This is a renewal of a land Lease from the State of Montana Department of Natural Resources and Conservation (DNRC).  The 200 acres of land are located in an area near the approach end of the Airport's primary Runway 10L/28R,  on the north side of the Airport's property. This parcel encompasses a portion of the extended safety area and clear zone, and is a part of the FAA Part 150 Noise Mitigation Program. While this leasehold is raw undeveloped land, the Airport has always maintained control of the property as a future protection against development in this area since it is a high noise area as identified in the Part 150 Noise Study. With State land, a lessee of that land can request that the land being leased be considered by the Land Board to be put up for sale through an auction process. The lessee must then bid to get control of the land that they had previous control over through the lease. This is a process that the Airport is considering very carefully, mainly because the lease rate went from $2,000 to $20,000 over the past five years. If the Airport were to give up the Lease and at some time in the future it was sold by the State and subsequently developed, due to the close proximity to the end of our main runway, the Airport would likely have noise mitigation issues to deal with, which can be very time consuming and costly. Subsequently, as long as the Airport can afford the Lease payments, it should control the property, at least until the time when aircraft are virtually silent.
The previous 10-year Lease was approved by the City Council on May 14, 2001 for a term that began on March 1, 2001 and expired on February 28, 2011. The new Lease term begins March 1, 2011 and expires on February 28, 2021.  The Airport has leased this property for approximately 30 years.

The City Council may:

• Approve the renewal of the 10-year Lease with the State of Montana for the Airport's Buffer Zone; or
• Not approve the renewal of the 10-year Lease with the State of Montana for the Airport's Buffer Zone and risk having noise mitigation issues in the future as discussed above.

The rental amount is $20,000 per year for the first five years. The rental amount will be reviewed at the end of the first five-year period, and may be adjusted by the DNRC to secure a fair return to the State.

Staff recommends the City Council approve the renewal of a 10-year Lease with the State of Montana DNRC for State-owned property that borders the Airport on the north side, and is a part of the Airport's Buffer Zone.