Published 12:00 am Thursday, March 16, 2017

Board OKs 5 months free rent; terminates lease

The South Alabama Regional Airport Authority approved a request for five months free rent for the Kearns Group, which plans to vacate SARA in May.

Ronnie Kearns, owner of the Kearns Group, made the formal request at Wednesday’s board meeting, asking the board to give him free rent January through May of this year in consideration of work he has done for the airport.

SARA Executive Director Jed Blackwell said Kearns Group current pays rent of just over $5,000 per month for the nose dock hangar and warehouse facility.

The board met in closed session after Kearns’ presentation before voting to grant Kearns’ request. However, if he is not out of the facility by May 31, he must pay all five months’ rent.

“We are going to allow the Kearns Group to remain in the nose dock and warehouse through May 2017,” Blackwell said.

This is the most recent in a series of leases that have been terminated. Several companies have leased the twin hangars, completed in 2006.

Board member Mike Holloway expressed his dissatisfaction that “no one has ever fulfilled a lease.”

During Kearns’ presentation, he said that he had put a lot of money into the facilities to make repairs that he alleged should have already been made by the airport.

At various times since 2015, the Kearns Group has leased the nose dock hangars, the FBO warehouse and the Twin Hangar complex.

He said there was plenty of construction not completed on that nose dock building when he moved in, including no electrical, no lighting, no air conditioning, no fire suppression system and no restrooms.

Kearns said he originally offered to provide improvements to the lighting, electrical, air conditioned office space, bathrooms, and fire sprinkler system. He requested that for every $1,000 he spent on improvements, SARA would provide his company with one month of rent.

Kearns said that the board agreed, but capped the exchange at one year rent-free.

Kearns said he spent some $21,804 on improvements at the nose dock hangars.

He also said the drainage causes water intrusion to the floor at the nose dock, and there are taxiway limitations that keep his company from moving his C-130 work previously done in the Twin Hangar complex to the facilities; and that the UH-60A Army Divestiture Plan to bring Blackhawk helicopters to SARA was halted, and the hangars don’t meet FAA or OSHA standards for aircraft maintenance.

Of the Twin Hangars, Kearns said that he sub-leased the facility from DRS from June 2015-June 2016 while his company was making modifications to a NASA-owned C-130.

He said he paid $275,000 in rent for the C-130 work and an additional $25,823 for other maintenance work.

Additionally, he said he made $12,613 in repairs to the twin hangars during that year.

He also said that he lost revenues on drop in work due to SARA’s announced agreement with BAE, which has since fallen through.

In January, SARA announced that a major aviation company was locating at SARA. Blackwell said then that a verbal five-year lease of the Twin Hangar complex had been agreed upon and that the new tenant had a contract for $300 million to perform work on 85 C-130s over a period of several years. The company was expected to bring 40 current employees and hire at least 40 more.

Later, Blackwell walked that announcement back, saying the company did not get an expected government contract.

Kearns is also renting the FBO office, but has not invested major money into the facility.

He said that there are major problems with that facility as well, including, water leaking into the lobby, no identifiable parking places for KAM, air conditioner not working in component area, air conditioners in storage area not cooling properly and the roll up door for the shipping area doesn’t stay up.

There’s also a list of nine additional minor items, he said.

“The Kearns Group of companies has made a business decision to vacate the SARA facilities,” Kearns said. “Our decisions are based on what we believe to be a lack of support from SARA of our continued efforts to develop business here.”

Kearns, who first came here in 2005 to work with what is now Vector Aerospace, said he’s invested 12 years of his life in Covington County.

“I’ve spent a lot of my money trying to do business here,” he said. “I don’t enjoy my commute to Ozark, but I found it hard to do business here.”

Kearns also told the board that he didn’t recall that being an issue when he previously represented other companies involved at the airport.

“It seems difficult,” he said.

Board Chairman Gary Smith acknowledged that Kearns had done a lot of marketing for the airport.

“You made a lot of efforts,” he said. “I didn’t see you mention that.”

Kearns said he wasn’t trying to sell that to the board, but he had done that that since he came to Andalusia in 2005.

“I had Lockheed Martin in these hangars,” he said. “It’s my long-term commitment to employees and to make some money. I’ve taken flyers to trade shows to promote the airport.”

Covington County Economic Development Commission President Rick Clifton said that the Kearns Group has spent money on brochures and banners to help market the airport.

Holloway asked Kearns where he felt the board dropped the ball.

Kearns said that when they passed him up to seek other tenants when he was actually doing C130 work in the Twin Hangars.

“BAE comes along and we were removed,” he said.

In its June 28, 2016, meeting the Airport Authority approved an agreement with the Kearns Group for July 1, 2016 through June 30, 2017, giving the company first right of refusal and an exclusive marketing lease on the twin-hangar complex, at a rate of $5,000 per month. If the company used the hangar, it would pay an additional $1,500 daily rate; and in the event the company received a contract of at least one year, or subleased to another company, the rent would increase to $60,000 per month. That agreement was later cancelled, Kearns said.

Board member Dr. Chuck Burgess also asked Kearns if he had a discussion with the airport before he stopped paying rent.

The company was two months behind on rent before the board was actually notified that Kearns wanted to ask for the rent-free deal.

Kearns refrained from elaboration, but said, “I’m not trying to be defiant.”

Blackwell issued the following statement after Wednesday’s meeting:

“The airport does not agree with all of the assertions made by Mr. Kearns in his presentation today. The airport has at all times complied with all of the agreements that it has entered into with Mr. Kearns and his company. I believe that today’s decision by the airport board to allow Mr. Kearns to remain in two airport facilities rent free for a period of five months (January 2017 – May 2017) along with our willingness to terminate the remaining 38 months of two leases valued at over $194,000 is another good faith effort on our part to support aviation tenants and help them be as successful as possible.”