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Despite chorus of objection from hangar owners, Ogden City adopts new airport policy

By Mitch Shaw standard-Examiner - | Apr 21, 2021

OGDEN — The Ogden City Council has approved a host of new policy changes at the Ogden-Hinckley Airport.

But on Tuesday night, the council’s passage of those changes was preceded by an adamant chorus of objections, made by a large contingent of airport hangar owners who said the action will hurt people who have previously committed to support the airport.

The amendments adopted by the council include several price increases for common airport activities like parking, aircraft landing and tie down fees, and for security badges. The ordinance also allows the city to establish fee waiver incentive programs to attract aeronautical services to the airport. The city’s 20-year master plan for the facility shows that the city wants to recruit aerospace companies to the site and continue to develop commercial passenger air service to make the airport more financially sound. The city wants to redevelop the airport’s west side to help meet those objectives.

While those aforementioned changes have been deemed necessary by Ogden officials, the major topic of conversation associated with the action on Tuesday was a set of new hangar lease parameters at the airport.

Prior to the adoption of the ordinance, the city granted leases of a maximum 15 years for a private hangar, 20 years for a commercial aeronautical operator and 25 year for “fixed based operators,” which are organizations that provide aeronautical services like fueling, aircraft rental, aircraft maintenance, flight instruction and more. Ogden City Attorney Gary Williams said with the pending west side development, the mayor’s office has concluded that the old lease terms didn’t allow prospective tenants to pay off construction debts fast enough, which hinders the city’s ability to attract new commercial enterprises.

The new ordinance gives the Ogden airport manager the authority to grant leases of up to 40 years, which Williams says gives tenants time to amortize their investment. Those who build at the airport own whatever they build but have to pay rent to operate on city property. The airport lease agreements are essentially a form of construction financing, where a particular tenant pays for construction on Ogden’s airport and then pays a discounted rent to the city.

Existing lease agreements will be honored under the city’s new plan, but the rub with the action is the city’s intent to begin exercising what is known as “reversionary rights.” Reversionary rights allow a landlord, in this case Ogden City, to take ownership of property that sits on a leased premises after a lease expires. Williams said the amendments, and specifically the renewed city interest in exercising reversionary rights, are meant provide a “forecast” to current tenants about the future of the airport. The measure will also help the city redevelop clusters of hangars that are near the end of their useful lives.

“The city … for many years has only rarely exercised its reversionary rights in these hangars,” Williams said. “There’s been much discussion amongst airport managers and (city) administration … and even in some public meetings, talking about the eventual day that the city would exercise reversionary rights. … So now we want to use a new standard as a forecast for everybody to know what the city is expected to do in the future for lease agreements.”

But some current, general aviation hangar owners whose leases will expire soon, and presumably not be renewed, say the city’s plan is unfair to them.

Ogden resident Martin O’Loughlin operates five businesses out of a hangar at the airport and says he’s invested nearly $500,000 to bring it up to modern standards and get a commercial lease from the city. He said if the city is allowed to take his hangar when his lease is up, he’s essentially losing his investment for nothing in return. O’Loughlin said before making that investment, he researched the city’s long-term plans and compared notes with airport neighbors who had similar leases, feeling he was making the right move. He said the city’s new goal effectively blindsided him.

“This proposal has some dramatic effects on people who invested in Ogden City and at the Ogden airport in good faith,” O’Loughlin said.

Dave Westwood is a city council member in Red Lodge, Montana, but he owns a hangar at the airport. He said when he purchased property it was based on the understanding he could own it, sell it or even leave it to heirs. He said now he’s essentially stuck with the property and at the mercy of the city because the new policy immediately devalues his hangar, making any attempts to get out from under it by selling to someone else useless.

Layton-based attorney Doug Durbano, who is representing a group at the airport calling themselves the “Ogden Regional Airport Association” described the city’s plan as a government taking. In so many words, Durbano said the city’s plan, with the reversionary clause pursuance, would invite a lawsuit.

“The adoption of the ordinance and amendments as proposed creates a legal mine field that will be very, very challenging,” Durbano said.

The attorney asked the city council to table the item and allow the ORAA and its legal representation to discuss the matter further in a council work session. Council members Marcia White, Angela Choberka and Doug Stephens said they were amenable to further discussion, but the remaining members of the council said the idea was impractical. Council Chair Bart Blair and members Rich Hyer and Ben Nadolski all said they felt ill equipped to sit down and negotiate with an attorney. The trio felt that those discussions would be better suited to Williams, who himself said he’s already discussed the issue at length with Durbano.

While the city’s aim to begin exercising reversionary rights is new, Williams said the reversionary clause been in all airport contracts for decades.

“There is no surprise,” he said. “I cannot believe that everybody who spoke to you tonight did not read their contract, but even if they didn’t … they are bound to the terms.”

The council ultimately approved the city’s airport plan, with White and Stephens voting against it. The pair said their “no” vote came not because they are against the proposal, but felt the issue should be discussed more.

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