The City owns three buildings at the airport which have spaces available for individual aircraft to rent.  Buildings #2 & #3 are fully enclosed, with basic electricity provided in the units.  Building #1 is a simple open shade-structure which provides some protection from most of the elements.  It is undetermined when Building #1 was constructed, but based on records from the Airport Master Plan, likely dates to the 1950's.

City Council, on August 26, 2019 approved a recommendation from the Airport Advisory Committee (AAC) to raise hangar rents for all units in the enclosed buildings #2 & #3 to $180 and $205 per month, respectively.  At the time, the net annual increase in revenue was estimated to be $7,800 per year.  It was directed by Council, at the recommendation of the AAC, to dedicate all net increase in hangar rental revenue in to a Hangar Construction Reserve Fund for the purpose of constructing additional hangars for rent in the future.  The intention being twofold, 1) begin accruing a reserve balance over several years to be used toward new hangar construction, and 2) increase rental rates to a point that would allow for a future marginal rent increase to cover ongoing debt-service of newly constructed hangars.

The AAC, at it's 12/1/2021 meeting, unanimously requested that the Council now also increase the monthly rental rates for the "open" hangars in Building #1 from $65 per month to $100 per month.  It is unknown when the last time was that this rate was adjusted, but it is assumed to be at least 20 years.  Building #1 has space for 10 planes, it currently has 7 paying tenants, and occupancy has remained relatively stable between 7-10 tenants for the past several years.  It is therefore estimated that this adjustment will increase annual hangar revenue at the airport by an additional $2,900 to $4,200 per year.

It is further recommended that the additional marginal revenue also be dedicated to the Airport's Hangar Construction Reserve Fund, for the same reasons outlined above.

Although there are currently 3 vacancies in Building #1, it is important to understand that there is, and has long been, a waiting list for space in the enclosed hangars in buildings #2 & #3.  That list is partially populated by existing tenants of Building #1 who wish to move in to an enclosed space, even at a higher rate, as well as a number of others wishing to relocate from the Tri-Cities (Richland, Pasco, and Prosser) after the Kennewick airport closed in 2014.  The real estate market for hangars has changed significantly since the open-hangars were originally constructed in the 1950's.  The market is more interested in paying more for an enclosed hangar than paying less for an open hangar.

Moving forward, it is still yet to be determined how/where future hangar construction may take place at the airport.  It may make sense to simply demolish the existing open hangar Building #1, and replace it with an enclosed facility.  This option would come with lower up-front costs associated with constructing new taxilanes and similar infrastructure serving the building, but would only replace existing aircraft storage capacity on the airport.  The other option would be to construct an additional facility, which would likely be more costly upfront, but would result in a net-gain of aircraft storage space.

This action is anticipated to result in a net annual increase in revenue at the airport of $2,900 to $4,200 per year.

Outside of the resolution, staff is also seeking Council guidance to direct the net revenue gain in to a hangar construction reserve fund, or to allow the gain to be absorbed in to the airport to offset normal operational costs.

1. Approve the resolution.

2. Reject the resolution.

3. Table the resolution and seek clarification.