I see that.

Good afternoon, everyone, and welcome to the land use public safety and community development committee meeting for August 14th.

We will begin with a Pledge of Allegiance.

So today we have Andrew Moore Airport Manager and Sean Dempsey Assistant Manager up here.

Andrew can sorry, the mics.

Okay.

It's with high flying hangers.

The proposed project is something that we've been working for for towards for about twenty years.

It's been our on our Airport layout.

It's been on our airport layout plan for quite a while for hangar development in the midfield.

So as a little bit of background to help you kind of understand where we're at with the airport, we generate about eighty percent of our operating revenue off of leasing about a quarter million square feet of space.

So for that reason, we've been a little hesitant to pursue any building projects.

After that, we spent probably three or four years having development meetings, meeting with different people, and we eventually distilled down and came across this group who we found that was a very good partner to go forward with a project like this.

And some of the reasons were that we felt like they had a very well developed plan.

They understood the market and the industry of the users and those who would who would um you know want these type of hangars.

Um another big part of it we found is they understand the cost to build hangars at a federally funded airport where they're leasing the ground.

Um we also felt with our previous uh uh development experience um that they could be someone that could complete a project like this.

So for that reason, um we're presenting to tonight.

We're confident this is the best and uh best use for the land out there.

Um and uh it would also best serve the current and future uses of uh Frederick Airport.

So I put a lot of information in the background.

I did that intentionally because this this lease that we have up here is very dense.

So uh if you have any questions on that, um I can answer them now, or we have the developer who will give a presentation about the project.

So you can tell me which one you want to do first.

Should we hear from the developer then?

Okay.

Come on.

Thank you.

Thanks, Sean.

The proposed development.

All right, can you all hear me?

All right.

Uh Councilmember Russell, Councilmember Kazemchak, am I saying your name right, ma'am?

All right, wonderful.

And council member McShane, um, thank you for having me today.

My name is Kendrick Dane, and I'm the chief legal officer for our family business, high flying hangars.

Let's see, is this my clicker?

We started our company five years ago.

Um, we're all passionate aviators.

Um, and when we bought a little aircraft to teach my little brother how to fly, we quickly found out that the entire nation is suffering from an aircraft hangar storage to the tune of about 60,000 units uh nationwide.

Um our company was founded to plug a gap in the market that has existed for some 30 years now.

Every other aviation property developer is focused on um aircraft shelter for ultra-high net worth individuals and corporate operated aircraft, uh, leaving the rest of the you know, every man flying public um with no options.

Um our product caters specifically to that market segment.

Um back on this first slide here.

This is a picture of uh 31,000 square feet of recently completed aircraft shelter in the city of Albuquerque, New Mexico.

So we are on a mission to solve the nationwide hangar shortage crisis.

Um we view this project at Frederick as uh sort of a marquee for us.

It is a large development of 78 hangars.

Um as I understand it, you know, that should take some pressure off of this 11-year-long wait list.

And as a matter of fact, as we sit here today, uh we've secured reservation agreements and significant down payments for uh buyers for the all of the phase one units uh comprising a total of 44 units in phase one.

So this project will result in 235,000 square feet of new hangars at a ground lease rate of a dollar per square foot annually, uh factoring in three percent annual escalation over the 40-year lease term.

That will result in direct revenues to the airport of 17.78 million dollars in addition to um other fees that we pay the airport for uh services like snow clearing.

I think it's important to touch on the economic impact that um aviation and airports drive to their local communities.

Um aviation think tank ran a study in 2023 that stood for the proposition that uh each business aircraft is directly responsible for two and a half million dollars uh economic impact to the community once you factor in fuel sales, maintenance, cruise salaries, uh catering, Uber, rental cars, hotels, and all the things that that surround aircraft operations.

So we're very excited about the Frederick market because this is one of the fastest growing areas of the country.

This aircraft is the excuse me, the Frederick Airport is the closest airport to the DC flight restriction area without actually being under the cone.

So the airport's master plan forecasts significant uh increases in demand at the airport.

And those are the kinds of markets that we go to around the country.

Well, we have a picture of the site plan that you'll find uh at Exhibit A to the lease towards the back, but there's a one with a Google overlay here that I think is a little easier to digest showing what we're doing, well, proposed to do.

Um we've engaged in significant pre-engineering.

We are um spending money, we're doing geotech, we're doing surveying.

Uh, we're very excited to get started with this project.

We've selected a contractor who is local Frederick-based uh Warner design build uh to construct the project, and I understand that they've done air other airport projects at Frederick, so they're very familiar with the airport specific requirements and with the management team.

Um so we're absolutely thrilled to get started with your blessing.

Um just by way of background, uh this is not our only project.

We started out in Albuquerque, and that's where we're based.

Uh we also have projects in Chandler, Arizona for 50 hangars, uh Las Vegas, Nevada for 170 hangar units, um, in Denton, Texas, which is a suburb of Dallas, there's another 53 hangar uh units going up there.

Amarillo, uh Tulsa, um Force Frederick, and uh also Manassas, Virginia.

So we're very interested in the in the in the greater DC area.

Um with that, I think uh you know there's a lot of information in the uh in the executive summary, and and I'm prone to long-winded speeches, so uh perhaps uh maybe I should turn the floor over to you for any questions you might have to.

I have a couple of questions.

So um when you say you're the only company providing title, can you explain to me what that means?

Yes, so um because federally obligated airports that take FAA grant money um you know can never sell their land per FAA regulation, all they can do is lease it out.

Um that spooks a lot of investors.

So we spent a lot of the first year uh uh of our company's time getting all the stakeholders together from the mortgage banking industry, the construction financing industry, title companies, airport managers, and figuring out a formula where we can um deliver constructive receipt of title to the improvement, and you'll see as an exhibit to the sublease that um there's a there's a excuse me, an exhibit to our lease is the city approved sublease, where when you purchase one of our units, uh a title company will underwrite it, and a bank will give you permanent mortgage financing if you choose to finance it, which makes it accessible to you know folks folks in the middle class.

Um at the end of the 40-year lease term, of course, the um the reversionary interest requirements of the FAA grant assurances to which uh Frederick is obligated, require us to turn title over uh in those buildings back to the city.

So we're building spending 30 million dollars to build essentially 100-year uh lifespan buildings, and the city will get those back, um, get title to those buildings at the end of our lease term.

So the end of your lease term is 40 years, correct?

Yes, ma'am.

And you're you say these buildings are gonna last for a hundred years, but I've never seen a building.

I mean, downtown, they last for a hundred years because they get taken care of in various ways.

But at the airport, regularly those buildings last for how long, Andrew.

I would say in the 60 to 80 year range is pretty reasonable, and even within that, you can completely rebuild steel structure out and potentially go on for much longer than that.

But you see, this is my concern.

So how long do they last without having to rebuild them?

I would say if you if you did no major rehab, you could expect 60 years of life out of them.

Okay.

So the sublease is 40 years.

We could expect 60 years of life, so that's 20 years that we would have the title back.

Or we would re-rent that.

Yeah, let me clarify with with no real work done to it.

You could probably get 60 years out of it.

But even our current hangars that are at year 25, um, we do consistent preventative maintenance, which could extend that out.

So it's impossible to predict how many years, but steel structures generally um are longer duration structures, and since this is you know, really a fairly simplistic building, um we we don't we don't uh he's sitting right there, man.

You know, it is these are these are uh effectively on top of the ground.

They're they're prefab steel structure buildings, right?

Um and we expect a long duration.

So at the 40 year mark, I think I'm I think I'm kind of getting towards the answer to your question.

At the 40 year mark, we we believe that there will be substantial value left in that.

See, this is why I ask yes and no questions all the time.

So you're still talking around it.

Okay.

For 40 years, this will be um leased and taken care of by high-flying hangers, right?

That's correct.

At the end of that 40 years, exactly what happens, and exactly what shape are we expecting to get that hangar in.

The last part of your sentence was what shape do we expect the hangar to be in?

Okay.

I'm sorry, I'm having tough time hearing you.

No, no, no, that's yeah, I'm sure that's me.

My microphone is not uncomfortably close enough.

Um so uh I'm not quite sure how to answer that.

Do you want me to take a crack at this?

Go for it.

May I, Councilmember?

Yes.

Uh so our lease obligates us to manage the property over the lease term in a first class condition.

Um my family's been in the property management business for 40 years.

Um we insure them.

Uh we enforce airport rules, we enforce um maintenance standards, we're obligated to continually uh maintain the asphalt aprons around them.

Um, you know, restriping, resurfacing.

Um, you know, uh that we enforce bans on signage.

If there's a leak in the roof, um we we fix it and spread the pro-rata cost of that over the affected unit holders.

Um we we intend to deliver these back to you uh um in in first class condition, reasonable wear and tear accepted, of course.

Reasonable wear and tear over 40 years could be pretty much.

I've seen the cars out here, it gets pretty rough, I understand.

Yeah, it does.

Um I'm just trying to figure out this whole title thing.

Is so the person doesn't actually own it, they're still leasing it, but you're providing them a way to get a mortgage, and that's why you call it a title.

Yes, ma'am.

They have a title to the improvement for the lease term, but and then the reversionary clause triggers.

It's not like a house that stays with you forever.

Yes, ma'am, that's correct.

Okay.

You said you have a local contractor, I don't remember the name that you mentioned.

Um, are we talking?

Have we looked at MWBE?

Have we looked at any we're using Warner design build?

Uh gentleman by the name of Randy Siebold is the project lead.

Okay, I'm looking for minority minority and women-owned business.

I'm sorry, I'm looking for minority and women-owned business.

Um I'm not sure of the status of the uh of their of their of their business in that way, but I can find out and I can get back to the council on that.

That would be great.

Thank you.

And um, you said that you all have been doing this for how many years now well, the constituent members of our country uh company have been building for 40 years now, um, to the tune of probably a half a billion dollars in projects over that time.

We've been around for five years doing this at this particular company.

Okay.

Yeah, that's why I thought you had said five years.

Um and so with five years of experience.

Are we gonna have something that ensures that if your company and no offense, I'm certainly hoping that you do great and everything moves forward and all that, but should something horrible happen and you all go bankrupt?

What protects the city?

This was a topic of a lot of discussion of mine with uh uh the city attorney Scott uh I forget his last name, Waxter.

Scott and Mr.

Wexler.

Um and the answer to that is um I propose that we uh bake in a provision to both the lease and the sublease, allowing the city to require uh our our purchaserslash sublessees uh at any time from time to time to enter into uh subordination and attornment agreements, allowing upon our default the city to step into our shoes and have the same rights as we have.

So in other words, you know, one substitutes for the other.

Um is that good for the city?

I'm sorry, say again.

How is that good for the city?

Well, the city manages them at that point, but um we collect a management fee in order to do that, and it is discretionary um what we charge.

The city would step into our shoes, and if it needed to staff up in order to uh maintain the hangars, um that cost would be passed along to the owners themselves.

And when you're talking about dividing that by 80 ways, it's not too big of an onus to increase that uh in that you know sort of doomsday scenario.

Um not a big burden for them.

Yeah, well, part of my job is to think of doomsday scenarios, sadly.

Um so the the very beginning of this conversation was how it's not a good thing for cities or owners of airports, um, government owners of airports to build hangars and lease them out, right?

Did I not understand that properly?

Well, in an ideal situation, that is the best way to do it.

Um because of our uh airport situation financially, um we uh we have a very good um um uh self-sufficient direction we're heading.

Yes.

And it's just a little bit early to make a big investment in a project like that.

So the only other way to do it is allow private investment where we kind of see immediate returns on leasing the ground.

Um and and that's that's why I would say that you know, right now it probably isn't the best move for the airport today.

Okay.

And we're not quite at the point to do that yet.

Thank you.

Um can you tell me the other the other cities that you are in, Albuquerque, Chandler, Las Vegas, Dallas.

At what point in the process are you in all of those places?

Uh two are midstream construction, the rest are in various stages of design and engineering.

Um and and uh two more will break ground shortly.

So nothing is actually done and running yet?

Uh we have we have completed and delivered um some sixty thousand square feet uh of hangar space.

And where is that?

That's in at our Albuquerque project.

That was our pilot project, yes, ma'am.

So I could check in with them and see how that's okay, about sixty thousand square feet, you say?

Yes, ma'am.

I'd be able to do that.

And you're doing about eighty thousand square feet here?

How many thousand square feet?

235,000 over a course of four years.

About sixty thousand two hundred and thirty-five thousand, I believe.

Close enough.

And that's the thing.

I'll find it in my backup somewhere, I'm sure.

I just wanted to get it in my head.

Absolutely.

Okay.

That's all the questions I have.

Thank you very much.

Thank you, Councilmember.

Thank you both for for running through this and you know, for working on on this for a good number of years, trying to expand our capacity here at the airport.

Um I am generally supportive of of what you've always brought forward and and what you guys are talking about.

Do you have a couple questions that I think we can run through quick?

We just sort of start at the top and help me uh draw the big picture in in my mind.

So you are proposing for the construction of the hangars would accommodate how many new aircraft?

80.

So that's an interesting question, Councilmember.

Um we're building 78 hangars.

Uh what we've found at our other projects where we've closed and delivered is that uh oftentimes multiple aircraft will um occupy one hangar.

Um so uh I th I think in that in that first row that we built uh on slide one here, uh nine out of ten of those units are double or or triple occupied.

So it it could potentially almost double the based aircraft fleet at um at Frederick, which currently sits at about 200 aircraft.

Okay.

And I'm just gonna jump back and forth, guys.

You mentioned the limited number of um spots we have available for our our largest hangers, our largest aircraft.

That's that's only how many right now?

Eight out of one hundred and five city-owned hangars.

Eight.

Eight.

Like like the single digit.

Single digit.

Okay.

And if utilized this way, your proposed project could accommodate how many of that size of aircraft.

What size are your large?

47-foot doors.

So you could probably fit maybe two of those in a 60 by 60.

So we we have a mix of units um in the 51 and a half by 40 foot range and the 60 foot by 60 foot range, um, the 60 by 60s are 3600 square feet.

Um you can put anything in the owner operated class from a tiny trainer aircraft to um to a small business jet um in in our larger units.

Okay.

So we would be able to uh increase significantly our capacity for for the larger aircrafts, but also expectedly and and and smartly, you can orient these these hangars to instead accommodate multiple smaller um smaller users.

Okay.

Then the structure for the rentals is for this to be a primary home location for the lessees.

Yes, sir.

That's that's that's generally our experience.

Okay.

Do you also operate with temporary use?

I don't I don't really know how this how this works.

If someone wanted to come into this facility and leave their aircraft for, I don't know, a limited number of days or weeks.

Is that in the model, or is it really just long-term, long-term storage dedicated spots?

Well, we've begun to hold back um uh just a couple of our units, maybe a little under 10 percent of each project uh to lease uh for people who want a shorter term commitment or um you know can't secure financing.

Um and and that's with a view towards eventually once we hit a certain market density um uh doing some sort of cooperative program where you you yeah, if you're a transient uh um aircraft and you need to stay in Frederick for a couple of nights for a meeting in DC, you can use our app to you know book it uh sort of Airbnb style, but um we're not quite there yet.

Uh but we are doing short-term leasing.

But that idea of sort of holding back a few tables for walk-ins seems good to increase um I'm I'm trying to imagine ways to increase sort of the vibrancy of our airport facility and having the ability for folks who maybe aren't based here but need to come to the Frederick area or really the the broader DC market, you know, can can come in here for some days.

Um sounds like a great a great thing for us to try to build in.

Um I am interested long term in making sure that we have a fantastic plan to move forward, and we're all gonna go into that, assuming it's going to work perfectly, it's gonna overperform, it's gonna be a great deal and a great plan for everybody.

Let's let's have that expectation.

But also we need to be intentional and cautious around any scenario, as we will be granting long-term use of public, you know, uh a public facility, public space, and we don't want to end up in some scenario, and I think it seems like you've you've talked about this, where we're left with a sort of dormant facility stuck on public property.

You know, but we've got a lease, and you know, I think it's better to build in some sort of scenario where what if in some number of years the team doesn't choose to or is unable to, or or whatever, continue their their intended operation of it.

How does it revert to the city?

What is how does the city take things on?

I'm less concerned about less concerned about the city ending up with an albatross.

Not really that concerned about that.

I'm more concerned with something kind of becoming dormant and wasteful, and now we've got this thing stuck on city-owned property and they're having some sort of trouble for whatever reason.

So I'd rather it like revert to another form of management, either directly from the city or the city brings in somebody else, so that we're not left with cobwebs where we should be having something active.

Um sounds like you're talking about that, but that's important to me, even if I am you know excited to to have a great partner um and optimistic.

You know, we always need to make sure that we're we're getting everything that we can out of any you know public asset.

And if I can just take a second to respond, um, you know, we have full faith in this group.

Um we wouldn't be at this point if we didn't.

We're um, you know, we've been talking with them for quite a while.

We're we're pretty diligent in that.

At the same time, um we've spent significant time and effort dreaming up every facet of failure that we could think of.

Sorry.

We've been open with them about it as we've worked through the language.

Um, you know, what happens if they stop here, what happens if they stop there, what happens if their management group walks away?

How does that work?

How do we be stay whole?

And we believe to the extent you can hash out everything and predict everything.

We feel in a good place working directly with um City Legal and Kendrick here of saying what happens at this point at that point at that point.

Um we feel good about it.

Um there isn't many ways they could terminate, walk away, or do anything where we wouldn't stay whole.

Is the best that we to the best of our ability we could predict that sounds great.

Sorry, say it again.

I said that sounds great.

No, I mean I I appreciate the you going through the sort of like the fail-safes um and trying to determine all that.

I know we've been talking about this for a number of years.

Um so it's exciting to see that this uh is on the verge.

Um and I uh councilmember McShane, I appreciate your points about having that sort of vibrancy and transient traffic availability.

I hadn't really thought about that, but that's a great point.

So um and then I would just like to, Richard, uh wish you a very happy birthday today.

That is all the questions.

I'm gonna suggest you call it Air H and Front.

Air H and Fair hangar and fuel instead of Airbnb.

Oh, I love I love would would you like to join our marketing team?

Trademarket quick.

Then she'd probably need to abstain, so careful what you're asking for.

Um since we're we're here, I'd love to get a little update on your vision for aviation here and our airport facility.

This seems like a big like potentially a good step for us.

We've made a number of recent expansions and improvements with facility, with runway, with you know, we've had to, you know, acquire some properties in order to allow for expansion, you know, over the years.

And we've heard today mention of our location in a broader market, our location close to but conveniently far enough from some other, you know, some of the metro areas, some of the major international airports, you know, we're we're really lucky to be quite close to multiple um big commercial airports.

There's also a spot in this market for us.

So in our 10-20 year plan, how does this fit in?

What are we hoping to be?

What are we hoping to provide and serve um as sort of our our vision of of what we're trying to do here?

Very good.

So to start that off, I just I just want to point out, you know, Sean Dempsey sitting behind me, he joined a couple of years ago.

And um a lot of these ideas floating around in my head.

He brought some new ideas.

Without him being on the airport manager team, we wouldn't have been able to accomplish as much as we had the last few years.

So thank you for that, Sean.

Um, you know, we're about to start another master plan.

Um we this project right here uh represents kind of one component.

We knew we identified a lot of issues, a lot of problems at the airport.

Um, and we work to solve them.

The problem is to solve it, a solution takes three to four years to see any fruit to that solution.

It's it's very frustrating.

Um we have the potential um to in the next uh we'll say 12 to 24 months, have a start to this hangar project, and possibly a start to a South Corporate Apron expansion project, which would be a big corporate hangar that would build at the same time.

So that's sort of change three and four years later from the work we did a while ago in getting feedback from the users, the tenants, the market, understanding what tweaks and changes and what we might need to give a little bit on the lease is that's the fruit of that.

We're seeing that now.

Now it's no guarantee even both of these will happen, but we're progressing very nicely in a direction that's very nice.

So the demand's already here.

We're not predicting any future demand, we're not spec building.

It's already here.

Um we're just trying to address it in the only way that public infrastructure does, which is very slowly methodically, and and we're providing that.

At the same time, we care about the culture of the airport, the existing users.

Um we have to balance all these different needs and these three or four different levels of regulations we have to follow.

So I I feel like from a strategic perspective, our trajectory is fantastic right now.

Um I'd like to see some more fruit of our labors coming sooner, but we're we're patient.

Um yeah, Sean, did I miss anything?

Um, council members.

Uh Sean Dempsey, assistant manager at the airport.

Um Andrew hit on um a lot of it there.

You know, as you mentioned, the master plan process, we just got the grant offer from the FA actually yesterday and pass it along to to Mayor and in legal for review.

Um thing about those master plans, and if you guys aren't familiar with the airport master plans, they're really designed to be a 20 to 30 year plan for that airport.

So this airport hasn't done a master plan in a long time, probably 1990s, 2006.

Uh so it's been quite a while.

But I would say that uh as Andrew and I look at our current master plan, the airport has hit most of the levels of growth that the FA had predicted for us to hit, and we have done most of the uh projects that the FA had said would be necessary to meet those levels of of growth that would be projected.

So one thing that uh we do have that was left on that master plan process was in an identified area for a T hanger development.

So I do want to add that uh the hangers that are being proposed here are an area that was proposed in that last study several years ago.

Uh but as far as future growth, we are about to look at that even more in depth and and figure that out going forward.

And that's a very public process as well.

Uh so there's gonna be committees and different types of focus groups that will be involved in really helping determine the future of the Frederick Airport.

But that's all I've got.

And can I add one more thing?

Um because I'm particularly proud about it, the financial future of this airport is great, and with the addition of this project and the revenue it will generate, um, you know, um we could we could potentially more than double our our margin every year, which is huge because it opens us up to be able to do other things that maybe aren't so profitable in the world of aviation or other projects that we know need to be done that we can't just do right now.

So deferred maintenance and things like that.

So that's it.

You know, great to hear um that we're focused on some near-term progress and developments and also some long-term stuff.

Does sound like we need uh sort of a new vision plan?

It's a little insane for me to realize as you were trying to recall when that last plan was drafted.

Was it the nineties?

2006.

It's a little insane that 2006 is much closer to the nineties than to today.

Like basically 1999.

Um it sounds like we've we've accomplished a lot of what we were hoping.

You know, sometimes it's two steps forward, one step back, but um over those 20 years, I think we've really closed in on where we were hoping, and and I'm excited for for next steps and uh you know some thoughtful expansion and and development.

You know, just uh to play on that a little bit.

We talk a lot about plans that we have in the city.

We spend time building plans, and then we we hear like our plans aren't coming to fruition.

Sometimes they just take a really long time, and it's great to hear that this plan that was put in place 20 years ago has progressed as as projected, and we're on the road to do even more.

So I just think that's really exciting, and um kudos to the all the hard work that you're doing.

Uh, is there any public comment?

Any remarks?

We are adjourned.

Thank you.

Thank you, Council.