Local Airport Lease Dispute Raises Costs, Offers Three Compromise Options

Dubois County Flight Services and the Dubois County Airport Authority met last week to continue a long running dispute over the renewal terms for a hangar built in 1992 by Dubois County Flight Services under the original lease. The lease allows the airport authority, after 30 years, to raise rates up to 1/20 of the building’s replacement cost, a clause that has set the stage for sharply different appraisals and competing rent calculations.

At the December 23 meeting, CEO Doug Bawel of Jasper Engines and Transmissions presented three compromise options after Flight Services commissioned two appraisals to counter the Airport Authority appraisal by Aviation Business Support. Bawel described the financial strain on owners, saying, “We are owned by our associate owners, so this has become very personal for me because it is our associate owners’ money. Thus far we have spent $88,000 in legal opinions and appraisals not including any of our own time.”

The first option would average all three appraisals and set annual rent at $53,676 with a 2.5 percent annual increase for 20 years plus two five year options. The second would use the AMCG appraisal plus 13.5 percent to arrive at $61,000 annually, with the Airport Authority allowed to advertise for higher offers while Flight Services retains first right of refusal. The third proposal would have Flight Services purchase the building for $756,175 based on the AMCG appraisal and lease the land for an initial 30 year term plus three 10 year options. Bawel noted current payments amount to $1.76 per square foot and his offers would raise that to $4.16 per square foot.

The split in valuations reflects broader appraisal challenges. Bawel criticized ABS for using comparables in larger metro markets, including Chicago. Airport Authority legal counsel Phil Schneider countered on appraisal quality, saying, “The comparable hangar rents that they cite in the report are all higher than what they came up recommending.” Board member Ken Schnaus acknowledged the difficulty of finding true comparables for a regional airport, saying, “One of the problems is there’s not a lot of us, so to try and find comparables it’s difficult to do, so it has to go out further to find this.” He later added, “We’re on the same team. We’re just trying to understand what our costs are going forward and we’re trying to cover those. We understand where you’re all coming from.”

For local residents and businesses the outcome will affect operating costs for based aircraft, associated aviation services and the financial position of associate owners who use the hangar. The authority agreed to request detailed methodology from its appraiser ABS before making a final decision. Officials tabled the matter pending receipt of that documentation and plan another meeting once the appraiser’s background is provided.