Public airport hangar financing?

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Duster

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Duster
Planning to build a hangar at a public airport, 25 year land lease etc., looking for direct experience with companies who offer this service. I'd appreciate any input from those who have been down this road.

Thanks


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I looked into it a few years ago. My bank was not interested. I know the bankers and they said that the 30 day 'we can take the hangar from you' clause in the land agreement made it impossible to get a loan.
 
All signs when I was looking pointed to a personal or Home Equity loan. There might be some banks used to doing business loans that might be ok with the land lease requirements.
 
texasag93 said:
I looked into it a few years ago. My bank was not interested. I know the bankers and they said that the 30 day 'we can take the hangar from you' clause in the land agreement made it impossible to get a loan.
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I don't blame them. What a lousy deal. If I wanted to get shaken by my ankles I'd just get divorced lol.
 
texasag93 said:
I looked into it a few years ago. My bank was not interested. I know the bankers and they said that the 30 day 'we can take the hangar from you' clause in the land agreement made it impossible to get a loan.
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Seriously? I didn’t know they had such a clause in those agreements. Definitely something to look out for if I ever go that route.
 
What happens at the end of 25 years? Twenty five years doesn't seem as long to me now as it did 50 years ago.
 
JOhnH said:
What happens at the end of 25 years? Twenty five years doesn't seem as long to me now as it did 50 years ago.
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I'm sure the lease is just renewed. Your best bet is to call the airport manager with all your questions on a note pad. That way you can go through your list and fill in the blanks. Here in Juneau I think it's a 20 year lease. The price you pay per year is based on the square footage. Don't quote me but I think it's about $0.38/square foot as an annual payment, adjusted every 5 years.

Good luck.
 
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JOhnH said:
What happens at the end of 25 years? Twenty five years doesn't seem as long to me now as it did 50 years ago.
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What's supposed to happen is the hangar becomes the airport's and they rent it back to you. To me, it's a way to develop the airport for people who really know what they need rather than speculate with government funds. In order to work, the hangar tenants get a good lease on the land for 25 years before they have to rent the hangar back. Trouble is, folks don't like giving their property away at the end of the lease, so they apply pressure from the leverage they have as business owners/tax payers to extend the leases. Some places that works, others not so much, but how do you know in the beginning how it turns out in the end?
 
dtuuri said:
What's supposed to happen is the hangar becomes the airport's and they rent it back to you. To me, it's a way to develop the airport for people who really know what they need rather than speculate with government funds. In order to work, the hangar tenants get a good lease on the land for 25 years before they have to rent the hangar back. Trouble is, folks don't like giving their property away at the end of the lease, so they apply pressure from the leverage they have as business owners/tax payers to extend the leases. Some places that works, others not so much, but how do you know in the beginning how it turns out in the end?
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This is exactly how I have seen it happen. After 25 years, everyone forgets that they agreed to give the hangar to the airport and rent it back from them. At the beginning it sounds like a fair deal for the cheap land lease, but after owning and maintaining it for 25 years, no one wants to give them up and they all start to vilify the airport for taking "their" hangars from them. They cause a big commotion over it, and either they get new leases, sometimes just month to month sometimes for long periods of time, or they have to follow through with the agreement made 25 or more years prior. To make matters worse, often these hangars have changed owners several times in those 25 years.

It can be a good deal over the 25 year period if you calculate the cost of renting an existing hangar vs the cost of building the hangar + land lease.
 
My basic understanding as always been that:

You sign a land lease with the airport for a fixed term, i.e. 25 years.
You pay rent for that 25 years on the land only.
You pay for the hangar to be built.
There is no rent due on the hangar for those 25 years. You own it during this time frame.
After the 25 years, the hangar becomes airport property.
After that you pay rent on both hangar and land. Hopefully at a fair rate.
During the 25 year land lease, you can sell the hangar to someone else. They typically would still be subject to the 25 year term.
That person would need to secure a new lease with the airport for the land depending on transfer clauses in the lease.

What I was not aware of are leases that says the airport can just take your hangar with 30 days notice before the lease term expires.
 
SkyDog58 said:
What I was not aware of are leases that says the airport can just take your hangar with 30 days notice before the lease term expires.
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Yeah, me neither unless maybe that applies to the succeeding lease term.
 
I suppose you could un-build it before giving the land access back to the airport.
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hindsight2020 said:
I suppose you could un-build it before giving the land access back to the airport.
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I know someone who ran an airport business, and several years after the lease expired, was asked to return the clean, vacant lot to the county. Meaning without the hangar that he had built and expanded over the years. In 30 days from the letter, too.
 
Hank S said:
I know someone who ran an airport business, and several years after the lease expired, was asked to return the clean, vacant lot to the county. Meaning without the hangar that he had built and expanded over the years. In 30 days from the letter, too.
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and people wonder why the avocation isnt expanding.....
 
As an airport operator, I personally don't want to take over the hangar. Our standard lease is for 50 years. After 50 years, I can expect the building will need some significant investment to keep it up. I'd also assume the owner stopped spending much money on a hangar they were about to lose. Much easier in the long run to just collect the land lease, and let the tenant handle maintenance.
 
Use a Small or local financial institution. We’ve done it before with the bank securing their interest using a UCC1A filing. Probably not bullet proof on banks end but did have relationship with them prior.
 
I've never built a hangar, just bought them. Airport leases can and should be negotiated. I have a 30 year lease and at the end of the term the land MAY revert to the city, it is not definitive. Along with that the lease says that I can take the building down and they just get the land that it sits on. I don't know of very many airports in recent history that actually have taken the building and used it for themselves to rent the land back to. Banks can do it, but it's a little more complex (US Bank I know can do it) because of the lack of security. Just don't expect a 30 year loan on a property in which you only have a 25 year lease. You can also re-negotiate leases and extend them by adding a little bit of square footage or something later on down the road which will essentially reset the clock. Same if you sell it to your wife/friend/kid. Hangars, even acquired from almost free, are not usually big money makers so unless you're somewhere where hangars are hugely valuable I wouldn't worry so much about the City taking your hangar away.
 
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