Hangar rental hike will lag behind cost increases

The Park Rapids Airport Commission voted Wednesday, April 12 to raise hangar rental rates by 3% for 2023.

City Administrator Angel Weasner said the commission chose not to raise the rates in 2022, but advised making an increase this year because maintenance expenses have gone up, including snow and ice removal. She said the state reimburses some of these expenses but not all.

Weasner said she consulted other cities and learned that their hangar rate increases range from 0 to 6% based on the market. She suggested a 2% increase this year, about $25.

Commission chair Thom Peterson suggested going with 3% if not higher, and commission member David De La Hunt advised putting an automatic escalator in the lease agreements to keep up with rising costs.

Asked how much of an increase would be necessary to meet expenses, Weasner said it was over 12%, but she agreed this would not be practical. Instead, she said, she wants to put a plan together for a more reasonable, regular escalation.

Responding to De La Hunt’s concern about getting ahead of inflation, city council representative Tim Little said, “I don’t think, right now, you can get ahead of inflation.”

De La Hunt suggested starting with a 5% escalator annually until rental rates start gaining on the inflation. He admitted, “You can’t do that forever, either. At some point you want to settle back in at 2 or 3%.”

Members said a 3% increase looks like “a deal” compared to the steep property tax increases in the last couple years.

Commission member Dan Dyre suggested raising rates 3% every year. Weasner said a 3% increase this year would come to about $41.

She said a decision would leave time to notify hangar tenants of the increase and give them time to decide whether they want to continue with their lease. Asked about demand for hangar rentals, Weasner said there are 33 names on the hangar waiting list.

Asked about De La Hunt’s idea of starting with a 5% increase, Weasner said she would feel more comfortable having a cash-flow plan before making a decision next year, also accounting for a new hangar the city plans to build if funding is approved. Meantime, she proposed just raising the rates a small amount this year.

Weasner also noted that additional COVID-19 relief funds were included in the airport’s finances for the last two years, but that funding will no longer be available.

De La Hunt made a motion to raise this year’s hangar rental rates by 3%, and the motion passed without dissent, absent commission members Lance Bagstad and Craig Rossman.

In other business, the commission and project engineer Matt Gustafson with TKDA discussed grant applications for updating the airport’s arrival-departure building, snow removal equipment (SRE) and a future large runway reconstruction project.

Gustafson also mentioned he is working on a close-out report for last year’s taxilane project.

Tom Hass with Park Rapids Avionics asked about a timeline to replace the tarmac on the airport’s apron area. Airport manager Scott Burlingame noted the apron by Hass’s hangar is in particularly bad shape, adding that the airport also has a gravel road behind the industrial park that needs to be paved.

Gustafson said projects like these have a low priority for grant funding, estimating that it would take two years for grant awards to move from runways to apron projects.

“You can use entitlement and infrastructure dollars on it,” he suggested, noting that Park Rapids receives $150,000 per year that, this year, is being used to purchase the SRE, and will also be needed for the upcoming hangar project.

Asked about utility connections to private hangars, Gustafson said the water and sewer services are already stubbed in but hangar developers will have to get electric and gas service lines installed individually.

Weasner reported that the airport has had expenses totaling $55,828 for the year so far, with about $136,000 (71%) of its budget remaining. She said insurance is the biggest expense.

The next regular airport commission meeting is scheduled for 9:30 a.m. Wednesday, July 19 at city hall.