BY KRISTI REED
For the past two years, the Barrow County Airport Authority and the airport tenants have been at odds over the definition of fair market value.
To settle the issue, the authority turned to an impartial third party to analyze what rates should be charged to lease airport property.
The appraisal, released today, shows that rents currently charged to airport tenants are well below fair market value rates – significantly below in some instances.
In 2006, Airport Director Glen Boyd began a comprehensive review of the airport’s leases. He discovered that periodic rent adjustment clauses in the leases had not been enforced. The result – several of the tenants had experienced little or no rate increases in the past several years.
The authority reviewed the leases and presented their calculations for fair market value to the tenants.
“We have board members that very thoughtfully considered what fair market value would be based on other properties in the area,” Boyd said.
Some of the tenants disagreed with the authority’s assessments.
Paula Cash, owner of the Flight School of Barrow County, was appalled to learn that the rent adjustments would increase her assessment by 58 percent.
Cash said she and other tenants asked for a third party appraisal when they could not determine how the authority reached their estimation of fair market value.
“They just refused to work with us,” Cash said. “They have absolutely ignored us for two years.”
After numerous protests from Cash and other tenants, the authority hired Keaton and Associates this past February to conduct a rental survey of aircraft hangars and commercial space at the airport.
The results may not be welcomed by some. Fair market value for corporate hangars, now leased at $2.54 per square foot per year, was estimated to be $3.40 to $4.00 per square foot per year according to the study. The office space currently leased for $6.87 per square foot per year was valued at $9.70 to $13.00 per square foot per year.
Boyd said the results of the survey present a dilemma for the authority.
“The authority has tried to be sensitive to the needs of the tenant and not price them out of their tenancy,” he said.
At the same time, the authority has an obligation to the citizens of Barrow County, Boyd added.
“They have a duty they have to fulfill. The airport has tried to be fair and respond to both the tenants and the citizens of Barrow,” he said. “It’s going to be a balancing act.”
Having spent public money to obtain a fair assessment of the rents creates a need for the authority to act on the information, said Boyd.
“They are trying to reach that balance point between their duty and obligation to the people of Barrow County while making sure these companies stay in business,” he said.
Complicating matters for the authority is the Federal Aviation Administration (FAA). Since the airport receives federal funds, they are bound by certain grant stipulations. Among those requirements – the airport must receive fair market value for its properties.
“If they invest in a local community, they want to know that the local airport is getting money back from that investment,” Boyd said. The FAA wants the airport to be self-supporting, he explained.
Cash said she has been fighting since November of 2006 to come to terms with the authority regarding her lease. For her, the appraisal is long overdue. Three weeks ago, Cash’s attorney filed a lawsuit suing the authority, Barrow County and Chairman Doug Garrison for breach of contract.
Cash said she wants the authority to interpret her lease correctly, not in the way that suits their needs.
“I’m glad they came out with the appraisal, but it sure is late,” she said.
In the next few weeks, the authority must decide how it will use the information from the appraisal. The decision will impact Cash and other airport tenants as they deal with the effects that rising fuel prices and a bad economy are having on the general aviation business.
Boyd said that if the authority decides to increase rates, the increases would only take place as specified within the tenants' current lease or when the lease renewed.
“This authority has been very reasonable. They will try to use this information in a balanced, fair way,” Boyd said.