When it comes to big bargains, it’s no secret that Morris Communications, parent company of The Augusta Chronicle, has one sweet lease attached to the company’s private hangar at Augusta Regional Airport.
Known as “Hangar 3” out at the airport, the Morris Hangar provides more than 19,000 square feet of space for private jets owned by William S. Morris III, chairman of Morris Communications.
But let’s just say the manner in which this hangar was built is a curious tale.
Back in December 1996, Morris entered into a business deal with the airport to construct a private hangar on the airport’s property to house his jets.
The Aviation Commission, along with the Augusta Commission, approved the airport’s budget of $1.5 million to pay for the new hangar.
Just in case you missed that, the city agreed to pay $1.5 million to construct a private hangar for… a multi-millionaire.
All right, so this is how the deal went down: Morris initially paid for the hangar during its construction and the airport reimbursed him after the project was completed and approved.
Gary Siegfried, the engineer and facilities manager at the airport at the time, said the airport and Morris entered into a contract that was a “turn-key arrangement.”
“A turn-key approach is when you hire a single company to both design and build a project,” Siegfried told the Metro Spirit back when the project was being constructed. “In this case, Morris hired Kuhlke Construction to design and build the hangar in one lump sum.”
Just in case any readers are new to the area, Kuhlke Construction is a well-respected commercial and industrial company owned by Bill and Dessey Kuhlke.
Back in 1996, when the city approved this lease arrangement with Morris, Bill Kuhlke was an Augusta commissioner.
So, why did the airport feel the need to reimburse Morris for a private hangar?
Well, the explanation that Morris provided the city for the need of the new hangar was that the door to the former hangar was “too low to accommodate larger corporate jets.”
At the time, Morris owned two jets and one was considered “high-tailed” and just wouldn’t fit in the city’s former hangar.
That’s a rough problem to have.
So, the airport agreed to demolish an older hangar and Morris Communications would build the new $1.5 million hangar.
Once it was completed, Morris then agreed to “sell” the hangar to the airport for $1.5 million, and then lease it back over 20 years at a commercial rate of interest similar to the rate of a 20-year treasury bill.
The 1996 deal stated the interest rate was approximately 5.7 percent and there was a $500-a-month charge for Morris’ use of airport land.
However, Mary Williams, a former finance manager for the airport, stated the project ended up costing $1.7 million, but Morris paid the extra $200,000, which was considered contributory or donated capital.
Way to cough up some cash, Mr. Morris, to make sure your private hangar fits your needs!
The way the 20-year lease for the hangar works, the airport may eventually have “sole control” over the hangar if the contract is not renewed.
But that is a big “if” because once the 1996 lease expires, Morris Communications has the option to renew the lease for an additional 10 years.
And here is one more surprise: While the lease agreement is dated Dec. 19, 1996, the lease didn’t actually start until April 1998. So, the agreement doesn’t end until March 2018.
So, let’s face it folks, while the city may technically “own” the hangar, that $1.5 million hangar will likely be controlled by Morris until 2028.
While some in the community have questioned the terms of Morris’ lease, many former aviation commissioners insisted it was a good business arrangement.
Some aviation commissioners argued that, by building the hangar, the project attracted more attention and brought other investors to the airport. And the airport also benefitted from the fuel being purchased for the jets in the hangar.
Talk about wearing rose-colored glasses?
It should also be noted that a number of the former and current aviation commissioners have ties with Morris Communications.
In fact, former Augusta Aviation Commissioner Ed Skinner, who served on the commission from 1978 until 2002, was the vice president for newspapers at Morris Communications. When Skinner retired from Morris Communications in 1998, he had worked for the company since 1944. That’s more than 50 years of loyalty.
But even today, Lowell Dorn, the manager of telecommunications at Morris Communications, currently serves on the Augusta Aviation Commission.
So, why bring this all up now?
Next week, the Augusta Commission will consider approving a sublease between Morris Communications and Cessna Aircraft Company, which was already approved by the aviation commission last month.
Basically, Morris Communications is requesting to sublease aircraft storage and office space in Hangar 3 to the Kansas-based Cessna Aircraft Company.
Apparently, Cessna wants a three-year lease to use the hangar to house a Beechcraft King Air 250 aircraft at a rent of $16,800 a year.
So, Morris is going to get $16,800 a year for the next three years to sublease the very hangar that the city paid to construct and is currently leasing to Morris?
Does anyone else see something wrong with that picture?