Helping Aberdeen Figure out Airport Space Rental Rates Costs $8,500

Last week, Elisa Sand reported that Aberdeen’s airport board is hiring Colorado consulting firm Aviation Management Consulting Group to figure out what the city should charge for rent for the airport hangars, shops, and offices. The Colorado consultants will get $7,500 plus $1,000 for expenses. That total bill of $8,500 is just about one third of the $26,277.02 that Sand tells me the city currently collects in one year from renting airport space.

One of my neighbors thinks that’s a bit steep:

John Aman, who rents space at the airport, opposed the study.

“I feel it’s appalling to spend almost $8,000 on a study to determine what our rental rates will be,” Aman said.

Aman said rental rates at other South Dakota airports can be obtained with a phone call [Elisa Sand, “Aberdeen Event Center Survey Finds Split Among Residents,” Aberdeen American News, 2017.08.08].

Phone call? Heck, just get on the Internet. The Watertown Regional Airport lists the following rental rates:

  • T-Hangars: $153/month
  • Newer T-Hangers: $178.50/month
  • Oversized T-Hangars: $255/month
  • L-Hangars: $76.50/month

The Sioux Falls Regional Airport lists the following prices:

  • T-Hanger Rentals: $135–$150/month
  • Ground rent for building a hangar: $0.20/sq. ft.

Of course, the math could be simpler than all that research. Folks renting Aberdeen hangar space could say, “If you can pay someone from Colorado a third of our rent to figure out what our rent should be, then you can afford to drop our rent by a third.”

Now if I could just convince landlords to hire me as a consultant to tell them how much rent they should charge….

Update 11:32 CDT: Aberdeen’s airport board may just be trying to follow the Federal Aviation Administration’s rules on fees for airfield use:

17.10. Rates Charged for Aeronautical Use. Charges for aeronautical uses of the airport must be reasonable. For aeronautical users, the FAA considers charges that reflect the cost of the services or facilities satisfies the self-sustaining requirement. Accordingly, the FAA does not consider the self-sustaining obligation to require the sponsor to charge fair market value rates to aeronautical users.

As explained in more detail in chapter 18 of this Order, Airport Rates and Charges, fees for the use of the airfield generally may not exceed the airport’s capital and operating costs of providing the airfield. Aeronautical fees for landside or non-movement area airfield facilities (e.g., hangars and aviation offices) may be at a fair market rate, but are not required to be higher than a level that reflects the cost of services and facilities. In other words, those charges can be somewhere between cost and fair market value. In part, this is because hangars and aviation offices are exclusively used by the leaseholders while airfield facilities are used in common by all aeronautical users [link added; FAA, 5190.6b Chapter 17: Self-Sustainability, 2009.09.30, pp. 3–4].

But don’t sweat that rule too much:

The FAA will not ordinarily investigate the reasonableness of a general aviation airport’s fees absent evidence of a progressive accumulation of surplus aeronautical revenues [FAA, p. 4].

FAA rules do not address how much consultants can charge for telling airports what their rates should be.

2 Responses to Helping Aberdeen Figure out Airport Space Rental Rates Costs $8,500

  1. Aberdeen always wants to copy Sioux Falls, so just use Sioux Falls rates and save the $$$. Sounds like rent in ABR is cheap and some people are scared they may have to pay more $.

  2. Hey, if we’re charging below market rates, I’m all for the city trying to make a little more revenue… and not spending it on consultants to tell us the obvious.

    Of course, I’m not renting a hangar, and I’m not flying anywhere anytime soon.