WESTFIELD – The Airport Commission is seeking to restructure leases with tenants at the Barnes Regional Airport through a new phased approach.
The commission voted Thursday to approve a recommendation from Airport Manager Brian Barnes to take a two phased approach to reset lease agreements. Phase one will focus on the lease agreements for tenants in city-owned hangers, while the second phase will address leases for tenants in privately owned facilities.
Leases became an issue following a decision by the Appellate Tax Board regarding a tax appeal pertaining to airport facilities located on municipal property.
Traditionally, airport facilities cited on municipally owned land were treated as exempt from property taxes. The Leominster Board of Assessors assessed the value of those facilities and a property tax, which led to the appeal to the Appellate Tax Board. The board upheld the Leominster Board of Assessors and required all municipalities with airports to tax facilities located on city-owned property.
The city’s Airport Commission voted to offset the new tax by lowering the leases for those facilities.
“We think the taxes are on the high side,” Barnes said Friday, “but the problem is that taxes don’t count as airport revenue. The goal of the FAA (Federal Aviation Administration) is that all airports be self-sustaining.”
“We took the hit before anyone here (by off setting the taxes through lower leases),” Barnes said. “If a tenant’s lease was $500 and the tax $100, we collected only $400.”
“We have to start bringing revenue back into the airport. We’re trying to be sensitive, to ease (tenants) back into it, bringing (leases) back to a fair market value,” he said.
Tenants in city-owned T hangers will be the first to see the lease adjustments in two incremental increases, one in February of 2012 and the second on July 1, 2012, the first day of the 2013 fiscal budget year.
Tenants renting space in the airport terminal and in privately owned hangers will continue to receive the tax/lease offset until those lease agreements are restructured during the next year.
The greatest challenge is that assessing a lease for tenants at Barnes is not an apple-to-apple comparison with other municipal airports.
“There are so many different factors involved,” Barnes said. “We’re huge with a military presence, we have 24-hour snow removal, 24-hour operations, and security, services most municipal airports can’t provide.”
Barnes said that the city’s Law Department is involved in the process of establishing new fair-market lease agreements
