Concerns raised over proposed airport storage facility
Staff Writer | August 5, 2022 1:00 AM
COEUR d’ALENE — Some Kootenai County residents have raised concerns over a possible revenue-sharing deal for a storage facility at the Coeur d’Alene Airport.
The proposed 50-year development and ground lease agreement is with Luxury International, LLC, for approximately 20 acres.
Airport Director Steven Kjergaard said the proposed lease is virtually identical to the rest of the airport’s leases, including the 50-year term.
Where it differs, he said, is in the revenue-sharing agreement based on acres developed.
In addition to the base rent of $0.05 per square foot per year, Luxury International will pay the airport $50,000 per year or between 10% and 13% gross income, whichever is greater.
“For every dollar they make, we’ll take between 10 and 13%,” Kjergaard said.
He said the deal with the proposed storage facility is an opportunity to produce significant revenue, at no cost to the airport or county, from a property that has been empty for 80 years.
“It will be a great neighbor to the airport,” he said.
But some area residents are concerned about the terms of the lease agreement, as well as Luxury International’s possible financial backing.
Rep. Doug Okuniewicz (R-Hayden) said several constituents reached out to him after a June 23 meeting with Kootenai County commissioners, where the Luxury International project was on the agenda.
“I don’t think most people even know this is going on,” Okuniewicz told The Press on Thursday.
He emailed commissioners on July 1 to share his thoughts.
“I would also like to know more about the nature of the $10 million loan that the prospective lessee says is being underwritten by the Bank of China,” Okuniewicz wrote.
Walt Fraser, the lessee, indicated to commissioners in June that he does business with several international banks. He said he provided Kjergaard with a “placement letter in the amount of $10 million.”
“This is a foreign bank,” Fraser said. “Actually, it’s the Bank of China. There’s a definite cost to me. I have to place a certain amount of funds — in this case, $10 million.”
The Bank of China is a Chinese majority state-owned commercial bank based in Beijing. It is the fourth largest bank in the world.
Fraser referenced the matter again at a July 13 meeting of the Airport Advisory Board, where he suggested his earlier comments were taken out of context.
“I’ve heard accusations that I’m going to get the money from President Xi in China and things like that, which is clearly not the case,” he said.
Okuniewicz questioned what might happen if Luxury International secured financing through the Bank of China and later defaulted on the loan.
A draft of the lease agreement obtained by The Press indicates that the county would authorize Luxury International to utilize a leasehold mortgage as a means of collateral to any lending institution for purposes associated with the business operations at the airport.
“There’s nothing illegal about it,” Okuniewicz said. “I just don’t think it would be very popular.”
But Kjergaard said the notion that Luxury International plans to get a loan from the Bank of China is an assumption.
“Luxury International never stated they were going to use financing from the Bank of China,” he said. “They may not even use a bank for financing.”
He added that the lease agreement has “guardrails.”
“There’s a lot of things we have in there that protect the airport and the county,” he said.
Okuniewicz also said he generally opposes the county partnering with a business that will compete with private-sector businesses.
Commissioner Leslie Duncan expressed similar concerns, adding that she was concerned that Luxury International does not appear to have a business plan.
Commissioners pulled a business item related to the lease agreement from the agenda of the July 26 business meeting. Another date for discussion has not been set.