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Commissioners approve airport lease amendment after debate over 3% cap and CPI measure
Summary
The board approved an amended airport lease (lesser of CPI or 3%) after commissioners raised concerns that the 3% cap and staggered contract terms could hinder efforts to close an operating shortfall and address unfunded liabilities; director and legal staff said FAA and MDOT rules limit differential treatment of tenants.
The Livingston County Board of Commissioners voted June 22 to approve an amended airport lease with language tying annual rent increases to the lesser of a consumer price index and 3 percent. The vote followed extensive discussion about whether the 3% cap and varying lease expirations could prevent the airport enterprise fund from narrowing operating shortfalls and unfunded liabilities.
Commissioner Nakagari pushed for a re-evaluation of rents and asked the airport director to pursue options to align leases or otherwise address an apparent multi-year shortfall. "The airport as shown on the audit was losing money — they're not charging enough to break even and they are an enterprise fund," the commissioner said, urging staff to review rate structure and fees.
Director Johnson responded that the county’s standard new-lease practice generally uses a 20-year term with options and that the airport’s rates must treat tenants consistently to avoid FAA concerns over "economic discrimination" when grant funding is involved. "If one tenant has a different rate in there, they would have a case for economic discrimination with the FAA," the director said.
County legal counsel advised the board that any change in practice should involve consultations with MDOT and the FAA and noted the difficulty of reconciling leases that begin and expire at different times for the same property. The board adopted a legal amendment to add clarifying CPI language and approved the amended resolution.
What happens next: Directors were asked to pursue a comprehensive review of airport lease rates and fee structures during the budget process to identify options for closing gaps while remaining consistent with FAA and grant requirements.
