Las Cruces International Airport Lease Analysis
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Las Cruces International Airport Lease Analysis November 2020 Contents Introduction & Summary 3 Airport Revenue Planning 58 Lease Rate Analysis 6 Current Lease Revenue 58 Comparable Airports 6 Proposed Airport Hangar Layout 61 Analysis Methodology 8 Potential Additional Lease Revenue 63 Percentile Rankings 10 East Side Hangar Development 63 Proposed Lease Rates 12 West Side Hangar Development 65 Lease Review 18 Introduction 18 Implementation 70 Organization 20 Implementation Plan 70 GIS Portal - LRU Leases 21 Line by Line Lease Review 22 Appendix 74 Anatomy of a Lease 22 Exhibit A - Sample Lease 74 Airport Lease Types 23 Exhibit B - General Conditions 82 Aeronautical Vs Non aeronautical 23 Exhibit C - Glossary of Terms 96 Land Lease 24 Exhibit D - Peer Airport Research 102 FBO Lease 25 SASO Lease 26 Hangar Rental Agreement 26 Sublease (Subletting) 27 DRAFT 2 :: Las Cruces Lease Analysis 1.Introduction & Summary Lease Rate Analysis Proposed Lease Rate Schedule Lease Review Introduction & Summary Hangar Revenue Planning Implementation & Appendix This document has been developed to help the This matrix, coupled with a detailed review of City of Las Cruces (the City) and Las Cruces LRU’s existing leases allowed the development of International Airport (LRU) to evaluate and a property management plan that will ultimately analyze existing leases, research comparable support the development and growth of airports and develop a lease rate schedule and aeronautics revenues at Las Cruces International property management program that will Airport. Therefore, this document is broken into enable City and Airport management to two phases. Phase I: Lease Rate Analysis and reasonably generate revenue while fairly and Proposed Lease Rate Schedule. Phase II: Lease equitably implementing a new lease rate for Review and Property Management Plan. private, commercial and military operations. In order to develop an equitable and ground- truthed lease rate recommendation, comparable airports facilities and lease rates were researched, documented, and placed into a lease rate analysis matrix. DRAFT DRAFT Future Devvelopment Opportunities Las Cruces Lease Analysis :: 3 This page is intentionally left blank. DRAFT 4 :: Las Cruces Lease Analysis 1.Introduction & Summary Lease Rate Analysis Proposed Lease Rate Schedule Lease Review Executive Summary Hangar Revenue Planning Implementation & Appendix This document was developed by Las Cruces Existing private, commercial, aeronautical International Airport to provide a thorough and and non-aeronautical leases at LRU have holistic overview of current lease rates at the been reviewed for consistency, compatibility, airport. and uniformity between leases. Multiple discrepancies are identified and discussed in By conducting detailed research into comparable the LRU Lease Rate Review chapter of this airports and an in-depth review of current lease document. This review and associated findings rates and documentation, this document supports and recommendations were provided. The the City and Airport to make lease adjustments research of comparable airports will provide that support a commercial and private use the Airport with documentation that supports environment at Las Cruces International Airport the proposed lease rate schedule that complies that is more equitable and sustainable than with FAA Compliance Order 5190.6b, is fair and current conditions. equitable, and considers the Airport’s need to be as self-sustaining as possible. This lease analysis is built upon a review of existing Las Cruces lease documentation for This lease rate schedule does not only propose both hangar and land leases, research into 13 new lease rates for LRU, but also identifies comparable airport operations, services, facilities, those private or commercial activities currently and lease details, and development of a lease taking place on the airport that have leases not rate analysis matrix. Interviews and research favorable to the airport in its pursuit of fiscal were conducted during the Summer of 2020. sustainability. In fact, it was discovered that no The lease rate analysis matrix gives each airport rent, perpetual leases exist of which the FAA facility, service, or lease detail a weighted score. would find to be in non-compliance. The risks Weighted scores were developed to reflect how associated with non-compliance include the a potential lessee might pay more or less for suspension of FAA Airport Improvement Program various airport facilities or services. (AIP) funding. The research into comparable airports illustrated The research conducted provides evidence that that though Las Cruces International Airport the airport would be justified to begin charging DRAFT maintains facilities and servicesDRAFT that rank in the proposed lease rates. The airport and city may 80th percentile among its peers, the current choose to set rates between those proposed and average lease rate at LRU ranks in the 45th the current rates. percentile of these same peers. This research is detailed in the Lease Rate Analysis chapter of In addition to the documented research of this document. existing lease details, comparable airport leases and operations, and property management plans, this document provides Las Cruces International Airport with a sample template lease and related documents that can be utilized to implement the changes recommended herein. Las Cruces Lease Analysis :: 5 Lease Rate Analysis Comparable Airports Non-New Mexico Airports As part of the Las Cruces Lease Analysis, initial To provide a more broad comparison beyond the research was undertaken to select a group state of New Mexico, five airports were selected of comparable airports to provide a range of based on comparable runway dimensions, facilities that can be utilized to better understand elevations, and surrounding community the range of markets offered by similar characteristics. Two were selected from airports both within the Las Cruces region and Colorado (Grand Junction Regional and Fort throughout the United States. Collins-Loveland), two from Texas (Lubbock Preston Smith Intl. and Ruck Husband Amarillo This memo outlines the initial proposed airports Intl.) and Rutland Regional from Vermont. that, once verified, will be further researched to develop the lease analysis matrix. The table that follows provides basic comparables for these airports, including NPIAS New Mexico Airports service level, FAA GA Asset Service Level, elevation, number and lengths of runways, Part Airports were selected within New Mexico 139 classification, and airport communications whose National Plan of Integrated Airport systems. Systems (NPIAS) Service level was General Aviation, and FAA GA Asset Service Levels of Regional, Local or Unclassified. FAA Part 139 Classification The Federal Aviation Administration (FAA) issues Elevations vary from 3544’ (Artesia Municipal) certification to airports that serve scheduled and to 6814’ (Sierra Blanca Regional). Runways were unscheduled air carrier aircraft with more than limited to those airports with 2 or 3 runways, 10 seats. These part 139 classifications are as with the exception of Doña Ana County Jetport, follows: which has only 1. Eleven New Mexico airports in total are currently proposed as part of this list. Of this list, only one airport manager was unresponsive to repeated requests for interview, which has caused Santa Fe to be excluded from the rate analysis. DRAFT Table –1 - FAA Part 139 Classification Types Type of Air Carrier Operation Class I Class II Class III Class IV Scheduled Large Air Carrier Aircraft (30+ seats) X Unscheduled Large Air Carrier Aircraft (30+ seats) X X X Scheduled Small Air Carrier Aircraft (10-30 seats) X X X 6 :: Las Cruces Lease Analysis Introduction & Summary 2.Lease Rate Analysis Proposed Lease Rate Schedule Lease Review Hangar Revenue Planning Implementation & Appendix Table –2 - Comparable Airport Details NPIAS Airport GA Asset AWOS/ Name State Service Elev. Runways Part 139 ID Service Level ASOS Level low high Las Cruces NM LRU GA Regional 4457 3 6009 7506 Class IV AWOS-3 International Airport NM Comparables: Artesia NM ATS GA Regional 3544 2 6800 6853 AWOS-3 Municipal Alamogordo NM ALM GA Regional 4200 2 3549 9205 AWOS-3 White Sands Clovis Municipal NM CVN GA Regional 4216 3 2442 7200 Class III AWOS-3 Deming NM DMN GA Local 4314 2 5675 8018 ASOS Municipal Moriarty NM OEO GA Local 6204 2 6200 7700 AWOS- Municipal 3PT Sierra Blanca NM SRR GA Regional 6814 2 6309 8120 Class IV AWOS-3 Regional Lea County NM E26 GA Unclassified 3118 2 2604 4704 Class I Santa Fe NM SAF P Unclassified 6349 3 6301 8366 ASOS Municipal Double Eagle II NM AEG R Regional 5837 2 5993 7398 AWOS Doña Ana NM DNA GA Regional 4113 1 9550 9550 County Jetport Roswell NM ROW P Unclassified 3671 2 9999 13001 Class I ASOS International Air Center Other States Comparables: Grand Junction CO GJT P Primary 4861 2 5501 10503 Class I AWOS-3 Regional Fort Collins- CO FNL P Regional 5016 2 2273 8500 AWOS-3 Loveland Municipal Lubbock TX LBB P Primary 3282 3 2891 11500 Class I ASOS Preston Smith DRAFT International DRAFT Rick Husband TX AMA P Primary 3606.7 2 7901 13502 Class I ASOS Amarillo International Rutland VT RUT CS Regional 787 2 3169 5304 AWOS-3 Southern Vermont Regional Las Cruces Lease Analysis :: 7 Analysis Methodology • Services Response Rates » Distance to Terminal: Parking Access Of the 15 Airports selected as comparables, all adjacent to terminal = 2 points, ~100’ from save 1 (Santa Fe) were responsive to interview terminal