Airport director proposes changes to hangar reversion fees; council favors lump-sum payment with a 5% upfront discount

Zach Bass, Redmondairport director, presented proposed revisions to the airport's hangar reversion or deferral fee policy and recommended three principal changes: switch the discount/investment rate from the prime rate to the Oregon short-term fund rate, require lump-sum payment instead of annual/monthly payments, and limit the deferral to one use per ownership entity. "Really what we kinda came upon is us being a bank in a sense to these these individuals," Bass said, describing operational issues and the city's exposure under prior terms.

Bass said the city has used deferral fees four times and collected nearly $1 million under the prior approach. He showed a sample recalculation using the Oregon short-term fund rate that produced a present-value estimate of about $386,000 for one recent arrangement over a 30-year term; under the proposed approach that would replace a previous calculation the airport used. The policy change aims to remove the city's role as a de facto lender, simplify administration and provide a clear, investable payment approach.

Council members questioned whether a strict lump-sum requirement would disadvantage smaller, mom-and-pop operators who lack access to large upfront cash. Staff explained a common financing path is for a bank to take first position and the airport to accept second position on a secured interest, which allows lenders to underwrite the transaction. Airport committee feedback recommended allowing a discount (Bass said 5% was under consideration) for those who pay upfront.

The council expressed general support for staff's recommendations and for an upfront discount rather than continuing annual payment options, and asked staff to return with draft policy language and an ordinance for formal council action in the coming weeks.