Hold a Public Hearing, Present, Discuss, and Consider Action on a Resolution Approving the Financing and Refinancing of the Addison Hangars, LLC Project Including the Redevelopment of Certain Real Property for Commercial Aeronautical Purposes Solely for Purpose of Section 147(f) of the Internal Revenue code of 1986, as Amended and Section 66.0304(11)(A) of the Wisconsin Statutes, as Amended.

The Town of Addison (“Town”) and Addison Hangars, LLC (“Addison Hangars”), a wholly owned subsidiary of the Sky Harbour Group (NYSE-SKYH), entered into a ground lease effective June 20, 2022, which, among other things, requires the redevelopment of a certain 6-acre site at Addison Airport (“the Ground Lease”). Pursuant to the terms of the Ground Lease, Addison Hangars is to design, construct and operate an exclusive corporate/executive jet hangar campus consisting of six hangars aggregating approximately 101,000 square feet, including 14,500 square feet of related office/shop space for aviation use, adjacent vehicle access, parking and landscape improvements (“ADS-Phase I”).

In June of 2022, the Town approved Addison Hangars financing of the ADS-Phase I development with loan proceeds originating from public activity bonds (also referred to as private activity bonds, “PAB”) issued by the Public Finance Authority (“PFA”). The maximum amount of bonds authorized to be issued was $20,300,000.

Addison Hangars is now requesting the Town to consider and consent to a proposed First Amendment to Ground Lease (“First Amendment”) to include an additional 6.5-acres of airport land to be improved with five additional hangars aggregating 86,800 square feet, including approximately 12,000 square feet of office/shop space for aviation use (ADS-Phase II”). Accordingly, Addison Hangars is seeking the Town’s consideration and consent to amend their maximum amount of bonds to be issued to $71,890,000.

In August 2021, Sky Harbour secured $166.34 million in financing through the sale of Series 2021 PABs tax-exempt senior bonds through municipal conduit issuer, Public Finance Authority. SkyHarbour and its subsidies including Addison Hangars, LLC, Sky Harbour Sugar Land Airport (Houston), LLC, Sky Harbour Opa Locka Airport (Miami), LLC, Nashville Hangars, LLC, APA Hangars, LLC (Denver Centennial) and DVT Hangar, LLC (Phoenix Deer Valley) collectively constitute the “Obligated Group”, whereby on a joint and severed basis the leasehold improvements secure the bonds while the revenues repay the bonds. As part of the financing plan, Sky Harbour has or will contribute up to $68 million in equity to the Obligated Group.

The Public Finance Authority (“PFA”) was created by local governments, for local governments, for the purpose of issuing tax-exempt conduit bonds for private development benefiting the public regarded as “qualified private activities” but present no risk to the taxpayer or any state or local government. Qualified projects that may be financed by public activity bonds include airport development and redevelopment.

Addison Hangars is requesting the Town of Addison as the host jurisdiction, acting through its City Council, to hold a public hearing and approve the issuance of the PFA Bonds to finance and refinance the Project, solely in order to satisfy the requirements of Section 147(f) of the Internal Revenue Code if 1986, as amended (the “Code”) and Section 66.0304(11)(a) of the Wisconsin Statutes, as amended (the “PFA Act”).

Public/Private Activity Bonds do not constitute a:

• Debt, loan of credit or, a pledge of the full faith and credit or taxing power of PFA, the Town or, the State of Texas; or
• Monetary liability of PFA, the Town or, State of Texas; or
• Contingent liability or obligation, charge directly or indirectly against the general credit of PFA, the Town or, the State of Texas.

In keeping with Section 147(f) of the Code and the PFA Act:

1. Airport Owner: Town of Addison, Texas
2. Initial Occupant/Borrower: Addison Hangars, LLC, a Delaware limited liability company or, another authorized affiliate of Sky Harbour Capital, LLC
3. Description of Project: This project includes the development of a general aviation and aircraft storage facility at Addison Airport in Addison, Texas (“ADS”), initially comprising six hangars aggregating approximately 101,000 square feet, including approximately 14,500 square feet of related office space for aviation use, and adjacent vehicle access, parking and landscape/hardscape improvements (“ADS Phase I”), and the subsequent development of five additional hangars aggregating approximately 86,800 square feet, including approximately 12,000 square feet of related office space for aviation use (“ADS Phase II”).
4. Project Location: Where commonly known as 4505, 4570, 4572, 4574, 4576 & 4580 Claire Chennault Drive at Addison Airport, Addison, Dallas County, Texas
5. Maximum Amount of Bonds to be Issued with Respect to the Project: $71,890,000.

Administration recommends approval.