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Airport staff explain lease addenda; two hangar leases to omit annual 3% escalation amid transition
Summary
Airport staff told council that two hangar construction leases converting to long-term leases will not include the 3% annual escalation clause because of a policy transition and miscommunication; staff described future leases including escalation clauses and an Assurant 4-year temporary parking lease at $0.25 per sq ft.
Airport staff briefed Shelbyville council on Sept. 3 about addenda to two private hangar construction leases that will convert into 30-year long-term leases.
Staff said the airport's current policy includes a 3% annual escalation clause on most leases but that these two initial hangar leases were entered during a policy transition and the lessees were not aware of the clause. To avoid an unexpected spike in rent the airport authority proposes removing the 3% annual escalation from those two leases, keeping a set per-square-foot price (35¢ per sq ft) for the first 20 years, with renegotiation and different adjustment intervals thereafter. Staff said subsequent leases will include the 3% escalation as part of the airport authority's standard policy.
Staff also reported a recent closing on property behind Celebration Feet and described a 1.31-acre, four-year lease with Assurant at $0.25 per square foot where Assurant will perform site improvements (fill, grading, paving, utilities) and then turn the improved parcel to the airport at the lease end.
Why it matters: the change affects long-term revenue and rent expectations at the airport and could set precedent for how transition-era lessees are treated. Council members asked about the length of the policy transition, how long construction delays had stretched the process and why the two leases differ from the more recent standard.
Next steps: staff will finalize lease documents and ensure consistent language in future templates; the council asked staff to return final lease documents to the business agenda for formal approval.
