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S.B. 292

             1     

AIRPORT OPERATOR LEASE AGREEMENTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Mark B. Madsen

             5     
House Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Aeronautics Act by amending provisions relating to certain
             10      airport operator lease agreements.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides definitions;
             14          .    requires an airport operator to, before the termination of certain qualifying lease
             15      agreements:
             16              .    provide the existing lessee the option to extend the term of the lease for a certain
             17      time period; or
             18              .    pay to the lessee the undepreciated amount of the investment for the capital
             19      improvements made by the lessee if a qualifying lease is not extended; and
             20          .    provides that if an airport operator enters into certain qualifying lease agreements,
             21      the lease agreement shall contain:
             22              .    a lease term or an option to extend the lease term for a certain time period; and
             23              .    a provision requiring the airport operator to pay to the lessee the undepreciated
             24      amount of the investment for the capital improvements made by the lessee if a
             25      qualifying lease is not extended.
             26      Money Appropriated in this Bill:
             27          None


             28      Other Special Clauses:
             29          None
             30      Utah Code Sections Affected:
             31      ENACTS:
             32          72-10-307.5, Utah Code Annotated 1953
             33     
             34      Be it enacted by the Legislature of the state of Utah:
             35          Section 1. Section 72-10-307.5 is enacted to read:
             36          72-10-307.5. Airport operator lease agreement requirements.
             37          (1) As used in this section:
             38          (a) "Capital improvement" means an addition of a permanent structural improvement
             39      or other renovations to property that:
             40          (i) enhances the property's overall value; or
             41          (ii) increases its useful life.
             42          (b) "Fixed base operator" means a person who:
             43          (i) is granted the right by an airport operator to operate on an airport; and
             44          (ii) provides aeronautical services including fueling, hangaring, tie-down and parking,
             45      aircraft rental, air charter service, aircraft maintenance, and flight instruction.
             46          (c) "Investment Schedule" means:
             47          (i) for capital improvements for which the investment amount is less than $1,000,000
             48      but more than $180,000, a lease term equal to 50% of the longest time period for which the
             49      capital improvements are or could be depreciated under applicable Internal Revenue Service
             50      depreciation schedules; and
             51          (ii) for capital improvements for which the investment amount is in excess of
             52      $1,000,000, a lease term equal to the longest time period for which the capital improvements
             53      are or could be depreciated under applicable Internal Revenue Service depreciation schedules.
             54          (d) "Qualifying lease agreement" means a lease agreement that:
             55          (i) is between an airport operator and a fixed base operator or a specialized aviation
             56      service provider; and
             57          (ii) includes a provision for one or more capital improvements to the leased property.
             58          (e) "Specialized aviation service provider" means a person who maintains facilities at


             59      an airport for the purposes of one or more of the following aviation activities:
             60          (i) aircraft fueling;
             61          (ii) aircraft services including parking, storage, tie-down, and ground handlings;
             62          (iii) aircraft maintenance or sales;
             63          (iv) avionics maintenance or sales; and
             64          (v) aircraft rental, air charter service, air taxi service, or flight instruction.
             65          (2) Notwithstanding any contrary provision in Title 63G, Chapter 6, Utah Procurement
             66      Code, an airport operator shall:
             67          (a) before the termination of a qualifying lease agreement that was executed before
             68      May 8, 2012, provide the existing lessee the option to extend the term of the lease for a time
             69      period that is consistent with the investment schedule if new capital improvements are made
             70      after May 8, 2012, by the lessee under that qualifying lease agreement; or
             71          (b) pay to the lessee the undepreciated amount of the investment for the capital
             72      improvements made by the lessee that have not been depreciated in accordance with applicable
             73      Internal Revenue Service depreciation schedules if a qualifying lease agreement is not extended
             74      for the time period described in Subsection (2)(a).
             75          (3) If an airport operator enters into a qualifying lease agreement on or after May 8,
             76      2012, the lease agreement shall contain:
             77          (a) a lease term and an option to extend the lease term for a time period that is
             78      consistent with the investment schedule; and
             79          (b) a provision requiring the airport operator to pay to the lessee the undepreciated
             80      amount of the investment for the capital improvements made by the lessee that have not been
             81      depreciated in accordance with applicable Internal Revenue Service depreciation schedules if a
             82      qualifying lease agreement is not extended for the time period described in Subsection (3)(a).




Legislative Review Note
    as of 3-2-12 10:55 AM


Office of Legislative Research and General Counsel


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