Aug. 19--AUBURN -- The city will get involved in a deal to help purchase a hangar at the Auburn-Lewiston Municipal Airport but with some added restrictions on its loan.
City councilors Monday voted to loan the airport $1.1 million for 13 years at a varying interest rate. The rate stays at 2.58 percent as long as longtime tenant Lufthansa Technik continues to occupy the building and as long as it remains taxable.
If either changes, Auburn councilors have the ability to boost the rate to 3.25 percent.
With City Councilor David Young absent, the vote almost ended in a tie, but Mayor Jonathan LaBonte cast the deciding vote in favor of the loan.
Councilors had considered setting the interest rate at a straight 3.25 percent, an amount Airport Director Rick Lanman said would have equaled his annual fuel budget.
"This might get us through and get us to the ultimate goal and buy a hangar, but it would end up costing us a lot and it's going to cause me to change my budget," Lanman said.
Lewiston and Auburn were asked to loan the airport the money from their cash reserves. The airport would pay a 2.58 percent interest rate on the money, a much lower rate than the airport could qualify for on its own. On the other hand, that rate is nearly double what the cities would get purchasing a certificate of deposit for that money.
Airport backers said the plan is designed to save the airport and the cities $48,000 per year.
Lewiston'sCity Council approved its involvement in June, but Auburn councilors narrowly voted it down in July.
The airport planned to use the money to purchase the hangar from Nobility LLC. It's currently home to Lufthansa Technik's efforts to rebuild a historic WW II Constellation aircraft.
The Auburn-Lewiston Municipal Airport leases the hangar housing Lufthansa's project from Nobility LLC., paying $249,750 per year through 2028. The airport subleases the hangar to the Lufthansa Technik group for about $240,000 annually.
The airport has the right to purchase the hangar for $2 million when the lease ends, but buying the hangar and the remaining lease now would save the airport about $48,000 per year.
"If we go to the full terms of the lease, that building would actually cost us twice what it is actually worth," Lanman said. "We should have taken care of this about five years ago, but I wasn't here when we negotiated that lease."
Lanman said owning the hangar is a step toward making the airport self sufficient.
"We should be able to pay for our own operations without coming back to either city every year," he said.
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