How does the Fairhope Airport Authority’s latest notice of availability for airport hangar leases differ from its last? To begin with, it was publicly advertised.
For the past two weeks, the Authority published a notice in the Mobile Press-Register soliciting applications from private developers to build hangars on one of five available hangar pads at the H.L. Sonny Callahan Airport, south of town off Highway 32.
The Authority is seeking tenants to lease the pads for at least 30 years, construct a minimum 6,000-square-foot, $500,000 hangar that will eventually become the property of the Authority, and agree to a ground lease rate of 27 cents per square foot per year, plus the Authority’s 7-cent-per-gallon fee added to all fuel purchased on site.
In late 2014, the last time two hangar pads were available at the airport, the Authority claimed it simply “sent out” a RFP and “was approached by two competing groups” as a result. Noting airport authorities are generally exempt from Alabama bid laws, the Authority began negotiations with both.
One, Cedar Creek, LLC, owned by Alan Boan, entered into a lease within a few months. The other, Executive Aviation Group owned by Kel Jones, allegedly engaged in negotiations, but never submitted the required financial documentation by the Authority’s August 2015 deadline.
Then, after several members of the Authority board resigned along with its attorney, a new request for proposals on the remaining hangar pad was publicly advertised, eventually receiving three letters of interest: one from Jones, one from an individual named Terry Chapman and a third from Ray Hix, an Authority board member. Hix, a commercial real estate developer, had incorporated Mid-Bay Air, LLC, in 2011 and was appointed to the Fairhope Airport Authority in 2015, after the other members had resigned but during the first round of negotiations with Jones.
All three submitted bids and by November, Hix and Mid-Bay Air were awarded the lease. The Authority determined Hix’s bid, with a more expensive hangar and higher anticipated fuel use, “would result in 21 percent more annualized income to the Authority than the next highest bid.”
Defending what was a controversial decision to some, the Authority claimed Hix recused himself from board discussions about the bid and, further, was precleared to submit his bid by an informal opinion of the Alabama Ethics Commission.
Since then, both Hix and Boan have completed their hangars at the airport.
Fast forward to last week, and Authority Board President Joe McEnerney said this time, “Anybody who is interested will have a chance to submit a proposal.”
McEnerney said as the airport has since developed a master plan and received nearly $9 million in funding from the Federal Aviation Administration (FAA), he has sent 20 to 30 letters to people who have expressed interest in leasing hangar space. Still, “I’d be surprised if we get five qualified folks,” he said.
Meanwhile, Authority member Jack Burrell, City Council liaison on the board, insinuated at a special-called meeting in January that these new efforts could still lead to problems of their own. Only two of the five pads have paved access, and the Authority disclosed in its notice that paved access to the other three “is dependent largely upon future funding from the [FAA].”
According to the notice, the application “must identify which of the five” pads is requested by the applicant. So, all bids being equal, if two applicants are interested in the same pad, how will the Authority determine who is awarded the lease?
Without providing details, McEnerney said the Authority will simply weigh who is making the greatest investment. The notice asks applicants to “provide a fixed baseline for annual fuel usage,” but does not mention total investment costs. A request to review the application itself was not acknowledged by press time, but last week McEnerney suggested whoever “will have the most employees” and “best hangars” will be part of the Authority’s consideration.
At the same meeting in January, Burrell accused McEnerney of guaranteeing certain applicants hangars before the notice had even been published.
“I’ve had people at the airport telling me, ‘you’ve told them they’re going to get a spot …,’” Burrell said. “How are you doing that? How do you know that? You can’t make a promise you can’t keep.”
McEnerney denied it, while Burrell said other Authority members had heard the same thing. If true, “it destroys the competitive nature” of the process, Burrell warned.
But at the meeting and again last week, McEnerney said he had made no such guarantees, but had simply suggested there would probably be fewer applicants than there are available leases.
“That was just not true … it was an off-the-cuff remark,” he said last week. “I’ve been out there trying to tell people the best I can in the aviation community about what we have. I haven’t promised anybody anything about the availability of hangars. … This process has been transparent, and ultimately the board will make the decision.”
Authority attorney Josh Myrick acknowledged last week legislation exempts airport authorities from bid laws and notification requirements, adding the notice of availability was published to “generate interest” and “get the best possible tenants.”
“But this is probably going to be an ongoing process until all of those pads are under leases,” he said. “Just because somebody expresses interest does not mean we’ll be able to agree on terms of ground lease.”
The Authority will receive sealed applications between March 22 and April 5, and “tentative” selections of prospective tenants will be made at the Authority’s regular board meeting April 16.
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