This action has no direct financial impact on the County General Fund. The Airport Enterprise Fund will not recognize additional revenue estimated at $52,788 annually based on a 2.6% Consumer Price Index factor.  
  

In 2013 the Airports Division created and began to implement a business retention and attraction program to strengthen and grow the Buchanan Field and Byron Airports. Airports staff analyzed the tenant and business loss data and competitive market rental rates to understand underlying factors for downturn in based aircraft and increased tenancy turnover at both airports; but most notably at Buchanan Field. The findings showed a decline in tenants and based aircraft due, in large part, to increased costs coupled with a soft economy. As such, On March 19, 2013, the Board authorized a one-year waiver (from April 1, 2013 to March 31, 2014) of the Consumer Price Index (CPI) adjustment.  
  
Airport staff conducted a market rate rent comparison in January 2014 and found that the Contra Costa County fair market hangar rental rates continue to exceed the competitive average and, as a result, are negatively affecting tenancy. Many, but not all, of the airport leases and rental agreements include an annual Consumer Price Index (CPI) rent adjustment. Of those that have this increase, some include the following language: “In no event will the Ground Rent for any year be less than the Ground Rent in effect for the immediately preceding year. In the event there is a decrease in the CPI or in the fair market rental value of the Premises, Ground Rent for the year in question will be the same as the Ground Rent for the preceding year (emphasis added)”. The emphasis is on fairness and equity to best ensure that adjustments are supported by market conditions.  
  
As indicated in the above information, the Contra Costa County fair market hangar rental rates continue to exceed the competitive average and, as a result, are negatively affecting tenancy. A majority of hangar tenants will get a CPI rent increase on April 1, 2014, as these agreements do not include the fair market rental value language. As such, to better attract and retain hangar tenants, a one-year CPI waiver is being requested starting April 1, 2014, based on the fair market rental rate comparison, in order to make our rental rates more comparable to other regional general aviation airports.  
  
The CPI waiver is a crucial component in the County’s economic retention and development program for the airports. Airports staff will work with tenants, businesses and other stakeholders to develop additional retention and attraction programs for the airports.  
  
The Aviation Advisory Committee reviewed and supported the CPI waiver at their February 13, 2014, meeting.  
  
On March 3, 2014, the Airport Committee of the Board of Supervisors reviewed a one-year CPI waiver for hangar tenants and expanded to include all applicable tenants at both airports to strengthen and promote economic viability. The Airport Committee also approved scheduling this item before the full Board of Supervisors for their review and approval.  

Delay in project approval will result in the airports’ tenants receiving a rental increase; making our rates even less competitive which may prompt additional loss of tenants and associated revenue.  
  
  

Delay in project approval will result in the airports’ hangar tenants receiving a hangar rental increase; making our rates even less competitive which may prompt additional loss of tenants and associated revenue.