PORT ANGELES — Citing a long-term public commitment and the potential for bad precedence, Port of Port Angeles commissioners Monday decided to keep their original lease with the High Flyer Hangar Condominium Owners Association.
The association, which leases at William R. Fairchild International Airport, has persistently asked for changes in the lease.
The request hinges on a “reversion clause” that states structures must either be removed or revert to port ownership at the end of a lease.
“Specifically, they’ve asked us to pay market value at lease term,” port Executive Director Jeff Robb said.
The association built its own structures at the airport after it signed the 50-year lease in 2004.
“This could very well set a very bad precedent if we start changing something we’ve done for years,” Commission Chairman George Schoenfeldt said.
Port staff and the port’s legal adviser said state laws and Federal Aviation Administration grant rules require the clause be in leases.
“I think this comes down to a policy decision by the commission on what we think are in the best interests, in the long term, of the port and our fiduciary responsibilities to the public,” Commissioner John Calhoun said.
A study conducted by Airport Business Solutions found “the presence of a reversionary clause is standard within the aviation industry,” said Dave Neupert, an attorney who represents the port, during a lengthy discussion at the commissioners’ meeting Monday.
“It’s certainly been the standard for the Port of Port Angeles for a long time as well, consistent with the aviation industry,” Neupert said.
The port is eligible for up to $1 million in Federal Aviation Administration grant funding every year.
Neupert advised it would be “inappropriate” for the port to rescind the reversion clause or to continually renew the lease.
“It’s the idea of kicking the can forward indefinitely,” Neupert said.
Jerry Nichols, who is representing the association, said the clause should be removed to encourage business.
“This is not a High Flyer argument,” Nichols said. “This has been a suggestion for this port authority since the day these leases were drawn, and we were given inaccurate information that it was an FAA requirement.”
Nichols said the High Flyers Association was led to believe the FAA required the reversion clause when it signed the lease.
“It is not an FAA requirement, and there are enough examples around, including in that ABS study, that tell you the leases are all over the block,” he said.
In an email, Peter Doyle of the Northwest Mountain Region of the FAA told the port that “the FAA does not have a position on reversion clauses.”
Doyle added that, depending on how a lease was handled, removing the clause could endanger FAA grants.
“This [reversion clause] is not complementary to people who want to come here and build buildings and open businesses,” Nichols said.
Mel Rudin, president of the High Flyer Association, said the group may decide to sell the hangars at the end of the lease. He said the group is not looking for a perpetual lease but rather a new lease for new ownership.
“The port must remember that this lease was entered into under a piece of missing information, as they gently put, and therefore if that piece of information is invalid it can be found — I don’t say it would be found — but it can be found in a court of law to invalidate the whole lease,” Rudin said after the port made its decision.
“These kinds of reversionary clauses that we have in current leases are fairly standard of the industry, and for good reason,” Calhoun said.
“Keeping the public port — including the airport — public I think is one of the paramount duties of the commission.
“Long-term incumbencies diminish our ability to provide the public with public benefits.”
But there are exceptions, Calhoun noted, such as Westport Shipyard on Marine Drive that a past port commission sold to the private company.
Commissioner Jim McEntire said port policy on aeronautical and non-aeronautical uses at the airport should be guided by three things:
■ It’s in the public’s interest to encourage economic activity at the airport.
■ Port leases should provide adequate exchange of value between public funds and the lessor.
■ Port policy on leases should provide adequate flexibility for a commercial enterprise to meet changing circumstances.
“Let the minutes reflect that I find it necessary to disagree with my two fellow commissioners in an amenable way,” Commissioner Jim McEntire said.
“I do think that there can be some additional flexibility written into this and future leases to accommodate adequate value exchange.”
McEntire said he is “not necessarily bound to a strict one-size-fits-all lease policy” as long as the port meets FAA grant assurances and city statutes.
“I think this is a close call, and reasonable people can disagree on what is in the best long-term interest of the port and the economic activity of the area,” Calhoun said.
“I think the commission, from what I’ve heard, is sort of settled on where we are.”
Calhoun complemented the High Flyers Association for its efforts.
“But really, I don’t think it’s going to be fruitful to continue to pursue clause changes in this lease,” Calhoun said.
“Perhaps a different commission would come to a different conclusion.”
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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.