Move designed to keep tenants at Hollister Airport during
recession
Responding to an unprecedented amount of turnover among tenants
at Hollister Airport hangars, the City Council recently voted to
suspend the annual rent increases on the spaces for a year.
Move designed to keep tenants at Hollister Airport during recession
Responding to an unprecedented amount of turnover among tenants at Hollister Airport hangars, the City Council recently voted to suspend the annual rent increases on the spaces for a year.
The recession “is placing extreme strain on businesses and corporations [and] several of the airport tenants are being adversely affected,” Airport Director Mike Chambless said in a report to the council. “The last year has seen an unprecedented 15 hangars that have changed hands” and one hangar was vacant for two months, which is out of the ordinary.
Suspending the rent increase, which is based on the Consumer Price Index (CPI), will help stabilize the rental market and prevent the loss of several key businesses at the airport, Chambless said. The annual CPI rental adjustments were put into place by the city council in 2002.
“Normally, the airport has a hangar change [of tenants] very rarely,” Chambless said. “This last year has been unheard of, which tells me that the economy is really nailing our pilots.”
It’s not just the pilots who are affected, officials say.
“Flights and gas sales are way down, and we’ve had some of our larger tenants consolidate their businesses and give up spaces,” Chambless said. “Skydiving used to fly seven days a week – now they’re down to three or four. We had one business that had to let an employee go.”
The airport has maintained a waiting list for hangar rentals for years, and there are up to 25 people or businesses on it at a time.
“We always used to fill our vacancies within a month, and it takes a while to go through the waiting list,” Chambless said. With a recent vacancy, however, “we went through the whole waiting list and no one wanted the hangar.”
Monthly rental fees at the airport range from $300 to several thousand dollars, which is comparable to similarly-sized airports such as the ones in Salinas, Watsonville and Livermore.
Gordon Machado, who sits on the Hollister Airport Advisory Commission, said the vacancy situation at the airport “is really rare.”
“I would assume the CPI is not going to be the breaking factor for most businesses,” Machado said. “It’s going to take more than that” to put them out of business.
But he said the commission believes freezing the rents was a necessary step to help businesses through the recession.
“It’s a good business practice to be a good landlord, especially if it’s the difference between a vacancy and an occupied space,” he said. “It’s worth it.”
Fred Meyer, who is chairman of the Airport Advisory Commission and has been a hangar renter for the past decade, said the economy has slowed down aviation “quite a bit, between the price of fuel and the way the economy is.”
“I’ve noticed quite a bit of turnover in the past six months,” said Meyer, who was on the hangar waiting list for 10 years before he had the chance to rent a space. “Everybody is pretty happy about the CPI freeze because anybody likes a decrease in their costs. I think it’ll help some of the commercial businesses that might be impacted. It depends on how long it’s in place and when the economy turns around.”
Meyer was excused from the airport commission meeting at which the commission voted to freeze the hangar rents, since he is a renter himself.
Ernie Persich, owner of Vintage Wings and Wheels, an aircraft repair and maintenance business based at the airport, said that the economy has had an impact on general aviation.
“A lot of people are holding off on buying or maintaining airplanes,” he said, though his business, which specializes in restoring and servicing antique airplanes, has been “fairly steady.”
He said that using the Consumer Price Index to control airport hangar rents makes it more affordable for general aviation pilots who store their planes in Hollister.
“I think the rates are comparable and fair,” Persich said.
Chambless said he is confident that the economy will improve and the airport hangar vacancy rate will remain low.
“The question is will it be in six months or 18 months?” he said, noting that the airport operates as an enterprise fund, meaning it generates and keeps its revenue, though it does reimburse the city for administrative costs.
