City Council members spent roughly 90 minutes Tuesday discussing the fate of a lease agreement for a single hangar at the municipally owned Bob Adams Field in Steamboat Springs.

The city owns 10 of the 49 hangars located in 14 buildings at the city airport, with the remaining hangars privately owned through ground leases with the city.

The two largest hangars at the airport, known as Corp. 1 and Corp. 2, were under 30-year ground leases set to expire Oct. 31 of last year. Prior to that expiration date, council members voted to extend those agreements until Dec. 31 of this year.

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Corp. 1 hangar is leased through the city by longtime local pilot Les Liman. Corp. 2 is leased by Mountain Aircraft Maintenance owner John Duffy.

With less than two months before the latest lease agreement extension for the two hangars was set to expire, council members discussed Tuesday on how they should be handled.

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With an understanding that the maintenance operation in Corp. 2 would continue under its current lease agreement, Public Works Director Jon Snyder reviewed three options for council members regarding the expiring agreement for Corp. 1:

• Allow the Corp. 1 lease to expire, in which case the ownership of the hangars would revert to the city, which would use it to book transient pilot visits with an estimated annual revenue generated to the tune of $51,359. Snyder noted city staff’s recommendation for this option.

• Renew the current lease and collect $9,459 annually.

• Renegotiate the lease with Liman to generate an estimated annual $18,975 in revenue for the city.

“It is clear that the city’s (return on investment) is significantly higher if the Corp. 1 ground lease is allowed to expire and the ownership of that hangar reverts to the city,” according to the staff recommendation document presented to council members Tuesday.

“Staff believes this scenario is better for the community as it reduces the General Fund subsidy, thereby freeing up more money within the General Fund for other city services,” the narrative added.

Total revenue in 2024 for the city’s airport came in at roughly $1.3 million — up from about $1.1 million in 2022  —  and was drawn primarily from fuel sales and hangar lease payments.

Still, the city has seen increasing operational costs for the airport requiring annual subsidies drawn through the city’s general fund and allocated to the airport’s enterprise fund operations.

Money supplied by the city to the airport’s enterprise fund has grown from roughly $173,000 in 2020 to about $230,000 in 2023. In 2024, the city’s subsidy is projected to grow to $491,000, according to data provided by the city.

The ground lease agreements in place contain a clause allowing the city to obtain hangar ownership upon the expiration of the agreements.

City Manager Gary Suiter, who is set to retire in early 2025 and whose 30-plus years of experience includes roles in airport management, added to the discussion with respect to why Corp. 2 — the hangar housing the maintenance operation — and Corp. 1 — the hangar leased by Liman — should be treated differently.

“Always make the decision that is in the best interest of the airport, and that’s one of the primary reasons why they are being treated differently. We desire to keep an aircraft maintenance business on our field and there is benefit for the airport in doing that,” said Suiter. “It’s a no-brainer, always make a decision that is in the best interest of the airport.”

Underlining the need to increase revenue from the city’s ground leases at the airport, Snyder noted the upcoming expiration of the office-space lease agreement with Honey Stinger that is set to occur in March.

“They have notified us that they are probably only looking at renewing maybe one-third of the space in that building so (City Manager) Gary (Suiter) (Assistant City Manager), Tom (Leeson) and I are working on options to fill that building,” said Snyder

“But if we don’t get a tenant in there, you can expect that general fund subsidy to grow,” he added.

Unanimously on Tuesday, the six City Council members at the meeting signaled a majority “thumbs up” vote for staff to produce a renewed lease agreement with the owner of Corp. 2 hangar as a way to maintain the presence of his maintenance operation. (Council member Bryan Swintek was not present for the meeting.)

The majority also directed city staff to explore a five year lease extension for the Corp. 1 agreement.

Council members will vote on the first of two ordinance readings needed to approve action on the lease agreements at their meeting Dec. 3.

Liman — a former City Council member who has lived in Steamboat Springs since 1969 and recently sold the waste-disposal operation he founded after 53 years in the business — leases Corp. 1 to store his twin-propeller airplane. He addressed council members Tuesday to ask that his ground lease be renewed.

“I have sat in your seat and been on City Council and worked on trying to keep this airport open and successful, and I would like to do whatever I can to support the airport,” he said. “I purchased my hangar at Bob Adams Field from Bob Adams.”

Liman offered to rent out part of his current hangar space and provide the city with 100% of the revenue. “I don’t want a percentage, just take it,” he said. “I would like to be able to have my airplane for the few more years I might have left on the planet.”