WORTHINGTON -- A memorandum of understanding that specifies funding for construction of a new, multi-plane hangar was approved Monday by the Worthington City Council.
The deal between Integrity Aviation, the fixed based operator at Worthington Regional Airport and part of Prairie Holdings Group, and the City of Worthington defines a financing plan for a total project estimated to cost $307,455. The city will fund the site construction and professional services costs, which are estimated at a total of $55,900 and will come from dollars reserved for capital improvements. The remaining costs -- building construction -- of $251,505 would be funded by lease payments from Integrity.
Marc Freese, who spoke to the council on behalf of Integrity, said the memorandum of understanding should pay substantial dividends to the city.
"At this time, we're looking at it strictly as a benefit to the city for economic development," Freese said. "If we continue on like this, it doesn't affect Integrity, but it does affect the city."
The new hangar will allow the larger resident aircraft to be relocated from the existing multi-plane hangar on the public apron. The existing multi-plane hangar will be able to accommodate hangar needs of transient aircraft such as corporate jets.
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"The concern is if we don't have some hangar space for these guys (corporate jets), they'll pull out and leave town," Freese said.
The memorandum of understanding included in the city council agenda Monday called for monthly lease payments based on an internal loan with a 20-year term and 5 percent interest rate. Utilizing the current $251,505 current cost estimate, the monthly lease payment from Integrity to the city would have been $1,659,82.
Councilmen, though, were also asked to consider an Integrity request of a reduction of $250 per month in the lease payment. After discussion, the agreement terms were modified to have Integrity pay a flat $1,500 per month. The actual total lease amount will be based on the final construction costs.
"This is a deal we've got to get done," Alderman Mike Kuhle said. "It's a deal that doesn't just affect Prairie Holdings, but a lot of other businesses."
Alderman Ron Wood noted other communities, such as Granite Falls, have benefited from the types of deals Worthington is moving forward.
"Look at other communities that put money into airports," said Wood, noting Fagen Inc. probably wouldn't have set up business in that community if it weren't for airport improvements.
It is hoped the new hangar will be constructed by next winter.
