In response to a July FAA letter criticizing the city’s lease of airport facilities to Sierra West Airlines and the determination that “…Sierra West Airlines at the Oakdale Airport functions mainly as a non-aeronautical activity” the City of Oakdale has hired Cogdill Real Estate Associates of Modesto to determine the fair market rental value of the airport facilities that are being used for non-aeronautical purposes and begin charging Sierra West Airlines fair market value rental of Hangars L-1 and L-3.
The inspection by the FAA officials found that the majority of the large hangars used did not have any airport related function.
The fee charged by Cogdill for the study according to the city is not to exceed $5,000. The cost of the study will be paid for from the airport budget.
In March 2013, the city raised rents for airport tenants announcing it would be billing Sierra West $4,350 per month based on recommendations of the Airport Ad-hoc Committee but later reduced them to the current $3,050 while they were in negotiations."
Last year the city entered into a five-year lease with Sierra West, with the option of two additional five-year extensions, for $3300 monthly for three buildings, hangars L-1, L-2, and L-3.
“It is our understanding that the purpose of this assignment will be to determine the Fair
Market Rental Value of these properties,” said Cogdill CEO David Cogdill in a letter to the city. “The function and intended use of the report will be to assist the City of Oakdale in operating the Oakdale Municipal Airport in a manner consistent with applicable federal obligations.”
Oakdale City Manager Bryan Whitemyer told the city council when asking for approval on Sept. 8 that the city is allowed to lease the facilities for non-aeronautical purposes, but just cannot charge the reduced aeronautical rate.
“Upon completion of the appraisal, we will go back to Sierra and inform them of the finding,” Public Services Director Thom Clark said.
Councilman Tom Dunlop questioned staff that if Sierra West didn’t want to pay a possible new rate, what position would the city be in regarding the existing lease.
Whitemyer said conversations with Sierra West representatives have already occurred and advised the council that Sierra West was disputing the FAA finding as well as pointing out that a signed five-year lease was in place.
Dunlop, stating he already had a distrust of federal government mandates, pointed out that Sierra West is responsible for 40-percent of the airport’s income and he didn’t want to “throw the baby out with the bath water” should Sierra West choose to not pay a revised rate and leave.
“Ultimately, I can’t tell you what the outcome would be,” Whitemyer said, but did point out in the “worst case scenario” the city would use its elected officials to push for assistance in the matter.