Expectations for Hangar Revenue Never Materialized
Lebanon — Six years ago, the City Council approved the construction of 20 hangars on city-owned property in an effort to reduce the airport’s growing deficits — unfortunately, it didn’t work out that way.
The council voted in early April of 2007 to OK the project at a cost of $1.2 million, with the hopes that leasing out the hangars could contribute about $135,000 in net revenue by the end of 2008. While the hangars were aimed at reducing the yearly deficits, the revenue from the leases has failed in recent years to even cover the annual cost of the city bond used to finance the project.
Airport Manager Rick Dyment said yesterday that the hangars, which he estimated were anywhere from 60 to 75 percent occupied, bring in about $70,000 every year. The yearly cost of the debt service, he said, is about $115,000. Though he could not say with certainty, Dyment said the bond runs from 18 to 20 years.
“It doesn’t cover the airport department’s cost of the T-hangars yet,” said Dyment, though he added that there is still hope that the hangars will reach full capacity. The 20 so-called “T-hangars,” named after the shape of the space the plane occupies, are located in two buildings with 10 hangars each.
Dyment said that the difference in what the airport owes on the hangars and what it nets in revenue is covered by another line item within the department’s budget. He also pointed out that the yearly revenue covers the cost of construction, but not the cost of the loan’s interest, which is about $49,000 annually.
“Clearly, when they get filled up, we would expect them to break even on our payment requirements,” he said.
More than one city councilor referenced the 2007 hangar decision when discussing a proposal before the Council this year to expand the airport’s north-south runway. City Councilor Karen Liot Hill, who joined the governing body in 2005, reflected on the vote when discussing the airport’s financial situation last week.
“The intention was very good on that one,” she said. “There was obviously some risk involved, and it didn’t pan out the way we had hoped.”
According to Finance Director Len Jarvi, the city’s general fund — which is supported primarily through property taxes — has contributed nearly $2 million toward the Municipal Airport Fund since 2009.
Ben Conarck can be reached at email@example.com or 603-727-3213.