Airport Business - 35

FBO MATTERS
infrastructure development. It is not a question of if, but when,
Lord Brabazon.
The conundrum is multi-faceted. FBO ground leases are
often 35-year instruments and often require capital investment
in the form of improvements shortly after lease inception. As
a for-profit going concern, it makes little sense for an FBO
to invest in improvements that do not provide a return on
capital employed. By definition then, that means hangars,
related office and an FBO terminal will be constructed.
And here's where it gets tricky: City, county or municipality
planning departments require that vehicle parking spaces be
constructed as well - usually as a formula of the total square
footage of office, shop, hangar or FBO space. Let's be clear
though- virtually no local planning
department have FBO construction
guidelines. FBO construction often falls
under commercial building ordinances
that require a certain number of parking
spaces per a given amount of square
footage of occupied improvements
constructed. While the specifics vary
by locale, generally, that number is one
vehicle parking space per every 200-500
square feet of commercial building space.
Hence, if your FBO is about to sign a
lease with a 35-year term, those parking
lots you will need to build per local
building code to serve the FBO, hangar
and offices may see more tumbleweeds
than cars in the coming decades.
To be sure, one hopes every local
planning off ice is already paying
attention to this issue. It affects all
ground transportation infrastructure
going forward - not just airports and
FBOs. However, it is the intermodal
nature of airports which will make them among the first to
be affected. How might FBOs plan for these sentient cars?
First, airport land already carries with it several development
restrictions as a result FAR Part 77, which restricts building
height at airports. While a local building code might allow for
a 10-story commercial building within city limits, one doesn't
tend to see high rises at airports due to the incompatibility
of aviation use. In such cases, federal restrictions trump local
building code. On a recent FBO development project in the
Pacific Northwest, local building code required that trees
were planted in the required greenspace surrounding an
FBO's parking lot. A brief meeting with the airport during
the early stages of the FBO's architectural planning led to a
letter from that airport director to the county planning office,
educating them as to the general incompatibility of trees at an
airport. A variance was immediately issued by the planning
office. Likewise, if the same notion of incompatibility can be
demonstrated with vehicle parking, leaning into the special
nature of aviation use land may prove fruitful.
An altogether different approach shared by one construction
firm is to designate a portion of parking spaces airside next to
hangars - which fulfills the formula calculation for required

parking. During the construction process, while the stripes are
indeed painted per the drawings for designated parking, there
is no intention of ever using them for their intended purpose.
Instead of automobiles, the FBO uses it for GSE parking.
Finally, a somewhat unrelated issue for FBO and airport
alike could be a win-win to address the reduced need for
automobile parking spaces in the future. As stated previously,
many airports require significant capital expenditure by a lessee
in the immediate years following lease inception, but there is no
capital requirement thereafter for the remaining term of the lease.
This has two overtly negative effects. For an FBO, far more
capital is deployed upfront than may be necessary due to meet a
lease covenant. For an airport, that means that an FBO has little
motivation to deploy additional capital into the leasehold later,
meaning those improvements tend to deteriorate prematurely.
This is one of the reasons one can find airports with brand new
lessee improvements next to lessee's improvements that stem
from the 1970s- or beyond. Instead, airports could reduce the
capital requirement at lease inception for a 35-year lease by a
given amount- say 25 percent - and require that difference to
be deployed 15 years into the lease, which still allows time for
amortization of improvements prior to lease termination. After
all, if planned correctly upfront, that parking lot may just make
a great spot for a new hangar 15 years from now. 

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Airport Business

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