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August 28, 2013

Ray: Lease payments must stay with airport

GREENVILLE — The City of Greenville appears to be nearing an agreement on a new lease with L-3 Communications Integrated Systems concerning property at Majors Field Municipal Airport.

The City Council was scheduled Tuesday to receive the results of an official appraisal of the airport, which was a prelude to the eventual agreement being adopted, but City Attorney Daniel Ray said the appraisal was not yet complete.

Ray did explain however, that one of the stipulations in the upcoming agreement would be that the lease payments made by the defense contractor would be dedicated toward the airport itself.

“All of that money must stay on the airport property, period,” Ray said. “There is no way around that.”

The lease negotiations  with L-3 were again included under an executive session during Tuesday’s meeting. But during the regular agenda, the Council was scheduled to hear about an appraisal of the airport upon which at least a portion of the lease agreement is being based.

On May 14, the Council approved a professional services agreement with Airport & Aviation Appraisals Incorporated, for an appraisal of the airport with a respect of the lease of the airport. The firm’s Win Perkins was scheduled to make the presentation Tuesday.

Ray said Perkins was unable to attend the meeting, as he was still completing the appraisal document, which Ray said would be based on Federal Aviation Administration (FAA) requirements, as well as a comparison of appraisals and lease agreements with up to 25 comparable airports.

Ray said Perkins intended to provide the Council Tuesday with a “one to two page, Dr. Seuss style explanation of how this all works.”

Ray said the total appraisal is expected to be a much more complicated and involved document.

“This particular one he is working on is going to be over 100 pages,” Ray said.

The Council voted in February to approve a non-disclosure agreement with L-3 Communications Integrated Systems, prior to negotiations starting on a new lease agreement for the defense contractor at Majors Field.

In January, Council voted to grant a professional services agreement with Taylor Olson Adkins Sralla Elam for legal matters with respect to the airport lease.

The airport covers approximately 1,500 acres. L-3 leases much of the airport property from the City of Greenville, with the original lease agreement reached in 1977. The lease agreement is up for consideration again in 2017.

Ray said the eventual agreement would address a worst case scenario, should the airport property ever be found to be taxable.

“And it will absolutely address where the proceeds go,” Ray said, noting that the eventual lease agreement would adhere to provisions under the Surplus Property Act of 1944, which transferred the federal government’s interests in the airport to the City of Greenville, ensuring the airport would be financially self-sustaining indefinitely.

“That is not dictated by the tenant, that is not coming from L-3,” Ray said. “That is coming from the FAA.”

Ray explained FAA officials reviewed and found fault with the 1977 lease agreement.

“It is absolutely not within FAA guidelines,” Ray said. “It would not work.”

One of the problems with the earlier agreement, Ray said, is that it did not include an escalation clause which would address increasing payments during the course of the lease.

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