they really need to do to grow the airport is to stop trying to run off general aviation.

[00:08:51] We’re 75% of the traffic count nationwide. The busiest airports in the country, in the world, five of ’em are in California, have no scheduled air carrier traffic, and they’re much, much busier than Eugene.

[00:09:04] And if they run off the GA traffic, the FAA will take away the tower because they work on takeoffs and landings, not enplanements. If you lose the tower, the city will have to pay Barton (ATC International, Inc.) or somebody to keep the tower open. That will cost you more than any revenue they might hope to gain by taking away our hangars and offering to rent them back to us.

[00:09:31] if you lose the tower and you don’t hire Barton, you’ll lose your air carriers. And now you’ve got nothing. So GA is extremely important. And the director of the airport doesn’t seem to understand this. If I were running the airport, my goal would be to grow GA, get more people like Steve Boulton.

[00:09:51] I’m a flight instructor. Get more people instructing, get more people flying, get the system built up. That’s where your increased grant money is going to come from.

[00:10:00] John Hirons: My name is John Hirons and I would like to confiscate this building. And the reason I say that, that’s what the city of Eugene is attempting to do out at the Eugene Airport with all the hangars. But I want to give you a little bit of chronological fill-in from the last time we went through this.

[00:10:18] That was 2001. Bob Noble was your airport administrator… We had a small meeting at the aviation office, but I had a speakerphone with an aviation attorney on the phone. Bob Noble said these famous words: “It’s the FAA making me confiscate your hangars without any compensation.” On the speakerphone, the roof started to shake. The floor started to heave. Came the two famous words from this aviation attorney, in legalese (excuse my French, but):  Bull s***.

[00:10:58] Leslie Robinette, who you’ve just heard from, talked to Bill Watson from the FAA, and Bill Watson’s comment was, strongly, says that it is not the FAA’s position that the city take possession of the hangars.

[00:11:14] On Oct. 30, (2001), there was a meeting with Kurt Corey and a group of us. Bob Noble stipulates that it is not the FAA requirement that the city have reversions on the hangars or confiscate the hangars.

[00:11:30] City of Eugene: Next, we will hear from Steve Kretsinger.

[00:11:33] Steve Kretsinger: I have a 1937 and a 1938 airplane. They’ve been in my family for over 60 years. They have significant amount of wood in them. So, they are required to be in a hangar at all times. If they’re left out in the weather, especially the Northwest weather, they will decay very rapidly.

[00:11:53] I am a retired air traffic controller. I had 35 years in with the service. I’ve been at Eugene since 1991. So I had 31 years at Eugene and I know that the traffic count… that we have at Eugene (because I was responsible for sending those traffic count numbers to the city, which is probably numbers that they give to you folks) are accurate…

[00:12:19] Eugene’s general aviation count is 68% of the total count. As an air traffic controller, I’m very much aware that our staffing is based on how much traffic we have. If general aviation, being 68% of the total count at Eugene, disappears, then like somebody else said, the justification to have the tower here is going to be lower.

[00:12:44] We have a radar approach control facility here at Eugene. Up at Seattle, they built enough holes for radar scopes to be able to take all of Eugene’s radar positions up there, so they’re ready to do it. If our traffic count goes down, the radar leaves, the tower gets contracted out, and then we’re left with a contract tower.

[00:13:07] Rena Cowan: My name is Rena Cowan. I feel really betrayed by the airport administration. I bought my hangar in 2017. I knew about the previous problem with them trying to take hangars, but it had been solved. And I thought it was solved for good, but apparently not, because here we are back with the same old arguments.

[00:13:27] First of all, (Airport Director) Cathryn Stephens was saying, ‘The FAA is making me do this.’ Absolutely false. And we proved that it was false. We had a letter from the FAA saying, ‘No, we do not require reversions, reversion clauses in leases.’

[00:13:42] And then it was something even more unbelievable. It was: ‘Oh, well, maybe they don’t actually say that, but you get this gut feeling back in the background that maybe, maybe if we don’t have reversion clauses in our leases, then our grant assurances are at risk.’

[00:13:59] This is utterly false. The FAA does not deal with gut feelings. They deal with rules and regulations. They are a very rules-and-regulations type organization. They don’t do gut feelings. And our, the grant assurances are already in place for the expansion of the terminal. We have nothing to do with that.

[00:14:20] I’ve heard that there’s been a saying that, ‘Okay, these hangar owners are in the way of our increasing the size of our terminal.’ Totally wrong. How do we have anything to do with that? But this is what we’re hearing and this is what we are getting no transparency from the airport administration.

[00:14:37] These leases should give everybody what they need and there’s no reason that they can’t. There’s plenty of money coming in from general aviation from the leases the way they’ve been handled in the past.

[00:14:49] There’s no need to change this to something completely new or a new format or a different ground lease amount. You know, we expect the leases to go up and that’s all. We just want to continue like we’ve been doing. We contribute. We want the airport to thrive. There’s no reason to change this and make it crazy.

[00:15:10] Shad Turner: My name is Shad Turner. My wife Cheryl and I own and operate Lawrence Air Service at the Eugene Airport, a designated small business that employs 38 people out there. At times we are the largest employer on the field and that includes the airlines.

[00:15:23] We provide services for all of the NCAA sports flights for both the Ducks and the Beavers and anyone who comes to play them. We provide general aviation maintenance and 100 percent of the emergency aircraft maintenance to all of the airlines. If your plane breaks, it’s my employees that come and fix it for you. They get you back in the air.

[00:15:43] When our hangar lease expires, the airport will either take our hangar, charge us 200% more than our current lease, or make us tear it down. Our hangars provide full-time work for our maintenance employees that service the airlines, which is only part-time work for us.

[00:15:59] Without our hangar, the airport will not only lose the general aviation maintenance, but the airline maintenance—a crucial component for keeping flights from being delayed and passengers missing their flights.

[00:16:10] Also, a major safety issue out there. Without our services, the airlines would then have to take, drive their own mechanics down from Portland, Seattle, and San Francisco.

[00:16:21] Lawrence Air Service mechanics respond within a half hour of being called and solve 95 percent of aircraft issues within the first hour of being called, because we staff three well-trained mechanics at all times.

[00:16:35] In addition, all of the airlines rent space in our hangars for their spare tires, their spare parts, and any equipment they may need to get their airplane back in the air.

[00:16:45] The airport is proposing to increase my rates by 200%. I cannot and will not pass that along to my customers. They would simply take their business to a new, more business-friendly airport.

[00:16:58] Synergy Air Service, which builds aircraft out at the Eugene Airport, is already closing its doors, laying off about a dozen mechanics and moving their business to an airport where they are treated fair and equitable, moving to an airport where they are not being charged for land that they don’t get to use.

[00:17:16] We hangar owners are now being charged for land that we cannot use. How is this fair? How is this equitable?

[00:17:22] City of Eugene: We will hear from Paul Redhead.

[00:17:24] Paul Redhead: Thank you for the opportunity. I’m here in my capacity as a hangar owner, former member of the Airport Advisory Committee, and a real estate broker with recent real-life experience with what the proposed changes in land lease policies at the Eugene Airport will have on value.

[00:17:41] In June 2021, buildings 151 and 153, each comprised of four T-hangars, were listed for sale for $390,000. In late 2022, when the leased area for the land lease was changed from footprint to include landscaping and approach aprons and the rent rate was increased 10 cents a square foot, the annual lease payment for these buildings went from $4,027 a year to $15,694.

[00:18:13] That’s a 290% increase. This resulted in a reduction of the list price to $225,000, a diminution in value of $165,000. In the spring of 2023, the owners just wanted out. They authorized me to offer the buildings at a reduced price to a few qualified buyers. A sale was negotiated and was in escrow at $150,000.

[00:18:39] The buyer noted that the land lease expired in 2026, and although historically leases at Eugene Airport have renewed automatically in 10-year increments, assuming the buildings are in good repair, the buyer inquired as to what the policy will be in 2026. He was informed that the lease would not be renewed, a reversion clause will result in a loss of the asset without compensation.

[00:19:02] Naturally, the transaction was terminated. It’s noted that in 2016 when the last renewal was granted, the owner spent $70,000 in repairs due to the reversion issue. I feel that these hangars are unsaleable. Approximately $400,000 of the owner’s net worth has been confiscated without compensation.

[00:19:24] Please note that these buildings were developed by the owner’s father, have served the general aviation community and the Lane County Sheriff’s Department very well for 47 years, and could very well continue over many, many decades.

[00:19:37] Bruce Lamont: My name is Bruce Lamont. And as someone who’s been involved with general aviation at the Eugene Airport since the 1970s, both as a pilot and a hangar owner, I’ve always been proud to be part of that community.

[00:19:50] My brother and I own four T-hangar buildings at the airport. Those buildings can house up to 39 aircraft. After we pay our land lease, insurance, taxes, and building maintenance, we make a little money on the buildings, as long as we can keep them full.

[00:20:04] Last year was the first time they’ve been full in the past 15 years. That was short-lived and we’re now at a 17% vacancy rate. I expect this to get worse as a number of tenants who have been informed that they’re aware of what’s going on in Eugene, they’re starting to look for hangar space at other airports.

[00:20:22] The GA community is interpreting the actions of the airport as unfriendly to general aviation, which is too bad because Eugene needs GA. If Eugene has a big dip in GA traffic, Eugene could lose federal funds.

[00:20:36] Back to the basic costs. The new leases have us paying for over three times the amount of ground that we paid for in the past. In the past, the lease covered the footprint of the building. Now the airport is asking us to pay for extra ground around the hangars that we cannot use. That along with the ground lease rate increase put us at nearly four times what we’re currently paying. And as Paul (Redhead) told you, the one hangar that was $4,000 is now over $15,000 a year, and that’s unacceptable.

[00:21:07] Communication with the current administration at the airport is not good, and the feeling of distrust among the GA community is high. They are currently gathering personal information now, to find out who’s in what hangar and different things, I think, so they can cut us out.

[00:21:23] Reversion: Currently there are no reversion clauses in our existing leases. They basically say as long as the building is in good repair, we will give you a lease extension. Over the past three years, the airport administration has been working pretty much in secret to change our leases and take over our privately-owned hangars.

[00:21:40] They tell us that if our buildings are 40 years old, we can have a new lease if we want to pay a large fee on top of the lease payment. And at 50 years, they will not give us a new lease at all. How many of you live in a house that’s 50 years old? I mean, you know.

[00:21:56] The last T-hangar building in Eugene was built in 2006. The cost of building versus the amount of rent they bring in, and the high cost of land lease, there won’t be any new hangars built.

[00:22:08] John Q: Assistant Airport Director Andrew Martz said conversations are continuing with both the FAA and tenants, and all current leases will be honored, including extensions allowed in the lease language.

Assistant Director Martz said the airport brought in nationally recognized consultants to review FAA guidance about the “highest and best use” of airport property. He said Eugene is in line with other general aviation airports, including Medford, Bend-Redmond, Troutdale, and Hillsboro.

He said Eugene does not anticipate losing its airport tower.

But the public comments rattled one resident. With Eugene’s homelessness crisis spreading beyond layoffs, budget cuts, and small business closures to take down the city’s only hospital, Warren Beer:

[00:22:52] Warren Beer: Good evening, my name is Warren Beer. My wife and I have lived in Eugene for three years, but Kathryn’s family has been a part of this community for generations, going back to the 1860s. And I must admit, I’m shocked at what I’ve heard tonight. We’re about to lose the control tower for our airport. We’ve lost a hospital, and we’re about to lose a professional baseball team. Is this a city in decline? Is this what you as the city council want to be remembered for in our collective consciousness?

[00:23:26] John Q: A survey last year found almost 60% of residents had little or no confidence in the city council. The latest news from airport hangar owners is unlikely to improve their ratings.