Lease of airport land raises questions

Is Red Eagle legal?

Concerns have been raised — most recently by the Quiet Skies group — about the legality of the city of Kalispell’s lease of land to Red Eagle Aviation, a fixed-based operator at Kalispell City Airport.

“Personally, I think it was all, the sale and the lease agreement, was all a set-up,” said Scott Davis, a vocal Quiet Skies representative.

“I would like to call it insider trading. It was an agreement between [Airport Manager] Fred Leistiko and some of the City Council members to do condemnation and expand the runway and airport. I believe it should have been put in the paper for bid to be a fixed-based operator at the airport. Putting the fixed-based operator lease out to bid would’ve made it open to other businesses.”

As a result of these complaints, the Daily Inter Lake looked into the matter.

The city in 2005 purchased land from Red Eagle Aviation, which is responsible for much of the city airport traffic, because a portion of the land was encroaching on the runway. The Federal Aviation Administration would require the city to purchase more land if the city decides to expand the airport, Airport Manager Fred Leistiko has said.

Red Eagle then leased land back from the city.

The purchase agreement dated Aug. 26, 2005, listed a price of $760,000, but that price could not be confirmed by the city attorney’s office. The Inter Lake has documentation of a price of $774,715.

Kalispell City Attorney Charlie Harball was not sure if the council approved a specific purchase price for the Red Eagle property. Council did approve the purchase of the land on Feb. 22, 2005, based upon an estimated purchase price of $600,000.

The purchase was approved as part of Phase I of an Airport Redevelopment Plan that included issuance of $1.9 million in Tax Increment Urban Renewal Bonds.

Other items approved in the purchase included construction of a northwest ramp and taxiways, installation of northwest utilities, construction of an internal vehicle access road, and purchase and installation of an automatic security gate.

State law requires that the lease, sale or donation of city property be approved by a two-thirds vote of the city council.

The council did not specifically approve the lease of the former Red Eagle property back to Red Eagle. But it gave the city manager the authority to negotiate hangar leases at the airport on Oct. 4, 2004 by a vote of 8-1 with council member Bob Hafferman dissenting.

City Manager James H. Patrick signed the lease with David Hoerner, then the owner of Red Eagle, on Aug. 26, 2005. The lease is good for 20 years plus two five-year extensions. It includes rent of $17,664 per year for 2,058 square feet of office space and four hangars.

The rental price was fixed for the first five years but is set to increase by 2 percent on Aug. 26 and 2 percent in each of the next four years. The rents for years 11 through 20 are to increase by 3 percent each year and in each subsequent year (years 20 through 30). Red Eagle also pays $3,600 a year to lease the fuel farm and pumping station.

Kalispell Mayor Tammi Fisher, who also is a land-use and real estate attorney, said she doesn’t know if giving the city manager blanket approval to approve leases of city property is legal or not.

However, she said she wouldn’t have voted for it or signed the resolution if she was on the council at the time. Fisher was elected in November 2009 and her term began in January.

“When you’re talking about issues that are 20 or 30 years in duration, it should be approved by council,” Fisher said. “Any city expenditure is going to be scrutinized by City Council because we don’t have a lot of money.”

Former Mayor Pam (Kennedy) Carbonari declined to comment. A call to Councilman Duane Larson, who was also on the council at the time, was not returned.

A representative from the Montana Attorney General’s office said the attorney general cannot get involved unless a city official requests an opinion.

Red Eagle Aviation subsequently was sold to Justin Sands, who then sold it to Jim and Serena Pierce. Jim Pierce did not return a phone call.

Reporter Caleb Soptelean may be reached at 758-4483 or by e-mail at csoptelean@dailyinterlake.com.