In a memorandum received by Historic City News this afternoon, Edward R. Wuellner addressed rumors circulating about the St. Johns County Airport Authority’s rate making decisions.
“A significant amount of misinformation has been circulating”, Wuellner said.
At the center of much of the controversy are the rental rates being charged to pilots and others for 50’x50’ and 50’x60’ box hangar units. Wuellner said, “At this point there has been no proposal offered or being considered that would raise the rates communicated and implemented over the last couple of years.”
Rumors indicating that we were raising those rates to nearly double those currently in place are simply “unfounded”, according to Wuellner.
The Authority “has a long-established minimum return on investment target of 7% per year”, according to Wuellner. “This is based on a 20-year period of time. This means that the Authority, by policy, requires revenue producing projects to generate at least 7% on the Authority’s investment when looked at over a 20-year period of time.”
In evaluating the rental rates proposed for the new T-Hangars and Box Hangars, Wuellner pointed out that the Airport Authority used a professionally developed rate survey. Wuellner said that both the FAA and FDOT require revenue producing assets to be representative of “fair market rental value”.
Accordingly, the Airport Authority adopted its first rental increase in the previous 18 months, however, some tenants are unhappy with the higher charges.
Before they were constructed, Wuellner says that there was a waiting list of more than 30 individuals for these new hangar units.
According to the memorandum, the Airport Authority isolated the new rental hangars from the existing hangars in making its investment return calculations. This methodology prevented a “dramatic” rent increase from being required of all established hangar tenants.
Using the investment return formula originally adopted by the Airport Authority, the rental rate being asked for the new hangars was nearly 2-times the rate being charged for other similar units. Consequently, leasing efforts of the new 50’x50’ and 50’x60’ failed.
The Authority took action at their last meeting to more closely align the rent of the new hangars to that currently being charged for the older box hangars.
“We are now re-contacting the original waiting list in an effort to get these units leased”, Wuellner said. “The newly adopted rates of $1,000 and $1,200 per month now reflect the percentage of increase (24%) that exists between our T-Hangar units in “K, L & M” rows.”
According to the memorandum, Airport Staff will be proposing a new policy over the next several months for the Authority to consider. This policy could provide for some limited joint-use of our Box Hangar units under some agreed upon conditions. This policy would be targeted towards providing the most flexibility to our tenants who have need of these larger units.
Although Wuellner’s memorandum was intended to help clarify the most important points, Wuellner emphasized that the Airport Authority takes actions pertaining to rates at noticed public meetings. The pilots and other members of the public are always encouraged to participate in such discussions when they occur. Wuellner hopes everyone will remain engaged in the process.