Durango City Council offered preliminary support Tuesday for a lease-to-own purchasing mechanism authorizing the Durango-La Plata County Airport to buy about 12.5 acres of land with two buildings on it just northeast of the existing terminal.
The Durango-La Plata County Airport received preliminary permission and unanimous support from city leaders at a special meeting to use revenue from passenger facility charges to support incremental lease payments on an almost $4 million acquisition of property near the airport.
The city plans to pay 3.5% interest on the $3.9 million purchase of the property, said Tony Vicari, aviation director at the airport. If the ordinance is approved on second reading at a public hearing next week, it would give airport administration the authority to pay anywhere from $450,000 to $491,000 each year for 10 years to acquire the property.
The passenger facility charge, which city leaders said should be used to purchase the property, is a $4.50 fee applied to all passengers flying out of DRO. The PFC fund has $3.65 million and an annual revenue of $735,000, according to information provided to City Council.
The airport commission spent about six months researching purchasing options, including buying the property outright through PFC funds or seeking private loans from local banks, and decided a lease-to-own agreement is the most prudent for airport finances, Vicari said.
Part of the agreement presented to City Council includes a two-year sublease agreement for the two buildings on the 12.5 acres of property. If approved, the sublease with Crossfire LLC would provide the airport with an additional $12,500 in monthly revenue until December 2019, when monthly rent for the buildings is scheduled to increase to $16,250.
Dean Brookie, who serves as a City Council liaison to the airport commission, said the money collected from the lease will effectively pay for the interest accrued through the purchase agreement.
The airport could have purchased the property outright, Brookie said, but doing so would have depleted airport funds and delayed current projects, including one to expand the airport’s terminal. And taking money from another fund would be improper, he said.
“It’s not sales tax, that’s not property tax, that’s people getting on airplanes,” Brookie said of the funding for the purchase. “Why rob that fund to pay for this when in fact no tax dollars are paying for this at all.”
The land will likely be used for passenger vehicle parking expansion, rental car facilities, circulation road and/or airport entrance road realignment, according to information staff provided to City Council.
A second reading and public hearing on an ordinance allowing the airport to pursue a lease-to-own agreement for the 12.5-acre property are scheduled for City Council’s regular meeting at 6:30 p.m. Tuesday, June 4.