Despite protests from tenants, the Santa Maria Public Airport District board voted to hike hangar rates to push them closer to what plane owners pay at neighboring airfields.

On Thursday night, the board voted 3-0 to approve a 50% increase in hangar rates, effective July 1. Voting in favor were Nash Moreno, Chuck Adams and Michael Clayton. 

Directors Steve Brown and David Baskett were absent from Thursday night’s meeting.

Clayton said he felt responsible to taxpayers, but admitted it was hard seeing the faces of plane owners who oppose higher hangar costs.

“It’s something that we’ve got to do,” Clayton said. “I’m sorry if it displaces anybody in this room, but it’s fair and equitable and I’m voting yes.” 

Before the vote, General Manager Martin Pehl shared what he called context for the increase, including a runway “in dire need of rehabilitation,” adding the project is a decade overdue. 

A frustrated Pehl ticked off other projects and expected expenses likely to add up to millions of dollars, including a legal settlement he said he couldn’t yet reveal — “it’s not going to be cheap” — and old chemical contamination cleanup the district might have to help fund. 

“I’m not sure how we’re going to do that, quite frankly,” Pehl said. “At the end, the solution is we have to find a way to increase revenues. We can’t subsidize people’s hangar space. We can’t.”

An analysis revealed 63% of hangar tenants live outside the sprawling airport district’s boundaries, which encompass the entire Santa Maria Valley and stretch east to Tepusquet Canyon and south to Los Alamos. 

That means those residents don’t pay property taxes toward the district’s operations.

“So two-thirds of our hangar tenants — and I mean no offense to them — are essentially having their rents subsidized by the district taxpayers,” Pehl said. 

SMX has 140 T-hangars, 35 corporate and eight corporate T-hangars it leases, with current costs at 26 cents per square foot. 

After the rate hike, Santa Maria airport hangar tenants will pay 40 cents per square foot, compared to 42 cents at Lompoc, 45 cents in San Luis Obispo and 83 cents in Santa Barbara.

Most airports are operated by the cities and counties and must be financially self-sustaining as enterprise funds. Since Santa Maria’s is operated by a special district, it receives property taxes that help cover shortfalls.

“If there’s going to be any subsidy, it has to be programs that are beneficial to the general taxpayer that’s providing that extra $2 million worth of tax revenue proceeds that most airports don’t see,” Pehl said.

Saying he represented tenants, Jordan Hahn spoke out against the rate hike.

“While we understand the board’s financial constraints, we firmly believe that a blanket rent increase is both shortsighted, unjustified and an inequitable approach to addressing these revenue challenges,” Hahn said. “Such a move would significantly impact the heart of the Santa Maria airport community here.”

Speakers Thursday night and at last month’s meeting contended the increase would lead to more vacant hangars, reduce fuel purchases and otherwise harm the general aviation community. 

In a written comment read aloud during the meeting, Santa Barbara County Taxpayers Association’s Lanny Ebenstein contended renting hangars for below-market rates amounted to a gift of public funds, which is prohibited by the California Constitution.

“Elected officials do not have discretion to require taxpayers of the district to subsidize rental rates of private parties storing their airplanes,” Ebenstein wrote.

After the vote, Clayton delivered an emotional soliloquy, expanding on his earlier comment. 

“I’m sorry if you don’t like the decision that was made, but this has to be done. There’s things that have to be paid. I’m doing the best I can at this job, I’ll tell you that,” he said, adding he knows the other board members have grappled with the situation a lot.

The district isn’t just raising rates for hangar tenants but others, such as growers leasing land owned by the airport district. 

“What you don’t know, and what Martin alluded if you were listening, is he can’t tell you about some of the things that we’re going to be obligated to pay. It’s going to sink our ship if we’re not careful,” Clayton added.