Landing Dassault Falcon: How Local Officials Collaborated on a $60M Expansion Deal

by Luke Jones  on Monday, Jul. 1, 2013 12:00 am  

Mathieu knew that Dassault would need more space, so he and the city started slowly acquiring land north of Dassault for its future use.

“A lot of the areas near there had become vacant over the years, so the commission acquired all that property for future expansion,” Mathieu said. “Here’s the way it works: If someone is looking for a decision on where to go, you really can’t come to the table and say, ‘If you pick me, two years from now when we’re finished buying land, it will be available.’ You have to have some skin in the game.”

“We approached the airport management and commission, along with the mayor and the city manager’s office, about the possibility of acquiring property that would provide land for the expansion,” Chesshir said.

The task of acquiring the land was risky.

“We had to make sure we’re sensitive to the neighbors who live every day with jets taking off,” Dailey said, noting that residents near the airport were not always thrilled when they learned that the airport was going to grow its boundaries.

The risks come from paying for land that may not be used for a long time, or ever.

“The interesting thing about when you buy land is you are preserving your ability and flexibility for the future, but it’s not generating any revenue for you,” Mathieu said. “In fact there are costs associated. You have to maintain it. People are buying jets for $30 or $40 or $60 million, and they’re coming through here, so you have to make sure the land is properly maintained.”

When it came down to the wire, the airport also cut Dassault a deal on rent.

“They own the buildings now,” Dailey said. “They’re capitalizing. We own the land, and we’re giving them a discounted rate.”

(Get This Week's Aerospace Lists: Download the list of the state's busiest airports and Arkansas' largest aerospace companies.)

So Dassault pays rent for the land, but not the buildings. The buildings gradually revert to the airport’s ownership over 25 years, saving Dassault about $41 million in rent. At the moment, Dassault is paying the airport $900,000 annually, and that will rise to $1.1 million after the expansion.

“On the front end it’s loaded to their benefit,” Dailey said.

 

 

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