City settles for less than market value on airport hangar lease

By on November 7, 2017
The City of Merritt has leased this hangar at the municipal airport to TRK Helicopters. (Michael Potestio/Herald)

After a lengthy search the City of Merritt has found a tenant to move into the airport hangar building it acquired from the Merritt Flying Club.

An in-camera document released by the City of Merritt states that council agreed to pay $144,000 in February to settle with the flying club.

City of Merritt chief administrative officer (CAO) Shawn Boven confirmed to the Herald that this was for the hangar building, which the club originally constructed at 4494 Airport Road.

At its regular meeting on Oct. 24, however, council unanimously approved a five-year lease with TRK Helicopters totalling just $120,000 in rent.

A fair market value appraisal from Flynn Mirtle Moran included in the council report suggested a rent of $30,000 per year, but the city will only charge about $24,000 along with taxes and utilities. TRK’s rent increases from $21,600, in year one to $26,400 by year five.

Council approved the lease, which went into effect Nov. 1, by a 6-0 vote. Mayor Neil Menard was not in attendance due to medical reasons.

“I’m struggling a little bit with the rent charge, and I know this is lower than what fair market value had been determined,” said Coun. Linda Brown at the meeting. “On the other hand, I also know how empty the airport has been for the last little while, and I also recognize that it’s going to bring in activity.”

Boven told the Herald the city settled for less than market value due to the level of interest expressed.

“Ultimately it is the market that determines the value,” said Boven. “It was a commercial lease appraisal that were were going by, so that’s what we were expecting to get, but based on the market interest we took the best offer we could get.”

The city, however, should still break even thanks to the $36,000 in tax revenue it stands to collect over the life of the lease.

TRK from Langley B.C. intends to use the hangar to store and operate some of the helicopters from its fleet.

“Having a business up there is better than having it sit empty,” said Boven, adding that having a helicopter company operating up there could spur more economic activity.

The city initially postponed its search for a leasee back in March when a number of issues with the hangar were discovered by a prospective renter.

Those issues include an uncertified hangar door and operator, lack of portable fire extinguishers in the building along with an incomplete mezzanine and electrical installation.

Boven said the city is working with TRK on the issues outlined in March.

“It’s mostly just paperwork, and I’m working with an engineer in Kamloops on that. It’s things like certifying the door … certifying that the mezzanine is structurally safe,” Boven said.

The City of Merritt took control of the hangar from the Merritt Flying Club about two years ago, after having denied the club a renewal of its hangar land premise lease in 2014. That move was spurred by a report from then-public works manager Shawn Boven that showed the club owed the city thousands of dollars in unpaid fees and utilities.

Flying club president Tom Fox told the Herald at the time the club would not vacate the hangar without compensation. The property was temporarily occupied by the club on a month-to-month basis until they vacated the premises in 2014, the report from Flynn Mirtle Moran stated.

 

This story was updated on Nov. 9 to clarify that CAO Shawn Boven confirmed the $144,000 the city agreed to pay the flying club was for the airport hangar building as it was not stated outright in the document.

 

City finds rental agreements for concession stand, Nicola Family Therapy

Other agreements for city facilities have been sorted out in the last few months.

A user group for the city’s concession stand at Central Park was found, and council agreed to a three-year lease agreement this past summer with Nicola Family Therapy, which had sought a cap on its rent at city hall.

For the concession stand, council asked staff last year to prepare a request for proposal (RFP) to find someone to operate the concession stand at Central Park on a one-year pilot project. The city is instead renting the building on a shorter term to Mary’s Catering.

“It’s not a long-term lease, we’re actually going week to week on that,” Boven told the Herald. “They’re renting it under the same kind of agreement that people rent the [civic centre] kitchen.”

Boven said the city could look at a long-term lease with the business moving forward.

“It looks like they’ve got a thriving business going out of there,” said Boven.

The City of Merritt’s concession stand at Central Park was built in conjunction with the multi-purpose lacrosse box in 2015. (Mary Holgate/Facebook photo)

Mary Holgate, owner of Mary’s Catering said she plans to keep the concession open during the winter about four days per week, adding that it would be nice if the lacrosse box can be used as a skating rink this year.

Last year Nicola Family Therapy (NFT) representative Sue Sterling-Burr asked council to cap the amount the non-profit counselling agency pays to rent space at city hall. 

She told council their rent has been increasing by a wide margin since 2011.

In July council approved a three-year lease agreement with NFT that expires at the end of 2019.

While no rent cap is in place, the rate for 2017 is the same as 2016 with one per cent increases for each following year. NFT is paying the city $1,169 per month for 2017, $1,181 per month in 2018 and $1,193 for 2019. Rental fee include water, sewer and garbage removal charges.

NFT has been renting space at city hall since 2004.

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