Only 1 airport parcel remains vacant after another lease approved

GILFORD — With the recent approval of a transfer of lease, just one of the airport’s available parcels remains vacant.

Members of the Laconia Airport Authority authorized an assignment of lease for 2 Airport Road to Chris Norwood of Paper Birch Holdings Thursday afternoon.

Norwood is set to purchase the building and improvements located at 2 Airport Road in Gilford, an airport-owned parcel which lies outside the airport’s fence. The lease rate is set to remain unchanged at approximately $0.15 per square foot. The lease to be assumed is set to expire in 2036. Leases at the airport generally last 40 years.

The transaction requires a termination of lease between the airport and the current owners, UHW Properties, and a reassignment to Paper Birch Holdings, which was approved by the airport authority Thursday.

Lease agreements, following a vote authorizing them by the Laconia Airport Authority, must also be approved by Laconia City Council. While the airport generally conducts the due diligence associated with leasing land, city councilors must authorize either Mayor Andrew Hosmer or City Manager Kirk Beattie to sign for final approval.

If Norwood desired, he’d be able to negotiate for a new, 40-year lease following the official assumption of the existing lease.

Leasing land at the airport works by way of an interesting arrangement — the airport owns the land and operates ground leases, and private parties build and own hangars on that ground. At Laconia Municipal Airport, there’s 12 parcels inside the perimeter fence, plus another nine associated with the Crosswinds project, which will continue development of an essentially abandoned runway on the property. There’s another four commercial parcels located outside of the fence, which can’t reasonably be used as hangars because they don’t have access to the runway.

The lease price for parcels inside and outside the fence differ slightly — parcels inside the fence are more expensive because they have access to the airport’s runway and are restricted to aviation use. The going rate for inside parcels, at present, is about $0.20 per square foot, plus annual increases according to the urban consumer price index, and for outside the fence is about $0.15 per square foot. 

The Crosswinds development project is a big deal — the addition of nine parcels upon which hangars can be built is a potential revenue driver for the airport. Individuals who lease land at the airport usually build hangars, and pay property taxes to the Town of Gilford, where the Laconia Municipal Airport is actually located. 

“Crosswinds development project has begun as of today,” Airport Manager Marv Everson said at an authority meeting on Thursday. “Work started this morning — along with that Eversource was here yesterday and today. Busby’s back on the job, Moulison [Heavy Electrical] doing the heavy electrical work as a [subcontractor] to Busy, was here today as well. They’re pulling the cables, the lines, to be able to provide power all the down Crosswinds Way. We’ve been waiting on that.”

Thus far, of the nine available parcels associated with the Crosswinds project, the airport authority has seven lease agreements in place — one lessee has two of the parcels — and there’s one parcel still available.

“All except Lot 6,” Everson said at the meeting on Thursday.

Everson told those at the meeting he hopes the Crosswinds project will be complete in June. 

The four parcels located outside the fence are commercial properties, and determining their value can be tricky. The one located at 2 Airport, for example, is a day care facility — it will likely remain one plus some office space. In determining fair value for a commercial property on a land lease — which is unusual in the area — a commercial real estate agent might use a capitalization rate to calculate value. 

A capitalization, or CAP, rate, is a metric used to determine potential return on investment associated with a property. To find the CAP rate, one would divide the property’s net operating income by its market value, resulting in a percentage which represents an approximate ROI. The parcel at 2 Airport, for example, is 2.33 acres. At $0.15 per square foot, the airport authority would make just over $15,000. Using a CAP rate of 8%, the value of the parcel would be in the neighborhood of $190,000.

Airport authority administrators, like Everson, have heard from commercial real estate agents who note that because those properties are outside the fence they don't have the same benefits as those inside the fence, plus the fact land leases aren’t common in the area, may indicate the current lease rate of $0.15 per square foot is likely fair market value, not undervalued. 

The price of lease agreements for parcels inside the fence is not uniform, as some leases are much newer than others, but generally sit around $0.20 per square foot. As leases are assumed by others and new leases are written and signed, airport administrators seek to level the playing field as much as possible, getting lease prices as close to one another as they can.

"Each one is generating more income for the airport," Everson said.