Vector could get 1-year free rent
South Alabama Regional Airport and local elected officials have offered Vector Aerospace a full year of no-facility lease costs and $1 per month land lease in an effort to secure a new, eight-year lease agreement and keep jobs at the airport.
SARA released the new proposed lease agreement details with Vector Aerospace, which were hammered out last week, on Tuesday.
The airport authority and elected officials from the City of Andalusia, Opp and the Covington County Commission, met Friday to hash out the final details on the proposal for a new lease agreement with the aerospace company. The agreement was sent to Vector yesterday afternoon, SARA Co-Executive Director Jed Blackwell said.
“Before we made a decision on what we wanted to propose for this new lease agreement, we wanted to make sure Andalusia, Opp and the county were in agreement with what we were proposing,” Blackwell said. “That was the purpose of the meeting on Friday was for us to put together what we wanted to propose.”
At present, Vector Aerospace’s agreement includes leases on two phases of facility construction and land rent. Phase one is $13,013 per month, and expires Aug. 31, 2015. Phase two is $22,846 per month and expires Aug. 31, 2016. The land lease is $1,050 per month, and expires Aug. 31, 2016. Those leases total $36,909 per month.
The proposed new lease agreement combines both phases beginning on Oct. 1, 2015, and expiring on Sept. 30, 2023.
“The first 12 months of that proposed new eight-year agreement, we’ve offered them 12 months of no facility rent cost,” Blackwell said. “Those first 12 months or one year of that eight-year agreement, we’ve offered them a land rent amount of $1 per month.”
If Vector agrees to the proposed lease agreement, then beginning on Oct. 1, 2016, through Sept. 30, 2023, the company would pay $36,950 per month for facility rent. With the additional $1,050 for land rent, the company would pay $38,000 per month.
Blackwell said the airport requested that the lease agreement be guaranteed by a related entity of Vector, or a parent company.
Previously, Vector also has asked for SARA’s help with additional firefighting support.
“The airport will continue to pay the salary for the fire department chief, and keep up the fire department facilities; however, no additional funds will be paid for equipment or for salaries,” he said.
The new agreement was proposed because Vector believes that military cuts, will reduce the work it gets locally, at least in the short term. At present, the company employs 121 people in Andalusia, 41.9 percent of whom are local residents.
The governing bodies of Opp, Andalusia and Covington County have a vested interest because they secured the construction bonds, and are responsible if the Airport Authority cannot make the payments. At present, they are in the midst of refinancing the airport bond issues and talking sole responsibility for those debts.
Because the airport agreed to give a year of free facility rent to Vector if it decides to take on the new lease agreement, then the airport would lose more than $400,000 in lease revenue. Consequently, the two municipalities and the county would absorb the bond payments for the facilities.
All three elected officials unanimously agreed to the free facility rent, Blackwell said.
Blackwell said that for the remainder of the lease — seven years — the airport will gain $3,192,000, if Vector accepts the lease agreement.
Blackwell said the airport is pretty happy with what they have proposed to Vector.
“We feel like the terms that we have offered to Vector are suitable for their needs and our needs, the airport and the community,” he said. “First and foremost, jobs is the biggest thing for us. We’re talking 121 jobs that are better than average paying jobs for this community.
“So, we want to do everything within our power as an airport community to keep those jobs in Covington County,” he said. “In our eyes, a fair lease is one that’s beneficial to both parties. We feel that what we’re offering is truly beneficial to both parties long term.”
Blackwell said it could take from a week to several weeks for Vector to come back with an answer on the proposed agreement.
“Vector has been located here since 2001,” he said. “They’ve done everything they’ve asked to do as far as employees and type of work they’re doing. We appreciate what they do in Covington County and we hope that what was proposed to them will keep them here in the county for many years to come.”