Nunno Master Ground Lease: Next Steps

By Lincoln City Manager Matt Brower

I’ve been asked to provide information to members of the Experimental Aircraft Association (EAA), the Lincoln Regional Aviation Association, other Airport tenants, and the Airport community about the status of City negotiations to enter into a new long-term master ground lease with Nunno Incorporated. I welcome the opportunity to provide this update and hope that it will settle many of the rumors circulating at the Airport.

Nunno executed a 20 year master ground lease with the city of Lincoln (City) in 1986. The lease included a single ten-year extension option; which
extended the lease though December 15, 2016 for a total lease term of 30 years. The ground lease encompasses an area located at the north end of the improved area of the airport, containing 74 hangers–24 fixed hangars and 50 port-a-ports.

The City commenced negotiations with Nunno in November 2016 to negotiate a new long term master ground lease. Both parties agreed to continue the existing ground lease on a month-to-month basis after December 15, 2016 until negotiations were completed or terminated. Regrettably, representatives of Nunno communicated their intentions to the City in August 2017 that they were no longer interested in negotiating a new master ground lease.

Nunno’s decision to end negotiations effectively brings their lease agreement with the City to a close. Under the terms of Nunno’s Master Ground Lease Agreement with the City, specifically Section 17, at the expiration or termination of the Lease all improvements on the premises, i.e. specific hangars, become the property of the City (reversion). It should be noted that the port-a-port hangars located in Rows P, Q, R, and S are not considered improvements and are therefore not subject to reversion.

The City has invested significant time in crafting a thoughtful and reasonable action plan for transitioning Nunno tenants and hanger owners to new agreement arrangements with the City. The Airport Committee has consistently been apprised of developments pertaining to the lease situation.

Upon expiration of the Master Lease, the fixed hangars automatically revert to the City. As such, the City intends to negotiate fair market rental agreements with current tenants of Nunno hangers. For privately owned port-a-port hangers, the City intends to enter into individual ground leases with each owner. The terms of the individual ground leases will include provisions to ensure rents are market rate based and possibly to include a common area maintenance fee. For fixed hangers that are privately owned, the City intends initially to negotiate short-term rental agreements to facilitate the transition from Nunno to the City, then to negotiate long-term individual ground leases.

The City will begin reaching out to tenants and owners of Nunno hangers beginning the week of October 9, 2017. Our goal is to negotiate new agreements with the respective owners and tenants by early November to ensure a full transition to the City by December 1, 2017.

Of critical importance to the City is to ensure that airport stakeholders are kept fully informed about the City’s plans for transitioning hanger tenants and owners to new agreements with the City. To this end, the City invites you to visit the City’s webpage, specifically the pages dedicated to the airport, for ongoing information; additionally, the City intends to: (1) post information about this situation in the pilot’s lounge, (2) directly contact owners/tenants of Nunno hangers, and (3) hold two Open Houses at the Airport on Thursday, October 19, 2017, at 10 a.m. and 5 p.m. The Open Houses will be located the City’s Corporation Yard located at the northern end of Flight Drive (2100 Flightline Drive).

Should you have questions or concerns about this transition, I invite you to contact Jennifer Hanson or myself. We remain committed to working closely with our airport partners to ensure the long-term fiscal sustainability of the airport.