June 18--LEWISTON -- The Auburn-Lewiston Municipal Airport's plan to buy out the 14 years remaining on a hangar lease will save the airport and both cities, councilors were told Tuesday.
Lewiston Finance Director Heather Hunter said both cities are being asked to loan up to $1.1 million to the airport to buy the hangar from Nobility LLC. It's currently home to Lufthansa Technik's efforts to rebuild a historic World War II Constellation aircraft.
Lewiston councilors unanimously agreed to the new plan Tuesday. Auburn councilors are scheduled to vote on it July 7.
Hunter said both cities are being asked to loan the airport the money out of their cash reserves. The airport will agree to pay 2.58 percent interest, a much lower rate than the airport could qualify for on its own. It's also nearly double the rate the cities would get by buying a certificate of deposit.
"The city has cash available, some for the long term, some for the short term," Hunter said. "We would take that excess cash flow and in lieu of a certificate of deposit, we would do a loan for a 13-year period."
The airport will lease the hangar for $249,750 per year through 2028. The airport will then subleases the hangar to the Lufthansa Technik group for about $240,000 per year.
When the lease ends, the airport has the right to buy the hangar for $2 million. Buying the hangar and the remaining lease would give the airport about $48,000 per year, Hunter said.
Lufthansa Technik has a contract that is expected to last though next year but airport officials expect the company to stay longer.
The circa-World War II Lockheed Super Constellations were fixtures at the Auburn airport until December 2007, when Germany bought them. The local Lufthansa group has been working to rebuild the Constellation in the hangar since 2008.
Work on the $3 million hangar began in 2008. Lufthansa and the airport cut the ribbon on the 50,000-square-foot hangar in August 2008.
The airport board is recommending the cities split the $2.2 million cost to buy the hangar now, saving an estimated $3.5 million in lease costs. The airport would pay about $201,000 per year to the cities to repay the loan.
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